Running a business can be quite expensive and lead to a pretty hefty tax bill. The good thing is that there are quite a few deductions a business can get to help make this bill a little smaller. Some businesses might get deductions that are figured out based on things like sales tax nexus, while others won’t qualify. Since it’s very important to know what you can and can’t qualify for, here are 5 common deductions that businesses can get.
Sales Tax
The first type of deduction a business can get is called a sales tax deduction. These types of deductions are for the sales tax you pay on items for your business. It does not include every single purchase you make over the year, especially for things you are buying for your personal use. If you aren’t really sure whether you qualify or want to know more about your tax situation, you can try to hire a sales tax outsourcing company. These are companies that will prepare and file sales tax returns for your business.
Business Meals
You can also get deductions for any business meals you have. These are for any meals you had that related to work. Keep in mind, this doesn’t only mean meals you had on your lunch break. If you take out clients to discuss business, you can get those meals deducted. Remember, it’s important to keep receipts and other paper trails that relate to these meals, just to ensure you won’t run into any issues or hang-ups while you’re actually filing your return.
Salaries and Benefits
With any business comes the need to pay salaries and benefits to employees. During tax season, this can become daunting, especially if your business is large and has hundreds of employees. There are some requirements in order to get these amounts deducted, but it includes normal wages, benefits and vacation time. With that being the case, it’s extremely important to keep a detailed and clear record of any and all amounts paid out.
Vehicle Expenses
You can also get deductions for any vehicle expenses. Most people use vehicles quite a bit for their businesses. The deduction for this includes any vehicle that’s specifically used for business, as well as personal vehicles used for the same purpose. If you use your personal vehicle for both business and personal use, you want to make sure you keep receipts and documentation to prove the times it was used for business. The good news is that these things are pretty easy to collect, so you shouldn’t have too many issues.
Travel Expenses
Finally, you can get deduction on any travel expenses your business gets. This includes things like rental vehicles, meals, hotels and parking fees. With this being the case, it’s important to keep all your receipts and papers from your business trip, so you can refer back to it and give any additional information if needed.
Besides the special circumstances, like sales tax nexus, there are quite a few other deductions that a business can qualify for. It’s a good idea to hire a professional to ensure that you get the most deductions you possibly can, so your tax bill won’t be more than what it needs to be. You might be surprised at the deductions you actually qualify for.