7 Overlooked Tax Deductions for Business Owners in 2011

Posted on December 16, 2010


Keep More of The Money That You Make

With 2010 fast approaching its conclusion, it’s time to start developing a strategy to save you as much money as possible during the 2011 tax season. During this time, it’s important to figure out how your business-related expenses can be turned to your advantage when dealing with the IRS. We have included some tried-and-true tax deductions for Business Owners as well as some updated or brand-new IRS tax provisions that may help your bottom line.

  1. Start-up costs for new small businesses

    If you opened a new business in 2010, you might benefit from a tax deduction for start-up costs. The IRS says, “Section 2031 allows up to $10,000 as a deduction for start-up expenditures and provides for a dollar-for-dollar reduction of the $10,000 deduction if start-up expenditures exceed $60,000.”

    To read more about this deduction and others that appear on the Small Business Jobs Act of 2010, visit http://www.irs.gov/businesses/small/article/0,,id=230307,00.html.

  2. Mileage for business use of cars

    The Internal Revenue Service (IRS) said that people using vehicles for business purposes could deduct 50 cents per mile driven in 2010. That amount will increase a penny to 51 cents per mile in 2011. If you plan on claiming your car as a business expense, you need to first decide whether you will use the car solely for business because that will determine how much you can deduct. The IRS has two ways to decide how much you can deduct, the standard mileage rate method and the actual expense method, so you should visit the IRS website to determine which you are eligible for and which will save you the most money.

  3. Equipping your business

    Section 179, which allows you to write off newly purchased equipment, has doubled to $500,000 because of the Small Business Jobs Act of 2010. Keep in mind that qualifying Section 179 property must be purchased and put into use by Dec. 31, 2010. Small-business owners can write off property including:

    -Office furniture and equipment, including scanners, fax machines, printers and copiers
    -Computers and off-the-shelf computer software
    -Other equipment and machines purchased for business use

  4. Deducting your marketing dollars

    Spending money on marketing your business (even during a down economy) is key to achieving growth. These expenditures can also be written off during tax season. Marketing expenses that you can deduct include:

    -Billboards, posters, fliers and brochures
    -Money spent on promotional activities such as contests, special events to attract business
    -TV and radio advertisements
    -Business cards
    -Money spent creating and maintaining your business website
    -Online directory listings
    -Phone book listings

  5. Association membership

    Not only is joining your state or national association a smart business decision because of the networking and educational opportunities, but the membership fees are also deductible. Make sure you document how membership in the association is related to your profession, and keep any receipts as proof that you paid your dues. If you subscribe to trade publications or publications from your association, those costs can also be written off.

  6. Business-related education

    As in most careers, entrepreneurs can benefit from engaging in continuing education. Education helps business owners to excel in their jobs using newer technology, more effective techniques and knowledge of the latest legislation. Money you spend on classes, seminars, conventions, videos or CDs is tax-deductible as long as these expenses are directly related to your profession and meant to improve your on-the-job skills and knowledge.

  7. “Ordinary and necessary” business expenses

The following business expenses are classified as “ordinary and necessary,” which makes them deductible: bank service charges, business-related magazines and books, casual labor and tips, coffee and beverage services, commissions, office supplies, postage, and promotion and publicity.


The lesson to take away from the preceding list of deductions is that while it’s sometimes painful to open your wallet and spend money on your business, you can get some of that money back come tax time. All it takes is careful documentation of your expenditures, organization of your receipts and invoices, and possibly consultation with your trusted tax advisor or accountant. Good luck to you and your business in 2011.