There are so many great tax deductions available for small businesses and of course it’s hard to know them all when you first start a business. I know I missed many deductions on my first couple of tax returns.
Do some research when you are starting your pet business and make sure you keep records of all your business expenses in a file.
Many of your everyday expenses become tax deductible when you own a home business. Depending on the structure of your business these deductions can apply against your business and your personal income.
Some examples of deductions that I will be claiming this year include:
a) The Home-office deduction – you can claim a percentage of your home expenses if part of your home is used regularly as an office for business use. These expenses may include maintenance and repairs (that are not capital in nature), rent, mortgage interest, house or apartment insurance, power, heat, water, and property taxes.
b) Vehicle expenses for business purposes. If you use your car 50 percent for business purposes, 50 percent of your car mileage, maintenance and repairs, vehicle insurance, gas and oil, car washes, license and registration, and auto club can be claimed. You will need to keep a mileage log book to track and substantiate your business miles.
c) Office expenses such as internet access, office supplies, books, and association memberships.
d) Travel to and fees for pet industry expos and conferences. All you hotel room charges, meals, and taxi fares are deductions.
e) Phone charges – I use my cell phone exclusively for business so that the purchase price of the phone and the monthly charges are deductible.
f) Business coaching – take advantage of this deduction and invest in yourself by getting the help of a coach who can help you grow your business faster.
g) Fees for advertising your business in the yellow pages, in online directories, running print ads in magazines or newspapers, or sending postcards or direct mail.
h) Printing charges for producing copies of business forms and contracts as well as your business cards and fliers.
i) Business website design and monthly website hosting charges.
The purchase cost of large items such as computers, printers, and fax machines can be depreciated over several years so keep receipts in your tax file as well as your warranty files.
If you run your business as a sole proprietor or partnership the IRS allows a new business owner to claim business losses against their personal income for 3 years. Make sure that after 3 years you do show some profit as otherwise they may label your business a “hobby” and this means you may be liable for past claimed expenses.
A good book to give you some tips is Home Business Tax Deductions: Keep What You Earn
by Stephen Fishman and Diana Fitzpatrick which is available at Amazon.
I would also recommend talking upfront to your accountant about the best structure for your business to make sure you keep more of your money at tax time.