If saving on self-employment tax and offering potential tax rate breaks isn’t enough, incorporating offers a whole laundry list of savings with eligible deductions.

Naturally, it’s very important to consult with a tax professional to ensure you’re taking legitimate deductions. The IRS guidelines can be confusing at times but it pays to know what you can and cannot claim.

While not an all-encompassing list, some major expense deductions are listed below.

Auto expenses – If your corporation owns a vehicle, or if you use your car for business related purposes, you can deduct at least some of the costs of maintaining it. You can either keep track of all of the actual business-related expenses or deduct a per-mile rate (which is 44.5 ¢/mile for 2006) plus tolls and parking for any business related driving.

Business start-up expenses – Expenses related to the start-up of your corporation are called capital expenses and can be deducted. The IRS states that the deduction must be spread out over a 5-year period. This can be helpful as an offset if you expect losses over the first few years you are in operation.

Regular business expenses – It goes without saying that any expenses related to the daily operation of your corporation can be deducted. These include: rent, utilities, office supplies, equipment repairs, employee salaries and medical insurance coverage, etc. If you’re working out of your home, be sure to check the IRS guidelines on office space and utilities, as rules are specific about this topic.

Costs of having employees – You can deduct the salaries, wages, commissions and bonuses of your employees. You can also deduct any costs associated with providing them with benefits such as employer premiums for healthcare and contributions to retirement plans.

Legal and professional fees or professional memberships – Expenses paid to attorneys, tax professionals and other consultants can be deducted. Professional association membership fees would also fall in this category.

Bad debts – Provided you’re selling tangible products, you can deduct the costs associated with customers bouncing checks or not satisfying their debts to you. You may also deduct losses associated with casualties and theft. Unfortunately, the IRS doesn’t allow deductions for debts if you are stiffed on a service.