“You must spend money to make money.” – Titus Maccius Plautus
I don’t know many people who enjoy spending money. But it’s a necessary part of doing business. You need resources to be able to do your job well and to grow your business.
Investing in your business is important. Whether it’s a new phone, a course to help you grow as a business owner or a place to set up shop, your business expenses are tax deductible. And some deductions get forgotten because you’re not recording or categorizing them correctly (or at all!) or mistaking a business expense for a personal expense.
But many deductions go by the wayside because you may not be aware that you can deduct them. If you’re doing your own taxes (which I don’t recommend, especially if you own a business), be sure you’re keeping tabs of the following expenses. Your bank account will thank you, come tax time!
- Health insurance – While there are rules that must be met, health insurance premiums are tax deductible for those who are self-employed.
- Charitable donations – Whether it’s a donation directly to a qualifying charity or expenses you incurred as a result of volunteer service, you can deduct donations your business makes. You cannot, however, deduct the value of your time if you volunteer.
- Cell phone – This is a tricky one. While you can deduct the cost of your cell phone (including both the purchase price and the monthly fee), this is true only for the portion used for business. So hang onto your phone records and talk to your accountant at tax time.
- Home internet – If your business is home-based, it’s likely a necessity of doing business. You can deduct the cost of using internet for your business—but not the portion used for personal use.
- Rent or mortgage – This is where those of us with a home office score! You can write off the portion of rent or mortgage you pay for the space you use for work. So if your home office is 100 square feet of your 1,000 square-foot house, you can write off 10 percent of your mortgage or rent payment.
- Team meetings – This can be a tricky one, but if you’re hosting a meeting with team members, you can write off some of the expenses. Whether it’s meeting space, travel or refreshments during the meeting, you can generally write these off. But check with your accountant first.
- Service fees – Any service you use for your business is deductible, including ATM and credit card fees, licensing, professional services and other service-based fees.
- Travel – Another great perk of being a business owner is being able to write off travel. But be careful. Unless the travel is directly and solely related to your business (meeting with an out-of-state client, prospecting new business, etc.), you’re better off paying out of your own pocket.
- CPA fees – If you own a business, it’s always a good idea to have an accountant on retainer. And they will let you know that their fees are all tax deductible.
- Moving expenses – Do you have to relocate to service a client? Is your office moving? You can deduct the expenses that relate to your business. On a separate note, if your family moves to a new state that can be deductible too! Keep track of your mileage and expenses and be sure and let your CPA know.
It’s always important to track any expenses related to your business, regardless of if it’s a write-off or not. Tracking your business expenses helps you to budget and see where your money is going.
Unsure about a deduction? Always talk to your accountant before claiming something on your taxes.