With tax season right around the corner, it is time for small business owners across the state to begin getting their paperwork in order. While many people start a small business with the goal of being their own boss, it also means there are an array of tax laws to follow. Even one slip-up can result in significant penalties.
To save on taxes, many businesses write off various expenses. Small businesses can save a significant amount, but it is vital for entrepreneurs to know what cannot go on these forms. When in doubt, small business owners should have a professional accountant look over tax expenses to ensure everything is correct.
Business owners can write off meals they had with potential or current clients. The government views this as a meals and entertainment expense. However, if you go out for lunch by yourself, then that cannot be a write-off.
You can write off gifts to an extent. On your federal tax forms, you can write off up to $25 of a gift you gave to a customer. That means if you give a customer a $100 gift card as a prize, then you could only write off $25 of that on your taxes.
If you have to pay a fine of any kind, then you cannot write any of it off. This includes minor penalties, such as a parking ticket, in addition to more significant fines brought on by the government.
4. Political donations
Business owners can only write off donations given to 501(c)3 charities that are fully registered. Donating to a politician’s campaign does not qualify.
If you need to travel to a client’s house or place of business, then you can write off a certain amount for the gas. However, when you drive from your house to your office, you cannot write off the gas for that.