SOLOPRENEUR TAX TIPS PART TWO
January 21, 2021 - Douglas Myser
Solopreneur tax tips part two. This is the second part of a two part series on being a sole business owner and the different hats you must wear, including the tax preparer hat. One of the ways you can make life easier as a solopreneur is to simplify your business in every way you possibly can. Simplify how you keep track of your expenses, get a plastic bin or container to keep your receipts in and out of the way of moisture, in case of a flood. The number of sole proprietors who need tax returns prepared, but lost receipts due to floods, is increasing nationwide. We get many clients who need irs tax resolution due to lost records, and a little preparation ahead of time, can mean less headaches later. How can you track expenses more easily ? Take advantage of the technology available to you and use it to make your life simpler. Link your business accounts to a bookkeeping app that will log your expenses into categories for you. Solopreneur tax tips part two.
If you think about business write offs, you need to ask yourself what is a business expense ? Or ask a tax professional what expenses can I write off ? Am I in pursuit of income when I am generating this expense ? Am I trying to make money ? Will this expense help me get to my customer ? Will this expense help me advertise ? Will this expense help me make a sale ? You have to link the expense to the pursuit of income. The law states that you must be in the pursuit of income and make ordinary and necessary expenses to get there. Let's say you want to look for a property for your business. Are you going to look at the property over the internet or in person ? Will you have to drive and/or take a plane to look at that property ? If you have to do all of those things and can link those expenses to the pursuit of income for your business, all of the above can be tax deductible. After you pay for the internet, car and plane ticket bill, simply charge your business card and track the expenses to your app.