It's getting closer to that time of year again. Lucky are those that can file simple returns and rush as soon as they get their W2's to claim their rapid refund. I used to be one of those people many moons ago. Now, however, I've discovered the joy of what filing a long form can actually do for you.
There are many advantages to having your own business and each business offers unique tax advantages. Here are many common deductions that should not be overlooked to keep more money in your pocket come tax time. As always, make sure to keep the proper documentation:
Phone bill, cable (internet), website expense, advertising expenses (if any), business cards, fliers, computer(s), television (if used for business), camera (if used for business), mileage to and from events, airfare for events, meal expenses (for meeting clients and on trips), booth rental (if any), and other expenses as documented for your business.
I'm sure I'm missing several that are pertinent but I am trying to cover those that come to mind and pertain to my own business. Personally I try to use as many free and inexpensive advertising mediums that I can such as facebook and other social sites. I try to keep most expenses to a minimum so I get to claim many that were already part of my household budget. This maxmizes your bottom line.
An additional expense that is unique to my business, is the ability to claim $60 to $70 plus freight in household expenses monthly as a deduction. This results in a minimum additional deduction of $900 per year. It's a nice perk to be able to use a normal household expense such as this to keep more of my hard earned money in our pockets.
As you can see, when well documented, all these expenses can add up quickly. You must qualify as being actively involved in your business but that is easy to document with a calendar marked with events you have attended and client meetings which most of us keep to stay on track.
I personally keep an excel spreadsheet and enter expenses into it to add them up quickly for tax time. All receipts go in a box until tax time then they get filed with the copy that I print of the tax form. It's easy if you are organized and by doing so, you can increase your refund exponentially.
This blog is not intended to be tax or financial advice. This is simply my version of how we are executing a solid Plan B as a way to reduce our fear and uncertainty with this economy. We feel very lucky to have found a business where we can work around our schedules and not spend any extra out of our budget.
If you haven't given much thought to it yet, consider how you can add a solid Plan B to what you are already doing. It's a smart thing to do with people working 2 and 3 jobs just to make ends meet. With unemployment rising, uncertainty seems to stay right around the corner. So how do you pick what's right for you? That's another topic for another day.
Have a fantastic day and happy filing!