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The Master List of Small Business Tax Write-Offs for 2021
Taxes are coming, taxes are coming! Get your master list of small biz tax write-offs for 2021!
(This post now includes new and updated content for 2021! Yay!)
It’s that time of year that everyone dreads. My husband stays glued to the computer for days on end, sorting and separating our year’s worth of business transactions in our Wave accounting program, and I’m downing wine, crossing my fingers that the final numbers look good.
But more than anything, I’m praying we don’t owe a bajillion dollars to good old Uncle Sam. Because someone in their office got the idea that small businesses are just rolling in dough, and they want their cut.
And in reality, every penny matters in a small business, and we need all the tax write-offs we can get, am I right?!
So I’m gonna share a little pre-tax prep list.
I’m CERTAINLY not a CPA or accountant or tax advisor of any kind, so let me just say- straight up- that I am NOT giving tax advice right now.
I’m simply giving you a handy, dandy little list of things you can calculate into that write-off column of your tax forms. (Hey, Turbo Tax, I’m calling to you! Remember these for later!)
Keep in mind that not all of these deductions will apply to you, and the IRS has put a limit on total allowable deductions (because we’re not Jeff Bezos, apparently), so definitely do some digging and make sure you use your deductions wisely. *wink wink*
At the end of this list is a totally awesome downloadable sheet of all of these deductions so you can save it to your phone (or laptop) for when you’re actually in the trenches with your coffee and calculator.
Don’t forget to download it when you’re done skimming through here, okay?
So here we go…. (and always have your taxes checked by a professional, which- again– is not me…)
Tax Write-Off #1 – Salaries, Wages, Labor, Supplies
- Payments to employees (including salary, wages, bonuses, business expense reimbursements)
- Contract or freelance labor payments
- Bookkeeping and accounting fees
- Legal representation fees
- Business supplies related to your business (like your printer, paper, ink, postage, software, etc)
- Advertising costs (online, print, etc)
- Rent on machinery and equipment
- Costs of goods (raw materials, inventory, etc)
- Credit card processing fees
(Important note: Payments to sole proprietors, partners, and LLC members are NOT deductible because these owners don’t qualify as employees.)
TIP: Anything paid over $600 per year is tax deductible (not including cash payments). So that social media manager that half-managed your facebook page last year probably counts. You WILL need to give any claimed contractors a 1099-MISC for their records. (Just snag a free one online.)
Tax Write-Off #2 – Automotive Expenses
- Your car/truck/van
- Automotive maintenance and repairs, oil changes, etc.
- Car Insurance
- Parking fees and tolls
(Important note: Always keep receipts for everything and keep record of your mileage, maintenance.)
TIP: The IRS gives a standard mileage rate that you can deduct, which is 57.5 cents per mile for the tax year of 2020.
Tax Write-Off #3 – Rent & Utilities
- Any rent paid for business property (store, office, factory)
- Part of your mortgage or rent if you work from home (based on the square footage of your office within your home)
- Utilities for your business property- water, electricity, trash (or portion for your home office)
- Cell phone and internet bill (and landline if you have an office phone)
- Alarm system payments
- Business insurance and/or rental or mortgage insurance
- Repairs and maintenance
(Important note: If you work from home, make sure to research how to calculate the square footage of your office space and deduct the appropriate amounts of the above categories for the required business space.)
TIP: Claiming your Netflix bill is tempting, but could get you flagged for an audit. Resist. Resist!
(Okay, so I didn’t have a good tip for this section…my apologies…)
Tax Write-Off #4 – Taxes, Insurance, & Other Boring Stuff
- Employer taxes, FICA, FUTA, State Unemployment. (In part or full depending on your business and situation)
- Business Insurance
- Malpractice Insurance
- Flood Insurance
- Renter’s Insurance (as mentioned above)
- Health Insurance (again, rules apply depending on business and situation)
- Bank fees & ATM fees
- Business licences, permits and education (books, courses, workshops)
- Memberships to professional organizations
(Important note: These are all technical deductions and the amount may vary based on your business and situation. Be sure to do some research or ask a tax professional)
TIP: These taxes are deductible, but they are tricky! There’s all sorts of rules and stuff to remember. This is where your CPA should be stepping in to make heads or tails of what you’ve paid for and what you can legally deduct.
Tax Write-Off #5 – Travel & More Complicated Deductions
- Business travel (Airfare, train, bus, etc)
- Lodging expenses for Business travel
- Business related meals
- Interest on business loans
(Important note: This section is mostly partial deductions and usually requires a decent bit of documentation to verify. Use these deductions with caution.)
And that’s our master list. Now hurry up and snag the printable version, tax season is like three blinks away! 😉
I feel like I should mention, again, that this isn’t a tax advice article! It’s just a friendly list of helpful categories you might not have already thought of.
PLEASE make sure that you have some sort of pro helping you deduct the right amounts of everything so you don’t get your accounts frozen by some suspender-wearing hot shot down in the tax office.
(I’m pretty sure that only happens in the movies, but hey… just in case!)
I hope this is helpful and saves you some bucks. Please comment if you know of any money saving tips that I might have overlooked.
And share this with all your fellow entrepreneurial buddies, because every penny saved is a penny earned. (Cue Ben Franklin with his kite…)
So until next tax season, folks… Peace out.
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