Business Tax Deductions You May Not Be Aware Of That Can Save You a Lot of Money

When you say "end of the year," most small business owners immediately think of two things. The *second* reason is the holidays. The *first* is TAXES! Even though almost all of us pay our taxes quarterly, we still have to file in January. That means November and December are spent preparing. Don't forget about these frequently overlooked deductions when gathering all of your information for your accountant.

Distance traveled

Sure, most of us are aware that we can deduct mileage from our taxes. However, many of us (especially dot-coms who don't travel frequently) don't bother keeping track of our travels because we believe it won't be worth the trouble. But, but, but, but, but, but, but, but, but, but

I had the same thought process, but at the urging of my accountant, I decided to keep track and see for myself. I will never forget to do it again! Even though almost every place I go is close by, adding up all the 10-mile trips to the office supply store, the bank, and so on resulted in a hefty total. Have you been keeping track this year? Begin right now.

Look through your check register for any deposits. This would have meant you went to the bank on that date... make a note of it. Do you have any office supply store receipts? You had to travel on that day, too. Make a note of it. Keep track of everything on a log sheet, including the date, the number of miles traveled round trip, and the reason for the trip (i.e., office supply store, bank deposit, etc.). You'll be surprised to learn that even short, weekly trips taken throughout the year can total 800 - 1,000 miles or more. Multiply that by the 2002 allowance of 36.5 cents per mile, and you get a tax break of $292 - $365!

Insolvency

Did you ever sell something or provide a service to someone who did not pay you? Have you tried unsuccessfully to collect the money? Those losses can be written off and deducted. No, it will not cover the full amount of your losses, but it is better than nothing.

Simply collect the sale information, the invoice you sent to the customer, and documentation of your attempts to collect the amount owed. You are not required to file bad debt deductions in the year in which they occurred, so if you have old losses, gather the information now so you can include it on your 2020 tax return.

Traveling

Almost any trip can be transformed into a business trip if properly planned. Even if you're attending a 20-year high school reunion, you can deduct your travel expenses IF you play your cards right.

Gather some business cards and hand out a few of your own while mingling with old friends. Ask people what they do for a living (in tax parlance, this is referred to as "market research"), and schedule a phone call or two for when you return home.

No, you are not required to spend the entire trip talking/doing business. Just be able to prove that you did some business while there. You can also deduct expenses for lodging and meals while on vacation, so keep your receipts!

As you can see, there are numerous tax breaks available to you. Set up a "pre-tax" meeting with your accountant or tax professional to learn more. They can provide you with information on additional tax deductions that may apply to your specific industry. When you add up all the small details, you can end up with some significant tax savings!