There are many deductions that small business owners and self-employed individuals can take advantage of. Be sure to find an experienced and reputable tax preparer who takes the time to get to know your business needs and who will ensure you take full advantage of every tax write-off you are entitled to.
MONEY IN YOUR POCKET
by Cassandra Joseph
WINTER | 2014 | 11
Your cellphone as a small business deduction
If you're self-employed and you use your cellphone for business, you can claim the business use of your phone as a tax deduction. If 50 percent of your time on the phone is spent on business, you could legitimately deduct 50 percent of your phone bill.
Deducting automobile expenses
If you travel for business, even short distances within your own city, you may deduct the dollar value of business miles traveled on your tax return. The taxpayer may file the actual expense he incurred, or use the standard mileage rate prescribed by the IRS, which is 56 cents as of 2014.
Other areas to explore
Other deductions that can be easily missed are advertising and promotional expenses, banking fees, and air, bus, or train fare. Restaurant meals and other entertainment costs may be written off as long as they are necessary business expenses.
Individual Retirement Plans (IRAs)
It is important that as a self-employed individual you prepare for the future.
The best tax write-off for the self-employed is a retirement plan. A person with no employees can set up an individual 401 (k).
If you have employees, consider a SIMPLE (Savings Incentive Match Plan for Employees) IRA – an IRA-based plan that gives small employers a simplified method to make contributions to their employees’ retirement.
Both plans are tax deductible.
Record Keeping
Be sure to keep detailed records of all business expenses. Record every expense incurred for business. Your tax professional will let you know if the expense is justifiable. Always be prepared in the event of an audit you want to be able to prove that you have claimed legitimate business expenses.