There are several ways to take advantage of business income tax deductions but a large number of businesses do not realize this. By doing simple things to keep things organized and updated, you can save thousands of dollars in business income tax deductions.
The first rule you should stick to is to keep any and all receipts that are business-related. Keeping track of all the receipts you get for a whole year can be the most difficult aspect of getting ready to do your taxes, but you should remind yourself to always ask for, and keep, a receipt, regardless of how small the purchase might seem. Small purchases add up to give you big money, so don't throw away anything. Get into the practice of actually looking at the receipts you get and make sure they have all the information you need in a legible fashion.
It's quite rare to forget that business taxes and business licensing fees are all included in income tax deductions, but often people forget to include all the membership fees they have to pay annually to any business-related organizations. Most businesses belong to several such organizations, so you need to ensure you're deducting all their fees from your income tax.
As a general rule, any money you borrow in order to run your business is considered to be tax deductible. Related fees can also be deducted, such as an amount that you paid to reduce the interest on the loan, or a payment you made for the improvement to your business property or for a purchase. Application, appraisal and the relevant legal fees for your loan can also be included.
Life insurance premiums are not a permissible income tax deduction, but you can still deduct the insurance premiums that you paid for insurance on buildings, vehicles, machinery or equipment that is required for your business.
Also considered legitimate business income tax deductions are any administration and management charges you've had to pay over the last year. This also includes bank charges.
Another deduction most people do not think of are the costs you pay for any repairs and maintenance to the property that houses the business and that earned you an income for the past year. The entire cost of both the materials and labor can be taken as a business tax deduction, unless there was no labor involved, in which case only the payments for the materials can be deducted.