Tax-deductible expenses are expenses that are both necessary and ordinary to run your business.
As a business owner, we know investing in our business should always be planned and well thought. We’re here to help you navigate on which expenses you can deduct from your taxable income. In plain English, the tax deduction will reduce your taxable income.
Below 9 tax-deductible expenses to start tracking:
1- Education and Training: Cost for any educational program, books, and professional training is tax-deductible.
2- Advertising: Running a Facebook ad, that magazine spot. Cost to maintain your website. Tax-deductible
3- Car Expenses: Expenses related to a car used for business, or mileage are tax-deductible – at $0.58 per mile. Apps like MileIQ and Expensify can help you track the mileage.
4 – Contractor expenses: Hiring a virtual assistant, a project manager, etc. All fall under tax-deductible expenses
5- Depreciation: Depreciation from your assets are deductible. Investing in equipment, furniture, leasehold improvements can go a long way.
6- Legal and Professional Expenses: Accountancy, legal expenses are tax-deductible.
7 – Cell Phone Expenses: If you have a dedicated phone for your business – it’ tax-deductible. If you use your personal phone for business, the % used for business is tax-deductible.
8- Software Subscriptions: Adobe Cloud, Canva, MS Office, google docs … – all software needed to run your business, are tax-deductible.
9 – Travel and Meals (50%): 100% of business-related travel (airfare, ground transportation, accommodation) is tax-deductible. 50% of meals and entertainment is deductible (you’ll record 100% on your books and 50% on your tax returns)
The best way to track those expenses is to have a separate bank account and credit card for business expenses and rely on a bookkeeping system. We recommend QuickBooks Online for small businesses – it’s intuitive, easy to use and affordable. Xero and FreshBooks are good alternatives as well.
If you’re in doubt if an item is tax-deductible or not, we always recommend you reaching out to your financial professional.
Contact me for a complimentary coffee date to cover some of the questions you might have: