Did you know that taxes do not work the same for small businesses as they do for employees? When I used to work in the school system I could only deduct $200 to $300 a year. Of course as a teacher, I spent way more money than I was supposed to from my own pocket because the school wouldn’t pay for it. Now that I own my own business I can purchase whatever I want without having to go through anybody to get it. Last year I purchased the Surface Pro 3. I was able to deduct the entire amount because I use it for my business. This expense goes under computer expense. In fact, if I wanted to get a new computer every year I could. There is no limit to my spending, except for the fact that I would like to actually make a profit.
So what types of things can you deduct?
1. Dues and subscriptions to websites or professional communities
2. Office supplies
3. Travel fees
4. Business gifts – possibly for referrals
5. Meals while travelling
6. Accounting tools like TaxBot – see the video below to learn more about Taxbot
8. Bank fees
9. Cell phone
10. Charitable contributions
11. Cleaning -If you have a cleaning crew clean your office it can be deducted.
12. Computer expenses
13. Dry cleaning and laundry while you are travelling.
14. Education – you can deduct the entire amount of the Tutorpreneur Program
15. Legal – some people like to turn their business into an LLC for liability reasons.
16. Licenses and Permits – if you are a teacher you can deduct the $100 it takes to renew it your license.
17. Maintenance and Repairs on anything in your office
18. Office expenses
21. Professional Fees
This is a huge list and it is important to keep track of it all. It can be really daunting to do it, but if you have a good system in place then it will save you a ton of headaches come tax time. About two years ago I was introduced to a tool called TaxBot. This tool allows me to take a picture of my receipts and file it online. I never have to remember to save my receipts and enter them later and risk forgetting. I enter them immediately and voila it is saved in Taxbot's system. In fact, this year on January 1st all I needed to do was print off a couple of documents and hand them to my tax accountant. In the past it took me weeks to put everything together.
When I first got starting with my online tutoring business I seriously missed a ton of opportunities to deduct things. I continued to educate myself, so that I could take advantage of this bonus.
Tax laws do change from state to state, so you will want to make sure that you are following the tax laws in your area. For the most part though, these are the major things that can be deducted.