When you’re first starting a company, there are a lot of overhead costs. You have to pick up furniture, electronics, and a whole host of other things. You’ve also got to worry about employees, whether you’re going to provide benefits, and more. Fortunately, there are a few ways that your startup can beat the tax man.
Work Opportunity Tax Credit
If you hire employees from a certain group, you can get a tax credit. This group includes individuals that receive food stamps, certain qualified veterans, and certain residents in the community. On average, about 25 percent of all new hires are eligible for one of the targeted work opportunity tax credit groups. The credit is up to $2,400 per qualified employee in the first year of employment. However, the qualified veterans program offers up to a $9,600 tax credit in the first year.
Consult with your tax preparer and see if they think you should expense or depreciate your furniture. This is an important decision, since you’re going to end up getting a ton of furniture.
You shouldn’t buy furniture just to get the tax deduction, though. Only get what you need now or furniture that you’ll anticipate needing in the very new future.
Did you know that you can deduct any expenses related to traveling in your car? You can deduct all parking fees, tolls that you encounter while on a business trip, and mileage. You’ll need to keep track of the mileage, as well as the start and finish mark of the odometer. Also note the business purpose for each trip. You’ll also be able to deduct repairs, insurance, and maintenance costs.
Home Office Expenses
Sometimes you don’t need an office to run a business. If you’re using a dedicated space in your home as your home office, you can deduct it. The only catch is that the room must be used to conduct business. If you conduct business on the same couch that you lie on when you’re taking online courses for your Masters of Laws degree, you’re out of luck. You can also deduct a portion of utilities, rent, insurance, and taxes.
Did you know that you can deduct any loans you get when you’re starting your business? They can be fully deducted! If you borrow money from a relative, make sure that it conforms to IRS rules before attempting to deduct it. This certainly provides a much-needed break and should put your mind a bit more at ease when starting your business.
Without advertising, no one will know your business exists. You can deduct the costs of advertising that cover multiple-year contracts, and the deductions must be spread out over all the contract years. This covers advertising on any form of medium, whether it be a billboard sign or a newspaper ad.
Startups take on a lot of costs, but these tax deductions can provide a bit of relief. Can you think of anything else that your startup can deduct? Leave a comment below and let us know!
Emily Green is a freelance writer with more than six years’ experience in blogging, copywriting, content, SEO, and dissertation, technical and thesis writing. She loves all things tech and and going on a jog with her dog.