The IRS allows businesses a number of tax deductions. To make the most of the deductions, you have to be aware of the opportunities for Northern Virginia businesses. Deductions are a legal way to reduce your taxable income. The following are the top 5 business tax deductions. These are applicable to corporations, partnerships, and single member business entities.
1. Travel Expenses
Business travel’s incurred expenses are tax deductible. If you’re not sure what that includes, it can cover a wide range of expenses. Travel expenses might include plane fare, taxis, lodging, meals, shipping materials, telephone calls and more.
2. Operating Expenses
Expenses that keep your business running are fully deductible. Operating expenses include rent, payroll, and office supplies.
Don’t neglect the opportunity to deduct operating expenses. This can end up saving you money in the long run, even though it may cost some time.
The costs of entertaining existing clients and prospects are deductible by 50%. The event can be deducted as long as it is directly related to the business and business is discussed. It can also be deducted if it is associated with the business and the entertainment takes place directly before or after a business discussion.These expenses might include a catered lunch meeting, or a night out for out-of-town clients or prospects.
4. Tax, Legal and Educational Expenses
Any fees paid that are directly related to operating your business are deductible. This includes fees paid to accountants, lawyers and business consultants. Education and training for employees is also deductible.
What do you do for legal expenses and deductibles? Take care before counting it as a deductible. Legal fees that are paid to acquire business assets cannot be deducted, but are considered part of the purchase price. They may be considered part of your startup costs and would then be amortized and deducted over time.
5. Bad Debts
In order to be considered a bad debt by the IRS, you will need to have tried to collect the debt for a reasonable amount of time. You can only claim a bad debt if the amount was previously included in your gross income.
Bad debts include any money that is owed to you that has become impossible to collect. Common bad debts include loans to clients, suppliers, employees or distributors, and debts of an insolvent partner.
This blog post was initially seen at http://www.bsbllc.com/top-5-business-tax-deductions/