While being your own boss can be fun and rewarding, it’s also a learning experience that involves a bit of legwork. Tack on the business costs involved in maintaining your office space and keeping clients happy, and you’ve got another responsibility on your plate—a number of business-related items for which you’ll need records when tax time rolls around. As an independent worker, you’re likely to owe on your taxes, so keep track of your expenses—no matter how small—and take all the deductions you can.
If you are self-employed, make sure to ask your tax service in Des Moines, IA about the following common deductions that may be available to you:
- Home office: If you work remotely or out of your home, the home office tax deduction is for you. But to claim your home office space, you must actually do your work in the area you are writing off, such as a room in your home or an office building the sole purpose of which is for conducting business and doing your self-employed work. Take accurate measurements of the square footage of the room and keep the information on hand for tax season.
- Equipment and supplies: Your business likely requires you to use certain types of equipment or supplies. Office equipment that will last a long time—like furniture, computers and printers—can be deducted every year at their depreciated value, and new supplies that were used up during the tax year—such as pens, paper, folders and printer ink—are things you can write off based on their actual purchase prices.
- Vehicle usage: Not everyone needs a car to run his or her business. But if you do, then a portion of your vehicle use—mileage driven for business and a percentage of your operating, maintenance and insurance costs—is tax deductible. File away all receipts and bill statements to take to your tax preparer.
- Phone and Internet: Whether you’re claiming a home office space deduction or not, don’t leave out the portion of your landline, cell phone and Internet bills that you use for your business. Alternatively, you can go ahead and deduct the entire monthly amounts if you have separate lines exclusively for your home office. This dedication could allow you to claim as little as 25 percent or as much as 100 percent of your Internet and phone expenses.
- Travel, meals and entertainment: Since you’re self-employed, you may incur travel, entertainment or meal expenses related to your business. This includes wining and dining important clients, traveling to meet with clients, travel lodging and transportation and going to entertainment venues with work partners or clients, which you can deduct in part, so long as you are discussing business matters.
It’s important to record the things you plan to write off and hold onto all relevant receipts in the event of an audit. Now that you know that claiming self-employment deductions is a simple way to lower an owed tax amount to a more manageable number, feel free to give Accounting & Tax Professionals, PLC a call today for tax service in Des Moines, IA.