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Taxes and Businesses

The tax laws are complex and often favor those who can contribute most to federal election campaigns. So, it is not to surprising that many tax deductions favor both small and large businesses.

There are a number of deductions you can take as a business owner. While a short article cannot consider all such deductions, we will list a few that small, home-based business can use effectively.

The most obvious deductions relate to business expenses. These include the costs of office supplies, advertising, shipping and mailing, business phones, and business Internet charges. If your business has a checking account, any fees are also business expenses. You may also provide free promotional items to potential customers. These expense are easily recorded and monitored as each of these expenses relate directly to the business.

Some expenses for equipment or furnishings cannot be deducted fully the year they are purchased. Such items are expected to be used for several years and have an expected life. They are deducted slowly over their expected life, or deprecated. Each year, the value of that year's depreciation is deducted.

If you operate a business out of a home office (an area of the home dedicated to your business) you can deduct some home expenses, in proportion to the area of your office compared to the area of your home.

As always, you should consult a tax attorney or professional tax advisor before filing your taxes. Your tax adviser should be able to provide the optimal tax solution for your particular situation. This will not only keep you legal, but help you plan your business for optimal tax breaks.

The following are resource you can use related to business tax advises:

Taxes in the News

washingtonpost.com - E-Taxes

Va. Bills Would Alter Communications Taxes
Gov. Mark R. Warner and some Republican legislators are urging the General Assembly to revamp taxes on telecommunications in light of the new phone, cable, wireless and Internet options available to consumers.

Bids Sought For 'Net Sales Tax Systems
State governments are moving ahead with plans to create the data infrastructure that they and retailers will need to manage the collection of taxes on most e-commerce transactions. States Hope to Revive Online Sales Tax Push
Congress isn't likely to help states collect taxes on Internet sales anytime soon, but some states are laying the groundwork anyway, hoping to convince sellers, lawmakers and the White House that it can happen simply and fairly. In Tax Debate, Varying Estimates Drive Debate
State policymakers frequently cite a 2002 study by two University of Tennessee economists estimating the amount of revenue the states would fail to realize in absence of a national system for taxing Internet sales.

Moratorium on Web Tax Advances
Congress Wednesday cleared the way to keep access to the Internet largely free from taxes for the next three years, breaking a year-long deadlock. -The Washington PostCongress Poised to Vote On Internet Taxes
Lawmakers to extend ban on Internet taxing, a move that would please service providers but possibly cost states millions in lost revenue. -washingtonpost.com

Senate Backs Internet Tax Ban Extension
The Senate Thursday voted 93 to 3 to extend a ban on taxing Internet access for four years, forging a compromise that telephone companies and other online providers said would give them incentive to deploy more high-speed Internet service.
In Minn., Bush Takes a Cue From Clinton
President Bush on Monday borrowed a technique popularized by predecessor Bill Clinton: the bite-size presidential initiative.