Taxes can be one of the biggest expenses for small business owners, but the good news is that smart tax planning can significantly reduce your tax burden. Many businesses overpay simply because they miss out on valuable deductions. In this guide, we’ll walk you through key tax-saving strategies to keep more money in your business.
1) Keep Track of Business Expenses
Many small businesses lose out on deductions because they fail to track expenses properly. Every business-related cost—from office supplies to software subscriptions—can add up to significant tax savings.
✔ Use accounting software to log transactions in real-time.
✔ Save and organize receipts and invoices digitally.
✔ Categorize expenses for easy tax filing.
📌 Tip: Even small purchases like business meals, mileage, and home office costs can be deductible!
2) Take Advantage of the Home Office Deduction
If you run your business from home, you may qualify for the home office deduction. This allows you to deduct a portion of rent, utilities, and internet costs based on the percentage of space used for business.
✔ Simplified method: Deduct $5 per square foot (up to 300 square feet).
✔ Regular method: Deduct actual expenses based on the percentage of your home used for business.
📌 Tip: Your home office must be exclusively used for business to qualify.
3) Deduct Business Travel & Vehicle Expenses
If you use your car or travel for business, you can deduct mileage, airfare, hotel stays, meals, and transportation costs.
✔ Mileage deduction: $0.67 per mile (as of 2024).
✔ Actual expense method: Deduct fuel, insurance, and maintenance costs.
📌 Tip: Keep a mileage log or use an app to track business-related driving for easy tax reporting.
4) Maximize Retirement Contributions
One of the best ways to lower your taxable income is by contributing to a retirement plan.
✔ Solo 401(k): Contribute up to $66,000 (2024 limit).
✔ SEP IRA: Ideal for self-employed individuals, allowing higher tax-deductible contributions.
📌 Tip: Contributing to retirement not only reduces taxes today but also helps build long-term wealth.
5) Write Off Equipment & Technology Purchases
Under Section 179, you can deduct the full cost of equipment and software purchased for your business instead of depreciating it over several years.
✔ Computers, printers, and office furniture
✔ Business software and technology upgrades
✔ Machinery and tools for operations
📌 Tip: If you plan to buy business equipment, doing so before the end of the tax year can maximize your deductions.
6) Leverage Health Insurance & Employee Benefits
If you provide health insurance for yourself or employees, you may be eligible for deductions or tax credits.
✔ Self-Employed Health Insurance Deduction – Deduct 100% of your premiums if you’re a sole proprietor.
✔ Small Business Health Care Tax Credit – Available if you have fewer than 25 employees and offer health coverage.
📌 Tip: Offering benefits not only lowers your tax bill but also attracts and retains top talent.
7) Don’t Forget to Claim Start-Up Costs
If you recently started a business, you can deduct up to $5,000 in startup expenses such as legal fees, branding, and marketing.
📌 Tip: Keep detailed records of initial expenses, as additional costs can be amortized over time.
Take Control of Your Taxes & Save More!
At Livewell Financial Services, LLC, we help small business owners identify tax deductions, reduce liabilities, and maximize savings. Don’t leave money on the table—let us optimize your tax strategy today!
