As a small businessperson, you need to take advantage of every tax break you can find. Knowing what kinds of deductions are available can help you plan your work for the year. You'll be more aware of the choices you make and remain vigilant about keeping receipts once you see the impact deductions can have on your tax liability at the end of the year.
If you work out of your home, you can deduct part of your mortgage, utilities and upkeep charges from your taxes. Determine where the majority of your business takes place and where you spend the majority of your time to figure out how much of your home qualifies. You cannot deduct a portion of your home if you use a room for business and personal use however. For example, if you are an accountant and work at your kitchen table, you cannot deduct the kitchen as your place of business. If, however, you are a freelance writer and exclusively use one room as your office, you can deduct all the expenses related to that portion of your house.
Travel and Entertainment
As a small business owner, you are entitled to a deduction for the mileage you drive on business-related trips. Whether you visit clients, drop off assignments or drive to business conferences, you can deduct the expense. The amount varies from year to year. For example, at the time of publication, the business mileage deduction is 0.50 per mile. If you buy lunch for a client, you can deduct the expense. Hotels, parking and meals for yourself while you are out of town on business also are deductible.
Insurance and Fees
As a self-employed entrepreneur, you can deduct the cost of your health insurance from your taxes. You also may deduct the premiums you pay to cover your family. Fees to professional organizations and for subscriptions related to your business are deductible. Entrance fees to business conferences and fees you pay for licenses required by your state may be deducted from your taxes.
Any money that you spend on items you need to do your business may be deductible. Consider your computer as a tax-deductible item, and keep receipts for service and supplies related to it. Printer cartridges, new hardware, software upgrades and printer paper all may fall under necessary work-related deductions. Your phone bills, Internet connection and cell phone may be deductible if you have dedicated lines. Take $25 off your taxes for every gift you present to clients. And don't forget the charitable donations you make. Keep all your receipts because your philanthropy may pay off in your bottom line.