Tax Deductions For Business Expenses

Build it, Deduct it!   On July 4th, the U.S. passed OBBBA, a sweeping tax reform package that delivers a windfall for companies who invest in innovation and infrastructure. It’s simple: more R&D + more CapEx = more free cash flow. Here’s why:   OBBBA reinstates 100% immediate expensing for U.S.-based R&D. No more amortizing over 5 years. If you’re building the next breakthrough in AI or life sciences, your tax deduction is instant. That means lower taxes this year, not in 2029. On the CapEx side, OBBBA brings back full bonus depreciation for qualified property, including everything from machinery, data center infrastructure, chip fabs, and corporate jets.   Buy it. Build it. Deduct it.   This bill serves to accelerate free cash flow, which will be a powerful tailwind for growth-oriented companies that reinvest heavily in their businesses. Companies that rely on R&D for product development (technology, biotech), building critical infrastructure (semis, energy, manufacturing, commercial property), or deploy heavy equipment (railroads, ship builders, farm equipment) benefit from this full write-off in year 1. For many companies this will result in a spike in free cash flow which should help drive valuations.   OBBBA also includes retroactive "catch-up" deductions for previously capitalized R&D from 2022–2024, which is a gift as refund checks for companies that have been carrying deferred tax assets is off-set this tax year. This policy rewards domestic innovation and encourages onshoring for strategic industries.   Asset Based Lending will also benefit since hard assets valuations will experience a step-function higher and U.S. taxpayers will see this flow through on their K-1s. At Marathon Asset Management, we are witnessing firsthand the demand to finance many of these hard mission-critical assets. 

Every small business owner should do this!! If you’re a small business owner and only think about taxes in March, you’re already losing money. High GST rates and fluctuating input costs mean that the way you plan your taxes can directly impact how much capital you keep and reinvest. Here are 5 things small business owners should focus on: → Your structure determines your tax liability. Like, LLPs are taxed at 30%, while Pvt Ltds pay 25% if turnover is under ₹400 crore. A proprietorship or partnership firm can be more efficient if cash flow is lean and compliance needs are low. → Section 32 allows depreciation deductions on assets like laptops, machinery, office furniture and even vehicles used for business. If you plan to upgrade equipment, time the purchase strategically before the financial year to get maximum depreciation. → Contributions to the National Pension Scheme under Sec 80CCD(1B) offer an additional ₹50,000 tax deduction beyond the ₹1.5 lakh under Sec 80C. If you run a Pvt Ltd or LLP and draw salary, you can set up EPF for yourself and employees. → Use tools like Zoho Books, QuickBooks India, Vyapar, or even Excel sheets with discipline. Most small businesses lose deductions not because they weren’t eligible, but because they had no records. Indian tax laws reward those who plan. In a small business, what you save is as powerful as what you earn. Which of these habits do you already have? #habits #moneymanagement #smallbusiness #tools

Why wait years to write off equipment when you can expense millions today? If you’re running a business, cash flow is everything. Waiting years to write off equipment or software isn’t just frustrating, it slows growth. That’s why Section 179 has always been powerful. What Changed in 2025: Section 179 expensing limit is now $𝟮.𝟱 𝗺𝗶𝗹𝗹𝗶𝗼𝗻 𝗽𝗲𝗿 𝘆𝗲𝗮𝗿, the highest ever. That means small and midsize businesses can immediately deduct the cost of new equipment, office tech, vehicles (that qualify), and even software. Why It Matters: 1. 𝗙𝗿𝗼𝗻𝘁-𝗹𝗼𝗮𝗱 𝘀𝗮𝘃𝗶𝗻𝗴𝘀 If your income is strong this year or rates are expected to rise, taking the full deduction now maximizes your tax break. 2. 𝗕𝗼𝗼𝘀𝘁 𝗰𝗮𝘀𝗵 𝗳𝗹𝗼𝘄 Immediate expensing frees up working capital you can reinvest into hiring, scaling, or new technology. 3. 𝗦𝗺𝗮𝗹𝗹 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗮𝗱𝘃𝗮𝗻𝘁𝗮𝗴𝗲 The higher cap is especially valuable for businesses that need large equipment upgrades but couldn’t fully expense them before. 4. 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗺𝗶𝘅 You can combine Section 179 with bonus depreciation (also permanent under the OBBBA) for even more powerful tax planning.     Key Things to Remember: • The property must be placed in service this year, not just purchased. • Section 179 cannot exceed taxable business income (excess carries forward). • States don’t always follow federal rules, so check your state conformity. • If you stop using the property mostly for business, some deduction may be recaptured.    📌 Before making major purchases, coordinate with your CPA to maximize the deduction and avoid surprises.

Powerful strategy for solopreneurs: - Start an LLC - Grow and Become an S Corporation: This can provide significant tax advantages by allowing you to split your income between salary and distributions, potentially reducing your overall tax liability. But make sure to optimize the qualified business income deduction - Pay Yourself a Reasonable Salary: As an S Corp owner, pay yourself a reasonable salary that reflects the market rate for your role. This salary is subject to payroll taxes, but any additional profits can be taken as distributions, which are not subject to self-employment tax. - Add a Solo 401(k) and Max It Out: Establish a Solo 401(k) plan to take advantage of tax-deferred retirement savings. As both the employer and employee, you can contribute up to the maximum allowable limit, significantly boosting your retirement savings while reducing your taxable income. But make sure your salary is not too low, it will impact what can go in here - Employ Your Spouse: If your spouse can perform meaningful work for your business, employ them and pay a fair salary. - Max Out Solo 401(k) for Spouse: By employing your spouse, you can also contribute to their Solo 401(k) plan, further increasing your family's retirement savings and reducing your taxable income - Backdoor Roth IRA for Each: Utilize the backdoor Roth IRA strategy for both you and your spouse. This involves making non-deductible contributions to a traditional IRA and then converting those funds to a Roth IRA, allowing for tax-free growth and withdrawals in retirement - Maximize Qualified Business Income Deduction (QBID): Take full advantage of the Qualified Business Income Deduction (QBID), which allows eligible S Corp owners to deduct up to 20% of their qualified business income (or lesser of that and 50% of w2 wages). This can significantly reduce your taxable income and increase your overall tax savings. - If salary is too low to max solo 401(k), then do mega backdoor Roth 401(K) to the $69,000 limit Implementing these strategies can help solopreneurs optimize their financial planning, reduce tax liabilities, and build substantial retirement savings

Every year, thousands of business owners underestimate their tax liability. HMRC collects over £13 billion annually from small business tax errors. The reason → Misunderstanding dividends, expenses, and the “hidden” costs of drawing from your business. Here’s what happened to my new client 👇 He was drawing £3,000 a month from his Limited Company: - £1,040 as salary (tax-free thanks to his Personal Allowance). - £1,960 as dividends (expecting to pay just 8.75% tax). It seemed like a solid setup to minimise tax. In reality, my client was also using the company account for Range Rover payments, personal meals, and Amazon splurges. His accountant had to reclassify £24,000 of these expenses as dividends, leaving him with - £12,500 salary. - £47,500 dividends (£23,500 + £24,000 reclassified). - £13,485 tax bill (£8,985 due immediately + £4,500 payment on account). Dividends aren’t a free-for-all, and not all expenses are “business expenses.” If you’re pulling money from your business, make sure: 1. You know what’s taxable and what’s not. 2. Your salary and dividends are structured properly. 3. Expenses align with HMRC rules to avoid reclassification. Tax planning isn’t just about saving, it’s about avoiding nasty surprises. Think you might have a similar situation brewing? Drop me a message.

Most business owners overpay taxes—not because they have to, but because they don’t know better. Every year, I see entrepreneurs losing lakhs simply because they aren’t aware of tax strategies designed to help them save. The best part? These strategies are 100% legal and used by the smartest business owners to optimize their tax outflows. If you’re a business owner, read this carefully—it could save you serious money. 1. Choose the Right Business Structure Your legal entity matters more than you think. Sole proprietorship, partnership, LLP, or a private limited company—each has its own tax benefits and drawbacks. The right structure can reduce your tax liability significantly. A sole proprietor might pay taxes at individual slab rates, while an LLP or Pvt Ltd company may offer better tax efficiency depending on revenue, compliance costs, and future growth plans. The key? Get expert advice and choose wisely. 2. Claim Every Business Expense Possible One of the biggest mistakes small business owners make is not claiming all eligible deductions. If it’s a business-related expense, it’s tax-deductible. Office rent, utilities, internet, software, employee salaries, marketing expenses, travel costs for work, depreciation on equipment—the list is long. Keep proper records and claim everything you legally can. You’ll be surprised how much this one habit can save you in taxes. 3. Don’t Ignore GST Input Credit If you’re paying GST, you must claim input tax credit on business-related expenses. This reduces your net GST payable and can save lakhs every year. Many businesses either don’t know about this or don’t track their eligible credits properly. If you're paying GST on rent, advertising, professional fees, or software—get that credit back. 4. Use Presumptive Taxation for Simplicity & Savings For businesses with revenue up to ₹3 crore and professionals earning up to ₹75 lakh, the government allows presumptive taxation—a fixed profit percentage of revenue is taxed instead of maintaining detailed accounts. Businesses: Tax is calculated on just 6% of total revenue (if digital payments) or 8% (if cash-based). Professionals: You can declare 50% of revenue as profit and pay tax only on that amount. No detailed books, no audits—just tax savings and peace of mind. The truth is, tax planning is not just for big corporations—it’s for every business owner who wants to keep more of what they earn. In life, only two things are constant—death and taxes. We can’t avoid the first one, but we can definitely optimize the second. If this helped you, share it with a fellow entrepreneur who needs to stop overpaying taxes. Let’s build wealth the smart way. #taxsavings #businessgrowth #entrepreneurship #smallbusinessowner #taxplanning #financialfreedom #gst #incometax #wealthbuilding #taxstrategies #moneytips #businessowner #startupindia #ca #taxconsultant #savemoney #investmenttips #financialliteracy #finance101 #legaltaxhacks

Washington just dropped a legislative bombshell on the real estate world — and it’s packed with opportunity for those who know how to act fast. The One Big Beautiful Bill Act, signed into law on July 4, 2025, isn’t just a tweak to the tax code — it’s a complete reshaping of how investors structure deals, time acquisitions, and unlock tax advantages. Here’s what stands out: ✅ 100% Bonus Depreciation is Back — Qualifying property placed in service after Jan. 19, 2025 can be written off in year one. With the right cost segregation, that could mean millions in deductions on a single deal. ✅ Section 179 Expensing Expanded — Up to $2.5M of certain property improvements can be deducted immediately. Perfect for projects under $5M that need big upgrades without slow depreciation schedules. ✅ Green Incentives on a Countdown — Energy-efficient building deductions (179D) and residential credits (45L) phase out after June 30, 2026. If sustainability is part of your plan, the clock is ticking. ✅ 1031 Exchanges Stay Alive — Pairing exchanges with bonus depreciation just became a tax-efficiency powerhouse. ✅ New Opportunity Zones Coming in 2027 — Fresh designations mean new chances to align with growth markets early. This law is live now — and some of its best incentives are already on the clock. The investors who adjust fastest will capture the biggest benefits. At CPI Capital, we’re already mapping how these changes influence underwriting, project feasibility, and long-term returns. If you’re planning acquisitions, developments, or value-add projects in the next 24 months, now is the time to align your tax strategy with the new rules. #cpicapital #realestateinvesting #taxstrategy #wealthbuilding #obbba2025

"Cheap" bookkeeping almost cost my client $91,760! I took over the accounting for a client in November 2023 and have been combing through their accounts throughout the whole year to ensure everything is properly categorized since I am preparing their taxes. I found a $42,000 deposit into their bank account and a $42,000 recognition of income back in February of 2023. The problem with this transaction was that it was not income, but an advance from their business credit line. You would think this would have been caught when they reconciled the business credit line, however the previous bookkeeper just made a plug entry to "owner's pay and personal expenses" as if they just distributed out the money. This wasn't the only error either, they had "auto-add" with rules for certain vendors/customers that incorrectly recognized business expenses as personal expenses to the tune of over $248,000. All of these errors would have resulted in over $91,760 in extra taxes paid since they are in the top tax bracket! I know bookkeeping or accounting isn't very sexy, but it is the foundation of tax planning and preparation AND it could save you thousands of dollars! Find a good accountant and Tax Advisor and KNOW YOUR NUMBERS!

Understanding the Pass-Through Entity Tax (PTET) ●Why PTET exists? The 2017 Tax Cuts and Jobs Act (TCJA) limited the federal deduction for state and local taxes (SALT) on individual tax returns to $10,000. This cap affects business owners with pass-through income in high-tax states, as they can’t deduct the full amount of state taxes on their federal return. PTET helps to bypass this cap by allowing the pass-through entity itself to pay the state taxes—which is then deductible at the federal level, effectively reducing federal taxable income for the owners. ● How PTET Works? Under PTET, the pass-through entity pays state tax on the income before it passes to the individual owners or partners. Then, the individual owners or partners: 1. Report the pass-through income from the entity (partnership or S-corp) on their personal tax returns. 2.Claim a credit on their state tax return for the tax the entity paid. This setup can reduce federal taxable income because the business can deduct the state taxes it paid, which reduces the pass-through income reported on the individual’s federal return. ● Example of PTET in Action Scenario: - Imagine a partnership in New York with two partners, Alex and Sam. - The partnership generates $500,000 in income, and New York’s PTET rate is 10%. Steps and Tax Effects: 1. Partnership Pays State Tax: The partnership pays $50,000 (10% of $500,000) in New York PTET. 2. Deduction on Federal Return: The $50,000 PTET payment reduces the partnership’s reported income to $450,000 for federal tax purposes, which is split between Alex and Sam. 3. Pass-Through to Partners: - Alex and Sam each report $225,000 ($450,000 / 2) as income on their federal tax returns, instead of $250,000 each, because the PTET reduced the partnership’s taxable income. - This reduced federal income results in lower federal income tax for Alex and Sam. 4. Credit on State Return: Alex and Sam each receive a PTET credit on their New York state return, offsetting the state tax on their pass-through income. ●Key Benefits of PTET - Federal Tax Savings: The deduction on the federal return reduces taxable income, providing federal tax savings. - Bypassing the SALT Cap: PTET effectively allows full deduction of state taxes for pass-through entity owners, bypassing the $10,000 SALT limit for individuals. ● Potential Considerations - PTET isn’t mandatory, so entities must elect to pay PTET if their state allows it. - Rules and rates vary by state, so it's important to consult state-specific regulations. In short, PTET is a strategy to help pass-through entities reduce the federal tax burden on their owners by shifting state tax payments from personal to entity level, resulting in more favorable federal tax treatment. #taxstrategy #PTET #accounting #taxes #passThroughEntities #business

Stop Throwing Costs Into "Operating Expenses" Without Thinking!  Not all operating expenses are what they seem.  If I asked you, "What are examples of operating expenses?" You'd probably say "Salaries, Transport, Insurance, Legal Fees etc" But forget what the textbooks say. Some costs 𝘭𝘰𝘰𝘬 like operating expenses but they are not.  Here are some scenarios where your traditional "operating expenses" might not be what you think: 1️⃣ 𝗖𝗮𝗽𝗶𝘁𝗮𝗹𝗶𝘇𝗮𝘁𝗶𝗼𝗻   If an expense 𝗽𝗿𝗲𝗽𝗮𝗿𝗲𝘀 𝗮𝗻 𝗮𝘀𝘀𝗲𝘁 𝗳𝗼𝗿 𝘂𝘀𝗲, it’s not an expense—it’s part of the asset’s value.   ✅ Example: The 𝘁𝗿𝗮𝗻𝘀𝗽𝗼𝗿𝘁 𝗰𝗼𝘀𝘁 for a new machine is part of its cost, not an operating expense.  2️⃣ 𝗠𝗮𝗶𝗻𝘁𝗲𝗻𝗮𝗻𝗰𝗲 𝘃𝘀. 𝗨𝗽𝗴𝗿𝗮𝗱𝗲𝘀   Routine maintenance = Operating expense. 𝗖𝗮𝗽𝗶𝘁𝗮𝗹𝗶𝘇𝗲 significant upgrades that increase an asset’s value. ✅ Example: Reinforcing the factory to handle heavier machinery load = Capitalization. 3️⃣ 𝗣𝗣𝗘 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗪𝗼𝗿𝗸 𝗶𝗻 𝗣𝗿𝗼𝗴𝗿𝗲𝘀𝘀 Labour and expenses during an asset's construction 𝗯𝗲𝗹𝗼𝗻𝗴 𝘁𝗼 𝘁𝗵𝗲 𝗮𝘀𝘀𝗲𝘁’𝘀 𝗰𝗼𝘀𝘁.   ✅ Example: Labour costs for building a new production line = CWIP, not an expense. 4️⃣ 𝗜𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆 𝗖𝗼𝘀𝘁𝘀   Your inventory value should include all costs to bring it to its current location and condition.   ✅ Example: Import duties for raw materials are part of inventory cost. 5️⃣ 𝗗𝗶𝗿𝗲𝗰𝘁 𝗖𝗼𝘀𝘁𝘀 𝗼𝗳 𝗦𝗮𝗹𝗲𝘀   If a cost directly drives revenue, classify it as a direct cost of sales.   ✅ Example: Delivery fees for shipping products to customers = Direct Cost of Sales, not OPEX. 6️⃣ 𝗗𝗲𝗯𝘁-𝗥𝗲𝗹𝗮𝘁𝗲𝗱 𝗖𝗼𝘀𝘁𝘀   Not all loan costs hit your expenses immediately.   ✅ Example: Legal fees for securing a business loan = Deducted from the loan, not an expense. Next time you record an expense, pause and consider its true nature. Ask, "Is this a general expense, or is it directly contributing to an asset or revenue generation?" Look beyond the conventional list of operating expenses. Evaluate the nature and purpose of each expense to ensure accurate recognition. Take a second look at how you classify expenses.   A small shift in mindset = a big improvement in your financial strategy.  #myCFOng 💬 𝗔𝗿𝗲 𝘆𝗼𝘂 𝗰𝗹𝗮𝘀𝘀𝗶𝗳𝘆𝗶𝗻𝗴 𝘆𝗼𝘂𝗿 𝗲𝘅𝗽𝗲𝗻𝘀𝗲𝘀 𝗰𝗼𝗿𝗿𝗲𝗰𝘁𝗹𝘆?   🔄 𝗧𝗮𝗴 𝘀𝗼𝗺𝗲𝗼𝗻𝗲 𝘄𝗵𝗼 𝗻𝗲𝗲𝗱𝘀 𝘁𝗼 𝗿𝗲𝘁𝗵𝗶𝗻𝗸 𝘁𝗵𝗲𝗶𝗿 𝗲𝘅𝗽𝗲𝗻𝘀𝗲𝘀!