Could your business use a break during tax season? You may think that’s incredulous and there’s no such thing. But there are many tax-exempt purchases for businesses that can save you money and help you run your business more efficiently!
Each state has its own rules governing what tax-exempt purchases are allowed. Be sure to check with your state’s taxation department to learn more about the specific regulations that apply to your business.
That said, here are five common tax-exempt purchases for businesses that can help save you money.
1. Sale for Resale Items
If you’re in the business of selling goods, you can purchase items for resale without paying taxes on them. This includes inventory that you sell, as well as packaging and shipping supplies.
To claim this exemption, you’ll need to provide your supplier with a resale certificate. You can get this certificate from the state in which you are reselling the items. Once you have the certificate, you fill out a form and send it to the IRS.
The form will ask for information about your business, the items you are reselling, and how much you paid for them. Once you have filled out the form, you send it back to the IRS. They will then issue you a refund for the taxes that you paid on the sale of the item.
You can use this money to reinvest in your business or to save for your future.
The advertising tax exemption allows businesses to deduct a percentage of their advertising costs from their taxes. This exemption can be significant savings for businesses, and it’s important to be aware of it when planning your advertising budget. It’s also important to note that not all advertising expenses are eligible for the exemption.
Only expenses for certain types of advertising, such as print, radio, and television advertising, are eligible for the exemption. So, when planning your advertising budget, be sure to take into account the potential tax savings from the advertising tax exemption.
To qualify for the tax exemption, businesses must keep records of their advertising expenses. These records must include the name and address of the person or business who provided the service, the date of the service, and the amount paid.
Businesses should keep these records for at least three years.
3. Travel Expenses
Travel expenses are often overlooked as a business tax write-off. This includes anything from airfare and lodging to ground transportation and meals. If you incur these expenses while away from home on business, you may be able to deduct them from your taxes.
There are several requirements that must be met in order for the expenses to qualify, but if you keep good records of your travel, you can deduct a significant amount come tax time.
So don’t forget to keep those receipts when you’re on your next business trip! With a little planning, you can take advantage of this generous tax break.
4. Company Vehicle
Assuming your business qualifies, there are several tax breaks you may be able to take advantage of if you buy a business vehicle. When you purchase a car for business use, how much of the cost you can deduct each year depends on how much you use the vehicle and for what purpose. If you use the standard mileage rate deduction, the IRS lets you deduct 58.5 cents per mile of business travel.
If, instead, you deduct your vehicle’s actual expenses – including depreciation, gas, oil, tires, repairs, etc. – you’ll need thorough documentation to back up your claim. You may be able to write off 100% of the purchase price of certain types of vehicles placed in service if they’re used solely for business purposes and meet other requirements outlined by the IRS.
These include passenger cars and light trucks weighing 6,000 pounds or less payload capacity. There are pricing caps in play so be sure to check current laws in your state to see what these are.
Note that this special deduction applies only to the portion of the vehicle’s purchase price allocable to its business use. Any personal use must be depreciated separately. Check with your tax advisor to see if your business vehicle qualifies for this tax break.
5. Professional Services
You can get tax writeoffs for professional services, such as legal and accounting services. In order to get the most out of your taxes, you need to list each deduction separately on your tax return. This means that you won’t be taking the standard deduction.
Business marketing expenses are also deductible as business costs, and there is no upper limit. This can be a significant benefit for individuals who have high professional expenditures.
Make sure to itemize your deductions on your tax return if you want to claim a tax break for professional services.
Take Advantage of Tax-Exempt Purchases for Business
Regardless of how big or small your company may be, it’s always a good idea to consult with a qualified financial planning firm in order to get the most out of your tax deductions.
With their help, you will be guided to any tax-exempt purchases for business you may make, which can end up saving you a lot of money in the long run. At Bennett Financials, we understand how important it is for you to run a tight ship. We’ll help you get all the tax exemption certificates and write-offs for businesses that are available in your industry.
Book a free consultation today and we’ll get you a quote in as little as 45 minutes. Stop searching for how to get tax write-offs and let us help you take advantage of every opportunity!