20 Tax Write-Offs for LLCs and Other Small Businesses

Any fees you pay for managing your retirement plans or other business services can be deducted. It’s a creative way to engage your audience and support your marketing efforts, all while benefiting from tax deductions. The cost of obtaining these permits, essential for industry compliance, is fully deductible, making it a crucial item on your small business deductions list. The taxes you pay on behalf of your employees, like unemployment taxes and your share of Social Security and Medicare, are deductible. This can include a wide range of medical costs, from doctor visits to prescriptions, offering some relief during tax time for significant out-of-pocket health expenses.

Basic Personal Information Required For Taxes

This part of your home, whether it’s retained earnings a full office or just a corner in your living room, can lead to tax savings. The IRS allows you to write-off this expense depending on your accounting method. When customers owe you money and do not pay you, it is a considered a “bad debt expense”. Amortization helps you spread out the cost of big expenses over time.

• I honestly don’t see this expense too often with the world being as digital as it is.
• You can deduct $5 per square foot of your home office space, but only up to $1,500.
• Any expenses used for the education and training of employees are also deductible.
• This allows small business owners to show appreciation without a heavy tax burden.
• S-Corp shareholders do not pay self-employment taxes, which is the primary advantage of S-Corp status compared to sole proprietorship or partnership.
• For furniture and appliances, you can write off the depreciation over a seven-year period.

Travel Expenses

For more information, check out this IRS Fact Sheet on Deducting Business Supply Expenses. This 20% deduction is known as the Qualified Business Income deduction. This content is not legal advice, it is the expression of the author and has not been evaluated by LegalZoom for accuracy or changes in the law. If your legal name has recently changed (for example, following a marriage), ensure that your name has been changed through the Social Security Administration. To avoid a delay or rejection of your return, your name must match what’s on file with the SSA.

• The magic happens when our intuitive software and real, human support come together.
• If your business is structured as a sole proprietorship or LLC, the IRS recommends writing off charitable donations on your personal taxes.
• This can include loans to employees, suppliers, or customers, as well as uncollectible accounts receivables.
• You can take a tax deduction when you accept returns or discount your products as part of a promotion or as a concession to an unhappy customer.
• You can deduct the cost of gifts for employees and customers, up to $25 each.

Are different business structures allowed different write-offs?

Keep in mind as a traveler who chooses this lifestyle, your home (think RV if you live full-time in an RV) is not a tax deduction. Maybe 5 feet of it could be considered a home office but even then, I’d argue it’s hard to have space set aside exclusively for business use in such a tiny space. A more comprehensive guide to some of these caveats can be found in this article. The home office deduction is one of the most frequently asked questions we get asked by our clients. And it’s understandable because you’re getting a write-off for money you’re already spending.

• If you run your business out of your home, you might be able to deduct a portion of your housing costs as business expenses.
• Eligible supplies include everything from minor purchases of pens and ink to major things like equipment and furniture, so it’s worth saving your receipts for office supply write-offs.
• It’s important to understand the subtleties of what is and what isn’t considered a write-off.
• Instead, you may be able to write-off a portion of your childcare costs under a “fringe benefit plan”.
• Your LLC and S-Corp may save money this tax season by deducting the cost of business-related training and education.
• When managing your expenses, you must be aware of potential write-offs that can significantly impact your financial situation.

Typical use cases for business may include travel to conferences, seminars, board meetings, or any other “ordinary and necessary” business purpose. Luckily, they’re also deductible, meaning you can subtract them from your taxable income. Whether it’s renting a space, providing snacks, or serving meals, these costs are part of doing business.

FAQs About Tax Write-Offs For LLCs

To keep your business cash flow in good shape, consider creating a tax calendar. For a full list of which goods and services excise taxes may apply, refer to the excise tax overview page on the IRS llc tax deductions checklist website. If you earn more than $400 from your business, you have to report it as self-employed income and pay the self-employment tax.

Office Supplies and Services

But keep in mind, C-Corp shareholders, which includes members, must also pay taxes on their distributions (but not self-employment taxes). Thus, the C-Corp is subject to what is sometimes referred to as double taxation. The credit is worth between 20% and 35% of Partnership Accounting your allowable expenses, depending on your income.