Everybody knows that running a business is no easy task, and expenses abound. But it’s important to remember that not everything is tax-deductible. So, to help you sort through the rules, we’ve created this tax write-off guide for Illinois businesses.
Below is a list of commonly deducted business items. It’s important to note, however, that if the expense is necessary and directly related to your business, there’s a good chance that it’s deductible.
Business management consulting is big business. Analysts estimate that the industry is worth hundreds of billions of dollars. There are business owners who started off as a small business but are looking to scale nationally, and might require a consultant’s expertise. Similarly, there are businesses that are unsuccessful that might hire a consultant at a last-ditch attempt at staying afloat. Regardless, consulting fees that are directly related to your business are deductible.
Businesses needs office supplies to function, no matter the industry. You’re covered for staplers, folders, cabinets, and paper. These office expenses are all deductible. As are postage cost and repair/maintenance. Yes, the money you spend to repair the office fax machine is deductible.
Just like anything else, the cost of business isn’t just the normal overhead, like rent and payroll. Other costs, such as insurance (liability insurance, workers’ compensation, etc.), and any sort of license fees required for your business, also count. In fact, the interest on a bank loan taken out for your business is even deductible!
However, it’s important to note that not everything can be written off, which is why it’s best to consult with a Chicago tax lawyer before filing.
Gifts are a great way to express customer appreciation. However, you can’t write off all client gifts. Specifically, the first $25 of a customer present is deductible. In other words, if you spend $500 on a token of appreciation, only $25 is deductible. However, if you spent $500 on 20 gifts for20 separate customers, you could deduct the whole nut.
You’ve got to dress for success! Unfortunately, you’ve also got to buy the duds on your own dime. That’s right, unless your clothing has protective equipment (i.e., construction worker gear), clothing isn’t deductible.
There are many people who believe that any meal that they eat during business hours is deductible. This isn’t true at all. For a meal to be eligible, you must dine with a client; and even then, only HALF is deductible. When you eat by yourself, nothing is deductible.
This is a big change! Starting in the 2018 tax year, entertainment expenses are NOT deductible. This includes costs like event tickets, concerts, etc., even if you attend with a client.