Running a business can be an incredibly daunting experience, especially if you’re running a new business.
You’re likely catching up to generating ROI and making sales, exhausting all means to keep it growing.
Given that money is everything in your first few years, accomplishing your annual tax tasks is essential to success.
Unfortunately, many new entrepreneurs fail to realize that there are potential tax deductions that end up saving money.
While you may be familiar with some, there are lesser-known deductions that enable your company to save more on tax bills. Here are some of them:
Deductible #1: Petty cash expenses
As the name suggests, petty cash expenses essentially pertain to the small items you need to pay for in cash.
Tolls and parking fees take up most of the lists, but early morning coffees and bagels for those dreaded 7 AM meetings also fit the bill. By capturing these seemingly small expenses, you’ll be saving big on taxes.
The best way to keep track of these expenditures is to keep good records of them—create a logbook specifically for petty cash, as with vouchers and receipts you can attach in the sheets.
You need to ensure that the time, date, amount, and what you bought are clearly stated, so avoid any confusion in future transactions.
Deductible #2: Employee gifts
You’ll likely have one or two parties in a year, especially when the holidays come around.
As a token of appreciation and gratitude for their hard work, you’ll likely be handing out non-cash rewards, such as employee gifts. Be it customized pens or ceramic cups, employee gifts are also deductible.
Be that as it may, there are are two existing conditions for claiming this deduction in the United States:
- You are only allowed to deduct $25 in non-cash gifts to each employee
- $1,600 is the maximum deduction amount for non-cash awards for employees
Deductible #3: Document preparation expenses
While this may constantly slip your mind, document preparation results in incurred costs you may deduct from your tax.
This could pertain to loan applications or business plans, as well as other paperwork that requires documents to be printed and bound.
Your business will likely find the need for the services of an account, attorney, or consultant for loans and other business work, which will require you to prepare and print out financial data, spreadsheets, business plans, and contracts.
These are expenses that end up quite a lot over time, and you are given all the liberty to deduct these expenses as professional fees.
Deductible #4: Office supplies
Much like petty cash expenses, the little things that keep your operations going can also be regarded as deductibles.
Your office supplies, such as printer cartridges, mailing items, paper, and even pens and paper clips can be included.
Cleaning items such as mops, trash bags, brooms, and cleaning supplies also fit the bill. These are necessities to a clean office, meaning that they’re essential to your business.
So long as you keep track of the expenditures through invoices and receipts, you’ll be well on your way to saving more.
In an effort to keep the cash flowing and the ROI goals alive, any opportunity to save cash is most welcome in your company.
While expenditures are a necessary part of business operations, knowing how much you can save on them through tax deductions is a saving grace.
By knowing which items save up on costs, you can now come up with better strategies and financial decisions, ones that will help your business keep growing.
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Backed up with 20 years of experience and outstanding certified public accountants, we’ll help you get through difficult financial situations.
Keep your business growing with us—reach out to us today!