2: Travel Deductions If you are headed out of town for a business trip, be sure to keep all your receipts. Most of the costs of your trip are fully deductible, with the exception of meals and entertainment (50%). Don’t forget fees you might not normally think of, like airline baggage fees, meals eaten while traveling, tips paid for services, or dry cleaning.
3: State Tax Deductions As a small business owner, you have the choice as to whether you want to deduct State Income Tax or State Sales Tax on your Federal return. This assumes that you live in a state with a state sales tax. Compare the two, and see which will give you a larger deduction – you may be surprised.
4: Bad Debt Deduction As a small business owner, you might unfortunately encounter a customer or other business that won’t pay what they owe you, no matter how many times and how hard you try to collect. You must keep track of goods or services rendered, and what you did to try and collect the debt if you are going to take this deduction. For more information, refer to the IRS Publication 535 – Business Expenses.
5: Charitable Donations It’s not only good for your business and community to participate in charitable donations, it can be good for your taxes, too. Businesses can write off between 20-50% of their gross income in charitable deductions, although most don’t rise to that level of giving. Make sure you keep your receipts, and if you are giving goods and/or services, you can deduct the cost to you, not the retail value.
6: Lifetime Learning Credit Whatever classes you want to take to enhance your business, you can deduct 20% of the first $10,000 in expenses per year, up to $2,000 per year. The school you attend must be accredited in order to qualify for the deduction. You can also deduct the cost of business-relevant subscriptions to online and offline publications, manuals and books.
7: Start-up Expenses Is this your first year in business? You are allowed up to $5,000 of start-up expenses, which include any money paid in connection with creating an active trade or business