tax write offs for small business owners 2016

Material & Supply Expensing: IRS regulations allow certain materials and supplies that cost $200 or less, or that have a useful life of less than one year, to be expensed (deducted fully in one year) rather than depreciated.ĭe Minimis Safe Harbor Expensing: IRS regulations also allow small businesses to expense up to $2,500 of equipment purchases. The five-year category includes autos, small trucks, computers, copiers, and certain technological and research equipment, while the seven-year category includes office fixtures, furniture, and equipment. The IRS regulations specify the number of years for the write-off based on established asset categories, and generally for small business purchases the categories include three-, five-, or seven-year write-offs. The following are the write-off options currently available.ĭepreciation: Depreciation is the normal accounting way of writing off business capital purchases by spreading the deduction of the cost over several years. How to deduct the cost for tax purposes is not always an easy decision because there are a number of options available, and the decision will depend upon whether a big deduction is needed for the acquisition year or more benefit can be obtained by deducting the expense over a number of years using depreciation.

From time to time, an owner of a small business will purchase equipment, office furnishings, vehicles, computer systems, and other items for use in the business.

Tax write offs for small business owners 2016