7 Small Business Tax Write Offs To Know

Tax season has crept up on us. It’s that time when you’re sending out income forms to all your employees and contractors, going over your expenses, and finding an accountant to help you meet the IRS deadline.

This year, thankfully, the IRS is giving us all more time to file. By April 18, you’ll want to make sure that everything is squared away.

Aside from the standard write offs for businesses, there are numerous breaks that you should be taking advantage of.

Small Business Owner Tax Write Offs

Here are several—some new for 2016—may not have realized you could use this year.

Don’t overlook new tax breaks

According to Anil Melwani, a certified public accountant and founder of 212 Tax and Accounting Services in New York City, small businesses should look into the Protecting Americans from Tax Hikes Act of 2015. Passed by the House of Representatives and the Senate late last year, the act gives small business owners two very large tax breaks. The first, Section 179, states that small business owners are able to deduct a maximum of $500,000 for the purchase of equipment and other assets for 2015.

The second tax break, called 50% Bonus depreciation, lets businesses “depreciate 50 percent of the cost of equipment acquired and put in service during 2015, 2016 and 2017,” according to Section179.org.

“Then bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019,” Melwani says. “These two tax breaks are huge for small business, and could be used to help many American businesses to grow.”

Remember your own funds you invested

You may have used your own money to start your business in 2015. Before you even officially declared your idea a business, you had to pay for incorporating and accountant or attorney consultations. When filing, you can’t forget to include that information. Alan Mehdiani, a CPA and the CEO of My Tax Company in Los Angeles, says, “These costs won’t show up in your business accounts, so they are often overlooked.”

Don’t forget charitable donations

About 75 percent of small business owners give to nonprofits every year, according to the Small Business Adminstration. If you did the same, you’ll be able to claim them on your taxes. Just make sure that you can locate the receipts from your donations to legitimate nonprofits, that your donation was fully paid last year, and that you’re deducting a dollar amount, not time you spent volunteering. However, if you were required to purchase tools in order to participate in volunteering, those are deductible, as well as your gas expenses.

Write off your home office

Do you conduct business mostly out of a home office? Perhaps you work days at the office with all of your employees, but find yourself spending even more time building your company from your den after hours. This may qualify you for a write off. All you have to do is multiple the square footage of your home office by $5. The maximum that the IRS allows you to claim is 300 square feet. With this simplified option, you can also incorporate itemized deductions like interest on your mortgage and your real estate taxes. Plus, if you purchased furniture for your office in 2015, you can claim the full price. Otherwise, if you bought it within the past seven years, you can claim a portion of it, since it depreciated in value.

Use your phone for business? Deduct that, too

There is no such thing as a boundary between work and your personal life, especially if you’re a small business owner. According to Mehdiani, you can write off your mobile phone when you utilized it for business purposes. For example, if you used it 20 percent of the time for business, you could claim 20 percent of your phone bill for the year on your taxes.

Deduct full cost of co-working spaces

If you operate your small business out of a collaborative workspace like WeWork, you can write off 100 percent of your expenses. Unlike the home office deduction, this one doesn’t require any math.

Write off transportation for work

Unless you live in New York, chances are, you’re driving to work every day. According to the IRS, the standard mileage rate for 2015 taxes is 57.5 cents per mile, up from 56 cents last year. If you drove for charity, you can claim 14 cents per mile. Entrepreneur’s Chris Newmarker writes that you can save big money by dividing business miles by the total amount of miles driven, and then applying the percentage you come up with to vehicle expenses. This may mean that you can claim tire changes, car washes, and anything else that keeps the car in good shape.

This year, don’t overlook any possible deductions. Find a local CPA who can walk through your taxes step by and step and make sure you’re getting the most out of your return.

When Raffi Rembrand’s son was diagnosed with autism at the age of 4, it was not the worst news the family received that day. The biggest blow came when their doctor said it was too late for the earliest treatments.

So for Rembrand, a chemical engineer by training, finding a way to detect autism earlier became his life’s mission.

Now, more than three decades after his son was diagnosed with autism, Rembrand has founded an Israeli company, SensPD, which he hopes will accomplish just that. 

SensPD, a finalist in the WeWork Creator Awards that will be held on June 20 in Jerusalem, is developing a way to detect autism based on physiological signs. The company uses an existing device commonly used to check the hearing of newborns, but has modified it to check for sensory perception. One of the major components of autism, which affects one of every 59 children born in the U.S., is its effect on the sensory system.

“We didn’t reinvent the wheel,” says Maayan Shahar, SensPD’s CEO.  “But we have altered a very known device used in all hospitals that will hopefully provide a standard screening process for all babies.”

The goal is for such a test to eventually become standard for every baby born around the world, allowing the various treatments for autism to start as soon as possible. When started very early in life, some therapies have a success rate of up to 90 percent.

“It’s been known for a long time that it’s early intervention that makes all the difference,” Shahar says.

But the standard diagnosis of autism based on a series of evaluations often comes after a children has reached the age of 3 or 4, which is too late for some treatments.

SensPD is currently preparing to start clinical trials in Israel. It hopes that if all goes well it will get regulatory approval for its device within three years.

Rembrand’s son, now 35 and living in a group home in Israel, remains an inspiration for the company.

“We want to bring this to market as soon as possible, but in the most professional way,” Shahar says.  ”So that instead of being isolated, children with autism can be a productive part of society.”

While Yehudit Abrams was working as a postdoctoral fellow at NASA, her job was to research the potential use of ultrasound to monitor astronauts on long missions to the international space station. But when her cousin, a gynecologist and breast cancer survivor, was killed in a car accident in 2011, Abrams started thinking of other uses for the medical device.

“She was so passionate about the early detection of cancer, and I wanted to honor her for that,” says Abrams, a physician and mechanical engineer who immigrated to Israel last year from California. “That is what got me thinking about using some sort of portable ultrasound for early detection of cancer.”

Abrams founded MonitHer, a Jerusalem-based startup that is developing a handheld ultrasound device that women can use at home to monitor their breast tissue. The device and its potential to change the way breast cancer is detected is why MonitHer was named a finalist in the WeWork Creator Awards, which will be held in Jerusalem on June 20.

An early prototype of the MonitHer scanner.

Women using the device will scan their breasts once a month for about 10 minutes. A U.S. Food and Drug Administration-approved software program then scans the images for any changes over time. If the software detects any potential problems, users will be advised to consult a physician.

By monitoring breast tissue over time, Abrams says women will be able to detect cancer earlier than the traditional method of self-exams where women feel each breast in order to find lumps or swelling.

“We are changing the paradigm from breast cancer screening to breast health monitoring,” Abrams says.

Once more than 100,000 women begin to use the device and upload their scans to the app each month, artificial intelligence and machine learning methods will be used to evaluate tissue changes.

While mammography has long been the best way to diagnose breast cancer, it is less effective on certain women, especially those with dense breast tissue. And the current protocols for breast cancer detection have recently been questioned for resulting in the unnecessary treatment of tumors that may never grow in size or harm a women’s health.

“We are wasting billions of dollars of year treating cancer that women don’t have, and this is because we have stopped innovating,” Abrams said. “Medicine is a dinosaur.”

Changing the system of breast cancer detection will not only save lives and money, but will give women more control over their medical care.

“We are empowering women,” Abrams says. “We are empowering the individual.”

When his friend Joshua Altman suggested that they could help provide clean drinking water to whole villages, Moshe Tshuva was dubious.

“When I first heard his idea, I told him it couldn’t work, because it wouldn’t produce enough water to be worth it,” says Tshuva, who has worked in the solar energy industry for more than three decades. “But it turns out that I was wrong and he was right.”

Together, the two engineers started Tethys Desalination, an Israeli company that aims to turn salty or polluted water into crystal-clear drinking water by harnessing the energy of the sun. Their easily installed device, which fits into a box that’s about a square meter in size, can produce up to 50 liters of drinkable water each day.

The system is scalable, so one device can meet the needs of a family, and a cluster of units installed together can sustain an entire village. Altman says the device could help save the lives of children in drought-stricken areas of Africa.

One device can meet the needs of a family, and a cluster of units installed together can sustain an entire village.

“And ultimately, it will allow those places without water to come back to life,” says Altman.

The device, which is being tested on a kibbutz in northern Israel, was recently named a finalist in the WeWork Creator Awards, which will be held in Jerusalem on June 20.

The idea for the device came to Altman back in the 1990s when was teaching a university course about water desalination techniques. He found himself frustrated by the limitations of desalination techniques.

“All of the processes use a lot of energy and are very aggressive toward the environment,” says Altman. “I thought there had to be a better way.”

Altman, who has co-founded several other successful startups, envisioned a cheap, simple, and energy-efficient desalination technique. The idea has garnered a lot of attention in recent months, with cities like Cape Town, South Africa, seeing their water supplies nearly run out.

The device is basically a weather system in a box, Altman explains. The sun causes the dirty water inside the box to evaporate. It then turns into mist and eventually drips down, producing clean water. This process, which mimics how clouds work, is repeated four times per cycle to maximize the amount of water produced.

“Basically we see how clean water is created in nature, through the water cycle of evaporation and rain,” Tshuva says.  “So we want to use this to solve the water shortage problem in a natural way.”

About 20 years ago, a group of Jewish and Arab parents whose children had attended the same private nursery school in Jerusalem wanted their children to continue to study together rather than be separated by Israel’s religiously segregated education system. So rather than sending their children to the usual Jewish and Muslim public schools, they started a new school called Hand in Hand.

At first there were fewer than 20 children, all in kindergarten, who studied in a spare room in one of the city’s schools. The school grew along with the children, adding a grade as they got older and bringing in a new group of kindergarteners each autumn. It now welcomes kids up to the 12th grade.

To help build relationships between Arabs and Jews, the nonprofit organization Hand in Hand now runs six schools with more than 1,800 students around the country. It has been selected as a finalist in the nonprofit category for the WeWork Creator Awards, which will be held in Jerusalem on June 20.

“We are not going to wait until peace comes to live together,” says Noa Yammer, who oversees international engagement for the non-profit organization. “We are just going to do it now.”

Rather than send their children to the usual Jewish and Muslim public schools, parents started a new school called Hand in Hand.

Besides six schools (and two more in the planning stages), the organization offers a variety of community programs for children and adults.

“We realized that we can’t just build a shared society through children,” says Yammer. “Adults also need to interact.”

Yammer says that the segregation within Israeli society — which is about 20 percent Arab — takes its toll on the country. It helps fuel the ongoing Israeli-Palestinian conflict, which made headlines again in May during protests around Israel Independence Day.

But Yammer acknowledges that the intensity of the conflict isn’t going to go away overnight. The anger on each side is too entrenched.

“We live in a violent conflict,” Yammer says. “There’s a reason people are afraid. Our project is not an easy project. It’s actually a really hard thing to do in the conflict we live in, but it’s important.”

Dahlia Peretz, a principal at Hand in Hand starting in 2001, says that the school is designed to help students see past the conflict.

“In our divided society, relationships between Jewish and Arab children can succeed only if parties meet as equals, without any feelings of alienation,” she says. “We created a school where all children feel their languages and cultures have a legitimate place, a school where intercultural exchange can take place despite the unequal balance of power in our society.”

In addition to expanding its network of schools, Hand in Hand is developing a curriculum that any school — regardless of religious affiliation — can use to better educate children about tolerance.

The organization sees a growing interest all over the country, with more than 1,000 children on the waiting lists for the Hand in Hand schools. A win at the Creator Awards could help expand the program.

“This really needs to be a project in every city in Israel,” Yammer says. “We just need more resources so we can say yes to those asking us to come.”

Photo by Craig Stennett