Business Management, Business Strategy, Finance, Local Business, Small & Medium Enterprise (SME)

9 Tax Deductions that Startup Business Owners Must Know

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Startup tax management

Startup company needs to know that there are strict rules when doing business. Owners are required to comply with lots of demands from the government in order to operate. They need to comply with various and complex laws and that include taxation.

As business owner, you should educate yourself about tax and how it will benefit you and your company. Starting and running your company is really expensive and impending tax bill can be a financial problem. However, there are so many tax saving options that you should be aware of so you can bring some profit for your business.

Read them below:

Startup costs

The cost of your startup business is the investment you made to physical open up the company. It includes marketing and advertising, business and market analysis, training for employees, professional fees that are related in establishing the business organization, and business licenses and permits. You must claim the tax deduction for startup cost the year that your company opens.

Office expenses

Office expenses like mortgage, supplies, cleaning services, lease cost, utilities, internet fees, and more are all included in tax deductions. When you file tax deductions, you should be aware that they are only partial deductions where a certain percentage of the costs is allowable.

Employment and staff expenses

In any startup businesses, it needs employees to run the daily operations. If you have employees, it means you have payroll and it is tax deductible. Savings plans and insurance contribution are also included. Other office tax deductibles are holiday parties, catered meals, and contract workers.

Travel expenses

Any travel expenses for business related is considered tax deductible. Business trips for trade shows and seminars are obvious reasons for travel tax deductions. In order to do this, you need to track miles and keep the records for future reference. Annually, the rate for mileage reimbursement changes, so ensure that you are using the correct rates.

Depreciation

Depreciation means an expense that decreases the value of an asset because of use, wear and tear or obsolescence. Sample is if your business installed machinery for the operation, it should listed to tax depreciation. More samples are software, hardware, and equipment used for running the business operation.

Advertising and promotion

Startup businesses should know that everything they spend on promoting their company is deductible. The following are included:

Marketing – Google adwords, Linkedin ads, Facebooks ads, other social media ads, ad placement on print publications and digital platform, sponsored posts by influences online, content marketing fees, and more.

Promotional materials – It includes posters, logo creation, business cards, flyers/leaflets, and logos on various materials like pen, bags, and shirt.

Website – Every startup businesses are into creating websites so people can find them online. Fees on hosting, domain name, plugins, subscription on different website services, stock photos, and more are tax deductible.

Fees from bank

Opening bank accounts has fees as well even the business loans have fees and they are all deductible. Bank fees that you can deduct in your tax are monthly service, overdrafts, deposits, ATMs, and wire transfer. For credit card fees, it includes annual and late payment fees. Fees from business loans deductible too and it includes set-up cost, underwriting fees, and closing costs.

Business permits and licenses

In putting up a business, it requires tons of licenses that you need to operate legally. You need to get general business license, permits from fire department, health and sanitary permit, and more. You will shelter money for these documents and they are deductible when tax season comes.

Training costs and professional fees

Businesses have various trainings it needs to ensure its success. It may also need professional help to start the business running. Trainings may include classes, seminars, certificates, and more. For professional fees, it will include expertise from lawyers, tax consultants, marketing and advertising agencies, and more. All of them are fully deductible for upcoming tax year.

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