Top 12 Tax Write Offs for LLCs [Updated List]

so in a few seconds i'm going to reveal the biggest tax write-offs you can take as an llc because without them you are guaranteed to overpay on your taxes now this video is for those who already have an llc who may be thinking about starting an llc and finally for those who smash the like button for the youtube algorithm thank you in advance now let's get into the list [Music] okay so first on the list is startup and organizational cost this write-off allows you to write off 5 000 in startup cost and then five thousand dollars in something called organizational costs and yes they're different startup costs include all costs incurred to get your business up and running examples include things like the money spent to research your business or getting an office ordering business cards training yourself and your staff and everything in between then there's organizational costs and these are costs to incorporate your llc such as legal fees and state fees now say your startup costs are more than fifty thousand dollars then your allowable deduction will be reduced dollar for dollar after fifty thousand dollars and if you spend fifty five thousand dollars or more the deduction disappears completely but any remaining cost after the deduction is taken must be amortized over the next 15 years okay number two on the list is office expenses and technology yes expenses for your office and technology can be written off and common office expenses include things like desks office chairs computers fax machines is anybody still using those and more and common work-related technology expenses may include software like your crm or maybe even google suite so need a new computer or ipad for your business write it off number three on the list business meals now a big thank you to the consolidated appropriations act that went into effect december 27th of 2020 that made business related meals that you eat at restaurants 100 deductible and that's until the end of this year and if not purchased at a restaurant you can write off 50 percent of the business related meal now notice i continue to emphasize business related meals because as tempting as it may seem you cannot write off personal meals so common business related meal expenses include the following meals with the client meals while traveling for business meals provided for a company meeting and even treating your employees to a meal in short if the meal is provided while business is being conducted you can write it off number four on the list and one of my personal favorites business travel all expenses related to business travel can be written off this includes the cost of your ticket your hotel your rental car or uber dry cleaning tips and more and in the instance that your business trip turns into a vacation you can only write off the portion of the trip that was for business and for your trip to qualify as a business trip your trip must meet the following criteria first the trip must be necessary for business second the trip must be in a different city than your business address and third you must travel for more than a normal workday and it must include lodging by the way if you want a complete guide on how to write off business travel i'm gonna link a video in the description all right number five is the home office deduction look more than fifty percent of all businesses in the united states are now home based and if you typically use a part of your home exclusively for business you can write off the expenses related to the business use of your home and not only can homeowners take advantage of the home office deduction people who rent can also take advantage of this deduction so what are the common home office deductions you can take for your business well we have utilities like internet and electricity how about those hoa fees mortgage insurance and interest as well as homeowners insurance or even renters insurance so how do you claim this deduction well you have two choices the regular method and the simplified method the regular method requires you to calculate the square footage of your home that you use for business so for example if your home is a thousand square feet and you use 200 square feet for your home office you would be able to write off twenty percent of the expenses now with the simplified method you can take a deduction up to five dollars per square foot up to 300 square feet so if you want to skip the calculations the simplified method is the easiest way number six phone expenses any phone used for business can be a tax write-off and you're allowed to write off both the phone and the cost of the phone plan and say you happen to use your phone for both personal and business use no need to worry simply calculate the percentage of your phone that you use for business and multiply it by your phone expenses that will get you your allowable tax right off number seven business interest and bank fees if you've taken out a loan or credit for your business there's a very good chance that you're paying interest luckily you can write off your interest charges on business loans and business credit cards in addition any extra fees from the bank are also deductible this includes monthly account fees annual credit card fees and those pesky late charges number eight on the list cost of goods if you have a physical product or even a digital product you can write off the entire cost associated with making or acquiring that good so common cost of goods sold include raw materials packaging costs supply costs equipment costs shipping costs storage costs commission or affiliate costs and overhead costs related to the production of that product and depending on your industry your cost of goods can look different but the key here is to include all expenses to create your product or your service when looking for tax write-offs number nine vehicles used for business now here's a write-off that all business owners love because if you use your car for business expenses related to that vehicle can be written off and there are two ways to write off a vehicle and the best method for you will be the method that gets you the biggest tax write-off the first method is by using the standard mileage rate when you use the standard mileage rate you multiply the miles you drive for business by the standard mileage rate and for the final six months of 2022 the standard mileage rate is 62 and a half cents per mile which is actually four cents more than it was at the beginning of the year so if you drove a thousand miles for business in 2022 you would multiply that by 62 and a half cents to get a total deduction of 625 dollars now the second method is to use something called the actual expense method when you use the actual expense method you track all expenses related to business use like your gas your insurance repairs and any other related expenses and then multiply that by the percentage of miles driven or business so if you have five thousand dollars worth of business vehicle expenses and you use your car twenty percent of the time for business you would multiply your five thousand dollars of expenses by the 20 used for business to get a total deduction of a thousand dollars but regardless of the method that you choose you're going to want to keep detailed records and i actually made a video that goes very deep into writing off your vehicle and basically tells you everything you need to know so go ahead and watch it after this video number 10 on the list is legal and professional services any legal or professional services that are needed to run your business can be written off examples may include legal fees consulting fees accounting fees and even coaching and depending on your industry those services can look very different for example for an airbnb business professional cleaning would definitely be an acceptable write-off but if any of these fees include personal and business use be sure to only write off the percentage of expenses used for business all right number 11 salaries and benefits you can generally write off the salaries and the benefits that you pay to employees if they meet the following criteria one the employee is not a member of the llc two the salary paid is ordinary reasonable and necessary and number three the employee actually accrues time in that period all right number 12 on the list work close look you may be able to write off your clothing if it's necessary in ordinary for your business but here's a caveat it can be tricky but a big rule of thumb is that if your uniform or clothing can be worn outside of work is likely not tax deductible this means that you can't write off a suit for your business because suits are generally acceptable to be worn outside of work but here are a few examples of tax deductible clothing protective clothing such as safety boots or masks uniforms with your company logo and hint that's a cheat code and costumes there you have it the 12 biggest tax write-offs for llcs look i truly hope this helps someone today if it did do me a favor go ahead and hit that like button for me it helps others to find this video on youtube and subscribe to the channel for more videos that help you save on taxes and increase your wealth i placed a few videos on the screen i think you should watch next be sure to check them out and as always i'm quran from life accounting and i'll see you in the next video

Channel: LYFE Accounting

Views: 8,689

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Length: 13min 53sec (833 seconds)

Published: Fri Jun 17 2022