When you own your own business we don't have the luxury of filling out a quick form and handing it in to our boss. We are the boss. And there are a lot more things than just one form that we need to take into account when filing taxes for our small business. One of the major things that gets forgotten or not taken advantage of is deductions. Today, the amazing Amy Northard, THE Accountant for Creatives is filling us in all about deductions!
There are so many deductions available to small businesses and it’s easy to overlook some of them. While you’re working on your taxes, keep these deductions in mind so you don’t miss out and overpay your tax.
7 Things to Deduct
Mileage - If you drive to client meetings, the airport for a business trip, or even the post office to mail out Etsy orders, you should be tracking your mileage. Since the mileage rate is $0.54/mile in 2016, this can add up to a pretty sweet deduction if you drive frequently for your business. Look for an app that you can have on your phone to track the miles for you. A popular mileage tracking app is MileIQ.
Software subscriptions - Think about all the online services you use to run your business. So many of them have monthly or annual fees that can be easy to forget about.
Meals with clients - If you grab coffee or a meal with a client while discussing business, make sure you keep your receipt and jot down on the back a short description of your meeting.
Education - Online courses, in-person conferences, e-books, and physical books are all examples of education expenses that can be deducted.
Facebook ads - When you pay to sponsor a post or run ads through Facebook, these costs should be included as an Advertising expense.
Hotel stays - The expense to stay at a hotel during a business conference or other business-related travel should be deducted. If you add on a couple extra personal days to your stay, be sure to leave that portion of the expense off.
Internet - If you have a home office, be sure to include your monthly internet costs in the home office deduction. This shouldn’t be deducted directly as a business expense, unless you have internet for an office space outside of your home.
3 Things You Can’t Deduct
Starbucks when you aren’t meeting clients - The IRS says we can only deduct our Starbucks addiction if we’re meeting with a client to discuss business. If you just needed to get out of the office and are working at Starbucks, those drinks are a personal expense.
Clothing - Whether you’re speaking at an event, or want to look a certain way when you work an event, if your clothing can be worn outside of work, the cost can’t be deducted. For example, if you’re a photographer and you always wear black to shoot weddings, you won’t be able to deduct the outfit as a business expense. Some common jobs that would have deductible clothing include postal workers and health care workers.
Gym membership - If being fit is a part of your business, it might seem like common sense that you should be able to your gym membership. I’m not just talking about fitness professionals. Bloggers, models, and speakers may rationalize that they need to look a certain way in order to be successful with their business. Unfortunately, the IRS considers this a personal expense.
There are many more deductions available to small business owners, but these are the most commonly asked about. When trying to decide whether something is a business expense, think about whether it helped you to run your business or make your business better.
Join the Biz Chic Co-op
You’re invited to a private membership community that’s loaded with all the necessary tools to grow and up-level your small business. We know it can be overwhelming with everything that’s on your plate right now. We know you’re being pulled in every direction trying to decide which area of your business to focus on. You’re wearing all the hats right now. We want to help simplify and give you some strategies to move your business forward no matter where you are at in the process.
Inside this growing community you will have access to worksheets, guides, ebooks, educational workshops and strategies that have helped other creative entrepreneurs just like you grow their business with clarity and ease. By dedicating just 30 minutes a day, these women have seen crazy success (seriously, one gal 12x her Instagram following in 2 weeks, another started seeing an influx in online sales and one even raved this was the best investment she ever made in her business).
This post gave you some insight on your own taxes so now let’s take it a step further inside the Biz Chic Co-op. Ready and waiting for you right now are materials suited for the creative ready to learn more about their taxes. You’ll find things like The Idiot's Guide to Small Business Write Off's, The Home Office Deduction Formula Worksheet, My Biz Finances and so much more that were made specifically for you. See more about each of these worksheet (and all the other amazing material you'll unlock here).
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