Vehicle Expenses

If you use a vehicle for work-related purposes — and many business owners do — your vehicle expenses often qualify as a tax deduction. You can either take the actual amount you spend on the vehicle, or you can use the government's estimate. For 2019, the estimate is 58 cents per mile for work-related driving.

As an example of how this works, assume you drive an average of 50 miles per week for work. This results in 2,600 miles over the course of the year, and 2,600 miles would net you a deduction of $1,508 (2,600 miles x $0.58 per mile). As a deduction, this amount can be subtracted from your business' revenue.

Even if you don't use a vehicle that much on a weekly basis once your business is established, you probably have some work-related driving expenses as you set up your business. For example, you may need to:

So long as an activity is linked to your business and you drive your vehicle there, those miles are deductible. Moreover, the deduction can be taken regardless of whether your business earns a revenue this year. You can show a loss for the year.

Health Insurance Premiums

Although not a business-related expense, business owners who are self-employed and don't have access to an employer-sponsored health insurance plan through someone else can deduct the cost of their health insurance premiums from their personal taxes. Additionally, they can deduct the cost of health insurance for themselves, their spouse, and any dependents.

In these situations, the cost to an individual is the total premium of a health insurance plan less any subsidy that the person receives.

If you'll rely solely on your business revenue for income, won't receive health insurance through the business, and don't have a spouse who receives health insurance from an employer, this deduction can result in a substantial savings.

The average cost of health insurance for just one person is $207 with a federal subsidy. Over the course of 12 months, that results in a $2,484 deduction for the year. The amount would be even higher for married couples and families with children.

Computer and Programs

Businesses today rely on computers even if they aren't in a technology-related sector. From online sales to basic administration operations, computers are pervasive. Also, many businesses use various software programs specifically developed for their industry.

Any computers, accessories, and software programs you purchase to use in your business operations can be deducted as equipment costs. If you rely on a new computer for a combination of business and personal use, a portion of the computer's cost can be deducted as a business expense.

Internet Connection and Phone Service

Similarly, the cost of any internet connection and phone service you use for business purposes can be deducted. If you use an internet connection or phone service for business and personal reasons, a portion can be deducted.

If you work online both at an office and at home, you should be able to deduct the cost of internet at both places. The full cost of internet at your office and some of the cost of your home's internet connection can be subtracted from your taxes.

If you need help with small business tax services, contact Bliss & Skeen Certified Public Accountants.