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Step 1
Keep tax recordsKeep impeccable records of business expenses throughout the year. Organize your files and books and update them daily or weekly as needed. The time it takes to set up a good system is minimal compared to how much time you'll save at the end of the year putting together your tax return. If you messed up this year, use your frustration as motivation for better organizing.
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Step 2
Save receipts for taxesSave your receipts throughout the year, especially those proving the purchase of supplies or self employed expenses. Keep all credit card statements, health insurance bills and retirement plan contribution statements.
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Step 3
Deduct health insurance costsAdd up the cost of your health insurance premiums. These are 100 percent tax deductible if you're self-employed. Other medical expenses, such as co-pays, deductibles and doctor bills, are only deductible if you itemize your deductions and the medical expenses (other than insurance premiums) add up to more than 7.5% of your adjusted gross income.
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Step 4
Deduct office suppliesDeduct the cost of business equipment purchased during the year. For small businesses, this may mean home office furniture, computers and tools. Large equipment or expensive purchases may be better depreciated over several years; consult a competent small-business accountant to learn more about depreciating assets.
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Step 5
Work clothingDeduct clothing purchased solely for work purposes and not worn elsewhere. For example, uniforms with company logos are deductible. Boots worn for both the job and recreation are not deductible.
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Step 6
Deduct one-half of the self-employed taxes you paid. This refers to your FICA and social security payments. You can claim one-half of the amount you owed, as a deduction when you file.











Comments
kelseyc said
on 2/22/2009 Wow, thank you so much for this article! You made it really easy to understand.
elliesmommy said
on 2/21/2009 I am wondering if you can deduct health insurance if you have your own business, but your spouse is employed by a different business. (we pay for health insurance out of pocket).
CBPope said
on 12/16/2008 I will be filing my publishing business for the first time. I hope everything works out> I haven't kept good records but I do have receipts.
MarlaineMarie said
on 8/12/2008 I find I don't want to know about this stuff until I have so - unfortunately, I bet a lot of people don't! Shrugs - thanks for the tips, it is better to be prepared ahead of time!