One of the benefits of running your own small business is that you can write off some of your expenses and deduct them from your total profit. So long as they are legitimate, you don't have to worry about getting audited. Claiming legitimate deductions is expected, and it will help you save money in the long run. Here are some of the small business tax deductions you should know about.

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Startup Expenses

When you're first starting up a small business, you're going to run into a number of expenses. Currently, the Small Business Jobs Act allows you to deduct a total of $10,000 of your startup costs. The startup costs must be directly related to your small business though, and it's not clear whether these costs can be applied to regular upkeep of a home office. In other words, you might not be able to claim a portion of your house utilities as part of your startup costs for your home business. However, you can include equipment, moving expenses, licensing expenses, and other expenses that directly relate to starting your business.

Lifetime Learning Credits

Small business owners have to make sure that they continue to hone their skills. It's part of remaining competitive. In some cases, the best way to do this is to take a formal course. Fortunately, you can claim that as a deduction. Currently, you can claim $2,000 in a year for accredited courses. With a few exceptions, the deduction itself is 20 percent of the total class cost. Online classes can be used, but they must be from an accredited institution.

Reasonable Expenses

The reasonable expenses are one of the best known small business tax deductions, but it's also one that gets people quite nervous, depending on their industry. The important thing is to understand what the IRS looks to when considering whether something is a reasonable expense.

A “reasonable expense” is one that is ordinary and necessary. Ordinary typically means that the expense is something that's common in your business or industry. “Necessary” means that it helps and develops your business in some way. This means that your business deductions might include client lunches and travel expenses related to your business as well as other items you might not have considered. To be on the safe side, document the reasons you are deducting the expenses, particularly if they aren't obvious at first. Also, the IRS only requires that you save receipts for purchases $75 or more. But just to be on the safe side, save all of your receipts.

Small business tax deductions can make it easier for your business to stay in the black. As long as you are honest in your deductions and document how they are appropriate, you should be fine. 

Get started Incorporate Your Business Answer a few questions. We'll take care of the rest.

Get started Incorporate Your Business Answer a few questions. We'll take care of the rest.