How to Write off a business loan
There are healthy ways to take on debt. If you use the funding to take on new Jobs & Projects to grow your business is one way. The 2nd is if you minimize your expenses by understanding how much you can write off.
Most of the clients I serve are in the construction industry, so this article may seem focused on Contractors, however this really does apply to any small business owner.
Interest on Loans
Many times, I hear business owners saying they don’t like to pay interest. I get that… who would?? But you can write off all interest you pay on loans for your business so expect a big tax write off. Technically you cannot deduct payments on the principal, but if you keep good records and use the funding for your business there are many more ways to increase your savings. Below are just a few of the bigger write offs for a contractor.
.Employee Wages and Contract Labor
All the wages you pay to employees are fully deductible. Also, if you hire temporary workers as independent contractors, you can write this off as an expense. Keep all of your agreements and invoices from the temporary employment agencies you use. This will support your claim for the deduction if the IRS questions it.
Car, Truck, Vehicle and Equipment Expenses
Any machinery you purchase for your business is tax-deductible. You can also deduct rental and lease expenses for machinery. If you do not use your car exclusively for business, you can deduct the percentage of expenses that matches the percentage of time you use the car.
In construction, you’ll likely need to make large purchases in terms of equipment and materials. Even if these purchases sustain your operations for years, it’s understandable that they begin to lose value the more that they’re in use. This lost value is known as depreciation, and it can be included in your construction company deductions.
Claiming depreciation can be an important benefit for industries that use large pieces of equipment or property, such as construction, farming, and real estate management. For more information on how this process works, you can explore Section 179 from the IRS.
Advertising and Promotion Expenses
You can deduct all advertising expenses from your business taxes. This includes costs for printing materials, ad design, radio and television spots and Internet ads. Keep track of all your advertising expenses throughout the year and deduct them at the end of the year.