Tax Tips for the Self Employed

Being self-employed comes with a whole host of tax-related advantages and savings. In fact, being self-employed is considered by many to be one the best tax strategies of our time.

Self-employment allows you full command of your tax situation and, with the right knowledge, you can have much control over the amount of taxes you pay.

Following are some tips for making the most of your self-employed status:

Probably the most important advice you can utilize as the owner of your own business is to keep thorough and accurate records. Keep all of your receipts and make sure you have the documentation to support your tax deductions.
Do you have children? Just because you work from home, or for yourself, doesn’t mean you don’t need childcare while you are working. If your children are in childcare, take advantage of the deductions allowed for childcare costs.
Do you enlist the help of family members with your business? Why not make it a family affair? Employ your family members legitimately and you can deduct their medical expenses.
Let’s talk about your workspace. Whether you work from a full office in your home or a nook in the basement, you can claim the area. Determine which percentage of your home your workspace makes up. Deduct this percentage from your rent or mortgage and your utilities.
You cannot create a loss in your business solely through the use of home office expenses. You can however, reduce your income to zero, thus reducing your income tax and your self-employment tax. Plus, any expenses not claimed in the current year can be carried over to the next.
Do you use your car for business? If your office is in your home, chances are you do. Do you pick up office supplies, make bank deposits or meet clients out? Any driving you do that is tied to your business can be taken advantage of as a tax deduction.

And, finally, be knowledgeable in tax laws. The Internal Revenue Service (IRS) is very aware of the many tax advantages of self-employment, thus it is an area they are subject to keeping closer tabs on. So, study the forms and instructions provided by the Internal Revenue Service (IRS). If in doubt, don’t hesitate to enlist the aid of a professional tax preparer or Certified Public Accountant (CPA).

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