Furnishing an office is a necessary but expensive endeavor. The Internal Revenue Service (IRS) understands that office furniture is a vital aspect of running a business, so they allow business owners to deduct those expenses from their taxable income.
There are rules when it comes to deducting office furniture. First, the IRS only allows you to deduct $5,000 worth of furniture if you are just starting your business. Anything more could be considered capital costs. You also can only deduct furniture that is necessary and that is actually used in your business. This means it’s best that your office furniture stays at your office. You shouldn’t be buying something personal and writing it off as a business expense.
The following items can be claimed as office furniture or equipment expenses:
- Chairs or couches
- Coffee tables
- Appliances (like refrigerators, microwaves, etc.)
This is not a comprehensive list. What qualifies as necessary furniture for your business depends on your industry, products, and services. If you are wondering if something will count as an office furniture deduction, ask yourself:
- Is the item necessary for me to successfully run or grow my business?
- Is the item something most businesses in my industry would need to function or operate?
If you answered yes to both questions, you can deduct the item from your taxable income. If you have specific questions about deducting office furniture, ask your accountant and they can determine what qualifies and how to categorize an item.
For more business write-offs you will want to take advantage of, check out “17 Tax Benefits You Can Take Advantage of as a Small Business Owner.”
Home Office Expenses
A lot of small business owners work out of their homes instead of an actual office. The IRS still allows business owners to write off their home office expenses.
If you’re working out of your home, you can claim the part of your house that you work in as your office. This means that you can write off part of your mortgage or rent as a business expense. You should calculate the square footage of your office and subtract that from the total square footage of your house to decide how much of your mortgage or rent you can write off. If you choose to write off your home office, it’s best practice to only use that space as an office. If you have other uses for the room then it’s not deductible.
You can also write off other normal business costs associated with using your home like trash removal, electric and heating, internet, snow removal, and other minimal repairs to your home that would affect your business. One thing you can’t include as part of your home office is a bathroom.
The office furniture rules apply to home offices as well, so any furniture that is strictly used in your office can be deducted on your taxes.
If you have any questions or need help with your business accounting and taxes, reach out to our team! We would love to help you any way we can!
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.