Advertising

A big one that should never be overlooked, as almost all advertising expenses, even the cost of printing up your business cards, can be deductible.

Bad Debts and Business Write-Offs

Unpaid customer accounts that will be written off as worthless debts as well as any documented losses due to theft or fraud (not already covered by insurance) can be deducted if the revenue was at one time included in your business’s gross income. However, cashbased businesses that never recorded the sale or service as income in the first place are not eligible to take this deduction.

Bank Fees and Finance Charges

Many of these business costs are deductible from both sides of the transaction equation—buyer and seller. So, not only can you typically deduct fees and interest charges on your own business credit cards, you can also deduct service fees charged by the bank for accepting your customers’ credit cards. 

Mileage Deduction

For the 2007 tax year, the standard mileage deduction for business-related driving rose to 48.5 cents per mile. Keep in mind, this deduction is only available to companies with four or fewer vehicles. One other note: While the standard mileage deduction covers most car-related costs, parking fees and tolls as well as finance charges on business-owned vehicle loans can be listed as a separate deduction. 

State and Local Sales

Taxes A relatively new and, therefore, commonly overlooked item, sales taxes paid by your business on property or retail services can now be deducted on Schedule A, but only if you itemize. One caveat, you cannot deduct both state income and sales taxes in the same year, you must choose only one (preferably, the higher of the two amounts). Consequently, this sales tax deduction is particularly important for businesses in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming, which have no state income tax.

Tax Preparation Fees

Ironically, the cost of hiring an accountant or tax preparer as well as the cost of purchasing tax preparation software is an often overlooked deductible expense. Don’t make that mistake.  For a more detailed list of deductions, check out sbinformation.about.com/od/taxes/Small_Business_Tax.htm or hrblock.com/tax_business_services/resources/article_ bus_ded.html. Of course, as is the case with any tax situation, it’s always a good idea to consult with a tax professional first to find out exactly which deductions best fit your business.