WHAT CAN BE USED AS A TAX WRITE OFF FOR YOUR BUSINESS?
So a lot of people that are starting businesses or have been running a business always ask me what can all be used as a tax write off. I keep tabs / receipts on everything I spend a dime on when it comes to my business. Check the list down below on a few things you can use as a tax write off and download my PDF for the full list! Feel free to print out the list and add it to your Fashion Business Planner/Binder.
1. Advertising and promotion.
Everything you spend on promoting your business is deductible, such as:
Marketing: Ad placements in digital and print publications, newspaper ads, billboards, signage, Facebook Ads, Google Adwords, and email marketing software.
Promotional materials: Flyers, business cards, calendars, leaflets, newsletters, posters, and swag with your logo on it, such as pens or stickers.
Website: Domain names, hosting, subscription website services (Wix, Squarespace) themes, plugins, stock photos, and other things you buy for your website.
2. Auto expenses.
Owning a shop, cafe, or restaurant means you run a lot of errands. The good news? You can write off what you spend on business travel. Example of business travel are:
Errands to the office supply store, post office, grocery store, and suppliers (like a restaurant supply store or maker workshop).
Travel to business meetings with partners, employees, suppliers, vendors, and consultants.
Scouting trips for new suppliers, vendors, and merchandise.
What doesn’t count as business travel? Travel from your home to your shop. This is considered commuting and is not deductible.
There are two methods to write off your auto expenses:
The easiest way to write off your auto expenses is by tracking your business mileage and taking the mileage deduction at tax time. Every year the IRS sets a standard mileage rate. At the end of the year, you just multiply your annual business mileage by the rate and- voila– you’ve got your mileage deduction.
Here’s an example: You drive 2,000 miles to take care of business errands. The IRS mileage rate for 2019 is 58 cents per mile. The formula is: 2,000 x 58 cents = $1,090. Your deduction is $1,160!
The second way to write off your car is by writing off a percentage of your total vehicle expenses. Vehicle expenses include insurance, gas, repairs, oil changes, and car washes. The percentage you write off depends on how much you use your car for business travel vs. personal travel.
Here’s an example: You drive a total of 10,000 miles and 3,000 miles are for business. You can deduct 30% of your expenses. Let’s say you spend $6,000 on your car. The formula is: $6,000 x 0.30 = $1,800. So your deduction is $1,800!
Regardless of which method you choose for calculating your auto deduction, parking and tolls for business travel are 100% deductible. So keep feeding that hungry meter.
3. Bank fees.
Fees associated with your business bank accounts and loans are deductible.
Bank fees: You can deduct monthly service fees, ATM fees, overdraft fees, deposit fees, wire transfer fees
Credit card fees: This includes annual fees, late payment fees, and interest.
Loan and leasing fees: This includes things like set-up costs for loans and leasing fees for equipment
4. Business licenses and permits.
Keeping things legit ain’t free. Shop owners need to ensure that they have current licenses and permits to run their shops. Fortunately, the fees and costs associated with acquiring those licenses and permits are deductible. Here’s what that can involve:
Licenses: Business licenses, alcohol resale licenses, and professional licenses required to perform your services or sell your merchandise fall into this bucket.
Permits: Resale permits and permits required by government agencies can be deducted.