Tax is one of the main issue every business face small
business owner face tax at end of every year cant mess with the income tax department
if you do (tax + penalty) for evading
tax but there is no rules that say you can’t take deduction regarding the expenses of the company
Tax deduction
help you reduce the tax burden but you can’t clam all your expenses as
deduction but some of them can be deducted
Important tax deduction small business can have
1 Travels
: travels is one of the good tax deduction for small business you have to
travel for business purpose form one place to another that doesn’t have to be
long trip but related to the business
Cost of plane ,
car operating cost fuel cost all the cost related to travels meal, telephone
can be deducted travel deduction should related to business not personal
purpose
2 Expenses of running a business: if you
running a business The business will have day to day expenses like adverting
utilities office supplies and repairs transport these all expenses can be
deducted as the current business expenses
In capital expenses
you can deduct up to $5000 of start of cost which include all the cost gone
into creating your business
3 Charity: if your business can make a charitable
contribution to a non-profit inistute or
school can clam deduction on the donation
If you donate more
than $250 in (US) no need to have a letter of verification from the organization
If you donate more than RS 10000 (India) through cheque you need to have receipt
of donation to calm the deduction
4 Bad debts : bad debts may or may not be
deductible it may depend upon the goods and service of your business bad debts happens in every business it up to
you to utilise those bad debts for tax deduction
If your business
sold goods on the base of credit but the buyer fail to make the payment you can
claim the goods as bad debts and the cost of goods can be deducted
Service is little complicated
in the service your business can only clam deduction only after the person don’t
pay after taking service from you
5 Employee benefit: any benefit given by the
business to your employee is deductible benefit like health plans, life insurance,
uniform allowance, travel allowance; house rent allowance any kind of allowance is given by the
business to the employee is deductible
6 Theft and loss : loss can be deductible when starting business
you have some loss in business those loss can be deductible theft if that can’t be avoidable can be deductible But accidental loss cant be
considered in deduction
7 Gift: employee gift are full deductible
and any gift the business give to client is also deductible is up to $25 a year
per person
8 Advertising and promotion : advertising
cost of the business and promotion is
total deductible as long as it is a current expense any cost related to promotion of business in yellow page ads is deductible
9 Software: any software brought by the
business for business use like management software and finance ,account
software is deductible with in 36 month
These days software
is expensive than hard ware and every business use some kind of software like
security software if the software some
with the computer it is not treated as separate it is considers as part of computer ( only those software is deducted which are
bought separately )
10 Professional fees : any business expenses related to account or
internal audit done by the business is deductible (lawyer , accountant , auditor , consulting
) there fees related to business is deductible
11 Rent: rent related to business office
on the property used for the business is deductible
12 Repair and maintenance: any cost to
repair or maintenance charge related to business and keep running of business
is deductible
13 Taxes: any tax charged or already paid taxes on running your
business is deductible means you are not going to pay the tax you already paid
do you means its totally deductible
14 Office equipment: any furniture bought by the business and the equipment
is deductible and desperation is also deductible from year to year
15 Home office : if you dedicate your home room for the business purpose it can be deduction the room should well organized for the business purpose having a single laptop wont do
