11 Tax Deductions Most Pharmacy Business Owners Should Tap Into
As a pharmacy owner, the tax law is filled with breaks to help you lower your taxable income and put more money into your pocket at the end of the year. After all, it’s not really about how much you make; it’s how much you keep that matters.
The concept is simple, the more you understand the tax rules, the more tax deductions you can legitimately take, the lower your taxable income will be. The tax breaks not only add to your bottom line, but tax codes can also occasionally have a personal benefit. For example, a combination business trip and vacation. It all depends on paying careful attention to IRS rules on just what is — and isn’t — tax deductible.
11 Tax Deductions Most Pharmacy Owners Should Tap Into
Be sure to check out number 10; it’s our favorite. However, it’s important to know we do not claim to be tax experts, please consult with your accountant or tax adviser for complete information.
- Your Home Office – Do you often bring work home? If you have a dedicated workspace, you may be eligible. You don’t need a full room to take advantage of this benefit. If your home office is just part of a room; measure your work area and divide by your home’s square footage. The percentage represents how much of the home-related business expenses that you can claim.
- Office supplies – Even if you decide not to take the home-office deduction, you can still deduct the business supplies you buy. Don’t forget to keep the receipts for these expenses to offset your taxable business income.
- Computer Systems, Robots, and Other Equipment – Items such as computers, copiers, fax machines, and scanners also are tax deductible.
- Subscriptions – Do you subscribe to industry-related magazines? You can take the total costs as a full deduction in the year spent.
- Mileage – If your pharmacy delivers or you drive often for other work-related reasons, you’re eligible to receive some of your money back. Keep a record of dates, mileage, tolls, parking costs and the purpose of your trip.
- Travel, meals, entertainment and gifts – Good news, small-business travelers, the cost of business travel is tax-deductible. The cost of travel be it air, rail, or auto, is 100 percent deductible.
- Telephone charges – You can deduct the cost of the business calls that you make for business from home. When your bill comes in, circle the business-related calls, total them up and keep a copy for when you file as a reference.
- Expenses to start up or expand your business – The biggest mistake in deducting expenses to start up or expand your business is failing to make an election to amortize or deduct these expenses in the first year. A paper election is required to be attached to the return, stating your intention to amortize them. Otherwise, the expenses become nondeductible until you sell or liquidate the business.
- Charitable Donations – Save all your receipts, and don’t forget to keep track of contributions of inventory or property.
- OUR FAVORITE: Continuing Education – The tax law is filled with breaks to help small business owners pay for business education events such as the PDS Super-Conference. After all, the smarter and better trained a business owner is, the more likely she will make more money and benefit the entire economic system.
- New tax benefits for 2018 – There are new tax rules for 2018. Some old favorites such as the manufacturing credit are gone and instead new benefits such as possibly expensing your inventory are now in play. This benefit alone is worth tens of thousands of saved tax dollars to most owners! It is vitally important you speak with a tax advisor that is schooled in how pharmacy owners can take maximum advantage of the new tax code.
The window of opportunity for reducing your 2018 taxable income is about to slam shut. While most of your tax deductions are already set in stone, attending PDS 2019 allows you to reduce your taxable income while simultaneously learning the numerous ways the new tax code will benefit pharmacy owners.