Money Girl answers a listener's question: What should entrepreneurs consider when starting a business? You'll learn five tips to protect your liability, cut taxes, stay organized, and find professional help.
In addition to paying less tax, qualifying tax deductions can give you nice perks like having a meal at a terrific restaurant with potential clients, combining a business trip and a vacation, and having a home office.
Here’s a list of common business expenses you might be able to claim as deductions:
- Auto expenses
- Entertaining, up to 50% of the cost
- Travel, including transportation, lodging, meals, and tips
- Business books, magazines, educational materials, and conferences
- Fees to professionals, such as an accountant or consultant
- Bad debts that are uncollectible
- Principal and interest paid on loans
- Computer equipment and software
- Office supplies
- Business losses
The IRS says you can deduct any expense that is ordinary and necessary for conducting your business with the expectation of earning a profit. When in doubt, categorize an expense as deductible and then consult with your accountant about it at tax time.
Also, just because you didn’t get a receipt for an expense or you paid cash doesn’t mean that it isn’t deductible. To learn much more about business expenses, read IRS Publication 535, Business Expenses.
See also: Taking Home Office Deductions
Tip #5: Get Professional Help
There’s a lot to know about the legal and financial aspects of running a business, especially as you begin to grow and hire employees or work with contractors.
Instead of running in the dark, reach out to professionals and have consultations about your questions, ideas, and goals when needed. It’s well worth your time and money to seek advice and make sure your business will be successful.
If you're ready for help managing debt, building credit, and reaching big financial goals, check out Laura's private Facebook Group, Dominate Your Debt! Request an invitation to join this growing community of like-minded people who want to take their financial lives to the next level.
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