It’s no secret that 2020 has been more than challenging for a multitude of small business owners across the country. The unforeseen pandemic left many scrambling to keep their doors open, but it also inspired the creation of many new ventures. The common denominator of it all is business owners should pay close attention to the deductions that are afforded to them as the year closes and tax season approaches.
To get the ball rolling, here are a few deductions and tax tips to consider when preparing to close the 2020 books:
- Home office deductions– COVID-19 caused many to work from home. Operating a business means this space has now become your office. A few home office tax deductions may include rent/mortgage, office equipment, furniture, cell phone charges and Wi-fi.
- Business software- If you purchased software that helps your business operate, this is deductible. For example, you may use an accounting software for payroll or design software to create promotional materials for your business.
- Mileage, Gas and Tolls- You are entitled to tax deductions when driving your car for business including gas, tolls, mileage and even car repairs. This does not include driving your vehicle back and forth to work, however.
- Business Travel- If you traveled on company business this year, the mode of transportation, hotel stay, and other related expenses are tax deductible. A portion of your business meals are also deductible.
- Cell phone- Any cell phone or landline specifically dedicated to the business qualifies as a tax deduction.
- IRA Retirement Contributions and Social Security- Contributions made to your IRA or Keogh account are 100 percent tax-deductible, and 50 percent of your total Social Security contributions are also deductible on your 1040 tax form.
While the above information offers a few tax tips and nuggets of advice, be sure to consult a tax professional to determine what deductions are applicable to your small business.
Lastly, I always recommend sitting down with a reputable financial advisor who can help stabilize your financial focus while mapping out your growth plans for 2021.
At Atled Financial, we are always looking for ways for you to improve your bottom-line. To schedule a complimentary consultation or a presentation to your group or organization, call 219-513-3710 or email email@example.com and mention this column. Topic ideas for this column are welcome!
*Securities and advisory services offered through Woodbury Financial Services, Inc., member FINRA/SIPC. Insurance services offered through Atled Financial Group 717 B Main Street, Schererville, IN 46375 which is not affiliated with Woodbury Financial.