5 . Business Entertaining
If you pick up the tab for entertaining present or prospective customers , you may deduct 50 % of the cost if it is either :
� directly related to the business and business is discussed at the event -- for example , a catered meeting at your office ; or � associated with the business , and the entertainment takes place immediately before or after a business discussion .
Make notes . On the receipt or bill , always make a note of the specific business purpose -- for example , " Lunch with Joyce Slater of Ace Manufacturing Co . to discuss widget contract ."
6 . Travel
When you travel for business , you can deduct many expenses , including the cost of plane fare , costs of operating your car , taxis , lodging , meals , shipping business materials , cleaning clothes , telephone calls , faxes , and tips .
What about combining business and pleasure ? It ' s okay , as long as business is the primary purpose of the trip . However , if you take your family along , you can deduct only your own expenses .
7 . Interest
If you use credit to finance business purchases , the interest and carrying charges are fully tax-deductible . The same is true if you take out a personal loan and use the proceeds for your business . Be sure to keep good records demonstrating that the money was used for your business .
8 . New Equipment
Some small businesses can write off the full cost of some assets in the year they buy them , rather than capitalizing them -- deducting their cost over a number of years . Section 179 of the Internal Revenue Code allows you to deduct up to $ 250,000 of the cost of new equipment or other assets in 2009 and 2010 . This is subject to a phase-out if you place more than $ 800,000 of equipment in service in 2009 . Some assets don ' t qualify for this Section 179 deduction , including real estate , inventory bought for resale , and property bought from a close relative . The annual deduction amount is scheduled to go down to $ 25,000 in 2011 .
9 . Moving Expenses
If you move because of your business or job , you may be able to deduct certain moving costs that would otherwise be nondeductible personal living expenses . To qualify , you must have moved in connection with your business ( or job , if you ' re an employee of your own corporation or someone else ' s business ). The new workplace must be at least 50 miles farther from your old home than your old workplace was . ( Technically , moving expenses aren ' t business expenses ; there ' s a special place to list them on your Form 1040 tax return .)
10 . Software
As a general rule , software bought for business use must be depreciated over a 36-month period , but there are some important exceptions :
�
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Computer software placed in service from January 1 , 2003 to December 31 , 2010 is eligible for a Section 179 deduction , which means that 100 % of the cost of software can be deducted in the year purchased . Starting in 2011 , you will no longer be able to use Section 179 to deduct off-the-shelf software . When software comes with a computer , and its cost is not separately stated , it ' s treated as part of the hardware and is depreciated over five years . However , under Section 179 , you can write off a whole computer system ( including bundled software ) in the first year if the total cost is less than a certain amount ($ 250,000 in 2009 ; scheduled to go down to $ 133,000 in 2010 ). See IRS Publication 946 , How to Depreciate Property .
11 . Charitable Contributions
If your business is a partnership , a limited liability company , or an S corporation ( a corporation that has chosen to be taxed like a partnership ), your business can make a charitable contribution and pass the deduction through to you , to claim on your individual tax return . If you own a regular ( C ) corporation , the corporation can deduct the charitable contributions .
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