In a word, Yes! The premiums are a cost to keep your painting business afloat, so they become a deductible amount. What’s more, insurance premium deductions could provide you with substantial savings on your taxes.
If you work from home, you can only deduct home office expenses and a part of utilities and mortgage. The IRS gives examples of what they term ‘ordinary’ and ‘necessary’ for tax-deductible purposes, which we breakdown in this article.
So, read on and become income tax savvy.
Take a deduction from premiums for these types of insurance
- Losses due to ‘Acts of God’ (fire, storm damage), theft, or accidents.
- Bad debts.
- Medical insurance for employees, which also includes hospitalization.
- Liability insurance.
- Workers Compensation insurance (medical expenses and lost wages due to an accident or illness).
- Contributions to an unemployment fund.
- Disability insurance.
- Life insurance for employees.
- Insurance for when your business is closed due to unforeseen circumstances.
- Building lease costs.
Do your research
You can get more information on the above, in addition to ‘small print’ clauses that you should be aware of, from the IRS. Further, as of this year, note that you can deduct healthcare costs, like health insurance premiums, that are more than 7.5% of your income.
Many clauses could be ambiguous and not self-explanatory as you work your way through an IRS document. Your advisor or specialist will be able to tell you when a specific clause applies and when it doesn’t for your planned action.
Many tax issues the world over are mired in ‘small print’ clauses that would escape your attention, but by further examination by a specialist, could significantly alter the way forward with your tax-deductible efforts.
What items are tax-deductible for your painting business?
- General Liability insurance covers legal expenses if your business is involved in a lawsuit over third party injuries or property damage.
- Professional Liability insurance – also known as malpractice insurance, covers an alleged negligence incident on your part.
- Commercial Property insurance covers your lost or damaged business inventory.
- Workers Compensation insurance, as mentioned above, is applicable in most states. Find out if you live in a state where this does not apply.
- Applicable retirement funds can also be deductible. You should know, as a painting business owner, if you are eligible. Speak to your insurance company and taxman.
- General expenses – if you use vehicles to transport painting crews, the mileage costs and repair costs can be deductible. There are also office equipment items that need replacing. These all fall into the small business category, and expenses are deductible. Meals while off-site also fit in here. Advertising costs also apply.
Added insights into insurance
You certainly don’t want to have to pay out more in tax than you have to. Let’s face who does? Pay a visit to your insurance company and tax specialist and heed their advice.
Not insured. No problem. Go online and get comparative quotes. Painting insurance doesn’t have to be expensive. Invest in your painting business by investing in the right insurance today.