| There are literally dozens if not hundreds of deductible | | | | dividing business miles by total miles. Then apply that |
| expenses available to the typical Sole Proprietor. | | | | business use percentage to the expense to determine |
| Some of these are more obvious than others, such as | | | | the deductible portion. |
| rent and lease expense. Let's take a closer look to | | | | Keep in mind, too, that this expense is only deductible if |
| make sure you're not missing out on this deduction. | | | | you are using the Actual Expense Method. If you are |
| Schedule C, Line 20 provides two sub-categories for | | | | using the Mileage Rate Method, then the lease |
| this expense: | | | | expense is not deductible at all. The Mileage Method |
| Line 20a - Vehicles, machinery and equipment. Let's | | | | uses the IRS-authorized standard mileage rate to |
| start with "machinery and equipment" first. Businesses | | | | determine your vehicle expense, in lieu of actual |
| often lease office equipment like computers, copy | | | | expenses such as lease, gasoline, maintenance, repairs, |
| machines and the like. If the equipment is being used | | | | insurance, etc. |
| 100% for business, then the lease expense is 100% | | | | Line 20b - Other business property. This is where you |
| deductible. As far as vehicles are concerned, it is more | | | | report the most common type of rent or lease |
| likely that you are not using the vehicle 100% for | | | | expense: the cost of renting your office, store, |
| business, as most Sole Proprietors drive the same car | | | | warehouse, or other commercial building. For many |
| for both business and personal use. If that's the case, | | | | small business owners, this is one of your largest |
| you'll have to do an allocation of the expense based | | | | expenses, if not the largest. So don't forget to deduct |
| on the business use percentage, which is calculated by | | | | it! |
