Did you know you can lower the business taxes you have to pay?
Did you know you can lower the business taxes you have to pay?
There are some legitimate ways to do it, which we will list in our tips.
The majority of those methods involve deducting your business expenses from your actual income, so that the taxable amount will be lower during the filing.
Now let's jump on the list and start saving on taxes like a pro.
1. Deduct Business Use of Equipment – Rental owners can claim the cost of renting or owning the equipment used in their business. However, ensure that the equipment is only used for business purposes, not for personal use.
2. Write Off Repairs and Maintenance – Owning equipment? That is great! But it does not mean you are free from expenses. They need to be maintained and repaired on a timely basis. You can deduct those expenses from your income.
3. Deduct Supplies and Consumables – Fuel, lubricants, safety gear, and tools can be written off as necessary business expenses. Yes, you can write off the supply of coffee if it is intended for business use.
4. Utilities and Internet – If your business has a physical location, deduct utilities and business internet costs. Monthly utility bills can add up and eat up a chunk of your profit. So, include them in your expenses list to reduce your tax bill.
5. Office Supplies – Paper, ink, pens, and similar business-related supplies are deductible. Those are just a few of many supplies. Whatever supplies you use for your business, keep their receipts in the file to present them during the tax filing.
6. Deduct rental storage and facilities – Leasing space to store equipment is a deductible business expense. Storage rentals are going up. Why not include them in your expenses list?
7. Home Office Deduction – If you manage operations from home, you may deduct part of your rent/mortgage, utilities, and internet.
8. Property Insurance Premiums – Deduct the cost of insurance on business property or storage units.
9. Property Taxes – If you own a commercial facility, business-related property taxes are deductible. Unfortunately, this deduction may be at risk as lawmakers are considering eliminating it. Till then, you can take full advantage of this deduction method.
10. Depreciate Equipment Over Time – Use MACRS (Modified Accelerated Cost Recovery System) to depreciate heavy machinery and tools. The system enables businesses to recover the cost of depreciable assets over a specified period through annual deductions.
11. Take Section 179 Deductions – Deduct the full purchase price of qualifying equipment in the year it's placed in service (subject to limits). For instance, if you purchase a heavy-duty pickup truck for your business, you can retain its value with the reduction in tax burden.
12. Bonus Depreciation – Currently allows for immediate expensing of qualifying new and used equipment (phasing out after 2026). It is similar to Section 179 because both are immediate expense deductions. However, bonus depreciation allows taxpayers to deduct a percentage of an asset’s cost upfront. In contrast, Section 179 allows taxpayers to deduct a set dollar amount.
13. Track Salvage and Trade-In Value – Keep records of trade-ins or disposals to report correctly on taxes.
14. Capitalize Long-Term Improvements – Upgrades to equipment that enhance its value or lifespan must be capitalized and depreciated over time.
15. Deduct Employee Wages – Salaries paid to full- or part-time employees are tax-deductible. You can include their commissions, bonuses, and paid time off that you give to your employees. To qualify for this deduction, the payments must be ordinary and necessary for your business, paid or incurred in the tax year, and reasonable for services performed.
16. Payroll Taxes Are Deductible – Employer-paid portions of Social Security, Medicare, and unemployment taxes are deductible.
17. Independent Contractors – Payments to contractors (e.g., drivers, repair techs) can be deducted, but you must file 1099-NEC forms.
18. Training and Certifications – Costs for staff education, licensing, or safety training are deductible. This should motivate you to train your staff to serve the clients professionally.
19. Mileage Deduction – Track mileage for business-related trips (equipment delivery, job site visits, etc.). Ensure you keep a mileage log to accurately report the qualified hours to the tax office. Mileages put on while personal use do not qualify for the deduction.
20. Deduct Fuel and Vehicle Maintenance – Expenses for trucks, trailers, and transport vehicles can be claimed. If you deliver your rental equipment, you will have hefty expenses for fuel and vehicle maintenance. Keep the receipts for all vehicle-related expenses and file them to claim a tax deduction.
21. Deduct Business Insurance Premiums – Liability, property, and equipment insurance are fully deductible. For example, the IRS considers them ordinary and necessary business expenses. However, the insurance premiums qualify for deductions if they are directly related to your business.
22. Professional Fees – Accountant, bookkeeper, attorney, or consultant costs are deductible. Those professionals are necessary for your business, but the good news is that you can recover a portion of those fees in the form of tax deductions.
23. Legal Settlements – Certain legal fees and settlements related to business may be deductible (consult a CPA). It means that hiring attorneys, defending lawsuits, settling claims, and paying damages are tax-deductible, as these expenses have a significant impact on the business's income.
24. Advertising and Marketing – Business cards, website hosting, SEO, social media ads, and print advertising are all deductible. Because you spend the marketing dollars to boost your revenues, which in turn, chips away at your income.
25. Software Subscriptions – Rental management platforms, bookkeeping tools, and scheduling software count as business expenses. By the way, if you need reliable rental software for your equipment rental business, consider Reservety. It has everything your business needs, from rental website design to order and inventory management, and marketing.
26. Phone and Communication Costs – Deduct business-related cell phone usage or landlines. If you provide your employees with cellphones and work numbers, this will make a significant impact on your taxes.
27. Make Estimated Quarterly Tax Payments – Avoid penalties by paying taxes quarterly if you expect to owe $1,000+ annually. Plus, paying taxes quarterly can help your business stay on top of things and avoid hassles during the busy tax season.
28. Hire a Tax Professional – A CPA or enrolled agent can help optimize deductions, avoid audits, and plan strategically for your financial future. If you are experienced, there is nothing wrong with doing your taxes. But the tax code can be complicated, and making mistakes can be very costly.
Those were the 28 tips to give you the general information on how to save and stay compliant with taxes.
You may also consider using rental software like Reservety, as it helps you generate real-time reports, track income and expenses, and integrate your rental operations with external bookkeeping platforms such as QuickBooks and Xero. All of these will be essential for your tax filing.
Reservety handles your website, bookings, inventory, and payments — so you can focus on growing your business.