I'm not going to lie...dealing with taxes and the legal aspect of running a small business can be a nightmare. Back in October I registered as an LLC, and elected to be classified as an S-Corp, and I'm still trying to figure it all out. Trying to deal with all of that while working with clients, blogging, redesigning my website and everything else that goes into running a business has my head spinning a little.
And now it's tax time.
I feel like I've gotten a pretty good handle on tax write-offs over the past 4 years that I've run my business, but I learn new things every year.
As an entrepreneur or small business, you know that taxes can be pretty harsh. Make sure you're taking advantage of everything you're able to.
8 Often Forgotten Small Business or Entrepreneur Tax Write-Offs:
1 | Animals
Did you know therapy animals can be tax deductible? The thought had never even crossed my mind!
2 | Gifts to Clients
If you keep the amount under $25 per client, you can deduct the entire amount during tax time. I know a lot of health coaches who provide welcome bags or thank you bags with goodies, so this would be a perfect example.
It also adds a fun touch to the coaching experience. For under $25, you could easily include your favorite book related to their main goal, your favorite healthy snack and another special item like a journal or candle.
3 | Software
Most small business owners know to deduct their expenses for accountants and legal advice, but sometimes it can be easy to forget the smaller software necessary to run your business. This could be anything such as invoicing software, anti-virus software or Evernote.
4 | Insurance Premiums
There are many different insurance premiums that might affect your business. The infographic below mentions liability, malpractice and fire insurance. If you work from home, you can also include your home owners insurance or renters insurance.
Don't forget to deduct your own medical premiums, as well.
5 | Research/ Training Trips
Writing off travel for business can be tricky, but there are times when you should. If your trip was related to furthering your business, even if it's writing an ebook, you may be able to deduct it.
If you mix business with pleasure, you may still be able to deduct certain parts of your trip, like 50% of a client/prospect meal and travel to see that particular client.
6 | Tools of the Trade
Some tools of the trade are easy to identify, like a new laptop.
But say you're a food blogger who makes money from developing recipes and posting them online or compiling them into an ebook. In that case, you should consider deducting props, cook books, utensils, and potentially even the food.
Speak with your accountant on the exact rules that would apply to your situation.
7 | Repairs and Renovations
If you work out of a home office, you may be able to deduct a percentage of the cost for the repair or renovation, even if it wasn't directly related to your office. Speak to your accountant to make sure you follow IRS guidelines.
8 | Processing Fees
Don't forget to deduct all those fees incurred from Paypal! Did you know you can also deduct the interest accrued if you use a credit card specifically for your business purchases? Or the fees associated with having a business checking account?
If you've already done your taxes for the year, I recommend pinning this infographic for next year.
In summary, it's important to track every little thing associated with your business throughout the year, even if you're not sure you'll be able to write it off.
*I was not compensated for this post and am not an affiliate. I just felt this would be helpful for new entrepreneurs trying to figure out their deductions.
In the Comments:
What was/is the most confusing tax write-off question you've dealt with since starting your business?