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Tax Deductions Every Start-Up Should Know About

The Harding Group Tax Deductions Start-Up

Tax deductions are an important way for any start-up to minimize expenses and maximize profit margins.

Starting a business comes with a host of challenges, but one area where entrepreneurs can find some relief is through tax deductions. Understanding which expenses are deductible can help start-ups save money and reinvest in growth. It’s important to do your research and speak to a professional for help, especially if you’re still new to handling business taxes. For now, we have outlined a few of the most common tax deductions you might be able to claim to get you started.

Start-Up and Organizational Costs

The IRS allows businesses to deduct up to $5,000 in start-up costs and $5,000 in organizational costs in the first year of operation. These costs include market research, advertising, legal fees, and incorporation expenses.

Home Office Deduction

If you run your business from home, you may be eligible for a home office deduction. The space must be used exclusively for business activities, and the deduction is based on the percentage of your home dedicated to business use.

Business Equipment and Supplies

Computers, software, office furniture, and other necessary equipment are deductible expenses. The IRS allows businesses to deduct these costs in the year they are incurred or depreciate them over time.

Marketing and Advertising Expenses

Costs related to advertising, website development, social media promotions, and business cards can be deducted as necessary business expenses.

Professional and Legal Fees

Expenses for hiring accountants, attorneys, and consultants to help establish and operate your business are deductible. These fees must be directly related to your business operations.

Employee Salaries and Benefits

If you have employees, their wages, health insurance, and retirement contributions are deductible expenses. Even payments to freelancers or independent contractors qualify, provided you issue a 1099 form when necessary.

Business Meals and Entertainment

While not entirely deductible, 50% of the cost of business-related meals and entertainment can be deducted, provided the expenses are necessary and directly related to business discussions.

Travel Expenses

Business travel expenses, including airfare, lodging, rental cars, and meals, are deductible as long as they are essential for business purposes.

Insurance Premiums

Many types of business insurance, including liability, property, and worker’s compensation, are deductible expenses.

Education and Training

Investing in courses, books, or seminars that improve your business skills or enhance your industry knowledge can be deducted as long as they are directly related to your business.

Depreciation

If your start-up has invested in assets such as buildings, machinery, or vehicles, you may be eligible for depreciation deductions over time, reducing taxable income.

Software and Subscriptions

Business-related software, SaaS (Software as a Service) tools, and online subscriptions essential to operations can be deducted.

Trust the Professionals at the Harding Group

Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients. 

Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning? We have the necessary expertise and years of proven results to help. 

We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. Follow us on Facebook, Twitter, YouTube, and LinkedIn for more tax tips.

This entry was posted on Thursday, January 30th, 2025 at 5:45 pm. Both comments and pings are currently closed.

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