Tax Deductions and Your Small Business

Taxes are an inevitable — and painful — part of every business owner's life. But there are ways to reduce, if not eliminate, your company's tax burden if you know how to use business-expense tax deductions to your advantage.

Most business owners know they owe taxes only on their net business profit — that is, their total profits after they subtract their deductions. As a result, knowing how to take full advantage of your deductible business expenses can dramatically lower your taxable profits. It's even possible to combine business with pleasure and to enjoy certain tax-deductible lifestyle perks — such as a sports car you use for work or a business trip to the Bahamas.

You can legally deduct a number of expenses commonly associated with your trade or business. Allowable deductions include:

• Employee wages and most employee benefits
• Rent or lease payments
• Interest on business loans
• Real estate taxes on business property
• State, local and foreign income taxes assessed to your business
• Business insurance
• Advertising and promotion costs
• Employee education and training
• Education to maintain or improve your own required business skills
• Legal and professional fees
• Utilities
• Telephone costs
• Office repairs