Free Investment Advice

Do you own your own business?  My hat is off to you.  Owning a business is hard work and keeping it running and making a profit is even harder.  Who wants to pay more to the government than they have to?  Below is a list of taxes that you may pay as a business owner that can be deducted at the end of the year as a part of your business expenses.

1.  Deduct real estate taxes for improvements.  These improvements have to be ordered by the city or state for the general welfare of the public.  This means that if the city levies taxes for construction they do to improve the downtown area where you business resides, you can deduct the part of the tax payment that went to interest as a business expense.  Remember, taxes that are deducted must be deducted in the year you made the payments.  Sometimes you can use the accrual method or pay taxes before they are actually levied, but this can be tricky and you should consult a tax professional about proceeding along those lines.

2.  Deduct state and local income taxes.  Corporations and partnerships are assessed taxes by local and state government.  These taxes can be written off as business expenses in the year that they were assessed.  However, at no time can you deduct federal taxes that have been paid.  Individuals can deduct the same taxes if they itemize on their tax forms.

3.  Deduct foreign income tax.  If your business is assessed income taxes from a foreign country, they can be deducted as a business expense.  Individuals can’t claim a deduction for foreign taxes on income, because the income is not subject to U.S. taxes.

4.  Unemployment taxes.  As a business owner, you are also an employer.  You may be making unemployment payments to the state fund on behalf of your business and employees.  These payments can be deducted as taxes that are a part of business expenses.

5.  Excise taxes.  As a business, you may be called to pay excise taxes.  These are taxes paid to the government on commodities you manufacture, use, or sell.  Excise taxes include environmental taxes, luxury car tax, fuel taxes, communication taxes, and manufacturer’s taxes.  These taxes can be deducted as an expense of running your business.

6.  Sales taxes.  Businesses need equipment and services to be performed.  When a sales tax is paid for an item or service that is a deductible business expense on your taxes, you can also deduct the sales tax paid on that item.

7.  Self-employment tax.  As a business owner, you are assessed self-employment taxes.  You are also allowed to deduct half of that tax on your taxes as a business expense.

Business owners have a wealth of options for deductions on their tax returns.  These deductions extend to the taxes that they pay in any given year for qualified business expenses.