Little-Known Deductions for Business Owners

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While tax preparation for 2013 is currently underway, it’s not too soon to think about ways to offset taxes in 2014.

Early in the year is an especially good time for business owners to intensify their efforts to use every available tax deduction. Some little-known deductions include vehicle expenses, educational materials, and advertising and marketing.

Vehicle Expenses
If you use your own car on business, you can use either the standard mileage or the actual expense method for tracking deductions. Using the standard cents per mile rate is simpler, but tracking actual expenses, including depreciation, can result in more tax savings.

The actual expense method may be especially helpful after purchasing a new vehicle you’ll use for business. Be sure to track business versus personal use because the IRS tends to be skeptical with reports of 100 percent business use.

Educational Materials
You can deduct the cost of any books that you purchase to improve your company’s profitability. Again, keeping records can help to support your deductions. It’s not likely you can deduct your favorite thriller, but nonfiction books may be a different story. A book that helps you negotiate with vendors, for example, or one that shows you how to hold down legal fees for your company may justify a tax deduction.

Similarly, the cost of audiotapes and videotapes may be deductible. If you drive to work listening to a tape about improving your employee management skills, that might be considered a reasonable business expense. Likewise, you can deduct the costs of publications such as magazines and newsletters that can help you in your business.

Taking a broader look at education, you can deduct the cost of any courses you take if you enroll to maintain or improve skills that are valuable in running your business. For example, you even might be able to deduct golf lessons: if you keep records that show 50 percent of your days on the golf course are business related (teeing off with clients or prospects), you may be able to deduct half the money you spent on the lessons.

Advertising and Marketing
You probably realize that the costs of traditional advertising in magazines or on the radio are tax deductible. In addition, other efforts to get your name out to potential customers and enhance your company’s reputation also may be deductible.

That includes the cost of business card preparation, for example. If you participate in trade shows or send out samples, you probably can deduct your outlays. Even the costs of sponsoring a local soccer league might be deductible, as long as your company’s name is displayed and may reach people who can favorably affect your business prospects.

Some of these items might be small, but you can wind up with substantial tax savings by keeping careful track throughout the year. Documentation is crucial; keep all relevant receipts. You also should maintain a log, explaining why certain items are business related and thus tax deductible.

For questions on what justifies a tax deduction, or setting up a system to track deductible business expenses, contact us at

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