Rule number one of owning a business: don’t mess with the IRS! That makes preparing your tax return a high priority. A large part of your tax return is business deductions because these deductions can lower your business’s taxable income.

There are different ways deductible expenses are classed. Most commonly, expenses are referred to as both ordinary and necessary to a business.

  1. An ordinary expense is common and accepted in your industry.
  2. A necessary expense is helpful and appropriate for your business.

Investing in your business before the end of the year allows you to take advantage of tax benefits and reap future rewards. Below are four ways your business can invest in 2017 operations and lower its 2016 taxable income.

End of Year Tax Deductions

1. Spread the Word

By committing funds to advertising and marketing at the end of 2016, your business will see returns throughout 2017. Most creative agencies have annual contracts, and advertising outlets will normally accept advance payment for an entire year.

Commonly deducted services include:


Publicity & Exhibits

Website Creation & Design

Internet Hosting & Services

Prizes for Promotional Contests

2. Hire an Expert

If you have big plans for the new year, get expert advice this year. Whether its legal services to incorporate your limited liability partnership or accounting services to prepare for tax season, professional services are a deductible expense. Businesses can even hire a graphic designer to create their annual holiday cards and count that professional service as a deduction.

Commonly deducted services include:



Graphic Design

3. Improve Your Physical Location

“We shape our buildings; thereafter they shape us.” – Winston Churchill

Ensure that your employees enjoy coming to work. Your building’s exterior, decor, furniture, and layout all shape your company’s culture, communication, and teamwork. The average individual will spend 30% of their life at the office! Your employees will thank you for the comfortable and effective space they work in.

If your current space doesn’t reflect or foster your company culture, consider moving.

Commonly deducted services include:

Repairs & Maintenance

Furniture & Fixtures

Supplies & Materials

Moving & Real Estate Expenses

4. Invest in Your Employees

Grow your business by helping your employees improve themselves. Studies suggest a strong correlation between economic growth and human capital investment. Employees who receive such training feel valued and part of the team, rather than a cog in the machine.

Deductible Costs

Education & Training for Employees

Continuing Education to Maintain Licenses

Professional Licenses

If any of these improvements are outside of your business’s budget, do not spend resources you do not have. But if you notice that you may have unspent budget money, consider using it before the end of the year to lower your taxable income. If you have any questions, consult an expert first–especially because you can deduct the fee!