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Tax write-offs: dos and don’ts

If you own a small business, then you can write off certain business expenses. However, not every expense qualifies as an eligible deduction.

Before you try to write off an expense, you should make sure that it is valid. This can help you prevent future issues.

Uses

As a business owner, you can use tax write-offs to deduct eligible expenses and reduce the amount you owe on your business taxes.

Legitimate Expenses

Depending on your circumstances, you may be able to write off expenses related to:

  • Rent
  • Vehicles
  • Insurance
  • Employees’ pay
  • Interest

You may not be eligible for everything on the above list, or you may discover that other items qualify for a deduction. For example, if you work from home, you may be able to deduct part of your mortgage interest, repairs or utilities. Your tax write-offs depend on your business and the current laws in effect.

Ineligible expenses

You should not try to deduct any personal or unrelated expenses, as those are generally not allowed. Any discrepancies revealed in an audit can result in fees, fines and other penalties.

It may be difficult for you to determine whether an expense counts as a personal or a business write-off if you work from home. The Internal Revenue Service has guidelines in place regarding the deduction of expenses.

Figuring out whether an expense is deductible is not always easy. But the tax benefits that small business owners can enjoy when they correctly claim write-offs can make the process worth it.

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