If you own your own business, there are many pros and cons involved with doing so. One of the advantages most people enjoy is being able to set your own hours and work when you want. This can help you have a more flexible schedule and avoid being tied down to an office cubicle. However, one of the major disadvantages also includes having to pay the employer's portion of taxes. This makes it more important than ever to be fully aware of legitimate tax deductions for the self-employed.
Deduction #1: Education expenses
Did you take a course to help you with your business? If so, the tuition you had to pay and the cost for any books or materials you had to purchase will be fully tax deductible.
Be sure to keep a copy of your receipts for these to give your tax preparer.
Deduction #2: Home office
It's common for many people to run a business from the home and the space that is dedicated to help you do so can be deducted. You will need to have the precise square footage of your home and there is a formula that will be used to determine the exact amount you can subtract from your taxes.
Deduction #3: Office supplies
Did you need to purchase a new filing cabinet, laptop, printer or other necessary items to run you business? If so, you can take these off of your taxable income. It's ideal to have proof of your purchases in the event you're every audited.
Deduction #4: Health insurance
One of the cons of being self-employed includes having to pay your own health insurance premiums. These can add up quickly and can be a high expense for you.
The good news is that you can take the full amount of your health insurance off of your income. This will add up to fewer taxes that you will need to pay.
Deduction #5: Service providers
It's possible you may need to rely on your phone or the Internet to help you get customers or clients for your business. For instance, if you own an online writing business, you will need to log in each day to complete your work. The cost you pay to your service providers can be subtracted from your income.
There are benefits of being self-employed and one of these includes the many tax deductions that you're allowed. Be sure to discuss this the tax accountant (such as one from The Callen Accounting Group, PLLC) you select to do your taxes for you!Share
10 December 2015
Accounting is the absolute most important element of running a business. If you mess up the bookkeeping even the slightest bit, the entire business could be in trouble. I know how costly a small bookkeeping error can be. About three years ago, I made a seemingly small mistake in the financial records for my business and the next year when I filed my taxes, things were very bad for me. What would have required a small tax payment had suddenly turned into a big tax bill and quite a headache. Since then, I have worked with an accountant and things have been better.