If you are running an e-commerce business, you may be able to lower your Tax Burden by taking various business deductions allowed by the IRS instead of settling for the standard business deduction. Prior to preparing your tax return for the year, consider the list of available deductions listed below.
Home Office Deduction
For businesses using a dedicated home room, a deduction is possible. It covers a portion of house-related expenses, including mortgage, utilities, maintenance, and insurance, based on home office square footage.
Office Supplies and Other Equipment
Office equipment used to run your business, such as computers, printers, inventory management software and even paperclips, is usually 100% deductible when used for business purposes.
Telephone and Internet
If you use your telephone and the Internet to conduct business, you can deduct a portion of these expenses based on the percentage of time these services are dedicated to business use.
Travel and Transportation Expenses
If you use a vehicle for business purposes, you have deductions available to you. When a vehicle serves both personal and business purposes, you can deduct a portion of its expenses based on business use frequency. Deduction options include per-mile calculations or actual costs like gas and parking. However, you cannot take both.
Other travel related expenses that can be deducted are airplane tickets, meals, and cab fare. You can even deduct tips given to service providers such as waiters and cab drivers.
Fulfillment Costs
If your business involves shipping products to customers, you can deduct the costs of your packing materials and postage.
Subcontractors
When subcontractors, like web developers or graphic designers, provide services for your business, you can deduct 100% of their fees.
Merchant Account Processing Fees
For e-commerce, you typically utilize credit card processing services such as PayPal, Stripe, or your bank’s merchant account for payments. However, did you know the fees associated with these credit card processing services is deductible?
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