Every penny counts when you are self employed or own a small business. If you fall into one of these categories, there are a lot of tax breaks that you should be aware of.
Many of the same rules apply for both small business owners and self-employed individuals. Take a look at the IRS Small Business and Self-Employed Tax Center for information about taxes and for federal and state resources for your small business.
There are specific rules that apply to self-employment taxes. You should also look into the specific tax breaks available in your state. Select your state from the list to find your state’s tax agency and get started.
The following are a list of expenses that can be used as tax deductions for small business owners and self- employed individuals. Read more about business deductions so you can be prepared.
- Home office
- Office supplies
- Software and subscriptions
- Travel, meals, entertainment and gifts
- Gas mileage
- Insurance premiums
- Retirement contributions (see below)
- Social security
- Phone service
- Child labor (That is, when you hire your own child if you are a sole proprietor or have a partnership, but not if you have a corporation)
It’s important for everyone to save, especially for small business owners and the self-employed. A SEP IRA—Simplified Employee Pension Individual Retirement Account is a variation of the Traditional Individual Retirement Account, but is for self-employed individuals, as well as small business owners and their employees. As a small business owner or if you’re self-employed, contributions up to $49,000 that you make to your retirement account are 100% deductible from your income taxes. The Department of Labor has specific information regarding how to set up a SEP-IRA.