<p>Being self-employed brings with it a lot of independence. You get to make your own choices and set your own hours. You work when you want to work!</p><p>But for better or for worse, that independence also means a lot more responsibility. You’re operating your own small business, and as a result, you’re responsible for your own <a class="link" href="https://1800accountant.com/services/industry/freelancer-self-employed">income taxes and self-employed deductions</a> in a way most working people aren’t.</p><p>If you’ve never paid or filed taxes as a small business owner before, there is a lot you should know before you get started. There are numerous ways you can bring down your overall taxable income and increase the money you get to take home. If you’re not taking advantage of these tax deductions for self-employed expenses, you'll be paying more than you should.</p><h2 class="wp-block-heading">Eliminated or Changed Write-offs for Self-employed Individuals from the Tax Cuts and Jobs Act&nbsp;&nbsp;</h2><p>Small business taxes can be extra complicated because of how frequently the laws change. The tax code can vary significantly from one year to the next, meaning you have to relearn everything all over again.&nbsp;</p><p>The 2017 Tax Cuts and Jobs Act changed a lot about small businesses; many deductions and credits were adjusted or removed entirely.&nbsp;</p><p>Here are a few <a class="link" href="https://www.investopedia.com/tax-deductions-that-are-going-away-4582165" target="_blank" rel="noreferrer noopener">tax deductions that changed or went away because of the TCJA</a>.&nbsp;</p><ul><li>Personal and dependent exemptions are suspended.&nbsp;</li><li>The standard deduction was increased significantly.</li><li>The child tax credit was increased.</li><li>Deductions for commuting expenses are more limited.</li><li>Job relocation moving expenses are no longer deductible except for active-duty military personnel.&nbsp;</li><li>Alimony expenses are no longer deductible and receiving alimony payments no longer counts as taxable income.&nbsp;</li></ul><h2 class="wp-block-heading">10 Self-Employment Tax Write-Offs to Use</h2><p>Here are ten valuable write-offs of business expenses for self-employed individuals you should include on your <a class="link" href="https://1800accountant.com/blog/small-business-tax-deductions-checklist">small business tax deductions checklist</a>.&nbsp;</p><h3 class="wp-block-heading">1. Qualified Business Income Deduction</h3><p>Every year, small businesses below a certain income level can deduct 20% of their qualified business income. QBI refers to your net income but excludes income related to capital gains, interest, or income earned outside the United States.&nbsp;&nbsp;&nbsp;</p><h3 class="wp-block-heading">2. Self-Employment Tax Deduction</h3><p>As a self-employed individual, you have to pay a higher percentage of your income into Social Security and Medicare, for a total of 15.3%. However, you can claim a deduction for half of that. 7.65% of your self-employment tax can be claimed as a business expense and not counted for your taxable income.&nbsp;</p><h3 class="wp-block-heading">3. Home Office Deduction</h3><p>Another significant source of savings is the <a class="link" href="https://1800accountant.com/blog/home-office-deduction">home office deduction</a>. However, simply working from home isn’t enough to claim this deduction. You must have a dedicated space in your home that is only used for your business, and it has to be a primary site for your work.&nbsp;</p><p>If you’re eligible for this deduction, you can claim a portion of all your home-related costs as business expenses. You can deduct a portion of your rent or mortgage and other important home repair costs in proportion to the space of your home office. All of that is in addition to the costs of any office supplies or goods you use exclusively for work.&nbsp;</p><h3 class="wp-block-heading">4. Health Insurance Premium Deduction</h3><p>If you’re not eligible for health insurance through your spouse, you can also count your health insurance premiums as a business expense. Effectively you are your own employer paying for your employee’s health insurance, so that cost should be paid with pre-tax income.&nbsp;</p><h3 class="wp-block-heading">5. Vehicle Use Deduction</h3><p>Do you frequently use your vehicle for business purposes? Commuting costs don’t count here, but other work-related travel costs can be deducted, either for a company car or your own personal vehicle.&nbsp;</p><p>To claim this deduction, you can either keep detailed records of your vehicle expenses or simply log the miles traveled for business purposes. The IRS has established a <a class="link" href="https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2023-business-use-increases-3-cents-per-mile" target="_blank" rel="noreferrer noopener">standard mileage rate</a> for tax purposes, and in 2023, most businesses can claim a deduction of 65.5 cents per mile for business, medical, charitable, or moving-related travel.</p><h3 class="wp-block-heading">6. Internet and Phone Bills Deduction</h3><p>How much do you spend on internet and phone bills? These may also be deductible expenses as far as they’re used for your business. For a home office or a personal phone that you also use for business costs, you can deduct a fraction of the total cost based on an estimate of your relative business use.</p><p>On the other hand, you might have a separate phone used only for work or even a separate internet subscription. In that case, you can deduct the full cost of those bills as necessary expenses for your business.&nbsp;&nbsp;</p><h3 class="wp-block-heading">7. Meals Deduction</h3><p>Under certain specific circumstances, you can deduct all or part of the costs related to meals or entertainment purchased as part of your work. If you take clients out for meals or bring food to your workplace to share with others, then those costs are 50% deductible.&nbsp;</p><p>There are also a few meal-related costs that can be fully deducted. To be 100% deductible, it must be food or entertainment provided as part of a party for the entire company at once, or it must be something officially included as compensation for your employees for whatever purpose.&nbsp;</p><h3 class="wp-block-heading">8. Retirement Plan Contributions</h3><p>Every year you’re permitted to deduct a significant amount of money for payments you make directly into your retirement plan. This allows you to defer paying taxes on that income until you withdraw that money later.&nbsp;</p><p>It would be wise to max out your deductible retirement contributions before the end of each year, especially if you’re likely to find yourself in a higher income tax bracket.&nbsp;</p><h3 class="wp-block-heading">9. Interest</h3><p>While the principal on many loans can’t be deducted, you can deduct the interest on loans, including your home mortgage, even if you don’t have a home office.</p><h3 class="wp-block-heading">10. Education</h3><p>The IRS sees continuing education as a regular and necessary part of the job. Any money you spend to help you do your job better or keep up with industry developments is money you can deduct for education expenses.&nbsp;</p><p>This also covers any fees you pay for professional publications or association memberships.&nbsp;</p><h2 class="wp-block-heading">Maximize Your Tax Savings With 1-800Accountant</h2><p>It takes serious dedication and know-how to efficiently utilize the tools available to reduce your taxable income and final tax bill.</p><p>It might seem overwhelming, but it doesn't have to be with 1-800Accountant in your corner. Let our <a class="link" href="https://1800accountant.com/services/small-business-taxes">experts handle your taxes</a> while you dedicate time and resources to growing your business. You’ll be able to rest easy knowing America's leading virtual accounting firm isn't leaving potential savings behind.</p>

Being self-employed brings with it a lot of independence. You get to make your own choices and set your own hours. You work when you want to work! But for better or for worse, that independence also means a lot more responsibility. You’re operating your own small business, and as a result, you’re responsible for [&hellip;]

Man researching self-employment tax deductions on his laptop in a bright, plant-filled room. text overlay: "top self-employment tax deductions.

Top-Self-Employment-Tax-Deductions

Top 10 Tax Write-Offs for Self-Employed Individuals

<p><a class="link" href="https://1800accountant.com/blog/prepare-file-small-business-tax-return">Filing taxes for your business</a> is essential to your responsibilities as a small business owner, but it can be complicated, especially if you're not prepared. One thing leads to another, and you can fall further and further behind on your taxes. </p>



<p>Even if you're past the due date for your tax return, it's not too late to file a return for back taxes. The more significant challenge will be figuring out how to file back taxes without records.&nbsp;</p>



<p>Preparing your tax return will be difficult if you don't have a complete accounting of your finances. How can you pay what you owe if you don't know much income you've received? Fortunately, you have options. Read on to learn how to file back taxes without records and the importance of doing so.&nbsp;</p>



<h2>Why You Should File Back Taxes for Your Small Business</h2>



<p>There are many good reasons to file your income tax returns, even if you are far beyond the deadline. Even late, it’s worth the effort to avoid what happens if you <a class="link" href="https://1800accountant.com/blog/what-happens-if-you-dont-file-taxes">don’t file business taxes</a>. </p>



<p>If you don't file a return, the IRS will eventually file a substitute return based on their data to estimate what you owe. Likely, they won't include every benefit and deduction you're eligible for. You will also surrender any possible tax refunds if you don’t file a return.&nbsp;</p>



<p>There is also a failure to file penalty fine. If you have unpaid taxes, that amount will grow every month you continue without filing a late return for up to five months afterward. </p>



<p>It’s worth figuring out how to catch up on unfiled taxes to claim those deductions and receive your refund. <a class="link" href="https://1800accountant.com/services/small-business-taxes">Filing your small business taxes</a> also helps you be sure you've paid everything you owe, no matter how late you file. Unpaid taxes will rack up significant fines over time, and the IRS will eventually act to collect them on their own if you don't pay.</p>



<h2>How Many Years Back Can You File Delinquent Taxes?</h2>



<p>The IRS will accept all past-due tax returns. However, if you want to claim a tax refund or credit, you must file your return within three years of the original deadline. <a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/filing-past-due-tax-returns" target="_blank" rel="noreferrer noopener">Filing past-due tax returns</a> are less valuable if you go further back than that.&nbsp;</p>



<p>You should file past taxes for at least the last three years to claim any benefits you left behind, ideally up to the previous six years. How many years you can file back taxes may also depend on the data you still have from those years.&nbsp;</p>



<h2>How To File Back Taxes Without Records </h2>



<p>You may wonder, "Can I file my back taxes?" The answer is yes, but you might not want to do it alone, especially when you don't have significant records to reference. You can file back taxes just like any other 1040 tax return.&nbsp;&nbsp;&nbsp;</p>



<p>The IRS will accept your past-due federal tax returns as soon as you submit them. For state tax issues, you should look up your individual state's policies or speak to an <a class="link" href="https://1800accountant.com/services/business-tax-advisory">accounting professional</a>.&nbsp;</p>



<p>If you don't have a good record of your finances over the period in question, however, it will be more challenging to figure out your tax bill. Here’s how to get started:</p>



<h3>Collect Financial Records</h3>



<p>To file your return, the first thing you need to do to get started is to collect all the financial data you can find on the tax years in question. You may not have consistent or reliable bookkeeping, but there must be some clues or records you can refer to that will help you assess your tax liability.&nbsp;</p>



<p>These are some of the most common sources you might be able to use to put together your past-due tax return:&nbsp;</p>



<ul>
<li>Bank account and credit card statements</li>



<li>Tax forms like W-2s and Social Security statements</li>



<li>Receipts from business expenses</li>



<li>Old emails or paper records of transactions</li>
</ul>



<h3>Requesting Tax Transcripts</h3>



<p>You might not find enough information to go in your records alone. Fortunately, the IRS also holds various records and forms for at least three years. You can request IRS tax transcripts with form 4506-T to <a class="link" href="https://www.irs.gov/individuals/get-transcript" target="_blank" rel="noreferrer noopener">get your tax record</a>.&nbsp;</p>



<p>There are a few distinct kinds of tax transcript you may be able to request:&nbsp;</p>



<ul>
<li>Transcripts of tax returns you submitted in a prior year</li>



<li>A report on your basic filing status and taxable income according to IRS records</li>



<li>A wage and income transcript brings together 1099s, W-2s, and any other relevant paperwork the IRS has received from other businesses or financial institutions</li>
</ul>



<h3>Work with Forensic Accounting Experts</h3>



<p>If you’re struggling and still don’t know how to file back taxes without W-2s or other records, you may need to contract with a tax professional or a team with specialties in forensic accounting. Forensic accounting specializes in investigating and reconstructing business activity without regular records.&nbsp;</p>



<p>You want to be sure you get your tax returns done right, so you want to work with people who know how to put the data together, maximize your savings, and get it done right to <a class="link" href="https://1800accountant.com/services/audit-defense">defend you from a potential audit</a>.&nbsp;</p>



<h2>How 1-800Accountant Can Help With Your Delinquent Business Taxes</h2>



<p>If you’re trying to figure out how to file back taxes without records, you may need tax preparation help from the experts. Find an accountant you can trust who can help file back taxes for your company and get you back on track with your bookkeeping for the future.&nbsp;</p>



<p>1-800 Accountant is standing by to support your company with professional <a class="link" href="https://1800accountant.com/services/business-tax-advisory">small business tax advisory services</a>. If you’re behind, don’t hesitate to get help now and get the situation under control.&nbsp;&nbsp;</p>

Filing taxes for your business is essential to your responsibilities as a small business owner, but it can be complicated, especially if you&#8217;re not prepared. One thing leads to another, and you can fall further and further behind on your taxes. Even if you&#8217;re past the due date for your tax return, it&#8217;s not too [&hellip;]

Young man reviewing and calculating his business finances.

File-Back-Taxes-Without-Records

How to File Back Taxes Without Records For Your Small Business

<p>Tax liability is something that affects all small businesses. For small businesses, several factors play into tax liability, such as business entity type, due dates, and specific taxes owed.</p><p>Small businesses can reduce their tax liability by implementing tax-saving strategies. There are ways to save money for yourself and your employees for almost every business entity. Continue reading to learn more about how to reduce tax liability as a small business owner.</p><h2>What Is Business Tax Liability?</h2><p>Small business tax liability is <a class="link" href="https://www.sba.gov/business-guide/manage-your-business/pay-taxes" target="_blank" rel="noreferrer noopener">the tax owed</a> on your business income, and your business entity type determines your tax liability at the federal and state levels.&nbsp;</p><p>Federally, all businesses will pay taxes based on their business entity. Some federal payments require payments throughout the year. You may also have federal tax payment requirements if your small business has employees. However, for those businesses functioning as pass-through entities, the tax liability is carried by the S Corporation shareholder or by the partner in a partnership at the federal level. State rules can differ for business entities.&nbsp;</p><p>Your tax liability can be for employment and income taxes at the state level. Your business entity will also determine your tax liability for state taxes. For businesses with employees, you can expect to pay different taxes.&nbsp;</p><p>Although this differs by state, you can expect to pay these business state taxes:</p><ul><li>Temporary disability insurance</li><li>Unemployment insurance tax</li><li>Workers’ compensation insurance</li></ul><h2>Different Types of Business Taxes?</h2><p><a class="link" href="https://www.usa.gov/small-business" target="_blank" rel="noreferrer noopener">Many business taxes</a> apply to small businesses:</p><ul><li>Employment tax</li><li>Estimated tax</li><li>Excise tax&nbsp;</li><li>Income tax</li><li>Property tax</li><li>Sales and use tax</li><li>Self-employment tax&nbsp;</li></ul><p>Employment taxes apply to employers who have employees. There are four employment taxes:&nbsp;</p><ul><li>Federal income tax withholding</li><li>Federal unemployment insurance tax (FUTA)&nbsp;</li><li>State unemployment insurance tax (SUI)</li><li>Medicare and Social Security taxes</li></ul><p><a class="link" href="https://1800accountant.com/services/quarterly-estimated-taxes">Estimated taxes</a> are another business tax from income not subject to tax withholding. You can pay estimated taxes if you don't withhold taxes voluntarily.&nbsp;</p><p>Estimated taxes include income from:&nbsp;</p><ul><li>Dividends</li><li>Interest&nbsp;</li><li>Self-employment</li></ul><p>Excise taxes are taxes you'll pay for using certain goods or services. You’ll pay excise taxes if your small business:&nbsp;</p><ul><li>Manufactures or sells certain products</li><li>Operates certain kinds of businesses&nbsp;</li><li>Receives payment for specific services</li><li>Uses various types of equipment, facilities, or products</li></ul><p>Income tax is another business tax. Most business entities will pay federal income tax, except partnerships. Instead, those individuals within a partnership will report their profits and losses on their individual tax returns.</p><p>States also charge income tax on businesses. Not every state charges businesses income tax, so this portion of income tax can vary depending on where your small business operates.</p><p>Property tax is a business tax that affects business owners. States have different categories on which properties are taxable.&nbsp;</p><p>Some states collect property tax for businesses based in commercial real estate locations. Other states can collect property tax based on the following, which are referred to as tangible personal property taxes:&nbsp;</p><ul><li>Business assets&nbsp;</li><li>Business vehicles</li><li>Computer equipment</li></ul><p>Sales and use tax is another tax that states may charge small businesses taxes for their use of goods and services whenever sales taxes aren't collected.&nbsp;</p><ul><li>When this occurs, it may apply to goods and services purchased out of state.&nbsp;</li><li>There are exclusions to what states can charge sales tax, including food, medicine, and utilities.</li></ul><p>Self-employment tax is the last business tax that business owners may be subject to, which applies to those who own their business.&nbsp;</p><h2>4 Ways To Reduce Small Business Tax Liability&nbsp;</h2><p>There are four ways to reduce the tax burden for <a class="link" href="https://www.thebalancemoney.com/ways-to-save-on-business-taxes-397610" target="_blank" rel="noreferrer noopener">small business owners</a>:</p><h3>Set Up and Fund Your Retirement Plan</h3><p>The first way to reduce taxable income is to set up a retirement plan. Small business owners can set up a retirement plan for themselves and their employees if their business entity has employees.</p><p>If you set your retirement plan as a qualified plan, you may qualify for additional tax savings.&nbsp;</p><h3>Qualified Busines Income Tax Deduction</h3><p>The second way to reduce taxable income is to use the Qualified Business Income Tax Deduction. The Qualified Business Income Tax deduction allows three pass-through business entities to deduct 20% of their qualifying business income:&nbsp;</p><ul><li>A partnership</li><li>A sole proprietorship</li><li>An S Corporation</li></ul><p>You can claim this deduction on top of claiming other business tax deductions, and you can claim this deduction whether you’re a single filer or if you’re married and filing jointly. For most businesses, there are income limits for this deduction.</p><h3>Take Tax Credits</h3><p>The third way to reduce the taxes you owe is to take tax credits. Small businesses may qualify for various business tax credits related to:&nbsp;</p><ul><li>Hiring employees</li><li>Providing health coverage to employees</li><li>The environment</li><li>Work opportunities&nbsp;</li></ul><h3>Tax Deductions</h3><p>The fourth way small businesses can reduce their taxes is by using<a class="link" href="https://1800accountant.com/blog/small-business-tax-deductions-checklist"> tax deductions</a>. There are deductions beyond The Qualified Business Income deduction, which can help your small business and its tax liability. These deductions apply to:</p><ul><li>Business equipment</li><li>Real estate</li><li>Machinery</li><li>Vehicles</li></ul><p>Working with <a class="link" href="https://1800accountant.com/blog/hiring-tax-professional-small-business">a tax professional</a> will help you know which tax credits and deductions you qualify for.</p><h2>When Are Business Taxes Due?</h2><p>Business taxes have <a class="link" href="https://www.irs.gov/faqs/small-business-self-employed-other-business/starting-or-ending-a-business/starting-or-ending-a-business-3" target="_blank" rel="noreferrer noopener">different due dates</a> based on the type of business entity and when its year ends.&nbsp;</p><ul><li><strong>C corporations</strong> can choose a fiscal year-end date</li><li><strong>Partnerships</strong> mostly use the calendar year for business tax payments</li><li><strong>S corporations</strong> use the calendar year to establish their due date</li></ul><h3>Business Entity Due Dates</h3><div class="rte-table-container"><table><thead><tr class="table-data-container"><td class="cell-0">Business Entity</td><td class="cell-0">Tax Return Due Date</td></tr></thead><tbody><tr class="table-data-container"><td>Corporations</td><td>April 15</td></tr><tr class="table-data-container"><td>Partnerships</td><td>March 15</td></tr><tr class="table-data-container"><td>S Corporations</td><td>March 15</td></tr><tr class="table-data-container"><td>Single-member LLCs</td><td>April 15</td></tr><tr class="table-data-container"><td>Sole Proprietorships</td><td>April 15</td></tr></tbody></table></div><p>Please note that for single-member LLCs and sole proprietorships, the due date aligns with the individual tax filing due date (Form 1040).</p><h3>LLCs Filing As Due Dates</h3><p>LLCs with multiple members can elect to pay business taxes as a corporation, partnership, or S Corporation, which presents three due date options depending on the chosen entity type:&nbsp;</p><div class="rte-table-container"><table><thead><tr class="table-data-container"><td class="cell-0">LLC Filing Type</td><td class="cell-0">Tax Return Due Date</td></tr></thead><tbody><tr class="table-data-container"><td>LLC filing as a Partnership</td><td>March 15</td></tr><tr class="table-data-container"><td>LLC filing as a Corporation</td><td>April 15</td></tr><tr class="table-data-container"><td>LLC filing as an S corp</td><td>March 15</td></tr></tbody></table></div><h3>Quarterly Estimated Tax Due Dates</h3><p>If you’re subject to estimated taxes, there are additional deadlines. Estimated taxes are due quarterly on:&nbsp;</p><div class="rte-table-container"><table><thead><tr class="table-data-container"><td class="cell-0">Payment Period</td><td class="cell-0">Estimated Tax Due Date</td></tr></thead><tbody><tr class="table-data-container"><td>January 1 - March 31</td><td>April 15</td></tr><tr class="table-data-container"><td>April 1 - May 31</td><td>June 15</td></tr><tr class="table-data-container"><td>June 1 - August 31</td><td>September 15</td></tr><tr class="table-data-container"><td>September 1 - December 31</td><td>January 15</td></tr></tbody></table></div><p>However, in practice, estimated tax payments are credited when paid.</p><h2>Reduce Your Tax Liability by Partnering With an Expert</h2><p>Determining your tax liability can help you, your employees, and your small business. Given how many variables there are to determine tax liability, you’ll want to work with tax professionals.</p><p>Small business owners may have several taxes to pay, but you have options available. When you need help with small business taxes, you’ll want to ensure you get the help you need. Work with the <a class="link" href="https://1800accountant.com/services/small-business-taxes">small business tax accountants</a> at 1-800Accountant for your small business tax needs.</p>

Tax liability is something that affects all small businesses. For small businesses, several factors play into tax liability, such as business entity type, due dates, and specific taxes owed. Small businesses can reduce their tax liability by implementing tax-saving strategies. There are ways to save money for yourself and your employees for almost every business [&hellip;]

One hundred dollar bills laying on top small business tax forms as the business owner ponders how to reduce their tax liability.

Reduce-Tax-Liability-for-Small-Businesses

How To Reduce Tax Liability For Small Businesses

<p>When you're in business for yourself, efficiency is everything. As an independent contractor, you can't afford to waste any time. You need someone else to share the load or to look over your shoulder and check your work. That goes for your bookkeeping as well!</p>



<p>Careful bookkeeping for independent contractors is essential to keep your small business healthy or sustainably grow your business. <a class="link" href="https://1800accountant.com/blog/bookkeeping-101-crash-course-record-keeping-small-businesses">Record keeping for a small business</a> is necessary, but it can be hard to get it right when you don't have the time or professional assistance.&nbsp;</p>



<p>Your accounting needs will vary as an independent contractor, whether an electrician, a rideshare driver, or a freelancer. But whatever you do, you're effectively functioning as a small business owner, which gives you certain obligations and opportunities, and bookkeeping is crucial for all of it.</p>



<h2>What are the Differences Between an Independent Contractor and an Employee</h2>



<p>First things first: What is a contractor, and how do their needs differ from W-2 employees?&nbsp;</p>



<p>Employees work on a permanent basis for wages from their employer, and their salary is reported with a W-2. Contractors function as independent business owners, whether they contract with one larger business or multiple clients, and their payments are reported with an <a class="link" href="https://www.irs.gov/forms-pubs/about-form-1099-misc" target="_blank" rel="noreferrer noopener">IRS Form 1099</a>.&nbsp;</p>



<p>Employees may need to keep track of some things for tax preparation, but their employers are responsible for the essential records. Accounting for independent contractors, however, is a lot more complicated.&nbsp;</p>



<h2>What Accounting Methods Can an Independent Contractor Use?</h2>



<p>Independent contractor bookkeeping can be as simple as recording each transaction in a contractor <a class="link" href="https://1800accountant.com/blog/create-simple-bookkeeping-spreadsheet-business">bookkeeping spreadsheet</a>. Tracking income and expenses is the core of bookkeeping, so all you have to do is make a note of it every time you spend or receive money. </p>



<p>Logging every transaction in a general ledger, whether on paper or in a spreadsheet, is called single-entry bookkeeping and is the most basic method of accounting. It's sufficient for smaller operations, but if your business gets a little bigger or more complex, you may need to move to double-entry bookkeeping.&nbsp;</p>



<p>In <a class="link" href="https://www.investopedia.com/ask/answers/022615/what-double-entry-bookkeeping-and-how-does-it-work-general-ledger.asp" target="_blank" rel="noreferrer noopener">double-entry bookkeeping</a>, every transaction requires you to make two entries in your records. For example, when you make a sale, you would make one entry for the increase in revenue and one for the decrease in inventory. A single spreadsheet is no longer enough, and you may want to invest in accounting software to help you manage your books.&nbsp;&nbsp;&nbsp;&nbsp;</p>



<h2>Importance of Tracking Expenses as an Independent Contractor</h2>



<p>While it may seem like income is the first thing you want to follow with your independent contractor record-keeping process, expenses are the key. It's good to know how much money you're making, but it's also crucial to understand how much you're spending and where.</p>



<p>The more informed you are about what’s happening in your business, the better prepared you are for tax filing and even for everyday business decisions. Independent contractor expense tracking is necessary for a lot of essential accounting purposes:&nbsp;</p>



<ul>
<li><a class="link" href="https://1800accountant.com/blog/prepare-file-small-business-tax-return">Preparing and filing tax returns </a></li>



<li><a class="link" href="https://1800accountant.com/blog/maximize-small-business-tax-deductions">Maximizing tax deductions </a></li>



<li>Producing financial statements for investors</li>



<li>More informed long-term planning&nbsp;</li>



<li><a class="link" href="https://1800accountant.com/blog/cash-flow-management">Managing cash flow</a> </li>
</ul>



<h2>6 Examples of What to Keep Track of as an Independent Contractor</h2>



<p>Expenses are just one of the things you should be keeping track of with your independent contractor bookkeeping. Here are the <a class="link" href="https://1800accountant.com/blog/bookkeeping-101-30-common-bookkeeping-terms">critical standard bookkeeping terms</a> you should be familiar with, and they should be your top priorities on the list of what to keep track of as an independent contractor.&nbsp;</p>



<h3>Revenue</h3>



<p>It should go without saying, but you certainly want to be keeping track of your revenue. How much money are you bringing in, and how? Do certain goods and services bring in much more revenue than others?&nbsp;&nbsp;&nbsp;</p>



<h3>Business Expenses</h3>



<p>While this has been mentioned already, keep track of all your business expenses. Doing so is especially important when it comes to bookkeeping for taxes since most business expenses will be tax deductible when it comes time to file.&nbsp;</p>



<h3>Profit</h3>



<p>If you track your revenue and expenses, you can now start monitoring your profit which is the bread and butter of bookkeeping for independent contractors. How much money are you making once you factor out your expenses? Tracking profitability lets you monitor and plan based on your profit margins over time.&nbsp;</p>



<h3>Tax Payments&nbsp;</h3>



<p>Tax payments are a specific category of expenses, and keeping track of them is essential. For one thing, you need to know where your money is going and when. As an independent contractor, you also need to track these payments to make sure they happen.&nbsp;</p>



<p>You should be paying payroll taxes, which include social security, medicare, and self-employment taxes. You also need to be paying <a class="link" href="https://www.sba.gov/blog/quarterly-taxes-basics" target="_blank" rel="noreferrer noopener">quarterly estimated income taxes</a> throughout the year. Keep track of these payments so you can be sure these payments happen on time.&nbsp;</p>



<h3>Accounts Payable</h3>



<p>Accounts payable refers to scheduled or planned expenses that have not yet occurred. Perhaps you owe the money, but the money has yet to leave your bank account. Good bookkeeping requires knowing how much money you owe and how much you have on hand at any given time.&nbsp;</p>



<h3>Accounts Receivable</h3>



<p>Accounts receivable refers to expected payments that still need to be completed. If you sell goods or services to a client on credit, those transactions will be identified in accounts receivable until you receive the cash for that purchase.&nbsp;</p>



<h2>Work With Our Certified Bookkeepers so You Can Focus on Your Business</h2>



<p>You don’t have to manage the bookkeeping all by yourself. Bookkeeping for independent contractors can be challenging and complex. It helps to consult with an accounting professional to help you set up your accounting system and establish a process for maintaining appropriate records.&nbsp;Making it up as you go is a recipe for disaster. Invest in bookkeeping services on the front end and help your freelance hustle to be efficient and thorough with its records right from the start. Find out what 1-800Accountant can do to <a class="link" href="https://1800accountant.com/services/bookkeeping">guide and improve your bookkeeping</a>.</p>

When you&#8217;re in business for yourself, efficiency is everything. As an independent contractor, you can&#8217;t afford to waste any time. You need someone else to share the load or to look over your shoulder and check your work. That goes for your bookkeeping as well! Careful bookkeeping for independent contractors is essential to keep your [&hellip;]

Top-down view of a workspace with documents, hands using a calculator, and a bold text overlay reading "bookkeeping for independent contractors.

Bookkeeping-for-Independent-Contractors

Bookkeeping for Independent Contractors: 6 Tips to Keep in Mind

<p>If you’ve been building a side hustle as an Etsy seller, and you’re wondering, “do I have to report Etsy income on my taxes?” you’ve come to the right place. Etsy is home to many artists and craftspeople selling their goods online – but you need to remember to report Etsy income when it’s time to file your returns. Some people work full-time as online sellers, making and distributing their products through online marketplace facilitators like Etsy, while others may only do it as a hobby in their spare time.</p><p>Whichever of those categories you fall into, you should be proud of yourself for the work you’ve put into becoming a small business owner. It’s not easy to find an audience and carve out a niche in the crowded world of internet commerce.</p><p>Whether you’re aware of it or not, you’re running a small business! That’s not a simple feat. And all of the money you make through selling your goods is income you’re earning as a self-employed <a class="link" href="https://1800accountant.com/blog/business-entity-sole-proprietorship">business owner of your sole proprietorship</a>.&nbsp;</p><p>Of course, running a business and earning income carry their own obligations, unfortunately. If you haven’t made very many Etsy sales yet, or if most of your income overall comes through an employer, your Etsy income is unlikely to have any effect on your situation for the tax year. However, you are required to report Etsy income to the IRS.&nbsp;</p><p>Do your due diligence to make sure you’re following the rules and avoiding any potential pitfalls! Here’s the process for reporting this income.</p><h2 class="wp-block-heading" id="h-lookout-for-form-1099-k-to-report-etsy-income"><strong>Lookout for Etsy Form 1099-K to Report Business Income</strong></h2><p>As the platform is processing your sales, Etsy is required to report those sales and give you a record of your overall income if you meet certain minimum sales amounts. Etsy will create and provide this report to you on form 1099-K. Receiving this tax form is the first important indicator that you will need to file all of your Etsy income on your tax return.&nbsp;</p><h2 class="wp-block-heading" id="h-what-is-a-1099-k">What is a 1099-K Form?</h2><p>The <a class="link" href="https://www.irs.gov/businesses/understanding-your-form-1099-k" target="_blank" rel="noreferrer noopener">IRS form 1099-K</a> is simply a report of the total gross sales that were paid to you on a platform. You might not have seen that same number released to you, depending on what the platform takes.&nbsp;</p><p>Etsy and similar platforms are required to create a 1099-K if you made more than a certain amount of online sales or received more than a set amount of money in business income. When they submit a 1099-K, they submit it simultaneously to you, the marketplace seller, and to the government. That means both you and the IRS are informed about the income you should be reporting on your taxes.</p><h3 class="wp-block-heading" id="h-can-you-deduct-business-expenses-when-you-report-etsy-income">Can you Deduct Business Expenses When You Report Etsy Income?&nbsp;</h3><p>You're required to report Etsy income on your income tax return. However, the good news is that you can claim deductions for business expenses as well. Because your Etsy shop is effectively a small business, you can deduct from your taxable income costs associated with operating your business.</p><p>Here are a few <a class="link" href="https://1800accountant.com/services/industry/freelancer-self-employed">self-employment deductions</a> you may be able to claim as an Etsy merchant:&nbsp;</p><ul><li>Platform fees</li><li>Marketing costs</li><li>Supplies and materials used for making your products or running your business</li><li>A portion of rent/mortgage/utility costs if you <a class="link" href="https://1800accountant.com/blog/home-office-deduction">qualify for a home office deduction&nbsp;</a></li><li>Other professional fees and subscription costs, including continuing education and skill development&nbsp;</li><li>Healthcare premiums if you are not eligible for healthcare through an employer or a spouse&nbsp;</li><li>Retirement savings contributions&nbsp;</li><li>Self-employment taxes for Social Security and Medicare</li></ul><h2 class="wp-block-heading" id="h-what-taxes-do-etsy-sellers-pay">What Taxes Do Etsy Sellers Pay?&nbsp;</h2><p>Everything explained so far above has to do with income tax, which is the largest tax you’re responsible for as an individual taxpayer in the United States. However, there are a couple of separate but related taxes and tax issues that you should be aware of.&nbsp;</p><h3 class="wp-block-heading" id="h-self-employment-tax">Self-Employment Tax</h3><p>If you earn wages through an employer, you’re probably used to having a part of your salary withheld to pay for income taxes and something called FICA. Employers withhold 7.65% of your income to pay into Social Security and Medicare on your behalf, and then they pay another 7.65% of your income out of their money but in your name.&nbsp;</p><p>The self-employment tax refers to this second 7.65% which is usually paid by the employer. If you are in business for yourself, then you are responsible for paying both halves for a total of 15.3%.&nbsp;&nbsp;</p><h3 class="wp-block-heading" id="h-quarterly-estimated-taxes">Quarterly Estimated Taxes</h3><p><a class="link" href="https://1800accountant.com/services/quarterly-estimated-taxes">Quarterly estimated taxes</a> are actually a part of your taxable income obligations, but they’re also something you might not be used to if you’re accustomed to working for an employer.&nbsp;</p><p>Income taxes in the United States must be paid as you earn throughout the year and not at the end of the year. Employers usually handle this on their employees’ behalf. However, if you make most or all of your money as an independent small business, you will need to do this yourself.&nbsp;</p><p>You can pay your taxes as you go by making quarterly estimated tax payments. You estimate the total taxes you will owe, and then you pay a quarter of it at a time. The IRS sets four annual deadlines for these four tax installments. The four quarterly estimated tax deadlines are:&nbsp;</p><ul><li>First quarter tax deadline: April 15</li><li>Second quarter tax deadline: June 15</li><li>Third quarter tax deadline: September 15</li><li>Fourth quarter tax deadline: January 15 of the following year&nbsp;</li></ul><h3 class="wp-block-heading" id="h-sales-tax">State Sales Tax</h3><p>On top of the income and income-related taxes, Etsy sellers also have to be concerned about state sales tax. This is a tax on the customer transactions themselves, and the laws on these are set entirely at the state level.&nbsp;</p><p><a class="link" href="https://1800accountant.com/blog/etsy-store-sales-tax">Etsy store sales tax rules are complicated</a> because it depends on where each customer is located and the relationship your business has with that state. You must pay sales tax on purchases made in states where your business has a significant presence or “nexus” of business activity.&nbsp;</p><p>This means that if a single customer from a state buys a product of yours, and you aren’t located there, you probably won’t owe sales tax there. However, if you start selling to more customers there, you will likely have to remit some sales tax money to that state. Exact minimum requirements and sales tax percentages vary depending on the state.&nbsp;</p><p>Etsy and other similar online platforms have the infrastructure to collect and remit sales tax, but they don’t always do it automatically if you don’t instruct them to. Make sure you’re getting the right taxes taken out of your sales.&nbsp;&nbsp;</p><h2 class="wp-block-heading" id="h-1-800accountant-makes-reporting-etsy-income-a-breeze">1-800Accountant Makes Reporting Etsy Income a Breeze</h2><p>There are numerous requirements and challenges that come with <a class="link" href="https://1800accountant.com/services/small-business-taxes">doing small business taxes</a> and reporting Etsy income, but you don’t have to figure it out on your own. Work with a professional from 1-800Accountant and ensure that you’ll be prepared when tax season comes around.&nbsp;</p><p>An expert ecommerce tax accountant can make filing your tax return a simple and efficient process, and you’ll be able to rest easy knowing that you’re saving as much money as possible. Get help from an <a class="link" href="https://1800accountant.com/services/industry/ecommerce">Etsy accounting professional</a> and focus on the creative work you do that earned you this income in the first place!</p>

If you’ve been building a side hustle as an Etsy seller, and you’re wondering, “do I have to report Etsy income on my taxes?” you’ve come to the right place. Etsy is home to many artists and craftspeople selling their goods online – but you need to remember to report Etsy income when it’s time [&hellip;]

A person in a yellow sweater packaging a handmade soap bar at a craft table surrounded by various natural ingredients and materials.

report-etsy-income

How to Report Etsy Income to the IRS

<p>Influencers are tastemakers who shape what their dedicated audiences will embrace or avoid. In some industries, an influencer's word can mean much more than a celebrity spokesperson or a famous athlete, which isn't lost on companies engaged in a tight battle for consumer dollars.<br><br>The influx of money, access, and power to this emerging industry has turned hobbyists into professionals overnight. Whether it's what they signed up for or not, influencing can be a real business that comes with real responsibilities. And if you shirk those responsibilities related to your income or aren't proactive about it, IRS penalties and scrutiny could follow.<br><br>Whether you're an established influencer or a hobbyist aspiring to become one, use this guide for influencer taxes to help you with filing taxes as an influencer during the upcoming tax season.&nbsp;</p>



<h2>Do Influencers Pay Taxes?</h2>



<p>If you're earning money from your efforts as an influencer, <a class="link" href="https://1800accountant.com/blog/influencer-accounting">you must pay taxes</a> on that income.&nbsp;<br>Like other professions, the amount of money you make will dictate how you file with the IRS.<br><br>Influencers typically work for themselves, so they are subject to a self-employment tax (SE tax) and an income tax. If you're an influencer making more than $600 per year, you must file Form 1099-NEC with the IRS. If you're making below that amount, you can file a Form 1040 with the IRS on your income tax return.&nbsp;<br></p>



<p>Remember that this is related to the money you bring in, not gifts or product samples you might receive. However, there are instances where you might have to report gifts and samples to the IRS.</p>



<h2>Do Influencers Pay Taxes on Gifts?</h2>



<p>Influencers regularly receive product samples and review materials from companies that wish to make inroads with a particular audience. The IRS views these materials as "gifts" on which you might have to pay taxes.</p>



<p>When a brand gifts a product and the value exceeds $100, you must include that in your tax filing to the IRS. If the total value of the product is less than $100, you do not need to declare this when filing your taxes. </p>



<p>It's important that influencers keep detailed records of every gift received and its value to avoid, this will help avoid stress during tax season. Remember brands often do not disclose the value of their gifts, and it's up to the influencer to declare during tax season. </p>



<h2>Do Influencers Need an LLC?</h2>



<p>Whether you need an LLC or not depends on timing. If you're starting and haven't cleared the $600 income threshold yet, it's best to wait.<br></p>



<p>But if the income from your influencer business is growing, it might be time to seriously consider making your business official by forming an LLC. But there are several different business entities for influencers to consider.&nbsp;</p>



<h2>What are the Different Influencer Business Entities?</h2>



<p>There are three main business entities influencers should consider forming as:</p>



<ul>
<li>Sole proprietorship</li>



<li>Independent contractor</li>



<li>LLC</li>
</ul>



<h3>Sole Proprietorship</h3>



<p>A sole proprietor is a self-employed individual who owns and operates a business. Influencers who form a sole proprietorship file their taxes using their personal income tax return and social security number.&nbsp;</p>



<p>Influencers will use <a class="link" href="https://www.irs.gov/forms-pubs/about-schedule-c-form-1040" target="_blank" rel="noreferrer noopener">Form 1040 and the Schedule C</a> supplement to disclose income and losses from their businesses.<br></p>



<h3>Independent Contractor</h3>



<p>There are similarities between sole proprietorships and independent contractors, with an important distinction. Independent contractors work for others on a contractual basis. Doctors and lawyers often operate as independent contractors, and influencers certainly can too.<br><br>The businesses influencers collaborate with will send a Form 1099 at the end of the fiscal year. This form will illustrate the exact amount of money you made that year working with that business or brand.&nbsp;</p>



<h3>LLC</h3>



<p>Forming as an LLC introduces influencers to a more formal business entity registered with their state.&nbsp;</p>



<p>Influencers who form an LLC enjoy simplicity and flexibility in taxing and protecting their personal assets, shielding them from business liabilities.<br><br>Once they form an LLC, Influencers will have 75 days to select a different business structure for their new company, such as an S corporation. They can also opt to stay as an LLC.&nbsp;&nbsp;</p>



<h2>Top five influencer tax write-offs</h2>



<p>There are several tax deductions influencers may be able to utilize. Some of the most popular deductions for influencers include:&nbsp;</p>



<h3>Work Phone</h3>



<p>Your phone bill is partially deductible if you're using it for work activities. Itemize work calls on your bill and provide a brief explanation of each charge.&nbsp;</p>



<h3>Office Supplies</h3>



<p>Stationery, photocopies, monitors, and more are tax deductible if used for business-related purposes.&nbsp;</p>



<h3>Business Website</h3>



<p>Your business's website hosting fee and associated assets, such as stock photos or a web theme, are tax-deductible.</p>



<h3>Advertising</h3>



<p>Your budget for ads, such as those found on social media and in search results, is tax-deductible for your business.</p>



<h3>Internet Access</h3>



<p>Accessing the internet is essential to most influencers' jobs, and you can write that recurring bill off.&nbsp;</p>



<h2>Work with experts that specialize in influencer taxes.</h2>



<p><a class="link" href="https://1800accountant.com/services/industry/freelancer-self-employed">Influencer accounting</a> can be complicated, and choosing the right path to keep the most money in your pocket can be agonizing. That's why so many influencers decide to work with 1-800Accountant, America's leading virtual accounting firm for small business owners just like you. Our team of experts who specialize in working with influencers in your state will provide <a class="link" href="https://1800accountant.com/services/business-tax-advisory">periodic advisory</a> and a year-round strategy to maximize your tax savings. Working with 1-800Accoutant allows you to continue influencing while we handle the rest. All it takes is a quick call to get started!</p>

Influencers are tastemakers who shape what their dedicated audiences will embrace or avoid. In some industries, an influencer&#8217;s word can mean much more than a celebrity spokesperson or a famous athlete, which isn&#8217;t lost on companies engaged in a tight battle for consumer dollars. The influx of money, access, and power to this emerging industry [&hellip;]

Young man creating a video for his influencer business.

Influencer-Taxes-Everything-You-Need-to-Know

Influencer Taxes: Everything You Need to Know to Navigate Tax Season

<p>While most people don't think of tax season as an exciting time to look forward to, it doesn't have to be something you dread. You'll be okay if you know what you're getting into and prepare. And there's no better time to prepare than right now, especially as we start approaching the end of the year.&nbsp;</p>



<p>If you wait until the following year to gather your records and tax data, you will make it much harder for yourself than it needs to be. You can do a lot in your year-end accounting to optimize your tax savings, <a class="link" href="https://www.sba.gov/business-guide/manage-your-business/pay-taxes" target="_blank" rel="noreferrer noopener">prepare to pay taxes in April</a>, and improve your planning and accounting overall.&nbsp;&nbsp;</p>



<p>Use your time while you’ve got it in 2022. Find out more and develop a small business year-end accounting checklist for your company to use this December.</p>



<h2>What is Year-End Accounting?</h2>



<p>For your 2022 tax return, you are only responsible for your income and expenses between January 1, 2022, and December 31, 2022. So as the end of the 2022 tax year gets closer, you are approaching your final chance to change how you calculate your taxable income.</p>



<p>End-of-year accounting is about the specific management and bookkeeping involved in preparing your company's accounts for the end of the fiscal year. Whether a business owner or a tax professional, the year's end is essential for attending to company finances.</p>



<h2>When Does the Accounting Year End?</h2>



<p>The accounting year may vary for each different business owner. Most businesses follow the calendar year, which means their accounting year begins on January 1 and ends on December 31. Other companies may have their 12-month fiscal year adapted for their schedule.</p>



<h2>Why Should Small Businesses Create a Year-End Accounting Checklist?</h2>



<p>The end of the year is an excellent time to be proactive in managing your tax bill. You can do a lot in year-end preparation to ease your tax burden and take control of your liability before you’ve closed the books for 2022.&nbsp;</p>



<p>Developing an accounting checklist and going through it with your staff or an accountant will set your business up for success in the tax season and the new tax year ahead. You can close out the tax year on your terms and prepare yourself to shift into the next one.&nbsp;</p>



<p>If you take a step back to planning at these natural transition times, you'll always react at the moment instead of deliberately moving toward the future. Keeping an end-of-year checklist for small business owners makes planning an intentional part of your year.</p>



<h2>6 Items to Include in Your Small Business Year-End Checklist</h2>



<p>You’re taking the time to make sure your company is in good financial shape for the next year with your year-end accounting checklist, but where do you start? Here are some critical items you should attend to as you wrap up the year.</p>



<ul>
<li>Tax deductions</li>



<li>Review and close out records for the year</li>



<li>Ensure you’re paying your quarterly estimated taxes</li>



<li>Estimate your tax liability</li>



<li>Get organized for the new year</li>



<li>Consult a tax professional</li>
</ul>



<h3>1. Maximize Your Deductions&nbsp;</h3>



<p>Tax deductions are an essential piece of your year-end accounting checklist. Claiming all your tax-deductible expenses will make a significant difference on your small business tax return, and all of those expenses need to happen before the accounting year ends.&nbsp;</p>



<p>Schedule your business expenses before the end of December if you want to be able to deduct them from your taxable income. On the other hand, you could postpone significant expenses until January if you expect to have more revenue to offset in the coming year.&nbsp;</p>



<h3>2. Review Your Books for the Year</h3>



<p>Your year-end closing process is about closing the books on the previous year's finances to be prepared for tax season. To get there, your bookkeeping for the last year needs to be thorough and complete.&nbsp;</p>



<p>Group similar transactions and set apart any major purchases made throughout the year. Identify refunds, income, and owner contributions. You should have a complete accounting of all your assets and liabilities, including accounts receivable and accounts payable that haven’t been processed yet, like unpaid debts or outstanding invoices. Double-check and update your inventory count of unsold goods.</p>



<p>Be sure to revisit and sort through these financial statements, too. If you let months go by before you go over these files, you will need to remember more to do this accurately and efficiently.</p>



<p><a class="link" href="https://1800accountant.com/services/bookkeeping">Bookkeeping for your small business</a> may initially seem manageable, but it can quickly become overwhelming. If you're struggling, reach out for assistance before submitting your information for tax preparation.&nbsp;</p>



<h3>3. Pay Quarterly Taxes</h3>



<p>Your year-end checklist should also remind you to<a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes"> stay current on your quarterly estimated taxes</a>. These are pre-payments to your tax bill based on what you expect to owe in a final accounting.&nbsp;</p>



<p>Here are the quarterly estimated tax deadlines:&nbsp;</p>



<ul>
<li>Quarter 1 Deadline: April 15</li>



<li>Quarter 2 Deadline: June 15</li>



<li>Quarter 3 Deadline: September 15</li>



<li>Quarter 4 Deadline: January 15 of the following year</li>
</ul>



<p>It's better to pay more in estimated taxes than underpay. If you underestimate what you owe, you could leave yourself with a large tax balance at the end of the year and get hit with underpayment penalties. Ensure your business is tax compliant by working with a <a class="link" href="https://1800accountant.com/services/quarterly-estimated-taxes">quarterly estimated tax expert</a>.  </p>



<h3>4. Estimate Your Liability Ahead of Time</h3>



<p>Another crucial step in year-end closing accounting is to estimate what you’ll end up owing on your final return. Knowing more or less how much you’ll owe in advance can help you prepare for filing and paying.&nbsp;</p>



<p>Spend time calculating your total gross receipts. Overstated receipts lead to paying unnecessary taxes, while understated income numbers can mean penalties with the IRS further down the road. You don’t want either to happen to you. You can work off of your tax records from previous years to get started.&nbsp;</p>



<p>Plan for a year-end accountant consultation to ensure you're on top of all your income streams and possible deductions. You'll need all of that information to get an accurate estimate of your final liability.</p>



<h3>5. Get Organized for the Next Year</h3>



<p>Ending a year is like completing a chapter in your life or the life of your business. You can close that chapter and begin a new one in a way that sets you up for success with organized recordkeeping.&nbsp;</p>



<p>Use your year-end accounting checklist to ensure you're ready for the new year. It's the perfect time to make significant changes to your process, try out new accounting software, or <a class="link" href="https://1800accountant.com/blog/accounting-trends">update your system with other recent accounting trends</a>.&nbsp;</p>



<h3>6. Check in with an Expert Accountant</h3>



<p>Be sure to set up an appointment with a professional before the last minute in April. Take the time now to consult with your accountant on how to do year-end accounting for your business.&nbsp;</p>



<p>It is an excellent opportunity to get ahead of the game and ensure you're as informed and prepared as possible with your year-end accounting checklist. Consulting with your accountant for year-end planning is a smart way to ensure you cover your bases.&nbsp;However you decide to proceed, your company’s finances are in your hands. It takes time to <a class="link" href="https://1800accountant.com/services/small-business-taxes">get your small business taxes done right</a>, and there’s no better time than the present to invest in future savings.</p>

While most people don&#8217;t think of tax season as an exciting time to look forward to, it doesn&#8217;t have to be something you dread. You&#8217;ll be okay if you know what you&#8217;re getting into and prepare. And there&#8217;s no better time to prepare than right now, especially as we start approaching the end of the [&hellip;]

A calendar highlighting the importance of year end accounting.

Year-End-Accounting-Tips-blog-header

Year-End Accounting Checklist for Small Business Owners

<span style="font-weight: 400;">There are more ways to be a </span><span style="font-weight: 400;">self-employed personal trainer</span><span style="font-weight: 400;"> today than ever. You could be a </span><span style="font-weight: 400;">traveling personal trainer</span><span style="font-weight: 400;">, coach, or contractor for a larger fitness organization or even offer online training services!</span>

<span style="font-weight: 400;">Whatever your work looks like, you've put in tremendous time, money, and labor to make that work possible. When you're working for yourself, there's no one else but you to set up the structure and support your work.</span>

<span style="font-weight: 400;">Fortunately, there are </span><span style="font-weight: 400;">tax deductions for fitness professionals</span><span style="font-weight: 400;"> that will recognize your massive effort and expense. Explore this guide to </span><span style="font-weight: 400;">personal trainer tax deductions</span><span style="font-weight: 400;"> and ensure you get the tax savings you're eligible for.</span>
<h2><span style="font-weight: 400;">Can I Deduct Personal Trainer Expenses</span><span style="font-weight: 400;">?</span><b> </b></h2>
<span style="font-weight: 400;">You can deduct business expenses from your taxable income as a self-employed personal trainer, which is a crucial part of your </span><span style="font-weight: 400;">personal trainer taxes</span><span style="font-weight: 400;">. Money used to support your business shouldn't count as taxable profit. </span>

<span style="font-weight: 400;">Consider working with a professional if you’re concerned about deductions or you’ve never done your taxes before. The stakes are high, and you may </span><a class="link" href="https://1800accountant.com/blog/reasons-you-need-accountant-self-employment"><span style="font-weight: 400;">need an accountant to help you with your self-employed tax return</span></a><span style="font-weight: 400;"> before </span><span style="font-weight: 400;">tax time</span><span style="font-weight: 400;"> arrives.   </span>
<h2><span style="font-weight: 400;">5 Deductions You Can Claim as a Personal Trainer or Fitness Coach</span></h2>
<span style="font-weight: 400;">You can claim deductions for many of the costs of doing business as a personal trainer or fitness coach. Here are a few of the significant </span><span style="font-weight: 400;">tax deductions for personal trainers</span><span style="font-weight: 400;"> you can take advantage of:</span>
<h3><span style="font-weight: 400;">1. Exercise Equipment and Supplies</span></h3>
<span style="font-weight: 400;">Personal trainers often work with their clients using various equipment, from hand weights to treadmills and elliptical machines. If you purchase this equipment for your small business on your own, you should claim a tax deduction for it. </span>

<span style="font-weight: 400;">If you see clients in a training room, you should be able to write off any </span><span style="font-weight: 400;">personal training</span><span style="font-weight: 400;"> equipment costs incurred as business expenses. However, you can’t deduct expenses for your home gym if you don’t use it for a business-related purpose.</span>
<h3><span style="font-weight: 400;">2. Certification &amp; Education Costs</span></h3>
<span style="font-weight: 400;">Personal trainers</span><span style="font-weight: 400;"> can deduct all expenses for required licensing and continuing education, including obtaining official certificates or maintaining your expertise. </span>

<span style="font-weight: 400;">You can deduct expenses for business-related books, supplies, and subscriptions to fitness websites, publications, or journals relevant to your field. Plus, you can deduct specific membership fees if you belong to a professional association.</span>
<h3><span style="font-weight: 400;">3. Office Costs</span></h3>
<span style="font-weight: 400;">Where do you conduct your work? If you rent a gym or </span><span style="font-weight: 400;">office space</span><span style="font-weight: 400;">, all costs associated with that space can be claimed as </span><span style="font-weight: 400;">deductions on your taxes</span><span style="font-weight: 400;">. </span>

<span style="font-weight: 400;">If you keep a </span><span style="font-weight: 400;">home office</span><span style="font-weight: 400;"> where you </span><span style="font-weight: 400;">train clients</span><span style="font-weight: 400;"> in your own space, you can claim a corresponding portion of your home rent and utility costs, assuming that the home office space is used exclusively for business purposes.</span>

<span style="font-weight: 400;">Other varied office-related expenses are also deductible, including anything from paper and staplers to printer ink and accounting software.</span>
<h3><span style="font-weight: 400;">4. Travel Expenses</span></h3>
<span style="font-weight: 400;">If you travel to seminars, conferences, or events for personal trainers, you can claim your travel and hotel costs as part of your personal </span><span style="font-weight: 400;">trainer tax deductions</span><span style="font-weight: 400;">. </span>

<span style="font-weight: 400;">When traveling out of town for work or driving long distances to </span><span style="font-weight: 400;">training sessions</span><span style="font-weight: 400;">, you can also write off mileage on your personal vehicle. When you write off mileage, you can either add up actual vehicle expenses or </span><a class="link" href="https://www.irs.gov/tax-professionals/standard-mileage-rates" target="_blank" rel="noopener"><span style="font-weight: 400;">use the standard mileage rate set by the IRS</span></a><span style="font-weight: 400;">. </span>
<h3><span style="font-weight: 400;">5. Liability &amp; Health Insurance Premiums</span></h3>
<span style="font-weight: 400;">Tax deductions for athletic coaches</span><span style="font-weight: 400;"> and trainers include insurance. If you pay your liability insurance, that's a tax-deductible expense. Self-employed trainers can also claim </span><span style="font-weight: 400;">health insurance</span><span style="font-weight: 400;"> premiums as business expenses. </span>

<span style="font-weight: 400;">You can also deduct uninsured </span><span style="font-weight: 400;">medical expense</span><span style="font-weight: 400;">s, but they're not business expenses, which means you can only claim them if you're itemizing your personal deductions.</span>
<h2><span style="font-weight: 400;">What Else Qualifies as Tax-Deductible Expenses?</span></h2>
<span style="font-weight: 400;">What can I deduct from my taxes</span><span style="font-weight: 400;"> for my </span><span style="font-weight: 400;">fitness business</span><span style="font-weight: 400;">? You should be able to claim deductions for nearly any </span><span style="font-weight: 400;">business expense</span><span style="font-weight: 400;"> you can justify as being necessary for your work. However, this only applies to your </span><span style="font-weight: 400;">self-employed personal trainer taxes</span><span style="font-weight: 400;">. If you are a W-2 employee, you can only claim personal deductions if you are itemizing your deductions. </span>
<h2><span style="font-weight: 400;">How to Claim </span><span style="font-weight: 400;">Personal Trainer Tax Deductions</span></h2>
<span style="font-weight: 400;">As you </span><a class="link" href="https://1800accountant.com/blog/how-to-file-taxes-independent-contractor"><span style="font-weight: 400;">prepare to file taxes as an independent contractor</span></a><span style="font-weight: 400;">, keeping careful records of your </span><span style="font-weight: 400;">income and expenses</span><span style="font-weight: 400;"> is the most important thing. You need receipts testifying to the business expenses you'll be claiming. </span>

<span style="font-weight: 400;">You'll fill out your 1040 personal tax return as usual, and here you can claim the standard deduction or itemize your personal deductions. Then you'll move on to </span><a class="link" href="https://www.irs.gov/forms-pubs/about-schedule-c-form-1040" target="_blank" rel="noopener"><span style="font-weight: 400;">IRS 1040 Schedule C, Profit or Loss from Business</span></a><span style="font-weight: 400;">, which is the form you'll use to report your personal business income and deductions. Your business expenses count as losses associated with that business.   </span>

<span style="font-weight: 400;">Don’t hesitate to seek help from an accountant as you work on putting together your small business tax return. </span>
<h3><span style="font-weight: 400;">How We Can Help You Maximize Your Tax Deductions</span></h3>
<span style="font-weight: 400;">For more <a class="link" href="https://1800accountant.com/services/small-business-taxes">help with your small business taxes</a> and finding personal trainer tax deductions, turn to the accounting experts at 1-800Accountant. Whether you're a small business owner or a self-employed individual working on your <a class="link" href="https://1800accountant.com/services/industry/freelancer-self-employed">personal trainer tax return</a>, we can help you keep more of the money you work hard to make.</span>

There are more ways to be a self-employed personal trainer today than ever. You could be a traveling personal trainer, coach, or contractor for a larger fitness organization or even offer online training services! Whatever your work looks like, you&#8217;ve put in tremendous time, money, and labor to make that work possible. When you&#8217;re working [&hellip;]

Young woman performing a back squat with her personal trainer there for support.

Personal-Trainer-Tax-Deductions_blog-header (1)

Getting Financially Fit: Top 5 Personal Trainer Tax Deductions

<p>For business owners, equity is a vital tool that you can use to your advantage. There are different equity types that serve different purposes within your business. Here’s an overview of what equity is and how to calculate equity in a business.</p>



<h2>What does equity mean in business?&nbsp;</h2>



<p>Equity comprises the net value of a business; it’s the result of a company's assets minus its liabilities. The bookkeeping term <a class="link" href="https://1800accountant.com/blog/common-bookkeeping-terms">equity</a> is important because it gives you an idea of:&nbsp;</p>



<ul><li>How much the shareholders would receive if they sold their stake in the company&nbsp;</li><li>Money left over for shareholders following asset liquidation and debt repayment</li><li>The net value of a business</li></ul>



<p>For businesses, equity can have multiple meanings for the value of their finances. Equity can refer to:&nbsp;</p>



<ul><li>Balance sheet</li><li>Liquidation</li><li>Real estate&nbsp;</li><li>Stocks&nbsp;</li></ul>



<p>When referencing the<a class="link" href="https://1800accountant.com/blog/bookkeeping-101-what-is-a-balance-sheet"> balance sheet</a>, equity refers to the total of common stock, paid-in capital, preferred stock, and retained earnings. This form of equity is shareholders’ equity.</p>



<p>Equity from liquidation is what remains following a business's bankruptcy and liquidation.&nbsp;</p>



<p>This form of equity is ownership equity. If your business is in a poor financial state before liquidation, there’s a chance that there won’t be ownership equity following debt repayment.</p>



<p>The third variation of equity in business is real estate. In this instance, equity is what remains after deducting the fair market value of your property from the balance you owe on your mortgage.</p>



<p>Finally, when referring to stocks, equity refers to the ownership interest that a business has. Investors can buy equity shares either as common stock or preferred stock. With stocks, equity represents the amount investors can receive as cash for the share.</p>



<h2>What are the different types of equity?</h2>



<p>Businesses use different types of equity, which illustrate what business owners, investors, and shareholders can learn about your company.&nbsp;</p>



<p>There are <a class="link" href="https://www.investopedia.com/ask/answers/012115/what-are-components-shareholders-equity.asp" target="_blank" rel="noreferrer noopener">multiple equity types</a> that a business may use to determine its value:</p>



<ul><li>Common stock&nbsp;</li><li>Negative equity</li><li>Positive equity</li><li>Preferred stock</li><li>Retained earnings&nbsp;</li><li>Treasury stock</li></ul>



<p>Common stock indicates that a person owes shares in a corporation. These shareholders represent an ownership stake in a company that allows them to receive profits from its operations.&nbsp;</p>



<p>Common stock shareholders receive distributions made by the company through dividends or stock repurchases. As a common stock shareholder, you can:&nbsp;</p>



<ul><li>Elect board members with one vote per share&nbsp;</li><li>Meet with other investors to elect board members</li><li>Vote on major decisions affecting your business, including who sits on its board and what projects it pursues&nbsp;</li></ul>



<p>Preferred stock differs from common stock with dividends and voting procedures:</p>



<ul><li>Preferred stock has a set dividend rate, which can be fixed or variable based on company performance&nbsp;</li><li>These shareholders aren’t able to vote to elect a board of directors or for major company decisions</li><li>This type of stock also allows you to participate in distributions made by the company through dividends or stock repurchases</li></ul>



<p>Businesses can experience positive equity or negative equity. Negative equity is an indicator that a company has more liabilities than assets. Positive equity indicates that a company has sufficient assets to pay its liabilities.</p>



<p>Retained earnings are the percentage of net earnings not paid to shareholders as a dividend. Businesses can use these earnings to pay debts or to reinvest.</p>



<p>Treasury stock represents the number of shares that a business repurchases from investors. On a balance sheet, you’ll list this stock as a negative number within the equity section.</p>



<h2>How To Calculate Business Equity in Accounting</h2>



<p>Businesses can calculate equity accounting in a few steps:&nbsp;</p>



<ul><li>Calculate your total assets&nbsp;</li><li>Calculate your total liabilities&nbsp;</li><li>Subtract your total assets from your total liabilities&nbsp;</li></ul>



<p>To calculate what is equity in business, you first need to determine the value of all the assets:</p>



<ul><li>This includes current assets and long-term assets&nbsp;</li><li>Current assets are assets you can convert to cash in a year or less</li><li>Long-term assets are assets that can’t be converted to cash within one year</li></ul>



<p>Next, you’ll subtract assets from all of your liabilities:&nbsp;</p>



<ul><li>This includes current liabilities and long-term liabilities&nbsp;</li><li>Current liabilities are debts owed within one year</li><li>Long-term liabilities are debts that can’t be paid within one year</li></ul>



<p>The resulting number is equity.</p>



<p>Here’s an example of equity: A small business has total assets of $3 million and total liabilities of $500,000. From this, you would deduct the $3 million in total assets from the $500,000 in total liabilities to get an equity of $2.5 million.</p>



<h2>How Can You Use Equity To Grow Your Business</h2>



<p>If you want to grow your business, but don't have access to the capital required, then equity is an option. As a business owner, <a class="link" href="https://www.forbes.com/sites/forbesbusinesscouncil/2021/09/15/how-private-equity-can-help-build-your-business/?sh=6f6e115068b6" target="_blank" rel="noreferrer noopener">there are ways</a> you can use equity for business growth, or you can work with private equity investors for business growth.</p>



<p>Equity allows you to give away part of the ownership of your company for investing. You can then use this money to invest in a new product or service to make more money for both parties involved.</p>



<p>The next way you can use equity for business growth is to work with private equity investors. These investors can work with businesses to propel business growth, and there may be business advantages in doing so. By partnering with private equity investors, you’ll get liquidity. You can also choose to remain invested in your business as well.</p>



<h3>Work with a Professional&nbsp;</h3>



<p>Equity can be a useful tool for growing and sustaining business growth over time. It has several uses and provides a good overview of your business value.&nbsp;</p>



<p>When it’s time to determine your business equity, or receive help for your small business bookkeeping needs, work with the professionals. Work with an accounting professional at <a class="link" href="https://1800accountant.com/services/bookkeeping">1-800Accountant</a> for all of your bookkeeping and accounting needs.&nbsp;</p>

For business owners, equity is a vital tool that you can use to your advantage. There are different equity types that serve different purposes within your business. Here’s an overview of what equity is and how to calculate equity in a business. What does equity mean in business?&nbsp; Equity comprises the net value of a [&hellip;]

An equity chart displaying an increase over time.

Equity-&#038;-How-to-Calculate_blog-header (1)

What Is Equity in Business and How to Calculate It

Excepteur sint occaecat cupidatat

JOIN NOW!

Your small business resource for accounting, bookkeeping, and taxes from our experts.<br /><br />

Accounting, Bookkeeping, & Tax Blog

Screenshot_2023-08-14_at_1.36_1.png

CLP_JoinUs_Testimonial_WomanBlueBackground_3.png

<p><strong>Huong T</strong></p>
<p>“Excellent first call, very informative. This is my third business … this time  I will ease the burden and use 1-800Accountant [for accounting]”</p>

<span>By clicking "Confirm My Appointment" you agree to our <a href="https://1800accountant.com/terms-of-services" target="_blank">Terms of Service</a>. This includes permission to communicate with you about your appointments via phone, email, or SMS. If you prefer to opt-out of SMS communications you may uncheck this box</span>