Small business tax deductions help businesses to lower their taxable earnings and save money during tax season. Deductions can be a simple way to save money but making the most of them involves keeping careful track of your business accounting throughout the year. Tax Day is April 15th so here is a list of our top 10 deductions to get you ready to file.
- Startup Costs: If you launched your Yard Card business venture in the last year, you could deduct as much as $5,000 in startup expenses. That can include costs associated with marketing your new business, purchases, and any initial investments.
- Vehicle Deductions: If you use your car for both business and personal driving, you can still deduct the business usage costs.
Option 1: Standard Mileage Rate: Track the miles driven and multiply that by each year’s standard mileage rate. For 2021, this is $0.56 per mile.
Option 2: Actual Expense Method: Track all your car-related expenses for the year. This will include gas, oil changes, repairs, tires, insurance, registration, and lease payments. Sorry, but you can’t write off your bumping new stereo system or LED lights and spoiler that you installed. Multiply these expenses by the percentage of use that was for business, and you have your total vehicle tax deduction.
- Home Office/Garage Space: If you have a dedicated home office space or use your garage to store your inventory, a percentage of it is deductible.
Simplified Method: Square footage of your home office multiplied by $5 for the maximum deduction of $1,500 because you can only deduct up to 300 square feet.
Detailed Method: Divide the area used for your business (home office/garage) by the total area of your home. For example, if your home is 2000 square feet and your home office is 400 square feet, your office space is 20% of the total area of your home. You can deduct expenses based on the percentage of the home used for business (example above). Typical expenses include rent/mortgage interest, utilities, insurance, and general home repairs.
- Office Supplies: We’re talking the printer paper you print your orders on, the stamps you send out on those “Thank you” cards, the card you mail out, pens, the new computer keyboard you bought when your other one died, the batteries in the wireless mouse you must replace…all of it. Keep your receipts and write those office expenses off
- Inventory and Supplies: Not just signs, but also your stakes, stands, sandbags, tape, fence posts, shelving, storage bags/containers, solar lights, tools, gloves, headlamps, boots, baby wipes, and all the things that you need to install and tear down your displays... yup all tax deductible.
- Marketing, Advertising & Subscriptions: Did you run a Facebook Ad? Boost an Instagram Post, or pay for marketing flyers or business cards to be made? Perhaps you wrapped your entire vehicle in your business logo or purchased a spot on a local billboard. Anything you paid for to market your business to customers is a write-off. Are you using Acuity, Canva Pro, Adobe Light Room, PicsArt, or any other app or program subscription that makes running your business easier, or presenting your products more eye-catching? Write them off!
- Business Insurance: Most businesses have liability insurance, (next blog post will go into more detail about this). These insurance costs are essentially a mandatory cost of doing business, so you are able to deduct them from your taxes.
- Gifts: Do you leave a gift behind for your customers, or are you selling mini bouquets or memory makers? All those toys, trinkets, candy, and fillers are tax deductible.
- Food: On those big install days, hello graduation season, sometimes there’s no time to sit down and eat, so you grab a bite from a drive-through window. Or perhaps you meet with a potential customer, you can write off 50% of the cost. Ask for a receipt and immediately put that in your tax folder.
- Business Training & Traveling: Whether it be a course you take to sharpen your Yard Carding skills, a class on social media marketing, a session on how to use financial software for tracking your expenses, or a YCS training retreat. If it’s education you require for growing and maintaining your business successfully, you can count that as a deduction.
If you aren’t in the habit of asking for receipts for products you purchase or printing off online receipts as soon as you place an order, start doing it now. Keep a folder for tax season and every time you make a business-related purchase put that receipt in it promptly, so you aren’t scrambling at tax time to remember what you purchased and when.
Don’t forget to join Yard Card Supply Business Support Facebook Group, if you haven’t already. You’ll often find additional information, tips, and videos from other carders. Also, don’t forget to check back for the next installment of Business Basics where we will be discussing Insurance.
***Disclaimer: Yard Card Supply does not provide tax, legal or accounting advice. This blog has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
ABOUT THE AUTHOR
Elaina Boling is the owner of The Yard Life, a yard card company in Fort Collins, Colorado as well as a Creative Specialist for Yard Card Supply. She is married with 5 children and enjoys an active lifestyle. Elaina is passionate about quality products, mentoring, and growing the yard card industry.