Utility Cost Deductions
Utilities are essential to keeping your business operational, and they’re fully deductible as business expenses. This includes costs for electricity, water, gas, phone services, and internet access. For example, if your business spends $300 per month on electricity, $150 on internet, and $100 on water, you can deduct $6,600 annually. These expenses are critical to maintaining a functional work environment, whether you’re powering computers, maintaining a comfortable office temperature, or ensuring reliable communication with clients.
To ensure you’re capturing all potential deductions, keep meticulous records of your utility bills. Categorize each utility expense in your accounting software, and consider setting up automatic payments to avoid late fees, which could also be deductible. Additionally, if you operate a home office, a portion of your home utilities may be deductible based on the percentage of your home used for business purposes.
Steps to Ensure Accurate Deductions:
- Keep Detailed Bills: Store copies of all utility bills—both digital and physical copies are helpful for backup.
- Use Accounting Software: Categorize each utility expense properly to ensure accurate bookkeeping.
- Consider Home Office Utilities: If you work from a home office, a portion of your home utilities may also be deductible, proportional to the space used for business.
Example:
- Electricity: $300/month = $3,600/year deduction.
- Internet: $150/month = $1,800/year deduction.
- Water: $100/month = $1,200/year deduction.
Have questions or need assistance? Reach out to us anytime at 480 747 3935! You can also schedule a chat with Chris here.
