ORIGINALLY POSTED BY CHERYL PHAN ON HER FAUX FINISHING BLOG
What Can You Deduct on Your Taxes If You’re Self Employed?
Are you taking advantage of your tax write-offs?
For years I didn’t take advantage of all the tax benefits that I was entitled to because quite frankly, I just didn’t know what I did know.
This was costing me thousands of dollars every year.
So, I made a list and I want to share it with you.
Related Post: Quit your job in 30 days and work from home
There are many advantages to becoming a business owner but one of the biggest is your deductions.
Every business is different so the deductions may vary. I would advise you to meet with your CPA to discuss what you can deduct from your individual business.
Here are some more tips to help you grow your business
Tax Deduction Checklist:
- Office expenses, including rent, utilities, etc.
- Car Repair
- Car Mileage or gas
- Office supplies, including computers, software, office supplies
- Health insurance premiums 100%
- Continuing Education such as online courses, coaching, classes
- Cell phone
- Postage and shipping
- Parking and tolls
- Travel including flights, rental cars, hotel, uber
- Client gifts
- Medical bills
- Office Furniture, Computer, electronics
- Office supplies
- Health Insurance
- Liability Insurance
- Cost of goods
- Marketing tools
- Professional services: IT, CPA, VA
Download the PDF version of the checklist here
6 Most Overlooked Tax Breaks
If you (eat-in or take-out) and have meetings with clients or employees, you might be able to deduct 50% of these meals as an expense as long as they are reasonable. You would be surprised at how much you spend on food and are able to claim as a deduction.
Manage Your Tax Bracket
Let’s say for instance, your taxable income is 80K for the year and you’re in the 34% tax bracket and you were planning to buy a new computer and office furniture that will run about 15K. If you make the purchase before the end of the year it will change your taxable income to 65K and a 25% tax bracket. This could lower your tax bracket and in turn save you on your income tax. A couple of months before the end of the year check to see where you’re at and decide whether you should make those big purchases and reap the rewards.
If you have your own health insurance and payout of pocket you can probably claim those premiums as a tax deduction at 100%.
Here’s how that can benefit you. Let’s say for instance you made $50,000 last year and your tax obligation is 30%. If you spent $10,000 on your health insurance premium last year, you can deduct the $10,000 to reduce your total income to $40,000. That will save you on your income tax payment. Your accountant can give you the exact numbers and explain all the other benefits. But you get the BIG picture.
Just about everyone these days have a cell phone. We are all busy and always on the go so it’s not uncommon for a business owner to have a cell phone. Most people only have one phone that they use for personal and business.
Did you know that you can write off a portion of your monthly bill as a business expense? Talk to your account to see what percentage you can use as a tax deduction.
One of the best advantages for a business owner that travels a lot is they can write off travel expense. That also includes car rental, parking at the airport, and uber (if used). As long as you are traveling for business and not for pleasure you can write off all your travel expenses. There are certain guidelines to combine business with pleasure travel you must follow.
One of the best deductions as a small business owner is working from home. This is why more and more people are starting their own home-based business, for the tax benefits and deductions. And the best thing about owning your own business is…You don’t have to work 40 hours a week. You can work as little as 4 hours a month if you want.
There are so many things you can write off that surprisingly so many people miss. Such as:
- Home office: Rent, Mortgage (this is a big one)
- Homeowners insurance
- Property taxes
- Water Bill
- Electric Bill
- Business equipment: such as computer, printer, camera, monitors Ect.
- Office supplies: Ink, pens, paper, furniture, etc., etc., etc.
I’m not allowed to give you any legal advice or make any claims this is just an overview of some of the benefits and to help guide you to make good choices when it comes to owning your own business. I suggest you call your CPA, Accountant or attorney for tax advice based on your individual business.
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