Top Overlooked Tax Deductions for Small Businesses

As a small business owner, every dollar counts when it comes to reducing your tax burden. While you’re likely aware of common deductions like office supplies and equipment, there are many lesser-known write-offs that could potentially save you thousands. In this comprehensive guide, we’ll explore 10 frequently overlooked tax deductions for small businesses and show you how Corvee’s advanced tax planning software can help you identify and maximize these savings opportunities.

1. Home Office Deduction

With more businesses embracing remote work, the home office deduction has become increasingly relevant. However, many entrepreneurs fail to claim this valuable deduction due to misconceptions about eligibility or fear of an audit.

Key points:

• You can deduct a portion of your mortgage/rent, utilities, insurance, and maintenance costs based on the percentage of your home used exclusively for business.
• There are two methods for calculating this deduction: the simplified method (flat rate of $5 per square foot, up to 300 square feet) or the regular method (based on actual expenses).
• Proper documentation is crucial to support your claim.

Corvee’s tax planning software can help you determine which calculation method is most advantageous for your situation and ensure you have the necessary documentation to support your claim.

2. Vehicle Expenses

Many business owners underutilize vehicle-related deductions, either by failing to track mileage or overlooking eligible expenses.

Deductible vehicle expenses include:

• Mileage for business-related travel (using the standard mileage rate or actual expense method)
• Parking fees and tolls
• Vehicle registration fees
• Auto loan interest (for the portion used for business)

Corvee’s smart questionnaires can help you capture all eligible vehicle expenses and determine which deduction method provides the greatest benefit.

3. Professional Development and Education

Investing in your skills and knowledge is not only good for your business but can also lead to valuable tax deductions.

Deductible expenses may include:

• Courses and workshops related to your industry
• Books, magazines, and online subscriptions
• Conference fees and related travel expenses
• Continuing education to maintain professional licenses or certifications

By leveraging Corvee’s comprehensive tax planning tools, you can ensure you’re maximizing deductions for all eligible educational expenses.

4. Bank Fees and Credit Card Interest

Don’t overlook the small fees that can add up over time. Many business-related financial charges are tax-deductible.

Eligible deductions may include:

• Monthly service fees on business bank accounts
• Credit card annual fees (for cards used exclusively for business)
• Interest on business credit cards
• Merchant fees for processing customer payments

Corvee’s software can help you identify and track these often-overlooked expenses, ensuring you don’t leave money on the table.

5. Health Insurance Premiums

Self-employed individuals may be eligible to deduct health, dental, and long-term care insurance premiums for themselves, their spouse, and their dependents.

Key considerations:

• The deduction is taken on your personal tax return, not as a business expense.
• You can’t deduct premiums for any month you were eligible for employer-sponsored coverage.
• There are special rules for S corporation shareholders.

Corvee’s federal tax planning features can help you navigate the complexities of health insurance deductions and maximize your savings.

6. Startup Costs

Many new business owners don’t realize they can deduct certain expenses incurred before their business officially opens.

Deductible startup costs may include:

• Market research and product analysis
• Advertising and promotional expenses
• Employee training
• Travel related to starting your business

The IRS allows you to deduct up to $5,000 in startup costs in your first year of business, with the remainder amortized over 15 years. Corvee’s tax planning software can help you properly categorize and claim these deductions.

7. Charitable Contributions

While personal charitable donations are well-known tax deductions, many business owners overlook the potential tax benefits of corporate giving.

Deductible contributions can include:

• Cash donations to qualified organizations
• Donations of inventory or equipment
• Sponsorships of local events or organizations

It’s important to note that the rules for business charitable contributions differ from personal donations. Corvee’s tax planning strategies can help you maximize the tax benefits of your business’s charitable activities while ensuring compliance with IRS regulations.

8. Bad Debts

If your business extends credit to customers or clients, you may be able to write off uncollectible debts as a tax deduction.

Key points:

• You must have previously included the amount in income.
• You must be able to prove that you’ve made reasonable efforts to collect the debt.
• Bad debts are deducted in the year they become worthless.

Corvee’s software can help you track and document bad debts, ensuring you have the necessary evidence to support your deduction claim.

9. Retirement Plan Contributions

Contributions to qualified retirement plans can provide significant tax benefits for small business owners.

Popular retirement plans for small businesses include:

• SEP IRAs
• SIMPLE IRAs
• Solo 401(k)s

Each plan has its own contribution limits and rules. Corvee’s multi-entity tax planning capabilities can help you determine the most advantageous retirement plan strategy for your business structure.

10. State and Local Tax Deductions

Don’t forget about potential deductions at the state and local level. These can vary significantly depending on your location and business structure.

Common state and local tax deductions include:

• State income taxes
• Sales taxes
• Property taxes
• Business license fees

Corvee’s state & local tax planning features can help you navigate the complex landscape of state and local taxes, ensuring you’re taking advantage of all available deductions in your jurisdiction.

Maximizing Your Deductions with Corvee

Identifying and properly claiming all eligible tax deductions can be a complex and time-consuming process. That’s where Corvee’s advanced tax planning software comes in. Our platform is designed to help tax professionals and business owners:

1. Quickly identify potential tax-saving opportunities across federal, state, and local levels
2. Calculate the impact of various deduction strategies on your overall tax liability
3. Generate comprehensive tax plans that clearly illustrate potential savings
4. Maintain accurate records and documentation to support your deduction claims

By leveraging Corvee’s powerful tax planning tools, you can ensure you’re not leaving any money on the table when it comes to small business tax deductions.

Staying Ahead of the Curve

Remember, tax laws and regulations are constantly evolving. What may be a valuable deduction one year could be limited or eliminated the next. That’s why it’s crucial to stay informed and regularly review your tax strategy.

Corvee’s software is continually updated to reflect the latest changes in tax law, ensuring you always have access to the most current information and strategies. Our team of tax experts is also available to provide guidance and support through our private client community.

Taking Action to Maximize Your Tax Savings

Don’t let valuable tax deductions slip through the cracks. By taking a proactive approach to tax planning and leveraging powerful tools like Corvee’s software, you can significantly reduce your tax burden and reinvest those savings back into growing your business.

Ready to unlock the full potential of your small business tax deductions? Get a free demo. Explore Corvee’s tax planning solutions today and discover how we can help you maximize your tax savings while ensuring compliance with all applicable regulations.