Updated: Mar 18
Most people find tracking write offs and knowing what they can write off extremely stressful and time consuming. I’m here to help with that. PLEASE KNOW: I am not a licensed cpa, tax attorney, or certified to give tax advice. This is not legal accounting advice. This is purely what I’ve learned and found that’s worked best for me.
Now let’s dive in. What’s a write off and how does it work? A write off is a business expense you can partially or fully deduct from your taxable income, reducing how much you owe the government. The less you have to pay at the end of the year the more that stays in your pocket. Knowing what you can write off and how to track those write offs is key to keeping your pockets full.
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While working on my taxes for 2019 I took down the different categories of itemized deductions H&R Block listed that can use for write offs. What I love about H&R Block is that when you’re entering your itemized deductions it doesn't just say “Advertising” or “Office Expenses” it actually gives you a list of examples under the name of each category. Here's a few I keep in my notes:
-Business cards, flyers, and newspaper ads
-Internet, television, and radio advertising
-Advertising at a charitable or community event
Car + Truck
-Mileage tracked during business drives
Legal or Professional Services
-Fees paid for tax advice for your business
-Feeds paid for the preparation of the tax forms for your business
-Legal fees paid to an attorney that were ordinary and necessary to the operation of your business
Business Meals and Entertainment
-Meals while traveling overnight on business
-A business lunch with a customer or client
-Refreshments given out at an open house
-A seperate phone line or internet service
-Office supplies and postage
-Maintenance and cleaning expenses
-Merchandise bought for sale to customers
-Material used to produce goods or assemble good for sale
-Print cartridges and printer paper
-Cleaning material and supplies
-Professional books, instruments, and equipment if normally used up within one year
Taxes or Licenses
-Federal highway use tax
-Property tax on a business property
PLEASE KNOW: I am not a licensed cpa, tax attorney, or certified to give tax advice. This is not legal accounting advice. This write off category list is what I found through H&R Block. This is not a full list of all write offs available to you, there are more. If you have questions or think there is more you could be writing off please contact a tax profession. This is just a great place to start!
Being self employed has its perks, but it also comes with a lot of responsibility. If you’re going to write any of this off you’ll need to track it. But how do you track it without it taking up hours and hours during tax time? The answer here is consistency and diligence. The only way to shorten the amount of time it takes to do taxes is to work on it throughout the year. An hour or two once a month will save you countless hours of frustration during tax time!
Let’s break this down into 4 simple steps.
#1 Finding Write Offs
Every month my bank sends me a paper statement with a list of all my transactions. Each month when I receive it I go through each transaction and highlight the write offs.