At tax time, small businesses look for ways to save money and maximize credits and deductions. “One of the most overlooked ways for small businesses to save at tax time starts at the beginning of each tax year,” advises David Ayoub, CPA in Syracuse, N.Y. “It’s simple. Keep every receipt. Find a way to corral all the loose receipts lying around your desk, in your purse and in your car. They can add up to a lot of deductions.” Another easy and often overlooked deduction is the cash transactions that many small businesses do. “Keep track of everything in a log,” adds Ayoub.
Get every deduction
TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.
Qualify for healthcare tax credit
A small-business owner can qualify for a 2014 health care tax credit of 50 percent if the business meets the following criteria:
- The average annual wages are less than $50,000 per person
- The business employs fewer than 25 full-time-equivalent employees
- The business contributes at least 50 percent to the employees' self-only health premiums
- The health insurance is purchased through the Small Business Health Options Program Marketplaces.
This is a federal deduction. TurboTax can help you determine if your business is eligible for any state deductions.
Carry forward the health credit
The healthcare tax credit is offered on a sliding scale. Businesses that employ fewer than 10 full-time-equivalent employees with average wages under $25,000 per person get the most benefit. To claim the credit, use form 8941 to calculate your eligibility. If your business did not owe taxes in that year, you may be able to carry the credit forward. If a remainder of the tax premium exists, you can claim business expenses against it.
Deduct section 179 property
Small businesses can opt to deduct the full amount of certain property as expenses in the year the business began using them. This is referred to as section 179 property and can include up to $500,000 of eligible business property in the 2014 tax year. Some eligible deductions include:
- Property used in manufacturing, transportation and production
- Any type of facility used for business or research
- Buildings used to hold livestock or horticultural products
- Off-the-shelf computer software
- Investment property
- Land outside of the U.S.
- Buildings that provide lodging
- Buildings that are used to store air conditioning or heating units
TurboTax can assist you in choosing what types of property are appropriate deductibles.
Deduct appreciable stock contributions
Many small businesses make charity contributions throughout the year and deduct the amount that’s donated. Ayoub suggests a way to maximize these contributions. “Donate appreciable stocks instead of money,” he advises. “Your business can deduct the current worth of the stock at the time of contributing, as opposed to what the stock was originally purchased (for).” For example, if you donate one share of a stock that you bought a year ago for $50 per share, and that stock is now worth $100 per share, you can deduct $100 at tax time. This gives you a deduction of the $50 you paid for the share plus the additional $50 that the share appreciated.