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7 Common Small Business Tax Deductions

A person works on their small business tax deductions

Learn some of the common small business tax deductions before preparing your taxes.

As you prepare to file your small business taxes, it is important to know what tax deductions you can apply to your business. Tax deductions decrease your taxable income, which means more of the money you earn gets to stay in your pocket. Some of the most common small business tax deductions are listed below; read on to learn whether each deduction can be applied to your business’ tax return. 

Home Office Tax Deductions

You can write off your home office expenses as a small business tax deduction. You can only deduct costs related to your home office. This space in your home must be used exclusively for business operations, and be the primary place from which you operate your business. 

Business Use of a Car

You can deduct the use of your car for any business-related and necessary travel that is not your commute to and from work. You additionally cannot write off as small business tax deductions any parking fees or traffic tickets accrued. 

Travel Deductions

Travel expenses for business-related trips can be written off as small business tax deductions. These costs include airfare and hotel fees. The expenses must be necessary and reasonable, and you cannot write off personal vacations that are unrelated to business. 

Employee Payment Expenses

You can deduct employee wages you paid throughout the year, and you can deduct contributions you made to employee benefits. 

The IRS allows you to claim employee expenses that are higher than 2% of your adjusted gross income. You will not permitted to deduct these expenses if they are lower than the 2% number.

Charitable Contributions

You can write off any charitable donations you made as small business tax deductions. The charitable donation you write off must be less than 50% of your adjusted gross income. Depending on what property you give and the organization you donate to, the deduction may be limited to 30% of your gross income. 

Business Bad Debt

If you sold to a customer on credit and have unsuccessfully tried to collect the money, accounts receivable turn into bad business debts. Business Bad Debts can be small business tax deductions, but you must be able to prove to the IRS that you have taken all reasonable steps to collect the money. 

Legal and Professional Fees

You can deduct any legal or professional fees that are necessary and directly related to your business, including accounting fees. If you had to take a customer who refused to pay to court, you could deduct those legal fees. You cannot deduct any personal legal or professional expenses. 

trust the professionals at the harding group

Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for emails or phone calls and will strive for open communication with our clients. Whether you are interested in business advising, tax preparation, bookkeeping and accounting, payroll services, Training + support for QuickBooks, or retirement planning, we have the expertise and years of experience to help. We serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of taxes, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on Facebook, Twitter, YouTube, and LinkedIn.

This entry was posted on Wednesday, December 18th, 2019 at 3:53 pm. Both comments and pings are currently closed.

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