There are many different tax deductions for small businesses. They can have significant financial benefits for small business owners. So, there may be a temptation for business owners to take as many deductions as they can every tax year. However, it can be important for a company owner to exercise care when it comes to business deductions.
For example, there are situations in which putting off making deductible expenses (and thus putting off taking the related deductions) could be in a business owner’s best interests. This includes situations in which it might be beneficial to keep taxable income higher, such as when:
- Planning on applying for a loan.
- Thinking of selling a business in the near future.
- Making certain efforts regarding building up retirement savings.
Also, when getting a business off the ground, an owner may find putting off making deductible expenses until they would better coincide with major income items to be beneficial.
So, when it comes to deductible expenses and business deductions, it can be important for a business owner to think about what conduct would best fit their overall goals.
Another thing it can be critical for a person to be very careful about when it comes to business deductions is only taking them for qualifying expenses. Taking deductions for expenses that don’t qualify could land a business owner in significant tax disputes with the IRS. Tax problems with the IRS could put all kinds of additional financial strains (and other stresses) on a small business owner and their company.
Given the high amount of consequences tax disputes over deductibles can have for a small business owner, when such a person is in such a dispute, they may want to have a skilled tax lawyer help them with navigating it.
Source: CNBC, “Small-business owners discover some tax deductions aren’t worth it,” Kayleigh Kulp, Oct. 31, 2017