Let’s talk about business deductions, also known as business write-offs. You might get overwhelmed and a little panicked when trying to determine if an expense is a business write-off so let’s break down 7 of the most common deductions that can be applicable to any business and industry.
1. Professional Services
Guess what your bookkeeping fee to hire a bookkeeper is 100% deductible in your business! So there is no reason to not hire a bookkeeper, it makes your life so much easier, especially come tax time! Of course, I’m a little biased but seriously every business owner needs to have clean and accurate books throughout the year to conduct your business most efficiently. In my experience this is the category most business owners don’t want to invest in but it is one of the most crucial parts of running a legitimate business. Other things in this category include hiring a tax preparer, lawyer, getting business contracts, etc. Things that are foundational aspects to running a business with strong foundations.
2. Education
As business owners we are constantly investing in different courses, coaches, and masterminds that are teaching us new skills and keeping us up to date with the latest trends. Investing in education is one of the best things you can do to grow your business and create systems & processes. Since this is directly related to your business, it is a write-off!
3. Advertising
This includes things like building a website, running ads, business cards, getting brand photos, going to networking events, and anything that is promoting your business. Here’s a secret here too– if you want to make client gifts or clothing deductible, get your gifts or clothing branded with your logo and they can fall into this category making it 100% deductible!
4. Contractors
If you hire out work through a contractor, this expense is deductible. You just have to issue them a 1099 at the end of the year. I recommend paying contractors through Gusto. Gusto handles issuing your contractor(s) a 1099 at the end of the year so you don’t have to and it is just a flat fee every month.
5. Credit Card Processing Fees
I could do a full blog post just on credit card fees and accepting payments. You might be hesitant to accept payments via credit cards because you don’t want to pay the 3% fee but trust me, having customers pay online via credit card is saving you time and money even with the fee, but that’s a story for another time! Credit card processing fees via Stripe, PayPal, etc. are directly related to getting paid and are 100% deductible!
6. Software
This is a big spending category, especially if you primarily conduct your business online. I know this is the biggest spending category for a lot of online businesses. This includes software like Zoom, Loom, Google Suite, accounting software, CRM software like Dubsado or HoneyBook, website hosting, Canva, etc.
7. Travel
If you travel for business, say you go to a business retreat, have a business meeting in a different city, or are going to attend a business conference, the cost of travel to get there, stay there, and travel home are deductible. This would include things like airfare, hotel, taxi, meals, etc. One thing to be cautious of is if you extend your stay for personal vacation, that could be interfering with your ability to deduct 100% of your trip. I recommend looking at the IRS guidelines for this or talking with your tax advisor.
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