Tax season doesn’t have to seem like a nightmare to your electrical company’s bottom line. Part of setting your small business up for success is maintaining good bookkeeping records that track all your expenses. Simple items that you may not have considered could count as electrician tax deductions that reduce what you may owe after filing. Let’s look at a few easy tax deductions for electricians with Barta Business Group, a small business accounting firm in Denver, Colorado.

Tax Deductions for Electricians: What You Need To Know

With the helpful insight of Barta Business Group, providers of small business accounting services in Denver, we can look at tax strategies for electricians. This way you can save the most money on your taxes, potentially saving thousands of dollars from going out the door. 

For example, section 179 lets electricians get big tax breaks for making large purchases such as heavy equipment and vehicles intended for business use. However, smaller operating expenses can really add up to give you significant breaks on your taxes as well. 

Let’s look at what those look like.

Professional Memberships & Dues

Union dues, professional association membership fees, big-box store memberships, insurance premiums, business licenses, and trade subscriptions may be tax deductible. If you are not a small business owner but work for an electrician, you may also deduct the cost of membership to civic organizations.

Education & Training

Continuing education is a requirement for electricians to maintain their licenses. It is also fundamental to supporting a specialization in niche markets, such as solar and wireless technologies. If you pay for employee training, tuition costs might be tax deductible. Similarly, if you pay for classes out of pocket, you may deduct the cost of tuition, transportation costs, licensure fees, and classroom materials.

Equipment

Tools and equipment that are necessary to perform electrical work are generally tax deductible if you replace them annually. Electrician tax deductions for tools and equipment that last longer are eligible for a different type of deduction because they depreciate in value with time.

Vehicle Expenses

If you are a business owner, you may receive deductions for the cost of purchasing and maintaining fleet vehicles. The government may also offer tax incentives if you purchase eco-friendly vehicles.

As an employee you can deduct expenses related to maintaining, cleaning, and fixing your employer’s vehicle if the company doesn’t reimburse you.

Travel & Meals

Rather than reimburse fuel costs, the government offers deductions based on how much you travel. This rate changes annually. To take advantage of mileage deductions, keep track of how much you and your employees drive for work-related purposes. Additional travel-related expenses include work-related tolls, parking, public transit, overnight lodging, and taxis.

The IRS will deduct up to 50% of meal costs that are directly related to doing business. As an employee, you may deduct a portion of meal costs when you work overtime or are traveling overnight for business.

Office Expenses

If you run your business from an office space or at home, you may deduct some or all rental or mortgage costs, utilities, and maintenance and repair costs.

Final Tips: Tax Deductions for Electricians

If you want to take full advantage of tax deductions available than keeping records of your business, the transaction is a must. If you fell behind on your record-keeping last year, then keep your records updated this year to make the most out of next year’s tax breaks. 

There is software out there that can help with this. Programs such as Xero and QuickBooks can import your transactions and help you sort them into business and personal categories. This kind of software can also help you file your quarterly taxes and estimate your upcoming tax payments so you don’t get hit with any surprises. With that, you can also write off the subscription fees or payments you make for the software as business expenses.

About Barta Business Group

Most businesses are great at their craft, but not great at the financial back of the house. Our team of bookkeeping, accounting, and finance professionals guides business owners in making better decisions, so they can focus on doing what they love in their business. We understand the peace of mind that comes from knowing your financial information is done right every time. We value being able to support businesses in turning financial data into actionable insights, so you may plot a course for your company’s future with confidence.