If you’re an online service provider, there’s a good chance you’re leaving money on the table come tax season. And we’re not just talking about a few dollars – we’re talking about deductions that could significantly impact your bottom line.
Let’s be real: taxes aren’t exactly the most exciting part of running your business. But what if I told you that taking a few strategic steps could keep more money in your pocket?
1. Home Office Deduction: Your Work Space, Your Savings
If you’re working from home, your home office could be a gold mine of tax savings. But here’s the deal – this isn’t about claiming your entire living room. We’re talking about a dedicated, specific workspace used exclusively for business.
Pro tip: Measure your workspace and calculate the percentage of your home it occupies. This could translate to deductions for:
- Portion of rent/mortgage
- Utilities
- Home maintenance
- Internet expenses
2. Business Mileage: Every Mile Counts
Driving for business? Those miles are money, friends. Whether you’re meeting clients, attending networking events, or running business-related errands, track. those. miles.
Quick math: The standard mileage rate can add up fast. In 2024, that’s 67 cents per business mile. A few trips here and there? That could mean hundreds in deductions. I share my recommendations for the best way to track your miles in this blog post.
3. Cell Phone
Your lifeline to clients isn’t just a communication tool – it’s a potential tax deduction. The key? Documenting the business-use percentage of your phone.
Tip: Keep a log of business calls, and estimate the percentage used for work. That could mean deducting 50-80% of your phone expenses.
4. Health Insurance
Depending on your business structure, you might be able to deduct health insurance premiums. Not only are you taking care of yourself, but you’re also saving on taxes. This is one you’ll want to work with a tax preparer on.
5. Retirement Accounts: Save for the Future, Save on Taxes
Contributing to retirement accounts isn’t just smart financial planning – it’s a tax strategy. SEP IRAs, Solo 401(k)s, or other retirement accounts can help you reduce your taxable income while securing your financial future. You can learn more about your guide to retirement savings as a business owner here.
6. Depreciation: The Silent Tax Saver
Your business equipment – computers, cameras, software – they don’t just lose value. They can save you money through depreciation deductions.
The 1428 Financial Approach
We’re not about just crunching numbers. We’re about helping you understand your finances, make strategic decisions, and keep more of what you earn. Taxes don’t have to be a nightmare – they can be a tool for financial growth.
Documentation is key. Keep those receipts, logs, and records. They’re not just paper – they’re potential savings. (but also, you don’t have to keep paper copies, opt for digital instead!)
Ready to Get Strategic?
Navigating tax deductions can feel like solving a complex puzzle. But you don’t have to do it alone. Our team at 1428 Financial lives and breathes this stuff. We’re here to help you turn tax time from a stress fest into a strategic planning session.
Want to dive deeper? Let’s chat. Because your numbers aren’t just numbers – they’re the roadmap to your most profitable year yet.
Send us a message to learn how we can help you maximize your deductions and minimize your tax stress!
The content in this blog post is provided for general informational purposes only and should not be considered professional tax or legal advice. The author is not a Certified Public Accountant, and no assurances can be made regarding the outcomes or consequences of tax returns, IRS actions, or any financial decisions based on this information. Readers are strongly advised to consult with a qualified tax professional or legal advisor for personalized guidance specific to their individual circumstances. The author expressly disclaims any liability for decisions made based on the information presented in this blog post.
