Small Business Tax Deductions That Are Easily Overlooked

Small Business Tax Deductions That Are Easily Overlooked

We are now slowly moving towards 2016 and for many businesses, it will soon be time to think about the tax season. You will want to make sure you are doing your taxes right as well as prepare the documents that can yield tax reductions for your business. However, some tax deductions are lesser known and it’s common knowledge that many businesses have not tapped into them to get rebates when tax season arrives. Let’s take a look at these small business tax reductions that are too easily neglected:


Advertising is integral to many businesses, be it a small business or a large multi-national one. Businesses can apply for tax deductions when it comes to advertising and marketing costs which can include TV time, ad space in a school year book, business cards and other promotional materials. With regards to promotion, you can also get deductions for certain costs that are associated with having your name attached to causes that promote general goodwill which you expect to lead to more business opportunities.

Bank fees

Bank fees are one of the things that can be deducted from your business operations. These fees include those such as the special fees that come attached when you receive a money order as well as costs that are associated with account management. You should keep in mind that this is not available to personal taxes as these fees are under the general cost of life allowance.

Credit card processing fees

In most cases, you will be able to deduct at least 2.5% off from what your credit card provider is charging you. The Internal Revenue Service lets you deduct the costs that are current with your business, and processing fees of credit card are covered. This will be counted as a miscellaneous deduction which means you can only make a claim when all your miscellaneous expenses are at least more than 2% of your gross income. This is a good chance for you to gain a little back on all those pesky payments. Fortunately, the coverage of miscellaneous expenses is pretty comprehensive. For instance, you can get over the 2% threshold if credit card usage plays a big part in your business.

Your company’s charity donations

The IRS encourages businesses to make donations to the charities such as the Red Cross and if you have done so, you can claim $150 back from what you have given to the foundation. To make charity donation claims, you will need to give to a charity that is approved by the IRS. You will also need to keep track of all the donations with an official acknowledgement or receipt. Additionally, you can deduct the costs of goods that you donate to charities as well, but the rules for this claim are more complex. For instance, you will not be able to deduct the retail price of the donated items, as you can only claim for the costs you have incurred while making the donations.

Bad debt deductions

The first thing to note is that you cannot get a tax deduction when a debtor does not pay you after you have fulfilled a service or you have handed over a product through a sales transaction. You can only get a tax deduction for bad debts if someone does not return the amount of money they borrowed from you. Secondly, you will need to record the money you have lent as handed out cash or income. Of course, you cannot claim that you are owed money when you have no proof. The last thing is that you will need to show that the debt is worthless and you have tried everything within your power to be repaid but to no avail.