Published March 22, 2013
Most small business owners know they can deduct their home office and any expenses associated with maintaining that, but many may not know their guard dog is also a write off. With tax season nearing an end, small business owners will want to make sure they aren’t leaving any money on the table when it comes to deductions. From the usual to the unusual here’s a look at five tax write-offs small business owners may be eligible for.
No. 1: Mileage, the often forgotten one
Whether it’s a quick trip to the bank to deposit a client’s check or an overnight ride to meet with a customer, small business owners can write off any mileage they put on their vehicle as long as it’s to conduct business. According to Steven Aldrich, chief executive of Outright, the maker of accounting software, small business owners know about this deduction but often it falls through the cracks because tracking your mileage can get cumbersome.
“The IRS lets you deduct 55-and-a-half cents per mile and that adds up,” says Aldrich. “You should make sure you are tracking your trips every time you take one for business.”
No. 2: Home office deduction makes people skittish
The home office deduction is one of those big write offs that everyone is skittish about. After all, there are specific rules about what constitutes a home office and run afoul of those rules and fear sets in that an audit will be coming.
“The IRS is very specific about what qualifies for your home office. You can’t use it for any other purpose,” says Aldrich. Hand in hand with the home office deduction is the write-offs for any expenses associated with maintaining that office. For instance some of your heat, telephone and electric can also be deducted, as long as it’s the portion that is for your office.
“Because you have to make sure you are only taking the right amount, people get skittish,” he says.
No. 3: Guard dog that works for you
Perhaps you are a shepherd that has a guard dog to protect the sheep, or you own a warehouse in a desolate area and have a dog on site to protect your inventory, whatever the case may be, if you employ a dog as part of your business the cost to keep and maintain that animal can be deducted.
“You can deduct the up keep of the dog including food and shelter, medicine and anything you do to keep the dog healthy,” says Aldrich. But it doesn’t only have to be a dog. Any other animal that is used for legitimate business purposes gets the write off.
No. 4: Makeup and clothes do more than make you look good
Small business owners spend a lot on clothing and cosmetics, especially if they are in the public eye, and that money is well spent since they can take a deduction for it. According to Aldrich, if buying clothes and cosmetics has a legitimate business purpose than that too can be a write-off.
“Some TV and film personalities have facelifts and other surgeries to keep them working and they can deduct them,” he says. “It has to be absolutely necessary for work.”
No. 5: Run afoul of the law, there’s a deduction for that
Whether you are indicted or face an indictment for some crime related to your business, it’s not an entirely lose lose situation. You can take comfort in the fact that you can deduct the legal fees.
“If you hire a lawyer for a criminal issue related to your business those legal fees are tax deductible whether or not you are found guilty,” says Aldrich. It may seem strange that you can write off the costs of defending you from say embezzlement, especially if you are guilty, but it’s a business expense because you are the business and therefore it’s legitimate.