Deduct Small Business Expenses
Can I deduct my small business? How do I deduct my sole proprietorship business? That’s a question I get a lot from sole proprietors and other small business owners. The trick is that most information about small business taxes reads like it aimed at larger businesses, specifically, those that have employees. However, the same IRS tax rules that apply to those small businesses apply to entrepreneurs running their own single person business or small family business. It’s an important question because small business expense deductions can lower your overall tax rates and move you down a bracket on the tax tables. When Can You Deduct a Business? There is really one simple test that a business must pass to be tax deductible: Is there a profit motive? For the IRS, the sole determination of whether something is a hobby, or a legitimate, tax-deductible business, is whether or not you are doing it for profit, instead of for fun. Of course, it wouldn’t be the IRS without hundreds of pages of rules, regulations, and numerous publications sorting out just what is a deductible profit motive. There is a somewhat legendary tax law case where a man claimed his golf expenses as …
