Tax Advantages for the Self-Employed
Being self-employed is not just being able to be your own boss. It is also about being able to put more money in your pocket at Tax Time. And wouldn’t you rather pay yourself than Uncle Sam?
But, as with any strategy, knowing how to implement it is crucial. That knowledge will allow you to be in control of your tax situation instead of being at the mercy of the IRS. This article is designed to begin the process of increasing your knowledge in this important area.
Following are some tips for making the most of your self-employed status:
The most important advice you can utilize as the owner of your own business is to keep thorough and accurate records. Keep all of your receipts and make sure you have the documentation to support your tax deductions.
What about childcare? Think that just because you work for yourself or from your home you can’t deduct for childcare? Not so. Childcare credit is just as available for self-employed and in-home business operators as for 9-5 workers. Use it when necessary and take advantage of the savings.
But your children can not only save you money, you can help them earn money. Why not let them be involved in your business with you. Pay them a fair wage, then deduct their wages, bonuses and even fringe bonuses on your taxes. Good, huh?
Let’s talk about your workspace. Whether you work from a full office in your home or a nook in the basement, you can claim the area. Determine which percentage of your home your workspace makes up. Deduct this percentage from your rent or mortgage, utilities, and repairs from your taxes.
Although you cannot use these types of deductions to bring about a loss in your business, you can use them to bring your business down to no profit. This reduces both your income tax and your self-employment tax. Can’t use all your expenses? Carry them forward to next year.
Remember that little trip to make the bank deposit? If you’re self-employed, that trip is a tax deduction. Your car is a business tool when you are self-employed. In other words, it’s a money maker, to help you pay less taxes.
The IRS keeps a close watch on self-employment income. That means you should know how to do it right. It can put money in your pocket.
Leave a Reply
You must be logged in to post a comment.