| Taxes are predictable and enduring for most of us, | | | | miles driven for business. Tolls and parking fees are |
| especially business owners. For the small business | | | | also permitted, including depreciation. However, if your |
| owner, tax deductions are an advantage in reducing | | | | car is used for business and pleasure, only the |
| their tax burden, but accounting for these deductions | | | | business part of these expenses is allowed. |
| must be precise and direct. Every owner of a small | | | | Advertising or promoting your business and products is |
| business hopes to make a profit; they will also owe | | | | a valid business expense under certain conditions. The |
| taxes on their net business profits. But business | | | | advertisement must be specific to the business and |
| owners who benefit from their deductible expenses | | | | products you are sponsoring. Legal and professional |
| can significantly lower their business taxes, including | | | | fees can be accounted for in the year they are |
| some business-pleasure perks that are legal tax | | | | incurred, if they are related to that specific year. |
| deductions. These perks can range from the car you | | | | Expenses incurred in one year but are linked to future |
| use for work to business travel, including meals and | | | | years, must be expanded over the related period. |
| entertainment directly related to your business. In | | | | Unpaid charges may be recuperated as bad debts, but |
| accounting for travel expenses, 50% of the cost is | | | | not all unpaid charges qualify as a tax deduction. For |
| allowed as long as accurate records are kept on all | | | | instance, time committed to servicing a client who |
| your business entertainment expenses and your | | | | failed to pay, is not a valid deduction. Interest and other |
| records must show how your expenses relate to your | | | | charges on borrowed money used for your business |
| business. Family members are permitted on a business | | | | is completely deductible, but your records must show |
| trip, but no deduction is allowed for anyone that is not | | | | that the money was used exclusively for your |
| part of the business team. | | | | business. |
| Tax laws change regularly, which makes accounting | | | | Some expenses for business assets, such as new |
| for legal tax benefits complex and difficult. Your | | | | equipment can be entirely accounted for in the year |
| deductions require expertise on current changes, | | | | purchased, under a certain IRS Code. However, not all |
| guidelines and advice for your individual situation. A | | | | assets qualify for this deduction. The depreciation of |
| number of permissible tax deductions are available as | | | | computers and software used in your business must |
| business deductions if looked at closely. These | | | | be carried over 3 years, but there are some changes |
| deductions can yield even more savings on your tax | | | | for tax-year 2008. The IRS Code that allows the entire |
| liability if everyday deductions are considered. | | | | cost of software in the year of purchase will no longer |
| Home-based businesses that have a home office | | | | be available. The new rule states that the depreciation |
| may deduct a part of the real estate taxes paid on | | | | period for computers and software purchased |
| the home, including a portion of utilities, telephone and | | | | together must be expanded over five years. However, |
| repairs for the office. If your business have employees, | | | | the old rules still exist for computer systems that cost |
| the following are accounted for as business expenses: | | | | less than $112,000 in 2007. Contact the IRS for more |
| wages, employee education, training and other | | | | information on this deduction. |
| employee benefits. In other cases, tax deductions for | | | | Taxes are normally deductible when acquired for the |
| your small business include rent or lease payments, | | | | operation of your business. Account for sales tax as |
| interest on business loans, real estate taxes on | | | | part of the cost of items bought for business |
| business property, state, local and foreign business | | | | operations, but excise and fuel taxes are deducted |
| income taxes and insurance for your business. | | | | separately. Employment taxes are paid by the |
| Educational expenses required to maintain or improve | | | | employer and deducted as a business expense, |
| the level of the present position you or your | | | | self-employment tax is paid by individuals who are |
| employees hold are valid business deductions, but | | | | self-employed. Federal income tax is not deductible, |
| educational expenses outside of your present position | | | | however state income tax is deducted on your federal |
| do not qualify. | | | | return as an itemized deduction and real estate tax on |
| Expenses for starting a business fall into two | | | | business property is deductible, along with local |
| categories. Capital expenses, the cost of setting up a | | | | evaluation for repairs or maintenance. But, evaluations |
| business and business expenses, the cost of running a | | | | for improvements are deducted over a period of |
| business after the business is set up. Accounting for | | | | years. Moving expenses are not business expenses, |
| the cost of starting a business the first year is a limited | | | | but are valid under certain circumstances. The move |
| deduction; remaining expenses are divided into a | | | | must be directly connected to the business or the |
| 15-year period. Newly started businesses usually don't | | | | person's position in the business and the destination of |
| realize a profit the first several years, so spreading | | | | the move must be 50 miles or more. |
| your deductions over several years could balance any | | | | Owners of small businesses accounting for charitable |
| profits. | | | | contributions, except corporations taxed as |
| The cost of operating the car used for business | | | | partnerships, can enter these deductions on their |
| purposes is a business expense and you may select | | | | individual tax returns. Old computers or office furniture |
| one of two ways for accounting for the expenses, | | | | with completed depreciation can be donated to charity, |
| standard mileage, which is a limit of 48.05 cents per | | | | but no deduction is allowed. |
| mile, or actual mileage by keeping precise records of | | | | |