There are numerous reasons to consider becoming an entrepreneur. In today’s uncertain economy, this may be one of the best career paths; because it gives you control over your job and ensures you cannot be “downsized”. Another major advantage of owning your own business is taxes. 
The prospect of doing your own accounting, making quarterly payments, and paying your own Social Security and Medicare taxes may seem daunting, and this is certainly a challenge to overcome when you first go into business. On the positive side, going into business also makes available numerous potential tax deductions that you cannot take advantage of if you work for someone else.
Here are some of the top tax deductions available to small business owners:
Startup Costs: Even before you open for business, there will be costs to set everything up. These may include incorporating, leasing commercial office space, furniture, computers, equipment, research and development, inventory, and many others. You are allowed to deduct up to $5000 in startup costs for your first year in operation. If your costs exceed that amount, the overflow expenses can be amortized over the next 15 years. If the costs to start your business exceed $50,000, certain limitations apply.
Office Supplies: Purchasing pens, notebooks, file folders, and other supplies may seem minor, but they add up over time. Supplies you purchase to run your business can be fully tax deductible.
Advertising: In the beginning, you will likely need to spend a significant amount on advertising/marketing. Once your business is established, you will need to continue ongoing marketing to keep new customers/clients coming through your door. All advertising and marketing costs related to your business can be deducted.
Business Mileage: Any miles you put on driving to and from your office or to visit clients/customers can be deducted. Make sure to track these miles closely (it is recommended that you use a log book) in case the IRS wants to see your books sometime in the future.
Phone and Internet: Just about any business these days needs to have a strong Internet connection, and you will certainly need phones for you, and in many cases, for key employees. Business communication costs are fully deductible.
Travel, Meals and Entertainment: If you travel out of town for business, a large portion of your trips can be deducted. You can deduct 100% of your airfare, train fare, bus fare and car rental; and you can deduct 100% of your hotel expenses. You are also allowed to deduct 50% of your meals and entertainment costs.
Home Office: If you use a dedicated space in your home as the primary office for your business, it may be deductible. In recent years, the IRS has provided a simplified option to calculate the home office deduction. If you qualify, just multiply $5 by the number of square feet in your home office (up to a maximum of 300 square feet), and that is the amount you can deduct.
Professional Fees: When you start your business, you may incur some fees to hire an attorney to incorporate and/or help you comply with all licensing and other regulatory requirements. You may also want to hire a CPA to help with your accounting, payroll, and taxes. Fees paid for professional services are fully deductible.
There are several other potential tax benefits to owning a small business, and taking advantage of them can significantly enhance your bottom line. But the tax deductions alone do not ensure that your business will be profitable. It is also important that you choose the right type of business, based on your personality, skills and viability of the industry.
Another important consideration is whether to start a business from scratch or purchase one that is already established. If you have the budget, an established business is almost always the best route, because someone else has already put in the countless months (or years) of hard work to bring it to profitability. To find an established business that is right for you, the best place to start is to speak with a business broker. A business intermediary can give you objective advice on which type of business fits your needs, and show you several available opportunities in your area.
