Tax season is stressful for anyone, but for business owners, it can be especially overwhelming.
Whether you’re a small business owner just getting started, or a seasoned veteran with a successful company, making sure you’re getting the best tax breaks for your situation can really make a difference to your bottom line.
“There are a lot of advantages to having an offsite storage space for your business,” says Indah Grady, a Texas-based senior district manager at Public Storage.
Understanding how your business storage situation can affect your taxes can help ensure that it’s smooth sailing come April 15.
Is a Storage Unit a Tax Write Off?
“Every dollar you pay for a storage unit should be tax deductible if it is related to a business,” he said.
According to Hymers, that could include a storage unit you use to keep goods that are sold through your company. In addition to inventory, your storage unit can also contain promotional materials, office supplies and equipment, office furniture, and company vehicles.
If your business deals with a lot of inventory, chances are you take advantage of an offsite storage solution.
Storing business inventory or supplies in a storage unit makes a lot of sense for your bottom line—you can save on space at your workplace, which means less mess, cheaper rent, and more productivity.
“There have been several instances during the COVID pandemic where it was impractical for business owners to continue paying expensive leases since their business wasn't operational,” Hymers said.
Having access to a storage unit gives business owners flexibility to terminate their lease and move their equipment to a temporary storage location to help save on rent, he said.
“Unlike a normal lease that may have a large security deposit requirement that is not tax deductible, storage units typically don't have a deposit requirement,” Hymers said.
What Do You Need to File Business Storage Taxes?
For small business owners or LLCs who also store personal goods in a storage unit, Hymers cautions that “you should have a close approximation of the square footage that pertains to the business assets versus the personal items, and prorate the rent so that only the portions that relates to the business is deducted for tax purposes as a business expense.”
If you’re currently balancing the storage needs of your business out of your home, a storage unit will help you know the exact square footage being used for business purposes.
Hymers further cautions that it is also important to note that you want to add your storage unit to expenses like the rental fees you pay for your office, and do not claim it as a separate office space.
Hymers explains: if that involves an Etsy shop, vintage reselling, or anything else with merchandise or inventory, having an offsite storage unit can help make those business deductions easier when you have to file.
Remote work is also so common, Grady has seen an increased need for business-related storage.
“A lot of businesses are now running online or remotely, and work or store things from an extra room in their house,” she notes. “For people who don’t have a dedicated office, a storage unit is a great way to store extra supplies they might need, especially for items that are considered overstock.”
No matter what kind of business you run, always check with your tax professional before you do your taxes. It can save you a lot of stress come spring.
Consider getting those business storage needs taken care of now, and don’t forget to visit our blog for tax organization tips!
The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. All opinions expressed in this post regarding tax issues are those of the person expressing them, not those of Public Storage, and are opinions only. Public Storage is not providing legal advice and you should not rely upon this post as legal advice. Please consult with a tax professional or lawyer regarding your tax obligations or with respect to any particular legal matter.