Ready, set, deduct! Small business owners can maximize their 2020 business tax deductions. Below are AB Financial’s recommended tax deductions to help protect your bottom line by overpaying 2020 taxes.

People Deductions

  • Benefits and salaries – Benefit costs, salaries and paid vacation are deductible for each accurately classified employee.
  • Independent contractor cost – Freelance and independent contractor costs are deductible expenses.
  • Education – Include workshops, seminars, classes, books, subscriptions to trade publications, transportation costs to classes for improving relevant skills.
  • Travel expenses – From flights, meals and lodging to dry cleaning on business trips, many travel costs may qualify. AB Financial can help sort your travel receipts.

Facilities Deductions

  • Rent expenses – Physical office space, and equipment rental costs are deductible.
  • Internet and communications costs – If integral to your business, internet and telephone costs can be deductible. Dual use devices, used both for business and personal communication qualify on the business portion. Careful record keeping is required.
  • Home office – A portion of your housing costs can qualify as a tax deduction. The simplified method allows the dollar amount for up to 300 square feet of the home use, depending on actual space used for business. The standard method requires comprehensive record keeping to be portional percentage of the home dedicated to business use. AB Financial can walk you through the use qualifications.
  • Moving expenses – Businesses can deduct the cost of moving equipment, supplies and inventory from location to location.
  • Depreciation – Business assets are depreciated over time for tax deduction purposes. The formulas are complicated, and carry over year to year. Let AB Financial help clarify your business depreciation profile, to maximize your 2020 tax filing.

Operations Deductions

  • Interest and bank fees – Interest on qualifying loans and bank fees associated with a business bank account qualify as deductions. This includes third party payment process fees, such as Paypal or Venmo.
  • Professional and legal service – Business related professional and legal fees qualify for a 2020 tax deduction.
  • Promotion, advertising and social media cost – These costs are 100% deductible. Website design, Facebook ad campaigns, mailers, rebranding and logo services, sponsoring an event, are some of the categories to include.
  • Business insurance – Business insurance premiums are deductible. The types of coverage include property, liability, malpractice, worker’s compensation, auto, employee life benefits and interruption to business, among others.
  • License fees, dues and taxes – This list includes state, payroll, real estate, excise, sales, and fuel taxes. Business license fees, trademark dues and membership dues also quality.

Miscellaneous Deductions

  • Business entertainment, business mileage and meals – The process of doing business with clients, and customers can qualify for deduction. Keeping records of entertainment, meal and mileage at the current formula, will maximize your savings.
  • Owner personal costs – Small business owners may qualify for the deduction of personal costs, and can do so on their individual return. Costs to consider include child and dependent care credit, retirement contributions, health care expenses and charitable contributions. The 1040, schedule A is used for these items. AB Financial can help with the 2020 tax filing formulations of personal costs for small business owners.

Consulting with AB Financial for all your 2020 tax deduction questions is the best way to optimize business deductions for your 2020 tax return. Call us today to learn more: 970-444-5586.

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