If you own a small business, you know that managing every dollar can make a difference in your growth. Owners are always looking for ways to trim the fat, including finding essential tax deductions to save money at the end of the year. Several deductions are supported by the IRS that can help you wipe out some of your extra car expenses. If you are using a personal vehicle to run your business, there are several ways for you to write off some of your costs.
Car insurance, lease payments, and fuel costs can add up when trying to start your own business. From logging your mileage to adding your car to a fleet policy, let’s look at a few ways that small businesses can deduct their vehicle expenses.
Buy a Hybrid
Electric and hybrid cars are becoming a popular transportation option across the country. As an incentive to buy these types of eco-friendly vehicles, the government offers various tax rebates to cut your costs at the end of the year. Hybrid cars that were purchased after 2010 can be eligible for an up to $7,500 deduction. This is a big chunk of savings that can be rerouted back into your business.
While hybrid vehicle prices continue to come down, you are still making a smart financial investment with the rebates and gas savings. If you don’t own a hybrid car, you can install a conversion update to qualify your vehicle for government tax rebates.
If you use your car for personal and business use, you can deduct your working miles for a tax rebate. It’s a good idea to keep a log of all the trips you make to submit to your taxes.
Although this kind of tax filing won’t save you on your payments, it can give you a significant deduction when you file your business return. Submitting your mileage works best for registered owners as a sole proprietorship rather than a corporate entity. As long as you separate your personal and business use, you can save money.
If you are running a small service business with vehicles dedicated to business only, you can get a rebate on your operating expenses. The costs of repairs, mileage, and lease payments can be filed for deductions that can save you on your annual return. Larger vehicles like SUVs, vans, or trucks exclusively used for your business may qualify for a 100% deduction. Smaller vehicles can be eligible for up to $18,000 off the purchase price.
For business owners, a vehicle is an essential part of getting things done. From traveling to see customers, running errands, and delivering products to clients, your car helps you run your business. If you are trying to save money and are looking for innovative ways to keep your expenses down, talk to your accountant today about some of these possible deductions for your car. Keeping good records, updating to a hybrid, and taking advantage of fleet rates can help you write off some of your vehicle expenses.