Little-Known Tax Write-Offs Your Small Business Could be Making

Tax season may traditionally run from January to April 15, but preparing for tax season is a year-round job for business owners. Below are several lesser-known tax deductions that correlate to things businesses may already be doing, but not fully leveraging financially.

Note: Tax deductions reduce your taxable income, which in turn reduces your business' resulting tax liability. This differs from tax credits, which directly reduce the actual tax dollars owed.

The Tax Deductions and Credits You May Not Know About

Some deductions may not be available to every small business. Consult with your tax advisor or CPA before claiming a deduction on your tax return.

Work Opportunity Tax Credit

If you employ veterans or other long-term unemployed people, you could be eligible for the Work Opportunity Tax Credit. It allows you to deduct up to 40 percent of your first $6,000 in wage costs.

Computer Software

Software programs used for project management or bookkeeping may qualify as deductions. The IRS now allows for full deduction of software, including POS systems.

Mortgage Interest

If your business owns real estate property such as its office building or lot, you can fully deduct any mortgage interest paid throughout the year. Unlike interest on personal property, the IRS sets no cap on the size of loans from which interest can be claimed.

Legal and Professional Accounting Fees

Fees incurred from legal counsel or professional accounting services can be deducted.

Carryovers From Previous Years

Certain small business tax deductions can carry over year to year, with capital loss being a prime example. Specifics around this type of deduction are frequently changing, so check with your accountant on current regulations before filing.

Bank Charges

Monthly account fees or ATM convenience charges can all be deducted when filing taxes. It's important to keep track of each receipt from the bank.

Unpaid Goods

If your business sells goods rather than services, you can deduct the cost of goods that have been sold yet not paid for by customers.

Education

Professional education for you and your employees could be any workshop, training, or educational conference that improves your skills as they relate to your job. Most costs to attend educational events can be deducted, especially if you work in an industry requiring license renewals.

Charitable Deductions

Deductible expenses can include gifts of supplies, money, or property. Some restrictions apply, so check with your accountant before making a charitable deduction to ensure the organization qualifies.

Make the Most of Small Business Tax Write-Offs

Tax deductions are an important way your business can reduce its tax liability each year. Though maintaining records of receipts and tracking expenses may be challenging, it's a cost-saving habit worth adopting.