It’s that time again. If you are just starting a business for yourself, you want to know the ins and outs of filing self-employment taxes. Having your own business requires a lot of recordkeeping you have to do for tax purposes. Remember those gas receipts you accumulated from making that meeting with a client? Yes. You want to keep those.
Here are a few tips that can make tax time less painful and help you take advantage of some of the tax benefits of working for yourself.
1. Company Form…. Keep it simple
Schedule C, Sole Proprietorship is the simplest way to file if you are self-employed. Its’ an easy way to go.
2. Automized Record-keeping
No more old school record-keeping (unless that is something you want to do). Start using personal finance software like Intuit QuickBooks that synchronizes to your bank accounts. Automatic record-keeping not only saves you time, but it’s less prone to mistakes too.
3. Charitable contributions can be business expenses
Unfortunately, with the Schedule C, you can’t deduct charitable contributions. However, if you give money to charities in exchange for advertising or other means of service, it’s a business expense. A greater tax benefit is what you want to have.
4. Know your allowable deductions
You know that website you built, email account you made and domain you purchased? These are allowable deductions. You can deduct expenses you paid to run your business that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and proper for your trade or business. (IRS.com)
5. Business mileage… Track It
Keeping records of your business mileage does add up and is needed for your records to deduct vehicle expenses. Expenses could be gas, oil, or even maintenance. Your records must include mileage driven, the purpose, and the date. You will also want to know your commuter mileage for the year as well. Miles add up.
We hope this tax information has been beneficial for you this season. Make sure to visit the Internal Revenue Services IRS website for more valuable information. The deadline to file taxes is April 18th.