Don’t-Miss Deductions for Small Business Owners

Greg Jones, CEO of BookKeeping Express, contributed this article to BusinessNewsDaily’s Expert Voices: Op-Ed & Insights.
It’s that time of year again. Small business owners are juggling the demands of their day job while moonlighting as their own accountants facing hundreds of new or complex regulations. Unbeknownst to many are money-saving tax deductions, and consequently, hard-earned money is left on the table.

To help shed light on these commonly-overlooked tax deductions for small business owners is Greg Jones, CEO of BookKeeping Express, the nation’s only franchise model for outsourced bookkeeping and financial intelligence consulting.

Here are eight ways you can deduct to your advantage.

Save on start-ups
The costs of launching a business are considered capital expenses, and you may deduct $5,000 your first year in business.

Business-related education
You can deduct educational expenses that maintain or improve skills required in your present employment, this includes seminars, classes, convention fees, etc.

Deduct on driving
Commuters may have missed the news that the fiscal cliff legislation signed by President Obama contains a provision that allows employers to offer up to $240 a month in tax-free benefits to employees who use public transportation or a vanpool to get to work. That’s an increase from $125 a month under old IRS rules. Employers can get a tax deduction by providing the Commuter Choice benefit or can save on payroll taxes by allowing employees to use pre-tax dollars to buy transit passes or pay vanpool costs. Employees save on federal income taxes.

Perks of working from home
Not only does a home-office allow you to work in last night’s pajamas, it also makes you eligible for home-office deductions. As long as the designated “office” space within your home is used exclusively for business purposes, you might be able to deduct a handful of things ranging from a portion of your rent and utilities to internet costs and repairs.

Self-employed health insurance deductions
Self-employed health insurance deduction is one of the most significant deductions you can take as a small business owner. You may be qualified to deduct premiums paid on qualified long-term-care insurance, medical and dental insurance not only for yourself, but for your spouse and dependents that are under the age of 27.

Software and subscriptions
The recently increased Section 179 provides another tax break in this area of business expenses. Previously, a company had to depreciate the cost of computer software over three years. Now, off-the-shelf software a business buys can be fully expensed in the year purchased.

Hotels and meals
You might as well stay in a nice hotel, because the entire cost is tax deductible. Likewise, the cost of travel — air, rail or auto — is 100 percent deductible, as are costs associated with life on the road (dry cleaning, rental cars and tipping the bellboy). The only exception is eating out. You can deduct only 50 percent of your meals while traveling. So stay at the Ritz and eat at Arby’s.

Telephone charges
You can deduct the cost of the business calls that you make for business from home. When your bill comes in, circle the business-related calls, total them up and keep a copy. At the end of the year, tally your 12 bills and deduct 100 percent.