3 Tax Deductions for Small Business Owners

During tax season, there are many ways a small business can save some money and make the most of their tax deductions. The easiest way to maximize your deductions is to keep every receipt, because even the smallest amount of money spent can add up to big savings at the end of the year. This article will give you some deductions that are often overlooked by small businesses when it comes to tax deductions. 

Healthcare Tax Credit

You can qualify for a health care tax credit if your business meets the following requirements:

  • The average wages paid per person annually are less than $50,000 
  • You have 25 or less full-time employees
  • Your business contributes at least one-half of your employees' health premiums 
  • The health insurance plan is obtained through the marketplace for small business health 

Your small business accountant will go over all of the requirements with you in greater detail in order to determine if your business qualifies, or what you may need to do in order to qualify for next year's credit. 

Auto Expense Deduction

If you use your car as part of conducting business, or you have a vehicle specifically for business purposes, you can deduct a portion of the cost for maintaining and keeping the car on the road. These deductions can be a bit tricky, but your accountant can assist you.

You can claim these deductions in two separate ways: 

  • Actual expense. You need to keep track of each expense incurred for the maintenance and upkeep of the vehicle. 
  • Standard mileage rate. You deduct a certain amount for business-related costs like parking and tolls, as well as for each mile driven.

If you use your car for both pleasure and business, you can only deduction the business use of the car.

Section 179 Property Deductions

You may not be aware of this deduction, but small business owners can take advantage of this opportunity to deduct the full value qualifying property as expenses in the year your business began using them. This is the Section 179 property deduction, and it can include deductions of eligible business property in the 2014 tax year of some of the following property: 

  • Property used in production, transportation and manufacturing
  • A facility that is used for research or business 
  • Facilities that are used to hold horticultural products or livestock 
  • Computer software from off-the-shelf

Excluded in deductions are the following property:

  • Investment property
  • Land in or outside of the United States 
  • Facilities that provide lodging services
  • Buildings that store heating units or air conditioning units

Business accountants such as Teri J Henderson, CPA, P.A. can help you with determining what type of property will qualify for this deduction, and how you can utilize this option.