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Write Off Any Business Expense
As you know, being a business owner, you have over 73,000 lines of code that you can take advantage of for tax write-offs. However, it’s not like going to the store and using several coupons until you don’t have to pay anything.
There are some tax write-offs that you may not qualify for, and if you’re not careful, you could get in trouble with the IRS.
In this blog post, we will discuss how you can write off your taxes without the IRS agents knocking on your door.
4 Questions To Ask Yourself Before Writing Off Taxes
I know it can be tempting to write off all your taxing using every tax code in the book. However, before you start writing off taxes, you want to ensure that your business can take advantage of these tax write-offs.
What you want to do is determine how these expenses you’re writing off help you in the pursuit of income. The best way to do that is by asking these four questions:
- How do you use it in your business?
- How is the expense so crucial that your business would not do so well without it?
- How does it benefit you?
- How does it help you make money or NOT lose money?
If possible, try to answer all these four questions and relate them back to you as the business owner, customers, employees, or vendors. These are the groups of people who drive your business.
Suppose you can come up with a valid reason why this expense is so crucial for your customers, employees, business owners, etc. Then that’s more than enough proof to the IRS that this is a necessary expense for your business!
Even if you are looking at turning your hobby into a business.
How you can write off luxury possessions
Can you buy high-end clothes, cruise ships, planes, cars and write it off as an expense? If you can somehow relate it to your business, the answer is yes.
For example, say you own a house cleaning business. For this business, you will always wear different blue and white dresses. This is your business uniform, and it is part of your brand.
When clients think of you, the first image that will likely come to mind is someone in a blue and white dress.
When an item you buy becomes an integral part of your brand, you always have to have it; therefore, it becomes a valid business expense and a small business tax write-off.
Another tax write-off example:
Say you’re a tour guide and you live somewhere where there’s a huge body of water. If you buy a yacht to give clients a tour around town, that is a valid business expense. That yacht is necessary for you to make money, so you can rightfully write off the purchase from your tax bill.
One last thing to note is that you always want to link your purchase to a specific part of your business.
Going back to our house cleaning example, say your house cleaning business has more than one service. Not only do you clean homes, but you also do window cleaning, car washes, dog cleaning, etc.
Well, now you’ll want to say specifically what activity or service you’re buying the blue and white dress for and why. In our previous example, we purchased the blue and white dress for house cleaning, so when asked by the IRS, we will state that:
“We bought the dress for the house cleaning aspect of our business. As it represents an important part of our brand.”
Conclusion
In conclusion, not all tax write-offs are created equal. As a business owner, you have access to thousands of potential tax write-offs, but you won’t be able to use them all. There will be only a select few that you will qualify for based on the kind of business you have.
The big thing you want to remember is that you want to prove how this expense is integral to your business. Then link that expense to a specific service or activity you do within the company. This gives the IRS a clear picture of why you’re writing off the expense.
