It’s tough owning a small business in the current environment. It can be difficult to get needed supplies, prices keep going up, and it can be stressful trying to grow your business. Luckily there are a few tax breaks that can make running a business a little bit easier.
Enhanced business meal deduction
If you find yourself often entertaining customers, there is an enhanced tax deduction that you may be able to take advantage of. For 2021 and 2022 only, businesses can generally deduct the full cost of business-related food and beverages purchased from a restaurant. Usually, the limit is 50% of the cost of the meal.
As usual, there are a few conditions. To qualify for the higher limit, the business owner or an employee of the business must be present when food or beverages are provided. Also, the expense can’t be lavish or extravagant, so that $800 bottle of wine you’ve had your eye on probably won’t count. But all in all, this is a change that will be welcomed by any business owner that relies on entertaining to close sales or maintain customer relationships.
Home office deduction
With a growing number of business owners now working from home, many may qualify for the home office deduction (known more formally as the deduction for business use of a home).
Usually, a business owner must use a room or other identifiable portion of the home exclusively for business on a regular basis. Exceptions to the exclusive-use standard apply to home-based daycare facilities and to portions of the home used for business storage, where the home is the only fixed location for that business.
There are different ways to calculate this deduction, so if you qualify for it, we encourage you to contact our office so that we can discuss which calculation would be more advantageous given your circumstances.
Other tax benefits
In addition to the two deductions discussed above, there are a variety of other deductions that a business owner might qualify for. There is a deduction for business start-up expenses, qualified business income, and even health-insurance for people who are self-employed. Now is the perfect time to start planning for the 2022 tax year, so please contact our office so that we can help.