Don't Spend $100 to Save $20
"It's okay. It's deductible."
If you catch yourself thinking this, STOP.
You should never spend more money than you plan to just because something is considered tax deductible.
As we approach Black Friday and the holiday season, you may be tempted to splurge a bit and buy yourself a new laptop or some new goods for the home office that you don't really need.
Before you do, ask yourself this:
Do I actually need this for my business?
Am I only buying this because it is considered a business expense?
Would it make more sense to buy this in a year with more income to offset?
Being deductible is not enough of a reason to spend. A deduction is not a rebate. It is a tax savings based on the rate at which you pay income taxes. If you buy something for $100, you are saving about $15-20. You are still spending $80+. Ultimately, spending nothing is better than spending $80 on something you don't need. The best way to save in taxes is to convert expenses you already have into business expenses, as opposed to creating more expenses.