Getting the Most From Business Tax Credits

By Erik Neilson , last updated June 28, 2011

One of the most important things you can do when running a business is to learn how to take advantage of business tax credits. Many people don’t realize how truly difficult it can be to run a business until they attempt to do so themselves. The fact is that the financial responsibilities that most often come along with running a business can be so overwhelming that they often cause people to give up and fold their businesses. The trick to staying afloat when running a business, however, is learning how to deal with business expenses in all the right ways. Tax credits can make or break the health of your business, and the importance of learning about them should not be underestimated.

Travel Expenses

Many people use a vehicle in order to travel for work-related tasks. Between the costs of fueling the vehicle and maintaining it, it can become extremely difficult and expensive to use a vehicle on a daily basis for work. Fortunately, it’s possible to deduct many of the costs of keeping your vehicle operating from your taxes. Most businesses deduct mileage from their taxes, which in 2011 equates to 51 cents per mile, an increase of one penny from 2010. While it may not seem like much at face value, deducting mileage expenses can actually have a rather large and important effect on your taxes overall.

Start-up Expenses

Getting a business off the ground is never easy, and most often turns into an extremely expensive endeavor. Between materials, advertising and rent, the common costs that go into starting a business can seem extremely intimidating at first. Fortunately, you can write off a great deal of these start-up costs on your taxes, allowing you to save far more money than you might otherwise think you’d be able to. Deducting start-up expenses is especially useful for those who don’t expect to make a profit immediately, as covering costs can be extremely difficult otherwise.

Meals and Entertainment

A big part of many business plans is entertaining clients and customers, which is often necessary in order to build strong working relations with them. The fact is, however, taking clients out for meals and drinks can run into quite a bit of money, and is especially difficult for those who are still trying to get their companies off the ground. You can write off 50% of your meals and entertainment expenses on your taxes, however, saving you a great deal of money over time. This is especially important for those who intend to take clients out on even a semi-regular basis.

Fees to Professionals

Depending upon the type of business you’re running, you may need to hire a professional at some point. Whether it be an accountant, lawyer or otherwise, hiring a professional can get extremely expensive, and should be written off if you have the opportunity. Since writing off professional services can get somewhat confusing, it is best to do your research on this aspect of deductions before going forward with it, especially if you plan on forging ongoing working relationships.

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