With the new year behind us, you may find yourself with questions about filing taxes for your small business. Working with a tax expert can help you understand which deductions you qualify for, but to help you get a broad overview of items to look out for when filing your return this year, here’s some basics you need to know.
According to Bench.co, Common Write-Offs for Sole Proprietors, include:
- Advertising: Including the cost of print ads, online ads, or social media marketing.
- Insurance: Business insurance for protecting your property, auto insurance for any company cars, employee health coverage, liability coverage, etc.
- Education: If you or your staff recently completed courses, workshops, or seminars to improve your business’ services and offerings, they may be tax deductible.
- Rent: Renting a space for your business or equipment is tax deductible. However, you cannot write off rent if you’re living in the same space, as well.
- Travel: Travel expenses can be written off so long as you’re traveling for a necessary, business-related purpose.
- Legal Fees: Certain legal fees are tax deductible for your small business are also tax deductible.
It’s important to note that the term “legal fees,” is a boarder way of describing what you may write off as a business expense. These fees must be strictly related to your business, whether you manage a corporation, proprietorship, partnership, or LLC.
Some examples of legal fees may include
- The cost of tax and legal advice from a small business attorney
- Assistance in getting your business registered in your state
- Legal assistance in drafting partnership agreements
- Legal assistance in drafting employment contracts
When it comes to your business tax return, remember that depending on what type of entity you own, you’ll need to document these specific legal expenses under different sections and using different forms (The Balance). As this can become a complicated process, it’s best to work with a professional who understands how tax laws affect your business and can provide you with experienced assistance, should you need to dispute a claim on your taxes.
To learn more, contact KTF Law Firm today!