5 Tax Deductions For LLCs, Part One

February 5, 2021

If your limited liability corporation, or LLC, made a profit this year, there’s a number of tax deductions you’re entitled to. Learn about some of the major deductions your Encino tax consultants want you to know about before tackling your taxes this April. 

Startup Costs

Since making money requires spending money, you can deduct all startup costs related to your LLC. Deduct market analyses and legal services, marketing expenses, money spent on training team members, and anything else that applies. For example, if you remodeled a commercial space to create an office or store for your LLC, you can add the expenses to your startup cost deductions. 

Cost of Goods Sold

Perhaps your business sells products instead of providing services. All tangible good expenses count towards tax deductions, including product manufacturing if it applies. Other expenses include buying, marketing, storing, and shipping your wares. If you keep products in a warehouse for several months prior to distribution, for example, all costs provide deduction opportunities. 

Home Office or Rented Space 

The IRS offers a tool for calculating home office square footage and deducting it from tax payments, so keep that in mind if you work out of your house or did for most of the tax year. If you rented a space at the beginning of the tax year or any time thereafter, it counts towards deductions if it is exclusively business-related. 

Independent Contractor Payments

What you pay independent contractors such as freelance writers and designers provides deduction opportunities during tax season. Anyone who is not directly employed by your company, including accountants and lawyers, becomes a deduction in the eyes of the IRS. Keep track of every fee paid to these individuals to avoid paying more in taxes than necessary. 

Transportation Costs

Whether your business provides delivery services or transports goods for any other reason, you can deduct related expenses. Typical transportation cost deductions include gas and tolls, maintenance and repairs, and driver fees. Alternatively, you can use the standard gas mileage rate to avoid paying unnecessarily. 

Discuss these and other LLC deductions with the Los Angeles accounting experts at Wallace & Associates. The LA accountant service in Los Angeles provides tax preparation help among many other business services.