What Are Employer Tax Deductions?

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  • Written By: K. Reynolds
  • Edited By: Jessica Seminara
  • Last Modified Date: 07 November 2018
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Employer tax deductions are legitimate expenses incurred by a company within a tax year that can be deducted from the revenue that the company generated during the same period. A business often has a variety of expenses that it must pay in order to continue its operations. These expenses can consist of advertising, payroll, and insurance, just to name a few. After all of the valid expenses have been deducted from the revenue generated by the company, the remaining amount is usually considered taxable revenue.

The types of employer tax deductions can be claimed will vary from business to business. Most businesses will have overhead expenses associated with their physical place of business. In this scenario, the rental expense that a company has to pay every month can be deducted from the revenue that the company generates. As long as the property is a business property, the expense is deductible. These rules do not necessarily apply to companies that operate out of the owner's home, and companies should seek legal advice before attempting to deduct rental costs.


Marketing and advertising costs are another expense that a company is able to deduct. Every business needs to advertise and market its products or services to generate new business. These costs can pertain to placing ads in magazines, sending out direct mail, or running television commercials during popular programs. Most of these expenses recur every month or every business quarter, therefore it is important that companies keep track of them as they are legitimate employer tax deductions.

Payroll costs are another form of employer tax deductions. As businesses grow, there is often a need to hire more employees and staff members. The costs associated with hiring staff members include not only their salaries but any benefits that they may be entitled to receive. Often, employers offer their staff members benefits such as health, education, and retirement plans. The expense associated with administering these benefits, along with employee salaries, are employer tax deductions that are normally claimed during tax time.

There are numerous risks associated with running a business. To protect themselves from liability, many business owners will acquire a wide variety of insurance coverage in order to mitigate some of the risks associated with running a company. These insurance costs are a necessity for conducting business and are therefore legitimate employer tax deductions that will be deducted from the revenue on filing taxes.



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