Tax Advantages for Self Employed
When tax time inevitably rolls around, self-employed individuals can reduce their taxable income and help increase their financial independence with a variety of different tax write offs. It is possible to turn costs that you would have experienced anyway into tax deductible expenses. Always be sure to refer to the proper tax guides or hire an accountant if you are unsure of any deductions.
Many self-employed people make their office right in their home. If you are among this group, you can find deductions for any workspace you use regularly and exclusively for business purposes. This can include the business percentage of your rent or mortgage, property tax, utilities, home insurance and any home maintenance costs you pay during the year. Be sure to create a map of your house and work areas and save it in case you are audited.
Health Insurance Premiums
If you pay your own health insurance costs and are not eligible for benefits on the health insurance plan of your spouse, you should be able to deduct any health, dental and long-term car insurance premiums.
Meals and Entertainment
Only 50 percent of your meal expenses are deductible, but you must conduct some sort of business with the person you are dining with. This category can include meals at restaurants, sporting events and even golf games. Remember to keep all receipts in case you are asked to provide proof at a later date.
As a self-employed person, you are able to deduct any overnight travel outside of the city limits. However, there must be a specific business purpose before you leave, and you must engage in some type of business activity while you are there. This could include any meeting, skills workshops or prospecting for new business.
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