Running a business means a lot of revenue, but it also means a lot of taxes. But the good news about taxes as a business owner is that there are tons of ways that the tax code is written and designed to give business owners tax advantages for contributing to the economy. But if you don't know what these tax deductions are, then you can’t take full advantage of them. Many business owners are missing out on many great tax deductibles. Here are three expenses that are deductible for your business to save on your taxes.
The first expense that is tax deductible for your business is your office costs. This includes both the cost of office supplies like pens, paper, office furniture, and appliances, but also the rent that you pay on your office space itself. If you are a sole proprietor who runs their business from their home, then you too can deduct a portion of your rent or mortgage costs for the space of your home that you use for work. Even things like utilities for your office space can be deducted and save you money on your business tax bill.
Another expense that is tax deductible for your business is your retirement contributions. Many businesses offer 401(k) retirement plans to their employees as a benefit, and these often come with an employer match for a certain amount of the employee’s contribution. Employer contributions to a 401(k) are tax deductible. If your business is offering retirement contributions to employees, you can save thousands of dollars every year by deducting those contributions from your taxable business income. This can also incentivize you to offer an employer match to your employees for the purpose of cutting down on your tax expenses.
The final expense that is tax deductible for your list that you should take advantage of is your payroll expenses. Any amount of money that your business pays to employees or to freelancers working for your business is a business expense incurred in the running of your business and is as such a deductible expense for your business. If you aren’t deducting payroll from your taxable income, you are paying tens of thousands more in taxes than necessary.
Taxes are a necessary evil but that doesn’t mean you should pay a higher tax bill than necessary. The key to lowering your tax bill is understanding what expenses deductible are for your business. Make sure that you are deducting these three things to keep your taxes low.
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