End-of-Year Tax Tips for Small Businesses

In the first couple years of operating our Internet marketing business, my partners and I were very conscious about stretching our start up capital. We relied on the expertise of a CPA to help us lower our taxable income by taking advantage of the 2011 tax deductions available for a small business.

Vehicle mileage deductions

One of our products is an online business directory and we made it our goal to visit every business owner and merchant in the small city where we are headquartered. This puts additional wear and tear on our vehicles. We are careful to track the mileage on our vehicles to differentiate between personal use and business use. For 2011, we have the right to claim $ 0.51 per business mile driven.

Start up business expenses

The first year we were in business we were allowed to claim $10,000 in deduction for capital expenses. These were for purchases we had to make before we even opened the door for business, such as office furniture and equipment. The rule is we can deduct equal amounts over the next 15 years, so this year we will claim $1,500.

Professional fees

We racked up a few thousand dollars in professional fees for bookkeeping, accounting, and legal expenses. For obvious reasons we hired professionals to keep our business books, but we also needed a lawyer to do things like write up contractual language and review our articles of incorporation when we made changes. All of these fees are deductible.

Business entertaining

There were a few times during the year when we "burned the midnight oil" with some of our clients to make headway on their marketing campaigns. We called our favorite caterer and had food delivered for the meetings. The total bill adds up to just over $600 and we will be able to claim half of it.

Business travel

I attended a business conference this year with one of my partners where we networked with other business owners. Many of them later became clients. Although it was in another city, it was close enough to drive. We will claim all of our travel expenses, including the car rental, hotel, meals, and even the gratuities we gave to the service people that cared for us.

Software expenses

This year we had to buy about $1,000 in software, including upgrades for our accounting software and software for building databases for client websites. This has to be depreciated over a 3-year period, so we can claim around $333 for 2011.

Education expenses

The conference we attended earlier this year was actually a series of seminars put on by social media experts in our industry. Because they were educational in nature, we will be able to deduct 100% of the conference fees.

It's good to have an idea of what you can claim at the end of the tax year, but always refer to a CPA or tax attorney for the most up-to-date, accurate information.


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