10 Business Expenses You Can Deduct
Let’s be real. Business taxes are hard.
So thumbs up for even clicking on this blog post to learn something about taxes! You’ve earned yourself a competitive advantage over so many entrepreneurs who ignore their taxes and end up paying extra at the end of the year. And you’ve earned yourself a glass of wine to make it through this post!
Ok, so business taxes are hard. But...if you’re doing your taxes correctly, business expenses should excite you!
Business expenses are things that you need to buy to operate your business. You can probably think of the obvious ones (product costs, photographers, facebook ads) but there are a lot of lesser-known business expenses that you can use to reduce your tax bill! If you want a comprehensive list, check out The Sprout Guide to Business Taxes because you’ll find over 20 pages of business expenses that you can use to lower your taxes.
How do business tax deductions work? Well, if your expenses qualify as business tax deductions, then you get to subtract that amount from your revenue. So the amount you made that year is lower, which means you’re taxed on a lesser amount and that gives your tax bill a break. Yay!
How do you know if your expense is a qualified business deduction?
We’ve got 10 examples right here:
1.Research + Development
R+D are costs about the development or improvement of a product. Like trying out a new ingredient or visiting a new manufacturer.
2. Credit Card/Square Fees
That 2.9% takes a chunk out of your profits. Luckily, you can deduct it as a business expense.
3. Your Accountant or Accounting Software
As long as they’re ordinary and necessary expenses directly related to operating your business.
4. Everything at Sprout Law!
Trademarks, Copyrights, and Contracts are deductible as legal expenses. All the downloads on our Resources Page (like the Better Business Plan and our Growth Guides) are deductible as general business/educational expenses.
5. Annual Retreat
It’s important to conduct an annual review of the company’s operations. If you operate a Corporation, LLC, or Partnership, you can deduct the cost of your annual operational board meeting. That likely includes travel, meals, lodging, and supplies. Vegas, anyone?
6. Business Related Jetsetting
Your flights, ubers, hotels, meals, drycleaning, internet charges, etc are all covered when you’re traveling for business. Plus, if you travel outside the United States for less than 7 days and you spend over 75% of the time on business activities, you can deduct all of your travel expenses.
7. Industry subscriptions, conferences, and events
You can also deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business.
8. Customer gifts
You can deduct up to $25 a year in business gifts for each client.
9. Client dinners
The cost of food, beverages, taxes, and tips for client meals are deductible as long as you’re there too.
10. Employee Perks
You can deduct meals provided to employees like coffee, snacks, and beverages. You can also deduct occasional parties, so we have a feeling the office holiday party is gonna be lit this year!
We totally get it: Business taxes are overwhelming. But not anymore! Now you can download The Sprout Guide to Business Taxes. It’s our step-by-step guide to filing your taxes. We’ll walk you through the process step-by-step and we’re giving you 20+ pages of business expenses that you can deduct to lower that tax bill! Did we mention the guide is tax-deductible, too? #meta