Should I Itemize or Use Standard Deductions?

 

 

Today we’re talking tax deductions, what they are, what qualifies, and how it will help your small business. Grab your favorite beverage and a notepad and pen and get ready to spend the next 30 minutes getting expert advice on how to work deductions to your benefit.  Have a specific questions or don’t have time to watch the entire episode? Check out the show notes (with watch times) below.

What qualifies a deduction?

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Ordinary – an expense that is common and accepted in your trade or industry.

Necessary – an expense that is helpful and appropriate in your business.

 

Basis for Deductibility

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  • Cash – when you actually purchase, that is the day when something becomes deductible (this the default and the most beneficial for the small business to use)
  • Accrual – when you receive the expense, that’s the day that the expense becomes deductible
  • Hybrid – a mix between cash and accrual

 

What Will I Save?

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Tax Savings Formula

Deduction x Tax Rate = Tax Savings

 

Examples of What You Can Deduct

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Vehicles (for business use)

Phone

Equipment (Tools, Camera, Computer, etc.)

Supplies (Office, Cleaning, Hardware, etc.)

Contract Labor

Business Meals

Travel

Insurance

Website and Software

Taxes

Marketing and Advertising

Insurance

 

 

Ben Sutton is the founder of Mazuma USA, an accounting firm providing tax, bookkeeping and payroll services to small businesses. Since founding Mazuma, Ben has established himself as an expert in the small business world. He’s still driven by that same desire to provide accounting help to all small businesses – from photographers, bloggers and creatives to lawyers, doctors, and dentists, everyone needs affordable accounting help. Ben is a Certified Public Accountant, and a member of the American Institute of Certified Public Accountants. But Ben considers his greatest achievement and credential to be his happy wife and four children.

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