What comes to your mind when you hear the words ‘Small Business?’ Unique, work, mine, hard-working? I’m sure taxes and bookkeeping aren’t two words that are on the top of your list, but sadly, those are two important components of running a successful small business. Whether you outsource (DAC Clients!) or you handle it all yourself, you have to make sure this is taken care of.
So, to make this a little simpler and to keep a few more dollars in your business checking account, I am going to show you the tax return form and a few deductions that you may not be keeping up with.
- On line 9, you’ll see a place for car and truck expenses. Did you know that you can deduct the mileage you drive for work? There are a few more technical rules to this, but generally, if you drive for your business those miles are deductible here. You have to keep up with this. There are lots of apps that can help, or just a simple spreadsheet does the trick as well. Just be sure you record where your odometer started and ended, how many miles you drove and the reason and you should be good to go.
- Contract labor. If you hire someone as an independent contractor for a one time project, you can deduct those expenses!
- Interest. If you pay interest on a mortgage for a building you work in (not your house), then you can deduct those expenses here! Make sure when you are doing your monthly bookkeeping that you separate the principal payment from the interest paid.
- Legal and Professional Services. If you hired someone to take pictures for your business, handled your bookkeeping each month, or to handle the IT side of your business monthly, then you can deduct these expenses here! Be careful though, if they do business and personal work for you then you need to be billed separately and pay the business part out of your business checking account and the personal from your personal account.
- Utilities. If you work from home and have a separate wi-fi connection strictly for work, that is a deduction! If you have a cellphone bill that is only for the business or a phone service for the business, then that is deductible as well!
The biggest warning I would give you is this, Be Consistent. Be consistent in what categories you put things in year after year and always, always, always double check with your CPA or EA if you have any questions. Don’t try to sneak personal expenses in here and don’t leave anything out that you know should be here.
I hope this helps you before you have to file taxes this year! If you have any questions, feel free to email me at Lydia@dacbalance.com and I will try my best to answer your questions.
As always, feel free to follow me @dac_balance_llc on Instagram and Facebook. I look forward to connecting with you there!