The good news is, you can write off most or all of these expenses at tax time! With some basic accounting, you can write off business expenses and end up with a much lower tax bill, or even a refund.
You might be asking, what is a business expense? Business expenses are any costs you take on to run your business. They differ from personal expenses, which are expenses for your life outside of your business. Some examples of business expenses you can write off at tax time include:
Professional fees. You can write off expenses such as licenses, permits, professional association fees, and relevant professional training.
Travel expenses. If you're flying or driving for business, you can write off plane tickets and car mileage. You can also write off hotel stays, public transportation or taxi use, and even the costs of meals while out of town for business.
In order to write off these expenses, you need to be careful. Otherwise, you might end up having to pay penalty fees in the event of an audit. Some tips for complying with the IRS include:
Keep careful records. In addition to noting expenses in your accounting software, save copies of your receipts in an online file or envelope. Write down the purpose of the expense (For example, lunch with a prospective client).
Double check all business expenses. Not everything qualifies as a business expense; one example is a non-dedicated home office that you also use for personal use. Clear all of your expenses with your accountant before taking deductions.
Be careful with your math. So many tax errors come from simple typos or calculation errors. Double check your work, and use accounting software and outsourced help to avoid preventable errors.
Contact us for help keeping track of your business expenses and other bookkeeping needs.