One of the many important things to be aware of with commercial insurance in Norman, OK is how premiums impact your company’s tax liability. Most of the commercial insurance premiums you pay to insurance providers like Steiner Insurance Group can be written off on your company’s tax return.
The following are three things you need to know about commercial insurance and taxes.
You can write off commercial insurance premiums as a business expense
Commercial insurance premiums are classified as an ordinary business expense. This means that they can be deducted from a company’s gross revenue in determining tax liability. This also means that paying commercial insurance premiums helps to bring down a company’s overall tax liability for the year.
You can’t deduct commercial insurance premiums already paid for future years
Business owners may sometimes pay their commercial insurance amount upfront for several years in advance. For example, a business owner may purchase a two-year policy and pay for it all at once.
However, the full amount for the two-year policy cannot be deducted the first year. The business owner can deduct half of the policy’s cost on the first-year return and the other half the next year.
You cannot write off the money you put into a reserve fund for self-insurance as a deductible
Some business owners prefer to take care of their insurance needs by setting aside a reserve fund that allows them to be self-insured. However, this method of insuring one’s company does not offer the same tax advantages as paying commercial insurance premiums. Money that is put towards such a fund cannot be deducted as an expense on a business’s tax return.
If you have any questions about how commercial insurance impacts your business taxes in Norman, OK, contact us at Steiner Insurance Group to learn more.