Industry-Specific Deductions for Small Business

7 minute read

As a small business owner, maximizing your tax deductions is crucial for minimizing your tax liability and boosting your bottom line. While many general business deductions apply across industries, there are also numerous industry-specific deductions that you may be overlooking. In this comprehensive guide, we’ll explore valuable tax-saving opportunities tailored to different business sectors and show you how Corvee’s advanced tax planning software can help you identify and leverage these deductions.

The Importance of Industry-Specific Tax Planning

Every industry has its unique characteristics, challenges, and opportunities. Recognizing this, the tax code includes provisions that cater to specific business sectors. By understanding and utilizing these industry-specific deductions, you can:

  1. Reduce your taxable income
  2. Lower your overall tax liability
  3. Increase cash flow for business growth
  4. Gain a competitive advantage in your industry

However, navigating these specialized deductions can be complex. That’s where Corvee’s tax planning software comes in, offering powerful tools to help you identify and maximize industry-specific tax savings.

Manufacturing and Distribution

If you’re in the manufacturing or distribution sector, consider these industry-specific deductions:

Research and Development (R&D) Tax Credit

The R&D tax credit is a valuable incentive for manufacturers who invest in innovation. It applies to:

  • Developing new products or improving existing ones
  • Creating new manufacturing processes
  • Improving production efficiency

Corvee’s software can help you track and document R&D expenses, ensuring you maximize this credit.

Section 179 Deduction for Equipment

Manufacturers can take advantage of Section 179 to deduct the full purchase price of qualifying equipment in the year it’s placed in service. This includes:

  • Machinery and equipment
  • Computers and software
  • Certain vehicles used in business

Corvee’s multi-entity tax planning features can help you optimize equipment purchases across different business entities for maximum tax benefit.

Inventory Valuation Methods

Choosing the right inventory valuation method can significantly impact your tax liability. Options include:

  • FIFO (First In, First Out)
  • LIFO (Last In, First Out)
  • Average Cost Method

Corvee’s software can model different scenarios to help you select the most advantageous method for your business.

Technology and Software Development

For tech companies and software developers, consider these deductions:

Software Development Costs

You may be able to deduct or amortize costs associated with developing software for internal use or sale. This includes:

  • Salaries of developers
  • Software tools and licenses
  • Cloud computing costs for development

Qualified Business Income (QBI) Deduction

Many tech businesses structured as pass-through entities can benefit from the QBI deduction, which allows for a deduction of up to 20% of qualified business income.

Corvee’s federal tax planning tools can help you navigate the complexities of the QBI deduction and maximize your savings.

Startup Costs

Tech startups can deduct up to $5,000 in startup costs in the first year of business, with additional costs amortized over 15 years.

Real Estate and Construction

Real estate and construction businesses have several industry-specific deductions to consider:

Cost Segregation Studies

A cost segregation study can accelerate depreciation deductions by identifying building components that can be classified as personal property or land improvements, which have shorter depreciation periods.

Energy-Efficient Commercial Building Deduction (Section 179D)

Businesses can deduct up to $1.88 per square foot for installing energy-efficient systems in commercial buildings, including:

  • Lighting
  • HVAC
  • Building envelope

Like-Kind Exchanges (Section 1031)

Real estate investors can defer capital gains taxes by exchanging one investment property for another of like kind.

Corvee’s state and local tax planning features can help you navigate the complexities of like-kind exchanges across different jurisdictions.

Healthcare and Medical Practices

Healthcare providers and medical practices should be aware of these deductions:

Medical Supplies and Equipment

Deduct the cost of medical supplies, equipment, and diagnostic devices used in your practice.

Continuing Medical Education

Expenses related to maintaining or improving professional skills, including conference fees, travel, and educational materials, are deductible.

Electronic Health Record (EHR) Systems

Costs associated with implementing and maintaining EHR systems may be deductible or eligible for depreciation.

Professional Services (Legal, Accounting, Consulting)

Professional service firms can benefit from these deductions:

Home Office Deduction

If you use a portion of your home exclusively for business, you may be eligible for the home office deduction. This can include a percentage of:

  • Mortgage interest or rent
  • Utilities
  • Property taxes
  • Home insurance

Professional Liability Insurance

Premiums paid for professional liability (malpractice) insurance are fully deductible.

Business Development Expenses

Costs associated with acquiring or retaining clients, such as marketing, advertising, and networking events, are deductible.

Easily Save Clients Thousands in Taxes

Scan client returns. Uncover savings. Export a professional tax plan. All in minutes.

Retail and E-commerce

Retailers and e-commerce businesses should consider these deductions:

Inventory Shrinkage

Deduct the cost of inventory lost due to theft, damage, or obsolescence.

Point-of-Sale (POS) Systems

The cost of POS systems, including hardware and software, can be deducted or depreciated.

Website Development and Maintenance

Expenses related to developing, hosting, and maintaining your e-commerce website are deductible.

Maximizing Your Industry-Specific Deductions with Corvee

Identifying and leveraging industry-specific tax deductions requires in-depth knowledge of tax laws and careful planning. Corvee’s advanced tax planning software offers several key advantages:

  1. Comprehensive Strategy Analysis: Corvee’s software analyzes over 1,500 tax-saving strategies, including industry-specific deductions, ensuring you don’t miss any opportunities.
  2. Multi-Year Planning: With the six-calculation system, you can project the long-term impact of various deduction strategies across multiple years.
  3. Scenario Modeling: Test different deduction scenarios to find the optimal tax strategy for your business.
  4. Custom Reports: Generate clear, branded reports that illustrate the tax implications of different industry-specific deduction strategies, helping you make informed decisions.
  5. Expert Support: Access Corvee’s community of tax experts to discuss complex scenarios and stay updated on the latest changes in industry-specific tax laws.

Staying Compliant and Maximizing Value

While maximizing deductions is crucial, it’s equally important to ensure compliance with tax laws. Corvee’s tax planning software helps you:

  1. Ensure Accuracy: Corvee’s software is regularly updated to reflect the latest tax laws and regulations, helping you stay compliant.
  2. Maintain Documentation: Use Corvee’s client collaboration tools to securely store and organize documentation supporting your industry-specific deductions.
  3. Plan for the Future: Leverage Corvee’s multi-year planning capabilities to anticipate future tax liabilities and adjust your deduction strategies accordingly.

Empowering Your Tax Strategy with Corvee

Understanding and leveraging industry-specific tax deductions is a powerful way to reduce your tax liability and boost your business’s financial health. By using Corvee’s advanced tax planning software, you can navigate the complexities of industry-specific deductions with confidence, ensuring you’re maximizing every available tax-saving opportunity.

Remember, effective tax planning is an ongoing process. Regularly review and adjust your strategies as your business evolves and tax laws change. With Corvee’s powerful tools and expert support, you’ll be well-equipped to optimize your tax strategy and drive your business’s financial success.

Ready to unlock the full potential of industry-specific tax deductions for your small business?  Get a free demo. Explore Corvee’s tax planning software and discover how to maximize tax savings while ensuring compliance. With Corvee, you’ll have the tools and expertise needed to navigate complex tax scenarios, provide data-driven advice, and help your business thrive in today’s competitive landscape.

Take The Next Step

See how Corvee allows your firm to break free of the tax prep cycle and begin making the profits you deserve.

Want to Learn More?

Please fill out the form below.

Interested in Partnering?

Fill out the form below, and we’ll be in touch.

Want to Learn More?

Please fill out the form below.

  • This field is for validation purposes and should be left unchanged.

Want to Learn More?

Please fill out the form below.

  • This field is for validation purposes and should be left unchanged.

Want to Learn More?

Please fill out the form below.

Schedule Your Free Demo

  • This field is hidden when viewing the form
  • This field is hidden when viewing the form
  • This field is hidden when viewing the form

Schedule a Free Demo with Q&A

Schedule a Free
Demo with Q&A

Let us show you how you could save your clients thousands of dollars and make tax planning easier than ever with Corvee.

Request a Demo 2.0 (Tax advisor or accountant)

"*" indicates required fields

This field is for validation purposes and should be left unchanged.

By clicking the button above I confirm that I have read and agree to the Terms & Conditions and Privacy Policy and agree to receive emails and texts about promotions at the phone number and email provided, and understand this consent is not required to purchase.