Have you borrowed money for your business? If so, you can most likely deduct that interest for your business! This is an easily underestimated deductible business expense.
When you record your payment to the lender be sure to allocate the amount for principle, which will lower the liability you most likely have set up on your Balance Sheet. Then allocate the interest amount as “interest expense” which is an expense on your Profit & Loss.
It doesn’t really matter what entity you are paying for the loan as long as you are using the money for business. There are some exceptions of course. They are pretty common sense though. Some are that you can’t deduct interest for personal loans, you can’t deduct interest on debts your business doesn’t owe, and you can’t deduct interest for overdue taxes or money borrowed to pay taxes.
Most business owners have some sort of loan that they are paying monthly with interest. Be sure your or your bookkeeper is separating the interest from the principle so you can take advantage of that deductible expense!
Jordan Ilderton, CPA