Improved purchasing power opens many doors for small businesses. Having the capital on hand to run advertising campaigns, purchase supplies, hire extra help when needed and grow…
As we close out 2016, many business owners are bracing themselves to prepare taxes. For new and small business owners without an in-house accountant, filing taxes translates to long hours, making sure everything is in order so that the IRS does not take a particular interest in the business and audit everything. The good news is that there are a few big tax deductible business assets which can save businesses a lot of money.
Whether your business has a company car, or you have a fleet to service customers, the cost of maintaining those vehicles is tax deductible. Keep in mind that the IRS does not approve deductions without proper documentation, so make certain you have all of your receipts. Mileage and tolls are fully tax deductible, and the IRS provides a formula for figuring out the amount. If the vehicle is used only for business, Section 179 of the tax code has guidelines on how to calculate depreciation of owned vehicles for tax deductions.
The Cost Of Starting A Business
There are certain tax deductible assets which you can claim after your business is up and running. However, the expenses prior to opening the doors are rarely counted. Businesses which have launched within the past year can claim up to $5000 in start up costs.
Computers And Software
If you purchased a computer for your business, the cost of the entire system is fully tax deductible. After the first year, guidelines for depreciation apply. Additionally, if you purchased software, such as an office or accounting suite, or point-of-sale software, then it is 100 percent tax deductible for the first year, as well.
New Equipment Purchases
Much like computers, if you purchased new equipment for your business, then those expenses are also tax deductible. Keep in mind, however, that listing new equipment as a tax deductible is only allowed up to a limit of $500,000. Even with the deductible cap at half a million dollars, the savings are fairly generous. Deducting new equipment costs can allow people in the construction, medical, manufacturing, and trucking industries to recoup quite a bit when filing their taxes.
While not technically a business expense, if you have had to relocate due to your job or setting up a business, the costs are tax deductible. There are caveats, however. The new locations must be at least fifty miles farther from your residence than the original business location.
Learn More About Tax Deductible Business Assets
If you would like to learn more about tax deductible business assets, consult with your accountant or visit the IRS website.