Last year I wrote a post called 101 Tax Deductions for Your Online Business. I was looking it over today, and thought I would point out a few of my favorites.
#10. Business related webinars and seminar fees. This is one of my all time favorite deductions, because I love to travel, and I love to be able to write off my travel. As long as the main purpose of your trip is business, and you spend the majority of your time in business related activities, you can write off all your travel expenses. So for example if your business is web design, and you go to a seminar for web designers where you can meet vendors, potential clients, and learn more about the latest advance in web design, you can write off your airline tickets, hotel fees, and 50% of your meals. Just make sure you have a real business purpose for the trip.
#58 – 66 Start up and organizational costs. Until you actually open your virtual doors and are “in business” you can’t deduct the expenses you incur while getting your business started. However, once the business is started you can take your start up and organization costs, and amortize them over “not less than 60 months”. With amortization, you don’t get to deduct all your expenses at once, but you do get to take a portion each year for 5 years. This can be to your advantage, because you will be deducting expenses in later years, when you will probably be making more money.
#98-101. Qualified Home Office. Sometimes thought of as an audit flag, a qualified home office done right is a great tax deduction. If you have a place in your home that is used regularly and exclusively for business, you can write off a portion of your mortgage, rent, utilities and home improvements. Just make sure you follow all the rules carefully and you will have a great tax deduction that will stand up to an auditor.
What are your favorite tax deductions for online businesses? What are the strangest things you have heard of people deducting for their business?
Good ideas for those with online businesses. One of the strangest ones I’ve ever heard of was someone trying to deduct a fur coat because it “gave them something to talk about with clients.” Not sure if they got away with that or not!
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If they go away with deducting a fur coat, I want to know who there tax attorney is!
I have heard lots of reasons for unallowed deductions, but that is a good one!
This is my first year as an online business owner so your previous post of the list of 101 tax deductions will be so help full to keep in front of me. Looking over it I saw examples of things I would not have thought of, Thank You.
Have any new deductions been adding this year?
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I’m Canadian but I have taken a U.S. tax course (I’m a CPA in the making). I’ve heard some outrageous stories and the one you just told, Blendetta, is outrageous (not that I don’t believe you).
Kathleen, Canadian and U.S. tax laws are very similar, but the U.S. Tax Code is so much easier to read than the Canadian Tax Act (that thing is written in Victorian-era English).
I think I am happy that I am not in Canada is the US tax code is easier to read!
I do have to admit, the IRS has tried to make it all a little more understandable.
I can’t imagine trying to interpret tax code that is written in Victorian English!
Thanks, as a small startup business its important to take advantages of things like this.
Oh, I was over-exaggerating with that Victorian English bit, but the tax act is worded in a way that resembles it.
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I really needed this information.
Thanks for posting.
Rob
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The Qualified home office would be really useful for those starting an online biz.
The fur story is just hilarious. Now we have something to talk about because of that!
Thanks for the post. I’ll pass the original to some of my friends who are just starting to be entrepreneurial, either out of desire or necessity (being laid off).