self employment and taxes - what do you do?

Posted on: 11 February 2015

Once you decide to open a business from your home, many expenses in your life become tax deductions. Keeping copies of bank statements and receipts is important so that you can take advantage of all the deductions you have coming. If you're just starting out, you might be a little confused about which expenses you can deduct from your profits to lower your tax liability. This guide explains three of the deductions that you might not think about.

The Small Office Supplies

There is little doubt that you want to get as many tax deductions as possible. Don't overlook the smallest of expenses for office supplies. They can add up nicely and put you in a lower tax bracket. Keep track of your office supply expenses so that your accountant can deduct them from your profits. Some of these smaller expenses include:

• pens and pencils
• printer ink
• printer paper
• shipping supplies
• scotch tape
• markers
• highlighters
• white boards

The State Fees for Doing Business

Most states have fees that you need to pay each year in order to remain in business. Some have a fee that you need to pay in order to keep your name, and others make you pay for the privilege of telling state authorities that nothing in your business has changed over the past year.

These state fees are tax deductible and can bring your bottom line down as far as your tax bracket is concerned. Keep track of how much you pay and when you pay them. Timing is key here because you can only deduct the fee for the year in which you physically paid it. So, if your fee is due in February and you paid it in December, then you will take the deduction for the previous year's taxes and not in the year in which it was due.

The Tax Preparation and Accountant Fees

Keep track of how much you pay your accountant for payroll services, bill paying and tax preparation. These fees are tax deductible against the profit of your business and could mean the difference between high or low tax liabilities.

Remember to keep records of everything you spend and bring in as you are operating your business. If you would rather concentrate on running your business, give these responsibilities to your accountant like Teri J Henderson, CPA, P.A. They can keep track of your expenses and let you know when you to curb spending, or when you should invest more into your business to have a better tax return.