5 Most Underutilized Business Deductions

BluePeak Financial
March 29, 2023

Attention business owners.

Have you considered that your business may have untapped potential for tax deductions?

Although finances might not be your favorite topic, it's crucial to recognize the five commonly underutilized business deductions that we are about to discuss.

And if you need help figuring out where to start, book a free tax reduction analysis.

We'll analyze your taxes, financials & bookkeeping to identify opportunities to save tax and improve your operations.

5 Most Underutilized Business Deductions

#1 - Travel Expenses

Did you know you could discount airfare, baggage fees, hotel stays, rental cars, valet parking, and tolls?

Travel expenses can be a goldmine of tax savings for small business owners.

If you use Uber or other ride-sharing services for business travel, those expenses are deductible.

Additionally, you can take advantage of the standard meal deduction for travel meals - a per diem rate set by the IRS that doesn't require you to keep receipts.

So, next time you're on the road for business, remember to track your Uber rides and take advantage of the standard meal deduction.

Your bottom line will thank you.

Peak Performance Tip:

Incorporate travel into your business strategy, plan a company meeting with your Board of Advisors, visit a client or vendor to cultivate a relationship, or attend a conference or workshop.

Create leverage in your business by using these trips to build relationships and expand your business while benefiting from a tax deduction.

#2 - Business Meals

The IRS permits 50% of the cost of dining out with important clients or prospects and 100% of expenses associated with employee meals, year-end parties, and marketing presentations.

Even better from a tax perspective, restaurants for 2022 allow 100% tax-deductible meals.

Maintaining an itemized list of all receipts always good sense to substantiate the deductions.

Peak Performance Tip:

Use Google Calendar to keep track of business meal meetings, create an event, capture the names of the attendees, and write a small note on the business purposes for your records.

Use technology to streamline your accounting processes, reducing the need for cumbersome documenting, maximizing your profitability, and making your life easier.

#3 - Technology!

It's important to recognize the significant role of technology in business operations.

Though the costs associated with technology can quickly accumulate, you can still deduct many of these expenses from your business taxes.

However, ensuring that any technology you plan to deduct is vital for your business operations is crucial.

For instance, if you use a computer to manage your online store, you can deduct the cost of that computer.

Other items like a separate business phone line, bluetooth devices, smartwatches, or office equipment can be deducted if used exclusively for work-related purposes.

Even small appliances used in the office, like coffee makers, can be deducted.

#4 - Home Office Deductions

A home office deduction can be a viable option for those running their businesses from home.

This deduction allows you to deduct some of your home-related expenses--like rent or mortgage interest, utilities, and repairs based on the size of your dedicated office space.

However, to qualify for this deduction, you must have a dedicated workspace exclusively used for your business.

Therefore, it's necessary to track all your home-related expenses and seek advice from a tax expert to determine your eligibility for this deduction.

Peak Performance Tip:

Due to recent tax court rulings, administrative or management activities at home may qualify for the deduction.

This is especially useful for those who conduct business outside of their home but also use their home as a base of operations.

By leveraging this deduction, business professionals can optimize their tax savings and improve their bottom line.

#5 - Vehicle Deduction

Did you know you can deduct expenses related to vehicles used for business purposes?

That's right, whether you're driving a car, an RV, a motorcycle, or even a giant truck, you can save money on your taxes.

You can either use the mileage method or deduct the expenses for using your vehicle for business purposes, including gas, repairs, and maintenance.

Peak Performance Tip:

The 179 deduction allows you to write off the entire cost of the vehicle if it's over 6,000 pounds and has a 6ft bed or greater or is enclosed, while the bonus deduction allows you to deduct up to $18,100 for certain types of vehicles.

By taking advantage of these deductions, you can save big on your taxes and invest more in growing your business.

#6 - BONUS TIP - The Most Underused Tax Strategy

We’ll send you our guide on small businesses' most underused tax strategy and more Peak Performance Tips.

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Here at Blue Peak Financial, we will serve be your year-round CPA and help you through the tax filing process.

We also work to minimize your deductions all year.

Sean Pfalzgraf
CPA & Owner, BluePeak Financial