When tax season approaches, small business owners are eager to find ways to minimize their tax liability and maximize their deductions. While many are aware of common deductions like office supplies and business mileage, there are several lesser-known tax deductions that can significantly benefit small businesses. In this blog post, George A. Spencer, CPA. in Jacksonville, FL will explore some of these often overlooked deductions to help you optimize your tax return and keep more money in your pocket.
Small Business Tax Deductions You May Not Be Aware Of
Self-Employed Health Insurance Deduction
For self-employed individuals who pay for their health insurance, this deduction is a game-changer. The cost of health insurance premiums can be deducted as an adjustment to your income, which can potentially lead to substantial tax savings.
Research and Development Credit
If your small business invests in research and development activities to create new products, improve existing ones, or innovate processes, you may qualify for the Research and Development (R&D) Credit. This credit rewards businesses that drive innovation and can offset a significant portion of R&D expenses, providing you with a powerful boost when it comes to tax savings.
Section 179 Deduction
Section 179 Deduction allows small businesses to deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. This deduction can be particularly valuable for businesses that invest in capital assets such as machinery, vehicles, or computer equipment, as it accelerates the depreciation deduction.
Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) offers employers a tax credit for hiring certain targeted groups, including veterans, long-term unemployed individuals, and those receiving government assistance. By employing individuals from these groups, your small business not only helps them gain employment but can also benefit from reduced tax liability.