If you’re a business owner, you know that the money you save is just as important as the revenues you bring in. When you save on taxes, you have extra money to help your business grow. Here are some ways you can save money on taxes.
1. Research and Development Tax Credit
This tax credit incentive is designed to encourage business innovations, yet many companies don’t even realize that they qualify. This tax credit pays dollar-for-dollar for everything you spend on research and development up to a hefty amount. An R&D tax credit could save you a lot of money you can then direct to growing your business.
2. Employee Benefits
If you pay for accident insurance and health plans for your employees you can deduct that cost from your taxes. The same goes for paid medical leave you provide to your workers, so long as it’s at least 50% of their normal take-home pay. Other benefits include education and adoption assistance.
3. Rental Costs
If you pay rent on your building, you can qualify for a tax deduction for your rental costs. The rent has to be reasonable, and it must be for the purpose of business. If you’re making payments for a conditional sales contract, that money isn’t deductible.
4. Bad Debts
If your clients refuse to pay, you can at least get a tax credit for those unpaid debts. Bad debt is defined as a receivable a customer or client owes you. If you can’t get that money, write it off as an uncollectible debt. Your company will have to use the accrual accounting method to qualify for this, however.
5. Legal Fees and Expenses
If you need to pay an attorney as a normal part of your business, you can get a tax credit for it. The fees must be ordinary and necessary, such as tax advice or litigation and business transactions. The costs of getting a patent fall under this category as well.
If you have legal fees from starting your business, however, those have to be broken down and deducted over a longer period of time.
If you have assets that are necessary for running your business, you can depreciate them over a certain period of time. To qualify, such assets must last longer than a year and are something you own rather than rent. These assets have to be an active part of your business, and they must lose value over time either by becoming obsolete or because of wear and tear. Even real estate investors can claim depreciation under certain circumstances.
7. Building Maintenance
If you work out of an office building or run a store, you know how important a well-maintained building is. Fortunately, you can declare those maintenance costs as a tax deduction. Deductible costs include repairs and the ordinary maintenance of your building.
Keep in mind, however, that if you decide to remodel or expand your building, that’s considered a capital improvement and won’t qualify for a maintenance tax write-off.
8. Business Travel
If you have to travel away from your home far enough that you have to stay at a hotel, that’s considered business travel and is tax-deductible. The trip has to be entirely for your business, and you can also deduct your daily expenses including meals and hotel costs.
Extra expenses, such as having your laundry done or some entertainment, might not be deductible. You also won’t be able to deduct the cost of bringing a family member under this credit.
If you own a business, these tax credits can save you money and help you direct those funds to other ways that enable your business to grow.