Need
help with your craft business taxes? When every cent counts and keeps your
doors open, you’ll want all the help you can get, and that includes deducting
every expense possible. However, you may not be including all the deductions
you’re owed! Knowledgeable crafters all use the following deductions to their
advantage, so make sure to read on so you can save money in the future.
1. Supplies
A
dollar at an antique store for the perfect part to your latest creation. Ten
bucks for yarn. Five dollars for buttons and broken glass chips at the craft
store. These expenses may not be much at the time, but crafters know how
quickly it all adds up.
Instead
of just eating them as the cost of running your business, make sure to add all
of these little payments on your tax forms as a deduction! Everything you use
to make your product is a business expense and therefore deductible. Just make
sure to save receipts. (This can get a smidge complicated, so check here for
the difference
between supplies and Cost of Goods Sold.)
2. Travel
Even
if you mainly sell out of your home, you still will incur travel fees. It could
be for a trip across the state for a crafts fair or just several jaunts to the
post office to mail packages. Whatever you travel for, every bit of it is
deductible on your taxes. The vehicle mileage deduction takes some work,
because you need to log each mile driven, but it will be worth it when you get
to deduct 55.5 cents for every mile driven!
3. Home Office
Most
crafting businesses are run out of the home. Nevertheless, you may still be
able to deduct office expenses on your taxes. There are several criteria your
home office must meet if it is to be deducted; mainly, though, the IRS wants
you to have an “official” office. In other words, the room you use for your
office should be used as an office and nothing else.
4. Bills
To go
along with the home office, percentages of your bills that help you run your
business can be deducted. For example, if you mainly use your Internet for
work, then you can deduct a good portion of it on your taxes. If you use a
small percentage of your phone for work, then you only deduct a small portion
from your taxes. It’s best not to overestimate as the IRS may call you on your
bluff.
5. New Equipment
Upgrading
your equipment certainly qualifies for a healthy tax deduction. After all, you
can’t operate if all your stuff is out of date, right? So the next time you
pick up something as big as a new computer or even a new glue gun, keep it in
your records for the next time you have to file. Keep in mind that longer-term
use items like computers and office furniture may be subject to “depreciation,”
and need to be deducted over a number of years. When you get into topics like
depreciation, a trusty accountant always comes in handy!
We
can’t stress enough how important it is you keep all your receipts. Not only
does it help you at tax time, it’ll come in handy just in case the IRS decides
it wants to confirm all your paperwork. Of course if you already use Outright to track your income and expenses, your
job is halfway complete already!
For
further reading: What
You Should, Must and Never Expense During Tax Time
This post was brought to you by Outright.com, the easiest way to manage your business finances, online and automatically!
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