Small Business Tax Write-Offs You Shouldn’t Overlook

Running a small business has its challenges. Still, it's manageable once you’ve gotten the hang of it. However, navigating taxes for a small business is a whole other beast.

More often than not, your company’s bank account takes a hit as tax season rolls around. But when you take advantage of tax deductions (also known as tax write-offs or tax breaks), you lessen your total taxable income. That, in turn, reduces the total amount you owe

The more deductions you use, the less you end up owing in taxes. Check out some of the leading tax write-offs overlooked by small businesses.

Business Expenses

This one might sound obvious. After all, most business owners know that work-related equipment can be deducted from a company’s taxable income. But more costs than you might think count as business expenses. Here are some common ones:

• Office rent
• Internet costs
• Office equipment (computers, phones, etc.)
• Staff salaries
• Business insurance
• Half the cost of meals for meetings held over lunch

It’s important to note that if you use a piece of equipment or a service for both work and personal use, you can write off only the percentage you use for work. For example, if your monthly internet bill is $100 and you use it for work 80% of the time, you could write off 80% of each bill.

Your Healthcare Premiums

One of the downsides of running a small business is that you don’t have employer-sponsored healthcare plans to fall back on. But the good news is that if you pay for your health insurance out-of-pocket, you can deduct that expense. It’s one of the major tax breaks overlooked by small businesses.

It’s important to note that if you have a subsidized plan like those offered on the Health Insurance Marketplace, you can only write off the amount you pay per month after any tax subsidy has been applied. And keep in mind that if you earn more than anticipated, you may need to repay some of the tax subsidy.

Business Mileage

The standard mileage deduction can add up if you drive even a moderate amount for work. The IRS sets a mileage reimbursement rate every year; for 2023, that rate is 65.5 cents per mile. That means that for every mile you drive for work, you can deduct 65.5 cents from your total taxable income.

However, there’s one important caveat: you can’t deduct commuting expenses. So if you’re driving from your home to your office, you can’t deduct those miles. But if you’re driving from your office to meet a client, then you can.

Why is this one of the tax write-offs overlooked by small businesses? Plenty of people find the idea of tracking mileage to be too much of a hassle. But you don’t need to keep a handwritten log — there are plenty of free apps for tracking business travel!

Never Miss a Tax Break

The world of taxes is confusing, and there are likely tax write-offs out there that you don’t know you’re missing. At STG Accounting, we’re proud to offer tax planning services to help you save money.

Want to learn how we can help your small business? Contact us today!