Managing a small business can be incredibly demanding. In fact, according to Bank of America’s 2012 Small Business Owner Report (PDF), running a business is twice as stressful as maintaining a relationship and almost three times as nerve-racking as raising a child.
With so many different hats to wear and a never-ending list of tasks to complete, you’ll want to take advantage of every bit of help possible, including tax breaks. Here’s a look at several small business tax write-offs your company might qualify for.
SHOP Marketplace health care
If you enrolled your employees in health care via the SHOP Marketplace in 2014, you’ll qualify for what could be a sizeable tax write-off. Although you’ll have to use HealthCare.gov’s SHOP Tax Credit Estimator to get a better sense of your company’s exact tax credit, it could be worth up to 50% of your contribution toward your employees’ premium costs.
In general, the fewer employees your company has, the greater your tax credit will be, especially if the average salary of your workforce is less than $25,000.
Here’s good news for small business owners who haven’t signed their employees up for health care yet: in 2015, businesses with 50 employees or fewer can sign up for coverage through the SHOP Marketplace. That’s up from 2014’s limit of 25 employees.
IRS mileage deduction
If you own a small business that requires you to be on the road for a good part of the day, you can deduct a portion of your travel expenses from your taxes. Every year, the Internal Revenue Service issues standard mileage rates that entrepreneurs can use to calculate how much money they can deduct from their taxes if they used a vehicle for business reasons. This year, the standard mileage rate is 57.5 cents per mile, which applies to cars, vans and pickups. Use Forms 2106 or 2106-EZ to calculate your deduction.
Hiring a veteran
Thanks to the Work Opportunity Tax Credit (WOTC), small businesses can also claim tax credits for having hired certain workers, like veterans and ex-felons, before Dec. 31, 2014. Employers will have to use Form 5884 (PDF) to calculate how much money they can deduct from their taxes. That amount will depend on a number of factors, like how long your new employee was unemployed in the year leading up to his or her hiring. The longer they were unemployed, the larger your tax credit will end up being.
Home office deductions
Work from home? That, too, can earn you a tax break. You can deduct a portion of the expenses related to you operating your business from home — like mortgage interest, insurance, utilities and repairs — from your taxes.
To qualify for this tax break, you’ll have to prove that your home — or at least one room in it — is the primary place that you conduct business. In other words, you won’t qualify for this tax write-off if you take part in conference calls from your living room every now and then. If you think you might qualify for this tax write-off, use Form 8829 (PDF) to calculate your exact deduction.
Although navigating tax forms can turn your hair gray, claiming tax deductions can help free up additional money for your business. Once you figure out which tax breaks your business qualifies for, collect the necessary forms and start crunching the numbers, keeping in mind that the IRS tax filing deadline falls on April 15 this year.
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