Knowing what you can and cannot deduct can be a confusing topic for small business owners. You may hear or read online that you can deduct all kinds of personal expenses, which is not true. You can ask two tax professionals and sometimes get two completely different answers.
Simple Profit provides the education you need, when you need it, for free or at a very low cost. Get answers your questions gives you the tools to help make business decisions.
Free Downloadable Tax Checklist
$ What can I deduct for my small business? $
A general principal to follow is that you can deduct costs to operate your business that are not personal in nature. Personal expenses include those that help you be ready to work, that affect your personal health, well being and grooming or dress.
Business expenses are required to be "ordinary and necessary" which essentially means they are common for your type of business, needed to run the business and reasonable.
If you are just beginning to understand business deductions, start with getting the basic idea. There are some deductions that are more complicated like home office, self-employed health insurance, retirement deductions, etc. It's okay to learn about the more complicated deductions over time.
$ Does it matter how my business is formed? $
Some deductions are a little different depending whether your business is taxed as a sole proprietor, LLC, partnership, S-Corp or C-Corp.
For example, to deduct the self-employed health insurance deduction as an S-Corp, not only do you have to meet the basic rules to qualify to deduct it, you have to follow additional rules to ensure it is a business expense but also add it to your W2 as additional income in a particular way.
$ Do I need an accounting system? $
Yes. You at least need a spreadsheet to track income and expenses in one place. There are also several accounting software options. If your business is a partnership, S-Corp, C-Corp or nonprofit, it is highly recommended to use software because you need more accounting reports than a P&L spreadsheet can offer. See my blog here on choosing an accounting system: https://www.simpleprofit.com/blog/accountingsystems
$ Where can I learn more about deductions $
Simple Profit has many resources to learn about business deductions.
Free resources:
- Deduction blog: https://www.simpleprofit.com/blog/deductions
- Deduction video: https://youtu.be/73pVSpvceZc?si=CB4JZOae18saTeb-
- Year-end deduction video: https://youtu.be/hmupsVVxuLc?si=4dWY3GfEAAm21-9K
- Download the free tax deduction checklist (above)
- FAQ in the Simple Guide (see video and sign-up below)
Low cost membership resources:
- Ask unlimited questions about business deductions
- Help setting up expense accounts in an accounting system
- Home office deduction tutorial
- Self-employed health premium deduction for S-Corp tutorial
Free Resources
Simple Profit has free resources including:
- Blogs (link)
- Videos (link) and (link)
- Free tax deduction checklist (above)
- Simple Guide with tons of FAQ on tax deductions (video preview below, scroll to join)
Watch the video below for an overview of the free resources found at Simple Profit.
Membership Resources
Inside the low cost membership you can:
- Ask unlimited questions about business deductions
- Get help setting up expenses accounts in an accounting system
- Watch deduction tutorials
The video below explains what is available in the membership, way more than you can get from any other CPA at this low price.
Learn accounting, tax and business analysis topics, build confidence and reduce anxiety while managing your day to day operations.
Hello! I'm Jennie Schottmiller
Jennie Schottmiller is a CPA and LMFT (licensed marriage and family therapist). Her unique background brings together skilled business knowledge with compassion and a desire to help.
There is no need to go to business school. You can gain the basics using Jennie's free resources and low cost membership.
