With tax season upon us, small business owners like those renting one of our Mesa office spaces may begin to panic, but never fear! The more tax deductions your business can legitimately take, the lower its taxable profit will be. This all depends on paying close attention to the IRS rules on what is and is not deductible.
According to the IRS, a business expense must be both ordinary and necessary to qualify as deductible. “An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade and business. An expense does not have to be indispensable to be considered necessary.”
Here are a few important tax deductions to employ for your office space in Mesa or elsewhere:
1. Auto Expenses – If you use your car for business or your business owns its own vehicle, you can deduct some of the costs. There are two methods for claiming expenses. The first is the actual expense method through which you keep track of and deduct all actual business-related expenses. The second is the standard mileage rate method, by which you deduct a certain amount for each mile driven, plus all business-related tolls and parking fees. The standard mileage rate in 2013 was 56.5 cents per mile and has since dropped to 56 cents per business mile driven for 2014.
2. Travel – Similarly, when you travel for business, you can deduct many expenses ranging from the cost of plane fare, taxis, lodging, meals, tips, and more.
3. Business Entertaining – Picking up the tab when entertaining clients or prospective clients can be deducted up to 50 percent if the meeting is directly related to business or takes place directly before or after a business meeting.
4. Office Supplies – Keep receipts for your office supply purchases.
5. Furniture – When your supplies are more than just pens and paper, you have another opportunity for tax deductions. With office furniture deductions you can either deduct 100 percent of the cost in the year the furniture was bought or deduct a portion of the expense over seven years to account for depreciation.
6. Equipment – Just like with office furniture, equipment like computers, copiers, fax machines, and scanners are also tax deductible; either as 100 percent in the year purchased or depreciated over five years.
7. Software – In the past, a company had to depreciate the cost of software over three years, but the rules have changed to allow for full deduction in the year purchased.
8. Taxes – You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses.
9. Insurance – You can deduct the ordinary and necessary cost of insurance as a business expense if it is for your trade, business, or profession.
10. Rent Expense – Rent is defined as any amount you pay for the use of property you do not own. Good news for tenants of our Camroad Properties’ Mesa office spaces; you can deduct rent as an expense if the rent is for property use in your trade or business!
These tax deductions and many more are available to small business owners renting space in the Valley. To read even more tips for your office space in Mesa, Tempe, or Phoenix, visit us at www.camroadproperties.com.