If you're a business owner, tax time is likely causing you quite a headache. Getting all your expenses/receipts in order, knowing what tax breaks you qualify for and what you can deduct... the list goes on. While we're not accountants, we are insurance experts -- so we can help you out with one particular deduction. Namely:
Can I deduct my business insurance?
Yes. Yes you can.
According to IRS.gov, business expenses are the cost of carrying on a trade or business. These expenses are generally deductible if the business operates to make a profit. The IRS specifies that expenses that are "ordinary or necessary" are eligible for deductions:
- Necessary: The expense must be helpful and appropriate for your business.
- Ordinary: The expense is common in your line of work.
Luckily for business owners, most business insurance is deemed as necessary as long as it's used "for the business's trade, business, or profession."
What does this mean? Well, that you can usually deduct the premiums paid for:
- General Liability Insurance
- Professional Liability Insurance
- Commercial Property Insurance
- Business Interruption Insurance
- Cyber Liability Insurance
- Workers' Compensation Insurance
- Commercial Auto Insurance -- you'll have to choose between this deduction and the mileage deduction
Of course, each situation is unique -- and we recommend reviewing everything with your business accountant!
Sources: IRS.gov, Deducting Small Business Expenses | Insureon, Reminder: Small Business Insurance is a Tax Write Off | Zacks, Can I Deduct My Car Insurance on Mu Business Taxes?
Photo credit: Phillip Ingham