New Form 7205, Energy efficient commercial buildings deduction. This new form and its separate instructions are used to claim the section 179D deduction for qualifying energy efficient commercial building expenses. Have your team of dedicated bookkeepers at Bench track all of the expenses related to running your business to ensure you’re taking advantage of every legitimate deduction.
They will help you understand the deductions available and how you can take advantage of them in your business. All ordinary and necessary expenses are write-offs that will reduce the company’s taxable income. So keep track of all your business expenses and keep those receipts.
Understand and Control Your Location Costs
If you cut 500 MFBM of timber, your depletion allowance would be $40,000 (500 MFBM × $80). The term “timber property” means your economic interest in standing timber in each tract or block representing a separate timber account. To figure your cost depletion allowance, you multiply the number of timber units cut by your depletion unit. If you have a partial interest in the production from a property, figure your share of the production by multiplying total production from the property by your percentage participation in the revenues from the property.
When you receive correspondence from us, read the entire notice or letter carefully. Typically, we only need a response if you don’t agree with the information, we need additional information, or you have a balance due. If we changed your tax return, compare the information we provided in the notice or letter with the information in your original return. If we receive a return that we suspect is ID theft, we will ask you to verify your identity using the web address provided in the letter.
Business Bad Debts
If you completely dispose of your business before the end of the amortization period, you can deduct any remaining deferred startup costs. However, you can deduct these deferred startup costs only to the extent they qualify as a loss from a business. On June 1, you hired an accounting firm and a law firm to assist you in the potential purchase of XYZ, Inc.
These costs may include expenses for advertising, travel, or wages for training employees. If you take business clients out, you can deduct the expense as long as you discuss business during the meeting and the entertainment takes place in a business setting for business purposes. You can deduct 50 percent of the cost of these entertainment expenses. You can also deduct as much as 100 percent of the cost of social events held for your employees. Upgrades that you make to your home to ensure it’s more energy efficient can qualify for tax credits, such as the federal solar tax credit.
Phone and Internet Expenses
You operate a plumbing business and use the cash method of accounting. You join a barter club and agree to provide plumbing services to any member for a specified number of hours. Each member has access small business tax deductions to a directory that lists the members of the club and the services available. In return for accounting services you provided for the house painter’s business, the house painter painted your home.
It sounds counterintuitive to advise against buying in bulk. However, anyone who’s made the mistake of purchasing the biggest tub of peanut butter at the warehouse club only to throw it away two years later has firsthand experience with the pitfalls of bulk buying. It’s important not to over-rely on freelancers and contractors because they’re likely to be less loyal and may have other obligations that distract from their work for your company. But for one-off projects and ongoing, noncore activities, they can serve as the secret sauce that keeps your company’s labor costs under control. If chronic procrastination is a problem at your office, figure out why it’s happening and take appropriate steps to address it — for example, by breaking overwhelming tasks into chunks. Every minute you and your team spend procrastinating is a minute that’s not being spent on value-producing work.
