Money Matters - Simplified

Tax Deductions Businesses Need to Know

The expenses incurred toward salary and employee benefits are tax deductible. These legal deductions include retirement plans and health insurance among other benefits offered to employees.

Expenses are integral part of any business. However, Internal Revenue Service (IRS) offers deductions on certain expenses.

Minor Deductibles:

1. Expenses for office items like computers, fax machines and photocopiers are deductible.

2. Subscriptions charges for software and industry-related magazines.

3. Insurance premiums

4. Telephone charges

The tax deductions, which are written off over time and not in the year you are paying income tax, lower your taxable profit, thereby leaving you with more money.

Carefully following the tax code provisions will help you save more money. Personal expenditure, capital expenses like real estate and equipment are not deductible.

A thorough examination of what is deductible will gives you financial leeway.

Here are Major Deductibles

1. Supplies
Supplies are essential expenses for any business and they are deductible. They include office supplies, materials needed for the smooth operation of business. Remember to keep receipts for these expenditures.

2. Advertising
Almost every business enterprise advertises and promotes their business or service. They allocate some funds toward the expenses. They are tax deductible.

3. Payroll
The expenses incurred toward salary and employee benefits are tax deductible. These legal deductions include retirement plans and health insurance among other benefits offered to employees.

4. Travel
As businesses involve a lot of travel, travel expenses are legally deductible. The IRS stipulates that the expense for travel or entertainment or gifts should be business-related.

The expenses include costs of travel to and from your business destination, lodging expenses, cab fare, rental cars trips, etc. Tax deduction can only be for business-related expenses. Personal expenses are not deductible.

5. Entertainment
There are some business entertainment expenses like hosting a dinner for a client. In such instances, 50 percent of these expenses are tax deductible.

6. Rent
The cost incurred on renting a compound or a building is tax deductible. In addition, the utilities required to maintain the facility are also deductible.

7. Professional Fees
Expenses or fee paid for professional services such as lawyer and accountant are tax free.

For a snapshot of tax deduction see
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For detailed analysis of tax deduction, see

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