If you already have a business or you’re thinking about becoming a self-employed entrepreneur, you’re in great company. According to the Small Business Administration, there are more than 30 million small businesses in the U.S.
By official measures, a small business is a venture that employs fewer than 500 workers. And surprisingly, they make up 99% of all businesses in the U.S. There are only about 20,000 large businesses, which have 500 or more workers.
Interestingly, 85% or 26 million small businesses have no employees. The Census Bureau calls this category “non-employer” businesses, but the nickname that’s stuck for these one-person ventures is “solopreneur.”
As consumers, we rely on these millions of solopreneurs and small businesses for a vast array of goods and services. Additionally, running your own full- or part-time venture comes with many financial advantages.
In this post, I’ll review seven ways that having a small business saves you money. You’ll learn legitimate, money-saving tax deductions that reduce both business and personal expenses. I’ll also cover tax changes that affect small businesses due to the Tax Cuts and Jobs Act of 2017.
7 Tax Deductions for Small Business Owners
- Business expenses.
- Home office expenses.
- Vehicle expenses.
- Insurance expenses.
- Travel and meal expenses.
- Retirement plan contributions.
- Qualified business income deduction.
Here’s more detail about each of these money-saving tax deductions for business owners and solopreneurs.
1. Business expenses
There are a variety of deductions you can claim no matter if you’re a solopreneur with no employees, a part-time freelancer, or the owner of a large corporation. Business tax deductions were created to help entrepreneurs manage the costs of running a profitable company.
To be deductible, the IRS says an expense must be both ordinary and necessary for your trade or business. Some common deductions for small businesses and solopreneurs include:
- Employee salaries and benefits (except when you employ yourself)
- Labor paid to independent contractors or freelancers (when payments exceed $600 per year, you’re required to issue Form…