Tax Benefits of Your Own Business

by David Ingram, studioD

The United States encourages small business ownership in as many ways as it can. The tax code is one of many facets of the United States that makes it a haven of business activity. Entrepreneurs can take advantage of numerous tax benefits of owning your own business in the U.S., which provides advantages over filing as an employed individual or an incorporated business. Familiarizing yourself with the tax benefits of small business ownership can help you to decide how to organize your new business.

Tax Structure

Sole proprietorships and partnerships are taxed as pass-through entities, meaning the income of the business is taxed as personal income for the owners. The main advantage of this tax structure is the fact that business expenses can be written-off on personal tax returns, opening up a a much wider range of deductions than filers that do not own their own business. Owning your own business also allows you to avoid double taxation, an issue that corporations must deal with.

Home Office Write-Off

Running your business from home can provide significant tax benefits. You can write off a portion of your home rent, proportional to the relative size of your home office. Depending on how often you conduct business at home, you may be able to write off a portion of your utility bills as well, including electricity, telephone. Internet access expenses are another category that most home businesses can easily write off.

Business Expenses

The ability to write off the wide range of deductible business expenses other than rent and utilities can take a sizable bite out business owners' income tax liability. Travel and lodging expenses, eligible entertainment expenses, vehicles and commercial property, energy efficiency upgrades and a range of normal operating expenses can be written off against business income, lowering owners' personal tax burdens.


Filing taxes as an owner of a sole proprietorship or partnership has advantages over filing as a corporation, in addition to the advantages over filing as an employed individual. Rather than using specialized, in-depth tax reporting forms, sole proprietors simply add Schedule C to their individual tax return, Form 1040. Partnerships use Form 1065, which, while a bit more complicated than Schedule C, is still simpler than corporate tax returns.

About the Author

David Ingram has written for multiple publications since 2009, including "The Houston Chronicle" and online at As a small-business owner, Ingram regularly confronts modern issues in management, marketing, finance and business law. He has earned a Bachelor of Arts in management from Walsh University.

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