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What Rideshare Owners Need to Know About Taxes

Looking to maximize your tax deductions? Now is the perfect time to plan. We know many business owners cringe at the thought of tax season. However, planning early and being knowledgeable about the deductions that are available to your business can make this process a lot less daunting. So, what business related expenses are deductible?Car-Related ExpensesOne of your most substantial deduction sources will be your vehicles. You have to choose between two methods of deductions for car-related expenses: the actual cost method or the standard mileage method.With the actual cost method, you keep track of every cost related to your car, which includes gasoline, insurance, maintenance, depreciation, lease payments and more. You’ll also have to track depreciation, which is calculated by cost, number of years, weight, and vehicle type.If choosing this method, make sure to take advantage of technology tools designed to reduce expenses like car insurance rates and driver and vehicle management software. If you purchased a vehicle for commercial use, you can deduct 100% of the cost during the year of the purchase up to $2,000,000, or deduct a portion of the expense overtime through depreciation.The standard mileage rate method lumps common expenses together for which you deduct a single rate per mile. You track your business mileage and then multiple the total number by the rate set by the IRS for that tax year.For example, the rate for 2017 was $0.535 per mile which includes: gasoline, lease payments, insurance, maintenance and repairs, vehicle registration, and depreciation. Since this rate includes all of the expenses, you cannot separately deduct them.This is the simpler method, however, compare your deductions using both methods to determine which gives you the best tax results.In addition to both of these methods, you can expense tolls, parking costs, and garage rents related to your business.Deductible Business ExpensesEmployee’s Salary – You can generally deduct pay you give to your employees for the services they perform for your business, this is true whether paid in cash, property, or services.Health Insurance - The deductible on health insurance is 100%, as long as it doesn’t exceed your business’ net profit.Marketing Expense - Although subject to certain limitations, the expenses that you incur in promoting your business, like formal advertising and entertaining a client or customer, are deductible.Research and Development - Research and development costs are costs you incur in the business to learn information about the development or improvement of a product. Products can include: formulas, inventions, patents, process, techniques, and similar property. If you’re looking to upgrade for the upcoming year, we certainly recommend investing in cloud-based platforms and automations systems.Office Supplies - All office supplies used in a trade or business are deductible as an operating expense. This includes items like computers, fax machines, scanners, and a business-related phones services and data plans. Furniture, machinery, and signage is deductible under Section 179. If these costs are adding up, implement optimization strategies throughout the year for even more back house savings.Software - Off-the-shelf software readily available to the public with a non-exclusive license is qualifying property to be expensed under Section 179.Retirement - You can deduct the contribution you make to you or your employee’s retirement. You can even take a deduction in the current year even if you don’t put the money into the plan until the following year.Hang on to those receipts! Every dollar not paid in taxes is an extra dollar that can go directly to you as profits. Be sure to work with a good tax attorney and check out your local state tax laws so you can get all the deductions and credits that may be available for your business.Interested in more money-saving methods for your business? Contact Dashride today!

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