Do you want a business profit formula that works? Look at what you are or are not writing off in your service-based business. I can’t guarantee that you can write all of these off as the rules change often and depending on your location they may be a bit different. What you can do is take a look and see if any of these ideas trigger for you some things that you want to ask your money-saving team about.
Most likely if you are reading this blog you are working from home. That seems to be the majority of the people that reply to my posts. I have a corporate office and a home office for different businesses. I can work with clients in larger businesses and I can work with clients that are small business entrepreneurs working from home and working to make a profit in their business. So let’s talk about what are some possible expenses you may have for your accountant, bookkeeper, or tax preparer (your money-saving team) look at and see if you can deduct them in your business.
Here’s a list of business expenses you may not think that you can write off as you prepare for next year’s taxes:
Rent of office or home office
If you have a space set aside for you to work on your business. A spare bedroom or a loft is great. But a corner with a small desk or table works too. You may be able to write that off as an expense. How big is that space? Measure it and know what the size is so you can share that with your money-saving team.
Utilities
These would include electricity, gas, and internet service for your office space. You may not be able to write off all of the costs for these expenses if you are using them for multiple things personally, socially, and professionally. You may however be able to write a portion off on your end-of-year taxes.
Cell Phone and Tablet
You may not be able to write off the full cost of buying your new cell phone or all of your cell phone service. Assess how much of your phone time and day is spent on you working your business. 20%, 50%, or 80% whatever percentage it is let your money-saving team know so they can help you write off the correct percentage for your business.
Vehicle Expenses
Are you using your personal vehicle to go meet with clients, attend workshops and training(s), business networking meetings, or lunch and learns? This may be another small amount that you can write off. One of the best things you can do is record your mileage every time you drive for business. Know your mileage for the beginning of the year. Record your business miles and then at the end of the year, you can determine how much of your driving is spent on your business. If you drive 50% of the mileage for the business you may also be able to write off 50% of your maintenance and service costs as well. And some of that car insurance you pay for could also be deducted.
Continuing Education – Certifications, Books, Workshops, Training
If you are doing education that continues you moving forward in your line of work you could write that off as well. Keep records of your training(s). How many hours for each training that you attend? Keep a log of that as well. This will help you later when you are trying to determine what you should be charging for your services. Where was the training? Were there any travel expenses involved? You could write some of that off as well.
Licenses
Do you need a business license to do business in your area? How about a specialized license or certification for your industry? Make sure you get the necessary licenses for you to do business with your local, state, and federal government. Seriously, who wants to pay the government? YOU DO! And you have the opportunity to make those fees an expense against your revenue. So do not skimp here and blow it off.
Dues and Subscriptions
What does that mean? You Chamber of Commerce membership, networking subscription, and memberships like eWomenNetwork, BNI, LeTip, Polkadot Power House, Associations for your industry, and journals to support your business. These all have the potential to be written off.
Insurance
Many small business people I speak with do not have liability insurance for their business. Have you not seen how we live in a litigious society? People sue people for the craziest things. Get insurance and keep yourself covered. There are also things out there like PrePaid Legal where you can ask a question and get things written for your business to protect you and insurance is not as expensive as you have made it up to be in your head. Get insurance and protect yourself and let your business pay for and get it written off.
Supplies and Office Expenses – web hosting, contact management software, membership site, software, client gifts, greeting card services, and postage.
Paper, pens, calendars, anything associated with your website or selling on the web. Sending your clients thank you cards, holiday and birthday cards can all be utilized as an expense in your business. Keep your receipts print or digital works and make it simple on yourself by using a credit card just for your business (See the previous blog on How to Save and Earn Money Using Your Credit Card) so everything is in one spot for you to go to when it is time to prepare your taxes quarterly and yearly.
Child Care Expenses
Did you know in some areas you can write off your child care expenses for you to do your business? Most people don’t think you can. You can hire someone (with the right criteria) to come into your home and keep the kids busy and out of your way so you can create sales and work with clients. You can send them to daycare and work hard in your business to get more clients so you can get paid a wage from your business. Check on this one to see if this large expense to your household can be written off. You can take this as a personal deduction on your personal taxes. (Not in your business expenses but because of your business you can write it off personally.)
Wrapping Up
These are just a few things I share with clients because often this is where the small business owner skimps or forgets to utilize the tax benefits of writing these off with your business. I have mentored many women who have their husband just files their taxes at home and he does not itemize all the expenses for their wives’ business. Sometimes they just think it is a little hobby you are doing. When you spend a little money on the right tax preparer it is likely you will end up getting a bigger return and actually creating a profit for your business. Or let your husband know that you want your business itemized and if he is willing to do it and understands the benefits of laying it all out then team up and get it done. Just a quick reminder for having business profit formula us to not mix business and personal bank accounts together. Keep your business and personal revenue and expenses separate. Starting now, go open a separate bank account and only use it for your business. If you are a sole proprietor you can open a bank account in your name and run it like a business account. Go to your bank today and get it done. Make all your payments for your credit card that you only use for your business and deposit all your business income in one account. Please do not mingle your personal money and your business money. Act like a business and people will treat it as a business.
And go like the Wisdom Highlights for Entrepreneurs Facebook Group and connect with me there.
Resources: