Whether you are self-employed out of your home or have an actual office with a couple of employees, the government considers you a small business, and what this means for you come tax time is (drumroll, please) write-offs.
Go ahead and do a little dance of joy, because small business write-offs can save you a ton of cash at tax time if you know what to look for. If this is your first year operating a small business, you might still want to consult with a tax professional until you are comfortable with all of the new possibilities open to you when you fill out your tax forms, but to give you an idea of what’s out there, below are just a few possible things you might be able to write off, depending on the type of business you run.
“Office” space… and all that that implies.
If you’re renting a space specifically as your office, the entire cost can be deducted come tax time, but even if you work from home, it’s possible to deduct at least part of your mortgage or rent. Possibly even more exciting, if you use them for business, part or all of the cost of things like electric, gas, water, cable, internet, and phone bills can be sliced off of your tax bill, too. Typically if you’re working from home, you shouldn’t write off more than about 50 percent of any of those things just to be safe.
Zoom zoom.
Did you talk business on that trip you took to the Bahamas? Well, okay, that one may or may not count, but if you can genuinely claim that a trip had business implications, you can write off part or possibly even all of it. Pretty nice when you consider the cost of things like gas, airfare, and hotel rooms. You probably can’t write off the souvenirs you picked up while you were there, though… unless they are meant to be gifts for clients. Even beyond larger trips, if you drive anywhere for business in your car, you can log mileage (51 cents per mile!) and deduct that from your taxes as well. And hopefully it goes without saying that you can deduct the car itself if you use if for business, though only a portion if it splits time between business and personal use.
Equipment and supplies.
Using that new laptop to keep in contact with clients and write proposals? Business expense. Ditto for that new all-in-one printer you just got, and the desk, chair, paper, pens – pretty much any kind of “office supply” type of product you can think of. Even your fancy new coffeemaker and books or DVDs you needed for research probably count. Be creative – although if you start to feel like you’re being too creative, we recommend checking with a tax professional.
Entertaining and networking.
Whether you’re meeting with a prospective client for coffee to see if you’d like to do business together, discussing the strategy you’ve come up with for launching your new line over lunch with employees, or valeting your car before you head in to a mixer where you hope to pick up new clients, all of these are potentially valid expenses to write off.
Tax prep and other professional fees.
Yes, you can write off the cost of getting someone to save you money on your taxes. In fact, you can even write it off if you buy a few tax books and try to do it on your own. Along those lines of using the tax books to do it yourself, any education expenses related to the work you’re doing can also be deducted. Other “professional” fees you might deduct include payments to lawyers or consultants for business-related fees.
These are just a few of the many things that small businesses can deduct, but you can already see how quickly they might add up if you’re smart about how you use your money. To make it even easier at tax time, keep a separate bank account and credit card for business expenses. You’ll be saving money in no time!
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