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Tax tips for small business and franchise owners

Tax season is upon us, and we’re here to provide some support. If you’re a small business or franchise owner, take advantage of these valuable tax tips that could help save time and money you can invest back into your business.

Know your tax deductions

Who wants to pay more taxes than they have to? Reduce your tax bill by claiming all the deductions available to you. Here are a few that may give you a break: 

  • Business travel, such as airfare, tolls, parking, hotels, taxis and mileage, which had a standard rate of 58 cents per mile in 20191
  • Fees for professional services, including accounts-receivable factoring, accountants and attorneys 
  • Home office, if used exclusively for business and as the principal place of your business2

Don’t forget about the Section 179 tax deduction

Did you use CIT’s equipment financing to purchase new or used equipment? The IRS Section 179 tax deduction lets you deduct the cost of certain assets as expenses during the year in which they were placed in service. Do you qualify? You do if the assets were:

  • New to you and put in service for the tax year in which you’re claiming them
  • Tangible personal property and qualified real property
  • Placed in service by Dec. 31 of the tax year

Want to learn more about how the Section 179 tax deduction works? Check out our Section 179 series for all the details of this tax-saving benefit for small businesses.

Recoup your franchise fee over 15 years

Are you a new franchise owner? According to the IRS, franchise fees fall under “Section 197 Intangibles”3 and are not tax deductible. However, since the IRS requires you to amortize the franchise fee over 15 years, you can recoup the fee through a depreciation tax deduction every year during that time period.

Undergo a cost segregation study

Did you make significant renovations to your franchise or other small business? Think about undergoing a cost segregation study. It can accelerate the depreciation of your assets and result in big tax benefits.4

Use a working capital loan to pay taxes

Keep your cash flow steady by applying for a working capital loan to pay your taxes. You can also use the funds to cover other expenses related to your small business, quick-service restaurant or franchise.

Hire a pro

Concerned about tax season stress? Hire a tax expert. IRS-regulated financial professionals such as certified public accountants and tax attorneys know the latest tax regulations. They can help you maximize deductions and avoid issues. A pro will provide expert advice, pull the records you need and give you peace of mind.

The best way to manage your taxes is to plan for them throughout the year. If accounts-receivable factoring or a small business loan could make your life a little easier at tax time, we’re here to help.

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