As an entrepreneur or small business owner, you can get slammed when it comes to taxes: You basically pay double for Medicare and social security, depending on the state where you live those income taxes can be brutal, and you don’t have any employer offering a matching 401(k) contribution to level the playing field. However, there’s one avenue where the self employed has it made: Write-offs and deduction. Act fast—you only have a few days left to make those purchases for the 2014 year.
An entrepreneur’s best friend is her CPA, so make sure you do your research and have a great one on your side. Your CPA can be depended on year-round (not just during tax season) to provide sound advice, including just how much you should be paying in quarterly taxes. Here are a few of the most overlooked tax advantages for business owners. Are you missing any?
1. 100 percent of your healthcare premium
You’re stuck paying for your own healthcare, but did you know business owners/freelancers can write off their entire monthly premium? You might also be able to write off deductions, co-pays and out of pocket expenses for medical care. This can add up handsomely, and it’s a great reason to spring for the more comprehensive care. The more you write off, the better your odds of squeezing into a lower tax bracket, and ultimately the fewer taxes you’ll pay.
2. All office expenses
Just be reasonable, and the IRS won’t have any reason to audit you or your business However, small businesses can write off everything from laptops (new ones every year aren’t considered a luxury), printer paper, commercial office space that’s rented, conference tables, etc. However, be careful when it comes to a home office because this is suspect for the IRS. You can only use all supplies and/or office space solely for business, so steer clear of gray areas.
3. Your employee/freelancer pay
If you pay someone for professional services, including your CPA, you can of course write that off. This goes for small business attorneys, that freelancer you hired just once to re-do your logo, and your permanent employees. Not only is this an incredible deduction, but it’s also legally required (otherwise, those workers can get by without claiming the earnings).
4. Business travel
Again, don’t get greedy with this one because the IRS is already generous enough. You can basically attend as many industry-related tradeshows, conferences, etc. as you like anywhere in the world and write off the travel expenses (including airfare). You can also deduct hotel expenses during the days of the event as well as 50 percent of what you spend on food and entertainment (just don’t go overboard). A good CPA can also write off an upgrade to business class if he can make a claim that you need extra space to work on the flight.
5. Miles on your car
In case you’re audited, you need to record exactly how many miles you drove for business reasons, who you met with/what you purchased, and how it relates to business. If you drive often for work, this is a great deduction. If not, it’s just a pain. The best way to avoid this is to have a car just for business reasons (or rent a car for business purposes) so the paperwork nearly takes care of itself.
Running your own business isn’t easy, but the good news is that perks are abundant once you start looking. It’s kind of like when you buy a new car and suddenly see the same model all over the road. Get into the deduction swing of things, and it’ll start to come easier.
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Larry Alton is an independent business consultant specializing in social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn.
