Running an auto detailing business can be an extremely profitable venture, and bring a wide variety of customers. But even as a successful business owner, saving money and increasing revenue is the constant journey you’re on day after day.
What if you found out there were different things you could deduct, running a detailing business, that would save you money in the long run? With tax season coming up, do you know what your qualified deductions are? For 2020, more things qualify that didn’t make the list before, and you’re going to want to know what they are. Otherwise, you might be paying for something you didn’t know could be considered a business expense.
Below are five different qualified deductions for running a detailing business in 2020 you may not have been aware of:
- Promotion and Advertising: Whether you’re printing business cards, running a sponsored social media ad campaign, or even launching a new website, all of these are deductible. Simply put, any promotion and advertising connected to your business are necessary to get more customers in our current digital age. Even purchasing ad space online can be considered a deduction.
- Your Car: Chances are, you probably drive the same car for work as you do for normal day-to-day personal reasons. Because of this, you’re able to deduct any expenses you incurred while using your vehicle for business reasons. As of right now, there are two different methods for deducting vehicle expenses [when used for business reasons]. They are:
-Actual Expense Method: This will include the entire cost of operating the car for the year, including any repairs, gas, oil, tires, insurance, registration fees, and lease payments.
-Standard mileage rate: This is simply multiplying the annual miles driven for business reasons by a standard mileage rate. As if January 1st, 2020, the standard mileage rates is 57.5 cents per mile. This is down 0.5 cents from last year, but a deduction is still a deduction, so make sure you’re tallying up your miles. - Employee salaries and job benefits: Believe it or not, your employee’s salary, along with their benefits and vacation time are tax-deductible. As long as it’s an average salary, the services were completed, and the employee isn’t a member of your LLC, partnership, or the sole proprietor, then it’s warranted for a deduction.
- Education and Training: We all know the automotive industry is continually changing, from cars, safety technologies, and even the latest repair procedures. There may be a new technique for detailing that would speed up the process, allowing you to have more customers. Or new tools could come out that have a bit of a learning curb. Each one of these are valid reasons why you and your team might require additional training.
The following are what the IRS considers deductibles when it comes to any required training or education in your business:
–Workshops or classes
–Book or subscriptions to specific publications in your industry
–Seminars (online or in-person)
–Transportation expenses to and from any workshops, seminars, or classes - Rent: Anything you rent can be deducted as a company expense, provided it is considered by the IRS a necessary cost for running a business. This can range from property rental, equipment, utilities, subscription services (like ReconPro), and possibly even rental insurance. However, the rent wouldn’t be considered a deduction if you have or plan to receive any equity in or title to the property.
There you have it, five different things (and many sub-categories) you can deduct during this year’s tax season when running a car detailing business.