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A tax deduction reduces taxable income by allowing eligible business expenses to be written off, lowering overall tax liability and freeing up funds for business reinvestment or growth.
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Common deductions include home office costs, marketing, travel, professional services, office supplies, and equipment, provided they are deemed “ordinary” and “necessary” by tax authorities.
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Home office deductions require exclusive and regular use of a workspace used primarily for business activities, with clear documentation to prove eligibility.
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Travel-related deductions apply to business trips that require you to be away from your usual work location for more than a workday, including transport, lodging, and meals.
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Vehicle expenses used for business purposes can be deducted using either mileage tracking or actual cost calculations, including fuel, maintenance, and insurance.
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Internet, phone, and software subscriptions are deductible only for the percentage of use tied directly to business operations, requiring accurate usage records.
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Employee wages, benefits, insurance premiums, and rent for business premises are fully deductible if they are directly tied to your operational needs.
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Asset depreciation allows you to gradually write off the cost of long-term business assets like furniture, machinery, and equipment over their useful life.
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Personal deductions like child care, charitable donations, and retirement contributions may apply if structured to support the business owner’s work or income generation.
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Maximize deductions by keeping meticulous records, staying current with local tax laws, consulting tax professionals, and using tools like Xero, FileCenter, and Resource Guru.
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