Tax deductions can often be the small business owner’s best friend. It is a simple equation, the more tax deductions your business can legitimately take, the lower its taxable profit will be. If you pay careful attention to the IRS rules on what is and isn’t deductible, you can end up putting more money into your pocket at the end of the year.
Don’t Forget to Track Your Auto Expenses
If you use your car for your business, or your business has a vehicle, you can deduct some of the costs it incurs. There are two ways you can do this; the Actual Expense Method or the Standard Mileage rate Method. This deducts a certain amount, meaning the standard mileage rage, for each mile driven. It also deducts all business-related tolls and parking fees. In 2011, the standard mileage rate is 51 cents per business mile driven, whereas in 2010 it was 50 cents.
Consider the Expenses of Going into Business
Once you have your small business running and off the ground, there are many expenses that you can deduct. These include advertising, utilities, office supplies, software, such as Dynamics CRM and repairs. But those only apply to your business once its doors has been opened, not before. The costs that come up when you are starting your business are capital expenses, and you can deduct $5,000 the first year you are in business (in 2010, businesses could deduct $10,000). Any remainder must be deducted in equal amounts over the next 15 years.
Paying attention to these deductions will not only save you money in the long run, but it can also wise you up to certain person benefits, such as paying a lower price for your nice car or doubling your vacation as a business trip.

September 24th, 2011
MReed
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