Small businesses in Florida enjoy some of the greatest tax advantages in the country. If your business registers as anything other than a C corporation, it is not subject to state income tax at all. For those organizations that are subject to state taxes, though, you can find many other tax deductions available to reduce your tax liability. If you own or operate a small business, you should definitely take advantage of these four deductions.
1. Interest Deductions
Many small businesses rely on credit lines to keep up with the cost of labor and to produce the goods they will sell. When you pay interest as a cost of borrowing for your business, you can deduct your interest payments on your tax return. This presents an important reason to separate your business borrowing and spending from your personal; you cannot deduct any portion of interest for personal borrowing.
2. Employee Salaries
When you run a business, your success depends on hiring the right employees. When you attain any kind of growth, you reach a point that you cannot do everything yourself. Fortunately, you can deduct the cost of your employee salaries as a business expense. Keep good records on your salaries and hourly wages paid, as these need to be reported for those employees, but what you pay those who work for you, you can and should deduct from your corporate return.
3. Cost of Goods Sold
When you sell a product, that comes with some embedded costs: manufacturing, marketing, storage, and other expenses that go into the process. You can deduct the cost of goods sold on your tax returns, as a way to recover part of these expenses. To claim this, you need to account for all of those costs as you incur them, and create a record you can then provide when you report your corporate income taxes. This applies to Federal as well as State taxes and is a must for any small business in Florida.
4. Business Use of Your Vehicle
If you use your personal vehicle for business, you can deduct the costs that you can attribute specifically to business purposes. This means carefully recording your mileage and maintenance costs, and separating out business versus personal use. As in the other deductions presented, accurate and reliable record keeping is essential to claiming this expense. Still, small businesses rely on being able to go where you need, and any of the expenses that come with your job duties can and should be deducted.
Running a business brings in many hidden costs that you might not have anticipated before you began. The tax exemptions and deductions that the government allows are there to encourage small businesses to operate intelligently. Make sure you take advantage of the deductions available to you.