Far too many entrepreneurs leave legitimate write-offs on the table. Sure, we all need to be better at keeping receipts and tracking our expenses, but asking the following five basic questions could save us big tax dollars.
1. Where did I travel this year?
This is one of the most underutilized tax deductions by small business owners today. Many of us could integrate a business purpose into our trips and could probably justify the bulk of our travel as a business expense with a little bit of forethought and creativity.
Unlike meals and entertainment that are limited by 50 percent, travel expenses are 100 percent deductible. These include airfare, hotel, rental cars, valet, taxi, trains and tolls. Consider all of your travels last year that may have involved a meeting with a client, vendor, or shareholder; a training session; a visit to a competitor's facility or store -- the list goes on.
Related:Tax-Time Crunch: 3 Deduction-Tips To Help Boost Your Bottom Line
2. How many miles did I log on my car?
I'm shocked at how many business owners are afraid to write-off the mileage they are entitled. True, you should do your best to keep a written record, but if you haven't been extremely detailed, make an estimate by writing down a schedule of your regular business routes and the frequency you drive them. Use this to create a legitimate record, then take the deduction. You’ll have a good case to defend the miles if questioned.
Remember, auto expenses are completely separate from travel. There are two main options for writing off your vehicles: mileage or actual expenses. Statistics show that 90 percent of small business owners use the mileage method. For 2012, this was 55.5 cents per mile, as published on the IRS website. This could be a huge write-off. Do the math and you'll be surprised at the impact on your tax return.
3. What are your favorite places to eat when doing business?
Dining tends to be a highly underused expense by small business owners and should be a healthy line item on your tax return. But it also needs to be proportional to the amount of sales and business you are doing. Don't be too aggressive if you're just getting your company started. Typically, the more business you do, the more meals you can write off for business purposes. Take the time to consider all your meals last year in which you discussed business with a partner, potential client, vendor or strategic alliance.
Related: 7 Tips for Keeping Receipts Organized for Tax Time
4. What gadget or supplies help you with work?
Every small business owner is regularly buying supplies and upgrading their computers, office furniture, digital reading devices and tech toys to help them be more effective and productive in their business. Don't forget that when you have a small business, the majority of these items can be fully expensed. This includes everything from kindles to ipads to video cameras used to produce content on your company's YouTube channel. If you've found a business purpose for it -- you can write it off.
5. Do you have a home phone?
Many entrepreneurs don’t know that case law and IRS rulings from 2011 now allow business owners to write-off 100 percent of their cell phone expenses, so long as they have at least one dedicated home phone line. Moreover, make sure to include the cell phones of family members who work in the business alongside you.
Bottom line: Take notes, create a spreadsheet, comb through your bank and credit card statements. If you have a reasonable argument for a deduction, don't be afraid to take it.
Related: Are You Leaving Money on the Table? 5 Often Overlooked Tax Deductions
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.
Mark J. Kohler, a certified public accountant in Irvine, Calif., is a partner in the accounting firm Kohler & Eyre, and the law firm Kyler, Kohler, Ostermiller, & Sorensen LLP, specializing in business, estate and tax. He is the author of What Your CPA Isn't Telling You from Entrepreneur Press.