Things You Didn't Know Were Business Expenses
All the way from that large fixed asset down to the smallest paper clip there are many things business owners aren’t aware they should be placing on their books as business expenses. Here is a list of the commonly forgotten ones.
Vehicle Expenses
If you are a business that constantly visits a customer on location, you will want to keep track of your vehicle expenses. This can be tricky if you also use your vehicle for personal use. We have two recommended methods. First, if the vehicle is used for personal use you would take the IRS Standard Mileage Rate rather than the actual expenses as it can become a nightmare to split which portion of those expenses are personal and which ones are business. It is a lot easier to track your mileage for the business use portion of your vehicle instead. Second, if your vehicle is used exclusively for business, track every expense on that vehicle. Come tax time, you will compare your actual expenses vs the IRS Standard Mileage Rate and see which deduction is higher and take that one. There are specific rules regarding business use of a vehicle but we will save those for another day.
Home Office Expenses
Do you run your business out of a home office? Did you know that the portion of space in your home that you use for business is tax deductible? Or that a portion of the utilities count as expenses for your business? This is something to discuss in detail with your bookkeeping professional and give them the details about your home office to determine what you can expense.
Professional Services
If you are a client of Blue Spirit Bookkeeping have I got good news for you. Every penny that you pay for our services is a business expense for you! This also includes other professional services such attorneys, consultants, and the like.
Office Expenses
Yes, we know this one is not new or shocking news but we want to bring something to light about this. At what level of detail do you look at your office expenses? How many times have you used a staple or a paper clip but didn’t deduct it? Every stroke of a pen, highlighted sentence, and shredded document is part of a business expense. If you make a trip to store to purchase a $2 pad of sticky notes, you better be providing that receipt to your bookkeeping professional and deducting it!
Independent Contractor Labor
If you are one of our clients, you most likely work with 1099-MISC independent contractors to help you complete work in your business. Every cent you pay them is an expense and if you pay out more than $600 to that individual, you need to issue them a 1099-MISC at the end of the year. This is a service that we can provide and help track for your business!
Bank Charges
This one is commonly missed because many businesses believe this is just common practice for a bank to collect these. However, they are business expenses for you. If your bank charges any maintenance fees, those are expenses. If you have a merchant account and they collect fees, those are expenses. If they provide you with POS hardware and charge a monthly fee for that, those are expenses as well.
Education
Did you at any point attend a class, seminar, or workshop to improve your skills related to your business? Did you have to obtain a license or certification to operate your business? You know what I’m talking about if you’re a real estate agent. Yes, all of those are expenses.
