You’re the CEO of your creative small business- not an accountant. I get it! Alicia here and I LOVE numbers! I’ve taken multiple accounting courses over the years and have self-educated a little too much in tax prep. So never fear! You don’t have to dread your creative small business taxes!
Today I’m going to share my knowledge and dish out some tax deductions you might miss. But please remember- tax code and law is complicated! I’m well versed in these concepts conceptually and put them to good use in my own business, but please do yourself a favor and hire a professional! It never hurts to have an experienced set of eyes go over your tax docs for the year and make suggestions for your specific creative small business taxes.
#1 Startup Costs
So you had some costs that you paid for before your legal start of business date? You and the rest of business owners too! You are allowed up to claim $5,000 in startup costs on your taxes! This is great news!
#2 Personal items that you are now using for business-only
This rings true for a lot of creative small business owners and is frequently missed out on! We buy the equipment for our hobby and then our hobby turns into a business- no shame! However- those supplies you bought that you now use for business-only? For sure deduct them. Just be sure you are deducting them at the fair market value of the item NOW, not the price you paid for the items.
#3 Self employment tax
The government knows it’s rough for a small business owner at tax time. Heard of FICA? When you’re working for an employer you see FICA taking out on your pay stub- it’s right around 7.5%. Well, now that you’re working for yourself you technically paying 15% because you’re the employer AND employee! Fortunately, you can deduct the portion that your employer would normally pay! This will directly adjust your income and make you one happy camper at tax time- thanks, Tax man!
#4 Interest payments
Oh, you didn’t have thousands upon thousands of dollars to start up your business? You took out a loan or used a credit card- we’ve all been there! Did you know you can deduct any interest payments you’ve made to the bank? So if you’re accruing interest don’t forget about this deduction!
#5 Expenses on legal documents and tax preparation
If you’re paying a professional to do a service for you ask yourself if it’s tax deductible! If you pay an accountant for bookkeeping throughout the year, CPA just for tax time, or turbo tax you can deduct these expenses! Did you have a lawyer draw up or review contracts for your business? Did a professional file your business documents when you started up? Tax deductible!
What deductions have you discovered apply to your business? Share them in the comments below!