Five Good Tax Write-Offs

Small businesses have a plethora of tax write-offs available to them.

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Navigating tax codes and IRS publications to find all applicable tax deductions for your small business can be tricky, exhausting and downright mind-boggling. But there are some common --- and not-so-common --- write-offs that most small businesses can take advantage of. Of course, every business is different and you should read IRS publications carefully, familiarize yourself with tax codes, or find a good adviser. But some write-offs are good fits for most small businesses.

Any area of your home that's used "regularly and exclusively" as a principal place of business may qualify as a tax write-off, according to the IRS. The website "Self Employed Tax Deductions Today," in a June 2011 article, says that such a move is a "no-brainer" for any small business person who utilizes his home for business purposes, although some homework needs to be done to ensure compliance. A deductible business expense is created out of former non-deductible personal expenses. For freelancers and independent contractors like writers, this can be a god-send. You'll need to calculate square footage and meet other requirements, but you'll also be able to deduct corresponding percentages of your mortgage, property taxes and other expenses, according to a May 2011"E Byline" story.

The IRS provides detailed criteria regarding entertainment and travel tax deductions. (See References 4) If you conduct business while at a restaurant, bar, nightclub or any other venue, the costs generally are deductible. Sporting-event and theater tickets, tips, drinks and similar expenses usually can be written off. Travel expenses also are deductible, including mileage. For 2011, the IRS allows 51 cents per mile to be deducted from Jan. 1 through June 30 and 55.5 cents per mile from July 1 through Dec. 31. Lodging costs are 100 percent deductible provided that they're reasonable.

For 2011, Section 179 of the United States Internal Revenue Code (26 U.S.C. § 179) allows for up to $500,000 in deductions for business-related equipment purchases, and there is a 100 percent "bonus depreciation" on new-equipment purchases.

Sole proprietors with no employees can add a spouse to the business payroll and reimburse the spouse for any out-of-pocket medical expenses. The reimbursed money is tax-free to the spouse and the business enjoys a tax write-off. Small businesses of fewer than 25 employees may be able to write off up to 35 percent of insurance premium costs for policies purchased for employees, according to a May 2011 Reuters article. The average annual employee salary can't exceed $50,000.

If your small business produces products, you may be able to write off most or all of your bad debts. The website "Nolo," in a 2011 article, reports that businesses can deduct the cost of goods that were sold but for which they were never paid. However, service-oriented businesses cannot deduct lost time spent with customers who don't pay their bills.

John Kibilko has been writing professionally since 1979. He landed his first professional job with "The Dearborn Press" while still in college. He has since worked as a journalist for several Wayne County newspapers and in corporate communications. He has covered politics, health care, automotive news and police and sports beats. Kibilko earned a Bachelor of Arts in journalism from Wayne State University.

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