You can minimize your tax burden as a self-employed person by saving your receipts and tracking your expenses for business expenses. You should also categorize your expenses carefully every day in a spreadsheet or expense tracking software. Here are some expenses to watch out for.
For many small businesses, travel expenses and mileage are one of their most significant expenses. You can get https://www.quonassociates.com/ to help you with the various ways of tracking this expense category. For privately-owned vehicles, it’s usually easiest to just have your employees keep track of business mileage and reimburse them on a per-mile basis. The IRS has guidelines and standard reimbursement rates for this. For company-owned vehicles, keep track of actual expenses. Be sure to allot the interest portion of any loan payments to interest expense.
Meals and Entertainment
Meals and Entertainment are some of the more complex expenses to keep up with, because the rates the IRS allows vary and are not 100 percent in most situations. Ask your accountant for guidance here.
Office Equipment and Supplies
Those runs to the office supply store add up, and these receipts are often lost in the shuffle. It’s important that you keep up with them and enter them in your system. It’s best to use a company debit or credit card and keep all expenses completely separate from your personal funds. This makes it much easier to defend these expenses in the event of an audit.
Things like snacks for the office are also deductible, as long as they’re purchased with company funds and made available to employees.
If cell phones are used primarily for company business, this is also a deductible expense. Just make sure you can establish the business purpose for the phones.
By keeping organized throughout the year, you can save your accountant a great deal of work come tax season. This benefits you by ensuring you get the maximum deductions allowable.