As a self employed business owner, you are in charge of finding a tax reduction strategy that benefits you. We’re discussing four tax reduction strategies that will apply to you if you operate your business as a proprietorship. As always, there are so many ways to reduce taxes, but these are just a couple of key elements to keep in mind.
Claim your office:
With remote work continuously on the rise it’s no surprise almost every home now has a home office. If you conduct any business from your home on a regular basis, you should definitely be claiming that office as a principal place of business. Not only does this obviously eliminate your office commute but it also gives you the home-office tax deduction.
Combine your trips:
Learn how and when to combine your personal and business trips in order to create a business deduction. For example, you plan to attend an annual convention in California but this year you decide to rent an Airbnb on the beach while you’re there – this can easily count as a business deduction. Keep in mind you can also count airfare, hotel suites, rental cars, and even boat/cruise tickets. As always, don’t forget to keep proper documentation for all of your travel expenses so you can justify and prove all of your expenses.
Make your friendships business partnerships
Next time you visit an old co-worker over lunch, think before you throw out that receipt. Did you talk about business? Did your acquaintance bring up any new work opportunities? These are all things to consider in order to make this lunch a source of business. Keep in mind, you need to have proof when recording these meetings. This includes the name of the person you shared a meal with, the receipt, the date, what was discussed, and proof of payment.
It’s common to disregard your start-up expenses when starting a new business, but we’re here to remind you those expenses are deductible! There are a variety of expenses that can apply here, including but not limited to: certain training costs, advertising costs, wages, certain fees to consultants, any travel expenses (flying, driving, etc.), outings with people who are providing some sort of expertise or advice to you, and many more. The expenses must have proof that they occurred before your business began and must also qualify as something that you would deduct if the business already existed.
Keep these simple tax reduction strategies in mind if you’re a self employed individual and never forget to reach out to a tax professional with any logistical questions you have. Here at Emerald Financial Partners, our team can help you keep track of all of your business tax preparation documents in order to make the tax season simple and easy for you – no matter what!
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