Discover the potential advantages of the standard deduction for the tax year 2022-2023. Explore how it can lower your taxable income and lead to significant tax savings.

<p>Tax deductions are crucial for filing your tax return if you don’t want to pay more than your fair share.<a class="link" href="https://1800accountant.com/blog/tax-deductions-work"> Tax deductions work by deducting eligible expenses</a> from your overall taxable income. Less taxable income means owing less in taxes, and it can even mean slipping down a tax bracket. Knowing how much your tax deductions can help you make crucial tax deductions.&nbsp;</p>



<p>The expenses you can claim for deductions are not meant to be counted toward your taxable income. These are essential costs, and the IRS is intentional about not taxing the money that goes to paying them. Enter: tax deductions.&nbsp;</p>



<p>However, the system for claiming deductions is complicated, and it requires keeping records of expenses. Not everyone has a comprehensive paper trail of all their deductible expenses ready to put together for their 1040. That’s a lot of work for both the individual and the IRS.</p>



<p>One way the government makes this process smoother is with the standard deduction. This is the primary deduction option individual taxpayers should be aware of. Whether or not you claim it, it’s essential to understand how it works. Here’s what you need to know:</p>



<h2>What is the Standard Deduction?</h2>



<p><a class="link" href="https://www.irs.gov/taxtopics/tc551" target="_blank" rel="noreferrer noopener">The IRS offers the standard deduction</a> as a sizable tax deduction available to most individual taxpayers in the United States. It allows you to deduct a portion of your income from your total taxable income without claiming or proving your eligibility for specific tax deductions.&nbsp;</p>



<p>It effectively functions as a shortcut, allowing you to assume a certain amount of tax-deductible expenses and contributions, whether or not you have any records to suggest as much.&nbsp;&nbsp;&nbsp;</p>



<p>To be eligible for the standard deduction, you must be a U.S. citizen or legal resident. You can’t have a spouse filing separately with itemized deductions, and your tax return must be for a whole 12-month period.</p>



<h2>How Much is the Standard Deduction for 2022 and 2023?</h2>



<p>The IRS (Internal Revenue Service) generally makes<a class="link" href="https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2022" target="_blank" rel="noreferrer noopener"> tax inflation adjustments each year to the standard deduction</a>, increasing it over time to keep pace with economic change. For the 2023 tax year, the standard deduction is $13,850 for a single individual and $27,700 for a married couple filing jointly.&nbsp;&nbsp;</p>



<p>For the 2022 tax year, which will apply as you file your tax return in April 2023, the single standard deduction is $12,950, while the deduction for a married couple filing together is $25,900.&nbsp;</p>



<p>Recent laws have increased the standard deduction significantly from what it was in the past, and it will continue to grow regularly.</p>



<h3>Increase for Senior Citizens</h3>



<p>Taxpayers 65 years or older get an increase in the standard deduction, further shielding them from a heavy tax burden. Single individuals get $1,850 more. A married couple filing jointly gets $1,500 more deducted for each spouse 65 or older.&nbsp;</p>



<h2>Standard vs. Itemized Deductions</h2>



<p>Itemized deductions involve presenting the IRS with a complete list of the tax deductions you are claiming and the amount of money they deduct from your taxes. You must present each deduction with valid documentation. This requires careful record management of your deductible expenses and the relevant receipts.</p>



<p>Here are a few of the deductions you can claim if you are itemizing your deductions:</p>



<ul>
<li>Mortgage interest</li>



<li>Student loan interest</li>



<li>Property taxes and certain other taxes</li>



<li>Charitable contributions</li>



<li>Medical costs</li>
</ul>



<p>If you claim the standard deduction, you take the shortcut and waive your right to claim specific deductions for individual taxpayers. It is a substitute option that functions in place of itemized deductions.</p>



<p>These deductions function separately from those you can claim as a small business owner if you earn income from self-employment.</p>



<h3>Charitable Contributions in the 2022 Tax Year</h3>



<p>While the rules explained above regulate how the standard deduction works in a typical year, the last couple of years has brought about unexpected changes. For the 2022 tax year, the IRS has adjusted the rules slightly to encourage charitable donations.&nbsp;</p>



<p>When you file your tax return for the 2022 tax year, you can claim deductions for donations you made to qualifying charities. This is done by itemizing deductions on your Schedule A in order to take a charitable tax deduction. It is also important to note that for 2022, the usual 60% AGI ceiling on charitable cash contribution is restored.&nbsp;</p>



<h2>When is it Better to Claim the Standard Deduction?</h2>



<p>The right option for you will depend on your particular tax situation. The only way to know for sure which is best is to add up every deduction available for you and find out whether the total is higher than the dollar amount already available with the standard deduction.&nbsp;</p>



<p>If you aren’t eligible for many deductions or don’t have the records or receipts to quantify and prove your itemized deductions, then it is likely a better choice for you to claim the standard deduction. If your situation isn’t clear, you can work with an accountant to figure out the best way forward.&nbsp;</p>



<h2>Work with an Accountant to Maximize your Deductions</h2>



<p>Find an accountant you can trust to help calculate payroll tax and work with you to increase your savings. This can come in the form of federal tax, property tax, social security tax, payroll tax, and more. &nbsp;Overall, this will help you prepare your tax documents checklist and get the notable tax forms. &nbsp;An expert can help you take advantage of every opportunity now and even prepare you for the future. They can help you set up a better record-keeping process for tracking deductible expenses in the future.&nbsp;</p>



<p>With enough planning, you can also schedule your deductible expenses to maximize deductions across multiple years. This way, you can alternate in different years between the standard deduction and itemized deductions, maximizing your overall tax savings over time.&nbsp;&nbsp;</p>



<p>Connect with <a class="link" href="https://1800accountant.com/services/small-business-taxes">tax professionals</a> at 1-800Accountant and make sure you maximize your deductions and get the optimal outcome on your tax return. Get the help you need and the savings you deserve<a class="link" href="https://1800accountant.com/services/income-taxes"> when you file your income tax return</a>.</p>

Tax deductions are crucial for filing your tax return if you don’t want to pay more than your fair share. Tax deductions work by deducting eligible expenses from your overall taxable income. Less taxable income means owing less in taxes, and it can even mean slipping down a tax bracket. Knowing how much your tax [&hellip;]

Notepad with the title "claiming tax deductions" displaying a list on a wooden desk, alongside a pen, smartphone, and keyboard.

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Standard Deduction for 2022-2023: Everything You Need to Know

<p>With tax season upon us, it's time to prepare your <a class="link" href="https://1800accountant.com/blog/end-year-tax-checklist">tax documents checklist</a>. Small business owners know that now is the time for tax preparation for 2023. Whether you’re a seasoned business owner or you’ve just passed your one-year anniversary, you know that there’s a lot of planning that goes into running a successful business. As a small business owner, there’s a lot to juggle between marketing strategies, inventory, budgeting, and taxes. Wondering how to file small business taxes efficiently? Take some time to read up on these small business end-of-year tax tips to get a jumpstart on the upcoming tax season. Your future self will thank you for a smoother tax filing!</p>



<h2><strong>Small Business Tax Planning and Tax Preparation: What’s changed for 2023?</strong></h2>



<p>The COVID-19 pandemic has dominated headlines since it broke out in 2019. It’s no surprise that this year has brought a new topic of intense focus: inflation. </p>



<p>From the gas pump to the grocery stores, inflation has impacted Americans a great deal.&nbsp;</p>



<p>In November 2021, the IRS (Internal Revenue Service) announced its<a class="link" href="https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2022" target="_blank" rel="noreferrer noopener"> annual inflation adjustments</a> for the 2023 tax year. Here are a few notable changes to consider for tax planning for small businesses:</p>



<ul>
<li><strong>Medical Savings Account</strong>: Individuals who are covered with this type of plan must have an annual deductible of at least $2,450, which is a $50 increase from 2021. The maximum deductible is $3,700, $100 more than the previous year.</li>



<li><strong>Standard Deduction</strong>: This amount has increased for every type of taxpayer. The amount for married couples filing jointly is $25,900 (an $800 increase), and heads of households will have a standard tax deduction of $19,400 (a $600 increase). Single taxpayers and those who are married but filing separately have a standard deduction of $12,950, which is a $400 increase.&nbsp;</li>



<li><strong>Earned Income Tax Credit</strong>:<strong> </strong>The IRS has increased this amount to $6,935 for taxpayers with three or more qualifying children.</li>
</ul>



<h2>4 Small Business End-of-Year Tax Tips for 2023</h2>



<p>Small business owners have a lot of day-to-day responsibilities when it comes to managing the finances of their businesses. In addition to <a class="link" href="https://1800accountant.com/blog/small-business-bookkeeping-basics" target="_blank" rel="noreferrer noopener">small business bookkeeping</a>, you might also need to understand <a class="link" href="https://1800accountant.com/blog/small-business-payroll" target="_blank" rel="noreferrer noopener">how to run payroll</a> if you have employees. There’s also the aspect of <a class="link" href="https://1800accountant.com/services/small-business-taxes" target="_blank" rel="noreferrer noopener">small business taxes</a>, which can be quite complex for the average business owner.&nbsp;</p>



<p>When you <a class="link" href="https://1800accountant.com/blog/calculate-small-business-taxes" target="_blank" rel="noreferrer noopener">calculate your small business taxes</a>, the process will be easier if you follow some tax tips for small businesses. Consider the following practices to help ensure the process goes smoothly:</p>



<h3>1. Maintain Good Records</h3>



<p>Your tax prep would not go smoothly without concrete tax records. These records could help you calculate your estimated tax payment. Make sure you record your business expenses on a regular basis, regardless of the amount. Don’t wait until the end of the quarter or year to reflect on your spending on things like advertising or business-related travel. If you maintain detailed and accurate records and save related paperwork and receipts, you’ll have a much easier time deducting these expenses during tax season.</p>



<h3>2. Know Your Deductions and Credits</h3>



<p>Depending on the type of work you do, you may be entitled to a variety of tax deductions and tax credits. Self-employed folks and small business owners are often eligible to receive certain deductions and credits that sometimes get overlooked. It’s important to be aware of these items to <a class="link" href="https://1800accountant.com/blog/maximize-small-business-tax-deductions" target="_blank" rel="noreferrer noopener">maximize your savings</a>.</p>



<h3>3. Beware of Scams</h3>



<p>Don’t fall victim to scammers who try to take advantage of taxpayers through various sneaky methods. Some <a class="link" href="https://1800accountant.com/blog/common-irs-tax-scams" target="_blank" rel="noreferrer noopener">common IRS scams</a> involve criminals who impersonate the IRS, while other scams originate from the taxpayer who’s trying to avoid payment. The IRS releases an annual <a class="link" href="https://1800accountant.com/blog/irs-dirty-dozen-tax-scams">Di</a><a class="link" href="https://1800accountant.com/blog/irs-dirty-dozen-tax-scams" target="_blank" rel="noreferrer noopener">r</a><a class="link" href="https://1800accountant.com/blog/irs-dirty-dozen-tax-scams">ty Dozen list of scams</a> that are relevant to both taxpayers and tax professionals.&nbsp;</p>



<h3>4. Work with a CPA</h3>



<p>Hiring a Certified Public Accountant (CPA) to handle your small business taxes is perhaps one of the smartest steps you can take. CPAs stay well-informed about current tax laws and regulations, so you won’t have to worry about missing critical details or deadlines. Outsourcing this critical component of your business can also help <a class="link" href="https://1800accountant.com/blog/5-reasons-hire-accountant-help-small-business-taxes-year" target="_blank" rel="noreferrer noopener">save money </a>and allow you to spend time and energy on other important tasks.&nbsp;</p>



<h2>FAQs for Small Business Tax Planning</h2>



<h3>What is the best tax planning software for businesses?&nbsp;</h3>



<p>There are many options if you want to take the DIY route for your business taxes, but the best option is to work with an accountant or CPA. Your business may have unique needs, and a CPA will ask the right questions to ensure your taxes are filed correctly. A CPA will also help you maximize your deductions and credits so you’re not overpaying or missing out on tax savings.&nbsp;</p>



<h3>How do I calculate small business taxes?&nbsp;</h3>



<p>Unlike individual taxpayers who pay yearly, many small business owners must pay <a class="link" href="https://1800accountant.com/blog/quarterly-estimated-taxes" target="_blank" rel="noreferrer noopener">quarterly estimated taxes</a>. To do this, you’ll need to calculate a few different numbers, including your adjusted gross income (AGI), estimated total income, and taxable income. All of these will factor into your total estimated taxes, which you can divide by four to get your estimated quarterly tax payment.</p>



<h3>How much should a small business put back for taxes?&nbsp;</h3>



<p>Unfortunately, there’s no simple answer for how much you should save for paying taxes. Taxes will vary depending on your location and business structure. For example, a C-corporation will have a different tax rate than a sole proprietorship. These tax rates can range from 10% to 37%, but remember that tax deductions and credits will also affect how much you’ll need to pay.</p>



<h2>Plan Your Small Business Taxes with 1-800Accountant</h2>



<p>These end-of-year small business tax tips can help put you on the right track for 2023. However, it’s ultimately a good idea to consult with a <a class="link" href="https://1800accountant.com/services/small-business-taxes">professional CPA</a>. No two businesses are exactly alike, and it’s best to work with someone who understands the specific laws and regulations that will apply to your business.&nbsp;</p>



<p>The team at <a class="link" href="https://1800accountant.com/">1-800Accountant</a> can advise you on your tax obligations and ensure you maximize your small business tax savings.&nbsp;</p>

With tax season upon us, it&#8217;s time to prepare your tax documents checklist. Small business owners know that now is the time for tax preparation for 2023. Whether you’re a seasoned business owner or you’ve just passed your one-year anniversary, you know that there’s a lot of planning that goes into running a successful business. [&hellip;]

Person reviewing financial documents at a desk with a mug and glasses, overlaid with the text "end-of-year tax tips.

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4 Small Business End-of-Year Tax Tips for 2023

<p>As a small business owner, you'll have questions about your business, business procedures, and taxes. You may have entity-specific or business tax questions, making receiving the correct answers urgently.</p>



<p>When tax season arrives, small business owners will have questions but only a little time to receive proper answers, assistance, and next steps. Here are answers to small business tax questions that small business owners are asking.</p>



<h2>Top 10 Small Business Tax Questions</h2>



<p>Here are the top 10 questions and answers to common tax questions that small business owners have:</p>



<h3>1. Can I Use Scanned Copies of Receipts for Tax Purposes?&nbsp;</h3>



<p>Scanned copies of receipts are okay to save and submit for tax purposes, and the IRS allows this as long as your receipts are identical to the original receipts. Your scanned receipts should also contain identical information to your original copies.</p>



<p>If you experience a tax audit but have scanned copies of your receipts, you'll want to save these records. With an audit, the IRS may require you to submit paper copies of your scanned receipts.</p>



<h3>2. How Do Taxes Work with a Small Business?</h3>



<p>Small businesses will<a class="link" href="https://www.sba.gov/business-guide/launch-your-business/choose-business-structure" target="_blank" rel="noreferrer noopener"> file and pay</a> their taxes based on their business entity. Businesses can choose their tax year when they file taxes for the first time.</p>



<p>Federally:</p>



<ul>
<li>Corporations pay income tax on their profits, and their shareholders pay personal income tax from the corporation's dividends.</li>



<li>Partnerships and sole proprietorships pay personal income tax and self-employment taxes.</li>



<li>S corporations pay taxes as pass-through entities, and their shareholders pay personal income tax.</li>



<li>Sole proprietors pay both personal taxes and self-employment taxes.</li>



<li>Multiple-member LLCs can elect to pay taxes as a corporation, partnership, or S corp. Single-member LLCs can pay taxes as sole proprietors.</li>
</ul>



<p>Depending on where you operate your business, your business may also have local and state taxes. If so, you may also have to pay employment taxes and state income taxes.</p>



<h3>3. How Much Can a Small Business Make Before Having To Pay Taxes?</h3>



<p>A small business's exact amount before paying taxes depends on its entity. Corporations can use Form 1120 to determine how much they'll pay in taxes.</p>



<p>Other business entities, such as LLCs, partnerships, S Corporations, and sole proprietorships, have different considerations for determining their income. These entities require their business owners to report income on their personal income tax returns, which means you'll have both business and nonbusiness income on your tax return.</p>



<p>Independent contractors and sole proprietors will have to pay taxes if they earn $400 or more.&nbsp;</p>



<h3>4. What Business Expenses Can You Claim On Taxes?</h3>



<p>The IRS <a class="link" href="https://www.thebalancemoney.com/deductible-business-expenses-3192959" target="_blank" rel="noreferrer noopener">has two requirements</a> for what business owners can claim as their business expenses.&nbsp;</p>



<p>Business expenses must be both ordinary and necessary. Ordinary expenses are expenses similar businesses or trades commonly pay for, and necessary expenses assist you in doing your business.</p>



<p>You can claim considerable business expenses as tax deductions:</p>



<ul>
<li>Advertising</li>



<li>Automobile expenses&nbsp;</li>



<li>Entertainment and meal expenses&nbsp;</li>



<li>Maintenance and repairs</li>



<li>Home office expenses&nbsp;</li>



<li>Transportation expenses</li>
</ul>



<h3>5. What Information Does a Small Business Need For Taxes?</h3>



<p>Small businesses will need several documents to file their <a class="link" href="https://1800accountant.com/services/small-business-taxes">small business taxes</a>. These documents include the following:</p>



<ul>
<li>Business assets and business expense information</li>



<li>Financial statement</li>



<li>Home office expenses for business owners using their home as their primary business site.</li>



<li>Vehicle use information if you’re seeking a tax deduction for business vehicles.</li>
</ul>



<h3>6. What Is The Easiest Way To Pay Estimated Taxes?</h3>



<p>The easiest way to pay estimated taxes is to use the Electronic Federal Tax Payment System (EFTPS). Businesses and individuals can use EFTPS to make estimated tax payments weekly, bi-weekly, monthly, or on a different schedule.</p>



<h3>7. What Is The Penalty For Not Paying Quarterly Taxes?</h3>



<p>The penalty for not paying quarterly taxes is 0.5% of the amount not paid for each month or part of the month that the quarterly tax remains unpaid. There's a maximum penalty of 25% for not paying quarterly taxes.</p>



<h3>8. What Will Trigger an IRS Audit?</h3>



<p>Although IRS audits are infrequent, there are red flags that <a class="link" href="https://aofund.org/resource/top-10-irs-audit-triggers-and-what-do-if-audited/" target="_blank" rel="noreferrer noopener">trigger an audit</a>. Small businesses may experience an IRS audit for:</p>



<ol>
<li>Undergoing significant changes in business expenses and business income.</li>



<li>Filing an incomplete tax return.</li>



<li>File a tax return with errors.</li>



<li>Mixing business expenses with personal expenses.</li>



<li>Not making a business profit for several years.</li>



<li>Not filing a tax return if a business experiences a financial loss.</li>



<li>Operating a business that deals with a lot of cash.</li>
</ol>



<h3>9. Which Receipts Can I Claim on My Taxes?</h3>



<p>As you collect your <a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/what-kind-of-records-should-i-keep" target="_blank" rel="noreferrer noopener">business receipts</a> throughout the year, it may become difficult to know which receipts to keep for taxes.</p>



<p>&nbsp;You can claim receipts related to the following:</p>



<ul>
<li>Expenses&nbsp;</li>



<li>Gross receipts&nbsp;</li>



<li>Purchases</li>
</ul>



<p>Receipts related to expenses will show costs your business incurs other than purchases. You can claim expense receipts, including:</p>



<ul>
<li>Account statements</li>



<li>Canceled checks</li>



<li>Cash register tape receipts</li>



<li>Credit card receipts and statements</li>



<li>Invoices</li>
</ul>



<p>There are additional receipts related to business expenses that you should keep to claim as a tax deduction. The IRS requires you to prove these expenses to claim entertainment, gifts, transportation, and travel.&nbsp;</p>



<p>Gross receipts are another receipt type you can claim on your taxes. You can claim gross receipts, including:</p>



<ul>
<li>Cash register tapes</li>



<li>Deposit information&nbsp;</li>



<li>Form 1099-MISC</li>



<li>Receipt books</li>



<li>Invoices</li>
</ul>



<p>Purchases are the last receipt type that you can claim on taxes. You may use information from your purchases to claim credits or deductions on your tax return from:&nbsp;</p>



<ul>
<li>Canceled checks</li>



<li>Cash register tape receipts&nbsp;</li>



<li>Credit card receipts and statements</li>



<li>Invoices</li>
</ul>



<h3>10. Who Has To Pay Quarterly Taxes?</h3>



<p>There are three groups of people who have to make <a class="link" href="https://1800accountant.com/services/quarterly-estimated-taxes">quarterly tax payments</a>:&nbsp;</p>



<ol>
<li>Corporations</li>



<li>People without enough tax withheld&nbsp;</li>



<li>Self-employed workers</li>
</ol>



<p>Corporations may need to pay quarterly taxes if they expect to owe at least $500.</p>



<p>Second, if you need more taxes withheld, you should make quarterly tax payments. There are two criteria the IRS has for who needs to pay quarterly taxes for those not withholding enough taxes, and you'll need to meet both requirements to pay quarterly taxes in this group.</p>



<p>The first criterion is that you'll owe at least $1,000 in federal taxes after adding your tax credits and withholding. The second criterion is that your refundable credits and withholding cover the following:</p>



<ul>
<li>Less than 90% of your tax liability for the current year</li>



<li>100% of your liability for last year</li>



<li>110% for taxpayers with an adjusted gross income of $150,000 for taxpayers filing individually, or $75,000 for taxpayers who are married and filing jointly</li>
</ul>



<p>Third, self-employed workers, including freelancers and independent contractors, should pay their quarterly taxes if they owe $1,000 or more in taxes.</p>



<h3>Work with Expert Accountants To Help Navigate Small Business Taxes&nbsp;&nbsp;</h3>



<p>Small business taxes encompass different requirements for different entities. Federal, local, and state tax requirements and multiple business entities make it critical to get your small business questions answered.<br>When you need to answer small business tax questions, it's best to work with experts. Work with the expert accountants at <a class="link" href="https://1800accountant.com/services/business-tax-advisory">1-800Accountant</a> for your small business tax needs.</p>

As a small business owner, you&#8217;ll have questions about your business, business procedures, and taxes. You may have entity-specific or business tax questions, making receiving the correct answers urgently. When tax season arrives, small business owners will have questions but only a little time to receive proper answers, assistance, and next steps. Here are answers [&hellip;]

Text overlay reading "common tax questions from small business owners" on a background of scattered paper slips with tax-related terms.

Common-Tax-Questions

10 Common Small Business Tax Questions Owners Are Asking

<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.

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Top 10 Tax Write-Offs for Self-Employed Individuals

<p><a href="https://1800accountant.com/blog/prepare-file-small-business-tax-return"><span style="font-size: 11pt;"><strong>Filing business taxes</strong></span></a><span style="font-size: 11pt;">&nbsp;is an essential responsibility 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.</span></p><p><span style="font-size: 11pt;">The good news is it's not too late to file a return for back taxes in 2026, even if you're past the due date for your tax return. The more significant challenge lies in filing back taxes without records.&nbsp;</span></p><p><span style="font-size: 11pt;">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 all of the income you've received? Fortunately, you have options. Use this blog to learn how to file back taxes without records in 2026.&nbsp;</span></p><h2><strong>Why You Should File Back Taxes for Your Small Business</strong></h2><p><span style="font-size: 11pt;">There are several 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&nbsp;</span><a href="https://1800accountant.com/blog/what-happens-if-you-dont-file-taxes"><span style="font-size: 11pt;"><strong>don’t file business taxes</strong></span></a><span style="font-size: 11pt;">.&nbsp;</span></p><p><span style="font-size: 11pt;">If you don't file a return, the IRS will eventually file a substitute return based on its data to estimate what you owe. It isn't likely that the IRS will include every benefit and deduction you're eligible for, which would have reduced your tax liability. You will also surrender any possible tax refunds if you don’t file a return.&nbsp;</span></p><p><span style="font-size: 11pt;">There is also a failure to file penalty that you'll be responsible for paying. If you have unpaid taxes, that amount will grow each month you continue without filing a late return, for up to 5 months afterward.&nbsp;</span></p><p><span style="font-size: 11pt;">You should make every effort to catch up on unfiled taxes to claim your deductions and receive your refund.&nbsp;</span><a href="https://1800accountant.com/services/small-business-taxes"><span style="font-size: 11pt;"><strong>Filing your small business taxes</strong></span></a><span style="font-size: 11pt;">&nbsp;also helps ensure 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 its own if you don't pay.</span></p><h2><strong>How Many Years Back Can You File Delinquent Taxes?</strong></h2><p><span style="font-size: 11pt;">The IRS will accept 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.&nbsp;</span><a href="https://www.irs.gov/businesses/small-businesses-self-employed/filing-past-due-tax-returns"><span style="font-size: 11pt;"><strong>Filing past-due tax returns</strong></span></a><span style="font-size: 11pt;">&nbsp;aren't worth the effort if you go further back than that.&nbsp;</span></p><p><span style="font-size: 11pt;">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 will typically depend on the data you still have from those years.&nbsp;</span></p><h2><strong>How To File Back Taxes Without Records</strong></h2><p><span style="font-size: 11pt;">You don't want to file alone, especially when you're missing significant records. You can file back taxes just like any other IRS Form 1040, U.S. Individual Income Tax Return.&nbsp; &nbsp;</span></p><p><span style="font-size: 11pt;">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&nbsp;</span><a href="https://1800accountant.com/services/business-tax-advisory"><span style="font-size: 11pt;"><strong>accounting professional</strong></span></a><span style="font-size: 11pt;">.&nbsp;</span></p><p><span style="font-size: 11pt;">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:</span></p><h3><strong>Collect Financial Records</strong></h3><p><span style="font-size: 11pt;">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;</span></p><p><span style="font-size: 11pt;">These are some of the most common sources you might be able to use to put together your past-due tax return:&nbsp;</span></p><ul><li><p><span style="font-size: 11pt;">Bank account and credit card statements</span></p></li><li><p><span style="font-size: 11pt;">Tax forms like W-2s and Social Security statements</span></p></li><li><p><span style="font-size: 11pt;">Receipts from business expenses</span></p></li><li><p><span style="font-size: 11pt;">Emails or paper records of transactions</span></p></li></ul><h3><strong>Requesting Tax Transcripts</strong></h3><p><span style="font-size: 11pt;">You might not find enough information to go into your records alone. Fortunately, the IRS also holds various documents and forms for at least three years. You can request IRS tax transcripts with IRS Form 4506-T to&nbsp;</span><a href="https://www.irs.gov/individuals/get-transcript"><span style="font-size: 11pt;"><strong>get your tax record</strong></span></a><span style="font-size: 11pt;">.&nbsp;</span></p><p><span style="font-size: 11pt;">There are a few distinct kinds of tax transcripts you may be able to request:&nbsp;</span></p><ul><li><p><span style="font-size: 11pt;">Transcripts of tax returns you submitted in a prior year</span></p></li><li><p><span style="font-size: 11pt;">A report on your basic filing status and taxable income according to IRS records</span></p></li><li><p><span style="font-size: 11pt;">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.</span></p></li></ul><h3><strong>Work with Forensic Accounting Experts</strong></h3><p><span style="font-size: 11pt;">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;</span></p><p><span style="font-size: 11pt;">You want to be sure you get your tax return prepared correctly, so you want to work with professionals who know how to put the data together, maximize your savings, and get it done right to help&nbsp;</span><a href="https://1800accountant.com/services/audit-defense"><span style="font-size: 11pt;"><strong>defend you from a potential audit</strong></span></a><span style="font-size: 11pt;">.&nbsp;</span></p><h2><strong>How 1-800Accountant Can Help With Your Delinquent Business Taxes in 2026</strong></h2><p><span style="font-size: 11pt;">If you’re trying to file back taxes without records, you may need tax preparation help from the experts. When you trust 1-800Accountant, America's leading virtual accounting firm, our accountants can help file back taxes for your company and get you back on track with your bookkeeping obligations, ensuring smooth operations in the future.&nbsp;</span></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 documents at a desk with a laptop, under text "how to file back taxes without business records".

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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;]

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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;]

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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;]

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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;]

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

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