Relocating a business takes quite a bit of time, energy, money, and knowledge. You should make sure to prepare as well as possible, especially if you're completely inexperienced. Whether you're relocating your business somewhere nearby or to a whole other state, there's always the question of how to deduct business moving expenses. Luckily, we're here to discuss the dos and don'ts and make this job easier for you.
Two main things you need to know
The first thing you should consider before deducting business moving expenses is that the move consists of two parts.
● The relocation of the business itself
Of course, the business relocation is the central part of the whole thing. This includes relocating all the stationary and any items that are in your offices.
● The residential move
Of course, if you're relocating your business somewhere far away, you'll need to relocate as well. You shouldn't look at these two ventures separately but rather as two sides of the same coin.
Caption: Before you research what you can deduct out of the business moving expenses, make sure to learn about the basics.
Of course, the most important thing not only when you want to deduct business moving expenses but also for the relocation itself is being organized. To stay organized during relocation, you need to plan it on time. Whether you're big on planning or not, make sure to create a timetable and stick to it as best as you can. Even though not everything will go according to plan, you'll have much better chances if you try.
Moving expenses for employees
Deducting employee moving expenses isn't a very straightforward thing. There's a limited percentage of moving costs that employees themselves can deduct from the taxes. Nevertheless, businesses can pay their employees whatever they want regardless of standing customs. Later, these expenses can be deducted from the company's budget. No matter the particular expenses (whether it's paying for a moving company or travel costs and meals), the company can place the obligation upon themselves.
Find an experienced moving company
One of the best things you can do to ensure that all the different aspects of your relocation are covered and handled well is to hire a good moving company. Make sure to find someone who's experienced in commercial moving and who knows what they're doing. According to the experts at Pro Movers Miami, finding reliable movers will not only mean less work for you, but you'll also have someone to rely on and ask any questions you might have.
Caption: One of the most important things you'll do both when it comes to deducting business moving expenses and the whole move is hiring the right moving company. Choose wisely.
Which expenses should you deduct?
There are certain things that have a deductible cost and others that don't. Make sure to know the difference. These are the most easily deductible business expenses:
● Moving business equipment, office supplies, and any other inventory from one office to another
● All costs that are associated with purchasing your new office
Make sure to write down any expenses that you'll later deduct to avoid making any mistakes.
Find ways to save money while you deduct business moving expenses
The fact that you'll be able to deduct certain business moving expenses shouldn't stop you from finding ways to save money. Once you get into it, you'll see that there's a lot that you can save on. For example, you can find a moving company that offers additional services for free or has excellent discounts.
DIY your interstate move?
Another way in which you can potentially save money without having to deduct business moving expenses is DIY-ing the move. However, interstate moving can be quite a hassle. Make sure that you're prepared for it. Know that good time management is crucial, and you should have the help of all your employees.
Caption: Relocating DIY can be tough. However, if you manage to do a good job, you'll probably save some money.
Personal moving expenses
As we've stated previously, the other thing you need to consider when planning your business move is the residential move that'll happen simultaneously. Know that you can actually find a way to deduct your personal relocation-related expenses as well. However, you'll need to meet some IRS rules and guidelines in this case.
You need to pass two IRS tests with flying colors to be qualified to deduct your personal moving expenses.
● The distance test
To pass this test, your future work location needs to be 50 or more miles farther from your former home than your previous work location was. Although it's a bit confusing, rules are rules. If this is the case, count yourself lucky.
● The time test
If you want to qualify as a self-employed person (which is necessary to deduct your personal moving expenses), you need to meet specific criteria. As the IRS states, you have to work full-time for a minimum of 39 weeks over a one-year period. Of course, if the full-time hours are different from the standard (40-hour-weeks) in your line of work, make sure to mention this.
Things you can't deduct as business moving expenses
There are also some things that you will not be able to deduct while relocating your new business.
● Expenses that are not directly connected to your business move aren't usually deductible.
● You cannot deduct business moving expenses that aren't in accordance with the rules and regulations that the IRS demands.
● Since you can deduct business moving expenses and business expenses, you need to choose between the two. Of course, make sure to choose wisely. Consider all the factors and see which option pays off more.