THERE'S A WRITE OFF FOR THAT!

For new business owners and sole proprietors, it's so easy to forget or not even known about all of the best deductibles and write-offs for your future tax season. So here are some of the best tips and hints and what you can look forward to writing off come April 15th!

April 15th. It's a day that goes down in infamy once you're proudly bringing home your first paycheck or have opened your own business or have become a sole proprietor. Even though it's still 9 months away from when we all have to open our wallets for Uncle Sam, taxes don't have to be as painful or as costly to you or your business as you think. We get it - taxes aren't your favorite thing. So to ease the pain between now and April 15 let's talk about something a little less painful - your tax write-offs and deductibles!

Those glorious write-offs can cut your taxable income and cut down on what you end up paying for your taxes come tax season. But are you writing off everything that you can? Do you know just how much you can track and write off every year to make sure you're getting the financial break you and your company deserves? Let's break down what exactly you can write off - and how you should be keeping track. Federal tax laws can be a bother and can get in the way of what you think you can write off and what you actually can. Tax code and Tax law does change a little every year, so there are loopholes and certain things that will affect how, how much, and when you can write off certain things. When tax season does come around, make sure you, your tax advisor, or your Quickbooks extraordinaire takes the time to research the new tax code for the year. This list covers the big write-offs - and a handful of others that you might not know about. A lot of the time the more unknown or forgotten write-offs can be some of the most lifesaving and profitable at the end of the day. Make sure you're keeping track - and reading the small print.

Our first recommendation is to keep track of everything for your company. Quickbooks is a simple and easy tool that can help you track all of your project probability, manage bills, track your mileage, keep track of your income and expenses, help you manage your invoicing and payments, manage your contractors, and of course - pay your workers. It's simple, efficient, and can take the headache out of tax time. You will also be a star employer if you get your taxes finished sooner than the cut off date. The faster you do, the faster that tax return can get back into your pockets and the pockets of your employees.  

The first general idea to keep in mind when you're just beginning and making plans of what you're going to be writing off this year, your write-offs HAVE to be something that is always used in your business industry. Once this is established, don't forget to keep and track your records. There are TONS of amazing apps and programs that can help you stay organized. Did I mention how amazing  Quickbooks is and how they can do all of that for you?

TOP WRITE OFFS FOR SMALL BUSINESSES!

• Equipment and Supplies: Any office equipment or supplies. This includes printers, computers, software, desks, paper, pens, and phones. This can also include cleaning supplies for a cleaning service and postage. You can also write off the rent or cost of any machinery or equipment you use for your company.
  • When writing off large ticket tangible items like tables, chairs, or vacuum, look into their depreciation values. Will it be better for your company to write off all of these big-ticket items now, or wait until later? If you don't depreciate them, they are treated as non-incidental materials and supplies (under a de minimis safe harbor). These items then become deductible when purchased or furnished to customers.
• Business Costs: This is the cost of doing business for the current fiscal year for services like attorneys, accountants, and consultants. This also includes your utilities; electricity, your mobile phone, and your second land line at your home (if you work from home). Ordinary repairs and maintenance of your building, office, or workspace. This also includes contract labor for freelancers and independent contractors.
  • Remember if your freelancers and independent contractors are making $600 or more from you, deliver the correct tax papers for them to fill out at the end of the year!
  • When writing off mobile phones - you can only write off the time you're using it STRICTLY for business.   
• Promotional Investments: All of your ordinary and common ways of advertising are fully deductible. This includes your business cards, phone book ads, sponsorship, Facebook ads, social media campaigns, and so on.
• Bad Debts: Surprising right? As long as the product that was sold as a tangible good NOT a service, bad debt from that fiscal year can be written off, as well as interest on business indebtedness. This also includes penalties or fines for late performance or nonperformance of a contract!
• Selected Taxes: This includes employment taxes, licenses, regulatory fees, taxes on real estate and personal property, employer taxes, the employer share of FICA, FUTA, and state unemployment taxes.
• Labor Costs: This includes employee compensation, wages, gifts, bonuses, and benefits such as health insurance and vacation pay. If your business helps with adoption assistance, and group team life insurance. This also includes commissions and taxable fringe benefits. You can also write off plan admission fees. This write-off also includes education assistance, dependent care assistance, and contributions to qualified retirement plans.
• Insurance: This write-off includes your business owners policy, malpractice coverage, flood insurance, cyber liability coverage, and business consultation insurance.
• The Office: You can write off the rent for the current year as long as the owners don't have and won't receive equity in a title to the space. You can also write off mortgage interest if you own realty.
  • If you work from home, you can still write off a part of your mortgage and the household expenses. BUT there are some important rules you need to follow. The space you choose must only be used for work and NOTHING else. To write of this space, measure the workplace you've chosen and divide that by the square footage of your home. The percentage you come up with is the amount of housing payment and utility cost you can deduct.
• Commission Fees: Fully deductible!
• Travel: If you travel for work, your transportation and lodging can be written off. Meals can be - but there is a limit to how much. If you're taking yourself out for a meal, this can't be written off. But if you're taking a client or employee out for a meal, 50% of that meal can be written off. You must substantiate the expense if you choose to do so.
• Car & Truck Expenses: The cost of operating any vehicle is only deductible if there are required records (receipts) to prove business usage. This practice can be eliminated if you rely on the IRS standard mileage rate of 58 cents per mile, instead of deducting your actual outlays. You can write off these expenses if you own the vehicle or you're leasing it.

EXTRA WRITE OFFS YOU MAY NOT KNOW ABOUT!

• Books, audiotapes, CDs, videotapes, software, and other similar items that grow your business skills.
• Bank Service Charges
• If you join a chamber of commerce and attend trade shows, you can write off dues and registration fees.
• Coffee and Beverages for your employees.
• Business Licenses
• Regulatory Costs
• Outplacement services for employees

How much did you know? Did you find anything surprising and helpful? I hope so! Hopefully, this has shone a light into some confusing or unknown waters that now makes more sense and will save you a few extra dollars this next tax season.

Next up: Things you think you can write off, but actually, you cant!