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11 Tax Write Offs for Small Business That May Surprise You

Reviewed by Ty Crandall

November 14, 2023


tax deductions for small business credit suite

tax deductions for small business credit suiteYou have to pay your taxes. Not only is it illegal not to, but paying your personal and business taxes is a major factor in fundability. If you apply for business funding and a lender sees you have not been paying your taxes, it will likely result in denial. After all, if you can’t pay your taxes, how can they believe you will repay them?  That said, there is no reason to pay more than necessary. There are several tax write offs for small business that can help. Many of them may surprise you. 

Tax Write Offs for Small Business Can Save You Money

In truth, a tax professional is the best way to make sure you take advantage of all of the tax write-offs available. There are more than most realize. Below is a list of tax deductions for small business that can help.  Remember, this is not a complete list, and not every business will be eligible for every deduction. Always work with a tax professional to ensure your business taxes and personal taxes are filed properly. 

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11 Tax Write Offs for Small Business

Check out this list of tax write offs for small business, and ask your tax professional if any of them are an option for you.

#1: Simplified Home Office Deduction

When it comes to business tax write offs, this one is pretty popular. Most everyone knows there is a way to deduct home office expenses on your taxes. If you work from your home, you can deduct the portion of that home that you use specifically for business purposes. However, you must have a dedicated office space that you only use for work.  Then, you have to determine the percentage of home expenses that are associated with the business. 

For example, if your home office space is ¼ of the total square footage of your home, you can deduct ¼ of the utilities, etc. as a business expense. As you can imagine, this calculation can get complicated and tedious quickly.  As a result, a lot of home business owners do not take this deduction. They do not feel they can properly keep up with it.  Some do not feel the deduction is worth the time it would take to keep up with all that is necessary for the calculation.

What you may not know is that there is a simplified calculation for this deduction. The simplified option is a quick and easy way to determine your home office deduction.  You just multiply the total square footage of the space you dedicate to work only by $5.  Remember, the maximum amount you can claim using this method is $1,500 

#2: Qualified Business Income Deduction (QBI)

If you own a sole proprietorship, partnership, or an S corporation, you may be eligible for a qualified business income deduction. If so, you could deduct up to 20% of your qualified business income from your tax return. 

That means if you have qualified business income of $100,000, you can deduct $20,000 and only pay taxes on $80,000. 

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#3: Bonus Depreciation

Depreciation tax write offs for small business are nothing new.  Business assets like equipment are depreciated on the books over time at a set rate. That means you do not count the full cost of the item in the first year it is purchased. However, under bonus depreciation, you can deduct more than standard depreciation in the first year. 

Before 2017 the bonus depreciation amount was 50% of the cost. Then, you would depreciate the remaining 50% of the cost over the life of the asset. However, the new law says that for anything purchased between September 27,  2017 and January 1,  2023, you can deduct 100% of the cost in the first year the item is put into service. 

You don’t have to, but it could be advantageous to do so. Your tax professional can help you make that decision.

What types of items qualify for bonus depreciation?  Tangible assets with a useful life of 20-years or less as dictated by the IRS. 

Some items that fall into this category include: 

  • Machinery
  • Equipment
  • Computers
  • Appliances
  • And furniture

#4: Business Related Legal and Professional Fees

If you use an attorney or an accountant for business services, their fees are deductible. Did you have an accountant prepare your taxes? That’s deductible. Using an attorney to help draft employment contracts or a writer to write a business plan? That is all deductible.

#5: Dues and Memberships

Fees paid to professional organizations for membership are deductible.So, a pediatrician could deduct any fees paid for membership to the American Academy of Pediatrics, or an architect could join the American Design Drafting Association (ADDA).  If the business pays the fees, it is tax deductible on that business’s tax return. 

#6: Interest on a Business Loan

Did you know you can deduct the interest you pay on a business loan? If you meet a few qualifications that is. 

Qualifications include: 

  • Funds come from an actual lender, not family or friends
  • You are liable for the debt, legally
  • Both you and the lender intend for the debt to be repaid

It’s also important to note that you have to actually spend the loan funds. You can’t just put them in an account and make payments. That’s considered an investment by the IRS, and therefore does not qualify as one of the tax write offs for small business. 

#7: Bank Charges

Pay attention to your bank and credit card statements. All those little charges and fees are tax deductible. It may not seem like much, but they can add up. Especially when you consider all of the charges this can ecompass. 

Costs such as: 

  • Cash deposit fees
  • Merchant service fees
  • Late fees
  • Online banking fees
  • And even credit card convenience fees

These all count, so keep up with them.

#8: Continuing Education Expenses

As a business owner, you can pay for continuing education for your employee and yourself, and it could be tax deductible.  The IRS says if the cost is related to training that maintains or improves skills required for the job, it is  deductible. The deduction includes a number of education related expenses. 

For example: 

  • Course fees and tuition
  • Books
  • Supplies
  • Lab fees
  • And other similar items

#9: Business Animals

Animals that are used in the course of business are tax deductible. That means both the cost of the animal itself and the care and feeding of it. Of course, you can’t just buy a dog or cat and call it a business animal. However, if you have a dog and you use it as a guard dog in your business, some of those expenses could be tax deductible. 

One fun example is a junkyard owner who bought cats to help with rats. The IRS ruled it was a legitimate business expense and therefore, deductible. 

If you are an animal breeder,  you can also deduct costs related to animals for breeding. 

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#10: Website and Other Internet Related Expenses

The costs associated with maintaining a website can be tax deductible.  This may include hosting fees, design costs, and a number of other related expenses.

#11: Magazine Subscriptions

You can deduct the costs of some subscriptions, including those for professional journals, trade publications, and even technical journals. It’s important to note that you cannot deduct the cost of magazines for a waiting room. 

Don’t Do It On Your Own

Want to know the number one sure fire way to pay more than you need to in business taxes?  Try to do them yourself. Don’t do that. Hire a professional. After all, the fees are tax deductible. Then, you can know you are getting all the tax deductions for small business you are eligible for. Don’t let not paying taxes negatively affect business fundability. Want to know more about fundability and what may be affecting yours? Try a free consultation with one of our business credit specialists now. 

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About the author 

Faith Stewart

Faith has a BBA with a major in Accounting, and a combined 20 years of experience in the fields of finance and account.

Before switching to writing, she spent 10 years working in various areas of small business and personal finance and accounting, including working as a public auditor at BKD, LLP, Financial Director at Central Arkansas Development Council, and Commercial Credit Analyst at Farmer's Bank and Trust.

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