Summer Expenses Can Mean Big Small Business Tax Deductions
Between the stress of tax season and the rush of the holidays, summer can seem insignificant to small business owners. Take some time to benefit your business and maximize your tax deductions in the process. The Internal Revenue Service (IRS) approves of the following deductible summertime expenses.
Client Entertainment
If you operate under the “ABC: Always Be Closing” mantra, summer can be a prime time to secure new accounts. When you invite prospective or current customers to an event, between 50 and 100 percent of the non-luxury expenses are deductible. Pool parties, baseball games and barbecues are all acceptable venues as long as business discussions actually take place. Keep the receipts and a list of attendees.
Some deductible client entertainment costs are:
- Charitable golf tournaments
- Cocktail party room rentals
- Working lunches
- Business trips
Even though you cannot write off the entire cost of your summer vacation, you can get paid to take a trip. Numerous trade shows and conventions take place during June, July and August. The IRS grants full deductions for business travel expenses, such as flights and hotels, and partial deductions for meals and entertainment. Take the family along, but don’t expect the IRS to pay for their stay.
Approved trip expenses include:
- Rental cars
- Public transportation costs
- Parking fees
- Dry cleaning
Facility Improvement
If summer is a slow time for your company, make the most of the lull. Remodel the office or move to a better location while customers are vacationing with their kids. Most costs related to facility improvement or relocation are deductible.
Claim a small business tax deduction from:
- Disability access renovations
- Building repairs and maintenance
- Cleaning and janitorial services
- New equipment, repairs or upgrades
- Storage rental
Continuing Education
Another way to take advantage of a summer slowdown is to focus on training. You can pay for employee education costs as long as the training relates to the worker’s current position and does not qualify the person for a new career.
Other education expenses involve:
- Continuing education courses
- Technology training
- Professional publications
- Tuition, textbooks and lab fees
- Business association membership dues
Team Building
In addition to boosting morale, company picnics, retreats and office parties provide significant tax savings. However, the events cannot be extravagant; they must be reasonable for the size and circumstances of your business. In addition, you cannot deduct the cost for family members to attend, and you can deduct only half of customer attendance costs.
Examples of team building and employee entertainment include:
- Meals catered in to meet deadlines
- Snacks and drinks in the break room
- Employee achievement awards
- Safety recognition gifts
Employee and customer entertainment, business trips, facility improvement and education are just a handful of tax-deductible summer expenses. The IRS grants hundreds of other common and unusual small business tax deductions. Keep in mind that each expense must be ordinary and necessary, meaning that it must be commonly accepted in your industry and appropriate for your operation. Review IRS publications and work with a tax professional to maximize your summertime write-offs.
At Verdeja & De Armas, our team of Miami tax consultants is dedicated to providing independent and unbiased tax recommendations for businesses and business interests of all sizes. Contact us today for a small business tax consultation.