Launching a technology startup is certainly not the easiest thing in the world. At the same time, you’re securing office space, camping out at Microsoft Teams meetings, and scouring local furniture stores for retro yet modern furniture to fit into your new offices.
We mean, who has time to worry about tax deductions for startups? You know. Or at least you should have the time. Because, trust us, tax deductions are about to become your new favorite buzzword.
We know full well that there is no phrase that scares business owners more than tax season. This is especially true if you are a first-time business owner and have never filed a tax return before.
At the same time, tax deductions have a direct impact on the amount of taxes you pay each year. The good thing is: The more you know about tax deductions, the more you can deduct and pay less.
Technology startups consume a lot of money, especially in the first few years of their existence. However, many startup entrepreneurs don’t take the time to identify their deductions before they start spending money, causing valuable deductions to disappear.
If this sounds familiar, you’ve come to the right place, because our comprehensive list of all tax deductions for tech startups is just what you need.
All types of commercial insurance
You’ve probably invested in business insurance to protect your tech startup. It is important to know that you can write off the cost of the insurance:
- Commercial property insurance ;
- Joint liability coverage ;
- Cyber Liability Insurance ;
- Insurance against loss of income.
For example, general liability insurance is also different for every business, as several factors have a big impact on the final price you pay for coverage, including the size of your business and the amount of coverage you choose to purchase.
So if you want to keep your start-up costs as low as possible, take a look at Next’s general liability insurance, which you can take out online in less than 10 minutes and which insures you against all sorts of incidents that could harm your growing business.
Sales promotion and advertising
Raising awareness of your company and product can certainly be very expensive, but fortunately the money you spend on advertising and promotion is fully deductible.
This includes marketing costs spent on Google ads, such as. For example, money spent on marketing materials such as business cards, and even money spent on providing websites such as. B. the purchase of domain names.
It’s simple: Make sure your accounting keeps receipts for the ads you order, as you can write them off quickly.
Working in the technology sector doesn’t necessarily mean sitting in front of your laptop all day. Sometimes you have to leave the office, and when you do, you can write off the cost of the business trip. These travel expenses cover such things:
- Networking meetings and events.
- Travel for business meetings with investors, contractors, partners and employees.
- Sent daily to the post office, stationery store and printer.
There are two different ways to write off car expenses. The first is to write off the expenses by recording the mileage and including the mileage deduction in your taxes.
The second method of car and vehicle depreciation is to write off a portion of the payments for the vehicle. These costs include gasoline, repairs, car insurance, oil changes and car washes. The depreciation rate depends on how much you use your vehicles for business and personal purposes.
All expenses related to your bank accounts and loans are also deductible. This includes your bank fees and you can deduct all fees related to your monthly cooperation, debit balances, deposits, ATMs and transfers.
This also includes credit and debit card fees, annual fees, late payment fees, loan fees, and credit opening fees, such as. B. Loan underwriting and closing fees and loan closing costs.
All cash and in-kind donations to your favorite charity are tax deductible. However, the organization must be classified as a 501(c)(3) nonprofit organization. This means that donations to your favorite political parties and organizations are not tax deductible. Remember, you will still need proof of donation for tax purposes as you will need to declare it on your tax return.
Since most technology startups are usually relatively new to the business world, the owners/managers and employees still have a lot to learn. Fortunately, you can fully deduct payments for work-related training and equipment for you and your employees.
This includes all books and study materials such as e-books, print books, magazine subscriptions, newspapers and audiobooks. This includes all educational workshops and training programs, such as online conferences, summits, in-person seminars, lectures, lecture series and others.
Purchase of equipment
All supplies and equipment you purchase for your start-up, such as computers, copiers, office supplies, desks and chairs, are also taxable. Based on the actual cost of the equipment, it is either recorded as an expense and depreciated over one year or as an asset and depreciated over several years.
Depreciation is a method of determining the value of an asset over its useful life. If you z. B. You buy a $2000 laptop and plan to use it for five years. The unit will depreciate $400 per year. You can claim a tax deduction of $400 per year.
In the early stages of your business, you will likely make large purchases of equipment such as computers and networking systems to get everything up and running. For the best advice, consult with your tax advisor regarding the deduction of these expenses.
Other tax deductions
Other important deductions include the licenses and business permits you need to run your startup, commissions you pay to partners or affiliates to promote your products or services, cost of goods sold, expenses for your tech startup’s events and parties, gifts to employees, customers or affiliates, awards for research and development, and utilities.
After all, recording tax deductions for your tech startup is not as simple as recording ordinary business expenses. Even if you think you know enough to figure it out, it’s always a good idea to consult an experienced accountant or, better yet, a tax advisor who specializes in the taxation of startups. They can help you overcome the obstacles to get your tax deductions and save money for your business.
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