Venturing into the business world can be exciting and lucrative if you do your homework and plan for success. Part of this planning involves setting up the right business insurance, in which you might be wondering if premiums can be written off from your taxes. The good news is certain types of business insurance are tax deductible.
Is Your Business insurance tax deductible?
You should be aware of business insurance tax deductible opportunities as a business owner. According to information on IRS.gov, business owners can deduct insurance premiums that cover fires, storms, theft, accidents, or other losses that your business can’t control.
Writing off your business insurance premiums
Some businesses have a wide variety of insurance premiums to pay each month. Many of these premiums can be written off on taxes, such as the following:
- Commercial Property
- General Liability
- Professional Liability
- Workers Compensation
- Business Interruption
- Data Breach Liability
Personal vs. business expense write-offs
While the IRS does not allow deductions for personal, living, or family expenses, it does allow a business to deduct several costs. If you run a home business, you may wonder if you can write off your personal computer as a business expense. You can, but it depends on how much you use it for business. If you use the computer 50 percent of the time for business, you can write off 50 percent of its cost.
What type of insurance is tax deductible?
The types of premiums generally tax deductible are commonly accepted as necessary costs of doing business. Medical insurance for employees and liability insurance are examples of coverage that can be deducted. For one-person operations, you can remove self-employed health insurance.
What kind of business insurance cannot be deducted?
The types of business insurance premiums that are not tax deductible include self-insurance reserve funds, certain life insurance, and annuities and insurance to secure a loan. You also cannot deduct particular types of insurance that the IRS considers unnecessary.
Can you write off car insurance on taxes?
If you are self-employed or in the armed forces reserves, you can deduct your car insurance premium in most scenarios. You should log the number of miles you drive for business use, as you can also write off fuel costs based on the standard mileage rate.
Business insurance deductions: seek a tax professional
Talk with a business tax expert about your company’s insurance coverage to clarify other premiums you can write off, including unconventional coverage. Not only can a tax consultant answer your questions about tax deductions, but they can also usually answer a broad range of questions about businesse’s taxes, depending on their experience. A typical tax consultant with financial industry credentials can further assist entrepreneurs with complex itemized deductions.
Learn more about business insurance
Business insurance and taxes are two areas that can seem like complicated puzzles for many new enterprise owners. If you have further questions about business insurance tax deductible issues, contact us today at Locke Insurance Group. We will help you navigate your business insurance needs and establish a plan that protects your assets.