What Can You Deduct? Your Guide to LLC Tax Write Offs
Despite the rumors, small business deductions are alive and well under the new tax bill. And just as before, taking advantage of them will go a long way toward saving you and your business money.
In this article, we'll tell you some of the most common LLC write-offs.
Things to Remember About LLC Write-Offs
Before we dive into the weeds of what you can and can't write off. Let's talk about some general rules you need to remember.
To deduct an expense, it needs to be ordinary and necessary. Ordinary means that it's a common expense in your industry. While necessary means that it's appropriate and helpful for maintaining your business.
You obviously can't deduct personal expenses. And, the expense has to be current, meaning it will benefit your business for less than one year.
Follow these rules carefully; tax fraud is a felony that can land you in prison for up to five years.
Now that you understand the basics, let's look at some of the most common LLC write-offs.
Property and Utilities
As a small business owner, there's a good chance you work from your home. And if you pay rent, you can deduct a portion of your rent as a business expense. This doesn't apply to homeowners.
You can also deduct the proportion of utilities that you use for your business.
If you have a personal car that you also use for business, you can deduct a portion of your driving expenses. Your daily commute to the office doesn't count, but any travel to a temporary business location, whether from your house or the office, can be deducted.
Did an unexpected flood or earthquake ruin a portion of your business's property? You can deduct the damages.
If you take a trip within the United States and spend more than 50% of the time on business, you can deduct all travel and business related expenses.
If the trip is outside the United States, the rules are a bit more complex. If the trip is under 7 days, you can deduct as if it were a U.S. business trip.
If it's more than 7 days, you have to spend at least 75% of your time on business to treat it like a business trip. If you spend between 50%-75% of your time on business, you have to make percentage based deductions.
You can deduct communication expenses such as internet access fees and phone expenses, but you need to divide the costs up into business time and personal time. The IRS is very strict about this category, so be careful.
You can deduct any interest or bank fees associated with your business's bank account.
Any advertising related expenses, including business cards, brochures, and web design, can be deducted.
Take Advantage of All Possible Deductions
Those are some of the most common LLC write-offs, but there are hundreds more. To really take full advantage of tax write-offs, you'll probably need to hire a professional.
We offer professional financial services at reasonable prices. Let's get started today.