{Business Tips} Tax Tip: Know Your Deductions

Tax season is here! IRS has extended the tax filing deadline to April 18th this year – that’s 3 whole extra days. So, it’s time to suck it up and get your paperwork ready to file your taxes.  Although your accountant or tax preparer won’t need all of your paperwork, (s)he will need your total business expenses and income for your Etsy shop.  Your Etsy business is considered a home business and therefore, you enjoy some special tax benefits.  You can save yourself a nice little wade of cash by understanding how to take advantage of your special situation.  I’m only going to offer one important tip in this post, so pay attention here it goes:

TIP #1 KNOW YOUR DEDUCTIONS

This doesn’t require you become a tax expert, but it does require you to become an informed tax payer. As a home business/small business owner the IRS treats you differently.  According to , “Rich Dad, Poor Dad” by Robert T. Kiyosaki, you are among a unique group on the “cash flow quadrant” and there are many deductions you can take advantage of. For instance, the ink you buy for your printer and the packaging you buy for shipping are all considered business expense therefore, they are tax deductible.

According to IRS, “To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.”

IRS code is a bit intimidating and overwhelming. I mean do they speak English?  But, this doesn’t give you an excuse not to be an educated tax payer.  To help you get started, here’s a list of deductions you may be able to take:

1. Purchase of Business cards/stationary

2. Office furniture

3. Office supplies

4. Postage

5. Professional services and consultants

6. A portion of utilities

7.  Phone, internet service and web-related expenses (i.e webhosting)

8. Education

9. Business Travel (i.e.cost of attending craftshows)

10 Use of auto for business

11. Business insurance premiums

12. Legal expenses

13. Etsy shop expense

There are a number of additional deductions that may apply, these are just a few.  To help you learn more, the IRS has a Virtual Workshop, that I highly recommend.  I know, you’d rather have your teeth pulled than have to sit through a boring IRS workshop.  But don’t fret, to ease your pain I sat through the entire workshop and kept track of lessons that would be of most benefit to you (I think I deserve to be added to your Etsy Circle for this one).  The following lessons get straight to the point:

Lesson 4 of the IRS Virtual Workshop provides additional information on “What you need to know when you run your business out of your home“.

Lesson 1 covers ” What you need to about federal taxes and your business

To checkout the Virtual Workshop, just click the image below.

Click Image to Launch IRS Virtual Workshop

Good Luck! and May the Force Be With You!

 

About Myra @ HerbanLuxe

Myra is an Etsian with an MBA. The art of business and technology are her two obsessions. She has been writing EcoEtsy Business Tips since 2010. Myra grew up in Puerto Rico with grandparents who were a head of their time and didn't know it - living what we would call today, "a simple green life." Her love of learning and teaching are the key drivers in almost everything she does.

Comments

  1. Thanks for the comments and for those of you who have added me to your circle I will be returning the gesture.

  2. I already sent in my taxes and I think I got all those. What a great post. I will sure be saving it and be ready for next year

  3. Thanks for all these tips! (OK, I’m adding you to my circle ;-)

  4. Glad I could offer some tax tips that may be useful. Thanks for reading.

  5. Thanks for all the info. I really appreciate it.