Many people, when building a web-based business may have the initial mindset of how much money they want to make and really don’t think about the tax breaks that their dream can offer.
Even when just starting out, many are working a full-time or part-time job to not only earn an income for living expenses, but also provide the initial funds to get their business and business education started. These funds are considered a loss or business costs. These costs can be deducted from your taxable income. So right from the start, you are getting tax breaks and when you are able to take advantage of these tax breaks, you have less money going toward taxes.
In my post “Do You Hate Taxes?” I showed how you can take a percentage of your household living costs and write them off as business expenses to lower your taxable income.
Want More Tax Deductions?
As you read on, I will show you the different aspects of what are considered losses or business costs that are considered deductions from your taxable income. I will also offer information of how to put a budget in place so you don’t find yourself digging a financial hole that can slowly keep you from your dream of working for yourself.
Whether you are starting your business while holding down a full-time job, or you have the ability to grant more time to it due to being an at home parent, retired, or some other situation that allows more time at home, budgeting is key.
When many expenses can be written off, we still have to keep in mind that we have to budget spending and go as cheaply as possible in the beginning.
What Can be Claimed as Business Expenses?
Anything that you purchase for the primary use of your business can be claimed as a business cost.
Here is a small list:
Let’s first look your basic needs for your business-
Here you are deciding to start your own business, but the computer that you have is either old, not functioning as well, or is loaded with so much stuff in the memory that it moves slower than Molasses in January. You decide that you are getting a new one. Whether it be a laptop or desktop, this would be considered a business expense and can be written off.
Now, this doesn’t mean that you can get on Amazon and find a deal to where you can buy a few computers for a great price and write them all off. You would only get one to claim as your write-off.
The same goes for printers as well. I have found clearance deals where brand new models from the previous year were on sale for a really great price, and I bought two. But, I could only claim one as a business expense.
Now, if and when you buy accessories for your “business” computer, being a wireless keyboard, mouse, mouse pad, or even a second monitor, these are considered business expenses.
Now some office furniture-
If you don’t have one, buying a desk and chair for your office is considered an expense as well, along with a file cabinet as well.
Pencils, Pens, Printer Paper, Notepads, and other office supplies-
Yes, all of your office supplies are considered business expenses too. These items are used to support your business, and therefore are costs against your revenue.
Tax Deductions Outside of the Office
If you use your car-
When you use you own vehicle for the purpose for business, that is a tax deduction as well. For instance, you decide to enter into a business, like being a representative for Nerium, Avon, or any business of that nature to where you are delivering product or driving to other an other person’s home to present your product or service for promotion or sale, the Internal Revenue Service in the US allows you to claim $0.54 per mile driven as a business expense. This also applies to if you want to advertise your site the old fashion way by putting up flyers or signs in the neighborhood.
A percentage cost for your internet provider is tax deductible. This will fall under the calculation of percentage use that I listed in part one of this post “Do You Hate Taxes?”
Service Providers and Training-
When you start your business, you might have a general knowledge of what you want to do, but not the tools or the specific training needed to get your business “off the ground.”
I will go ahead and use Wealthy Affiliate as an example. In the beginning you want to learn how to build, promote, and advertise your new website so you can start to generate revenue. You decide to “get your feet wet” by using the free trial and set up your free website. You realize the value and the opportunity that Wealthy Affiliate offers and you decide to upgrade your subscription to the Premium Level that offers more training a tools to really make your website great. This subscription fee is now considered a business cost.
Later on, you could find some other software or add-ons to enhance or improve the performance of your website that you need to pay in addition to what you are already paying; these are deductions or business costs too.
Now we need to advertise and market our site-
Now you decide that after you did some more training, you are going to advertise your website on Facebook or any of the other social media sites. You see there is cost for this advertising. You notice the cost is affordable and go ahead and start a small campaign.
This is considered “Marketing and Advertising” and yes, is a business cost that is a tax deduction.
There are so many more types of deductions that would take me forever to list, but as you can see from the amount that I have listed above, there are many items that can be deducted from your income to lower your tax costs. This is why it is so important to talk to a tax adviser to establish what are appropriate deductions and what deductions you can take advantage of.
Establishing a Budget for Business
When I found out of what I could do to reduce my taxable income, the first thought that came to my mind was that I could do almost anything, sign up for anything, and because of the deductions, throw caution to the wind about my business spending.
Heck! These were write-offs……… it’s like free money!! ………………………………..boy was I wrong.
I learned quickly that I could mount up some serious debt in the beginning, especially with all of the self proclaimed “internet gurus” out there willing to sell you their secrets for a high price. Yep, the wolves are out there and once they see someone that has the hunger for wanting their own business will attempt to suck you in saying their program is the best and will make you profitable quick.
This is where budgeting becomes very necessary. You really have to look at what is offered out there. If you don’t place a budget in place, regardless of the tax breaks, you will end up with a lot of bills and no additional income. In addition, you have to not only consider your business, but your household and living expenses as well.
It’s hard, but with discipline, it can be done .
Here is how to establish-
First off, look at your finances and see how much you can dedicate monthly to your business at the start. You can get away with a beginning budget of $50 a month.
Just remember, you will be just starting out and it will take time to gain some education and training on how to do this.
Just for example, depending on the time you are able to set aside for this venture, it will take a minimum of three months to see any revenue from a website. Nothing happens overnight.
Just like us all, you are going to start Google searching for programs to get you started. I did. You will find many programs and offers to get you up and running to make money instantaneously to lure you in. If they don’t have a free trial, a money-back guarantee, or promises that you can be making money in less than 24 hours, it’s more than likely you will be throwing your money away without any return in either revenue or knowledge.
When you do get on track with having a website, and start seeing results of your work, you can expand on your budget, but still be frugal.
Take advantage of free services, Google has many of them in trends, your site performance, click rates, and visitor counts.
Regardless, always stick to your budget……..This is extremely important to keep your dream of “being your own boss” alive and well.
In addition, keeping your budget intact and well disciplined is the best way of making your tax deductions benefit you in the best way in saving you money.
Just a Word in Closing
I have seen many with dreams of owning their own business fail abruptly in the first six months to a year of starting. I will admit, that I have done the same.
Sure, you could call it a learning curve, but I also hate seeing people give up on their dreams. In this type of business arena, there is room for everyone. It doesn’t matter if you are just setting up a small website to supplement your income to make things a bit easier, or attempting to start a grow a business that has the potential of epic proportion.
We all need a place, not only to learn, but to learn and share ideas to help others in their success. There are so many different facets to different businesses that one can enter into and make a good profit. It’s just getting started that can be intimidating.
Learning how to reduce your taxable income through business costs and business tax deductions is only a small part to profit and sustainability to your business. There is so much more to learn.
Through my trials, I have joined a couple of training sites to find issues to where questions weren’t answered, or tools were not offered (or if they were — offered at a price). But I can safely say that since I joined Wealthy Affiliate, I have learned so much, offered so much support, and taught how to place what I have learned in results that I can physically see.
I offer you to search out there and find a web-based business training program that offers the same as Wealthy Affiliate.
If you have a real tight budget, like most of us do, just enroll in the free trial and give it chance. You get a free website and free training to set up your website. It is, by far, the cheapest program to get you up and started toward your dream of having your own business. You just can’t get cheaper than free.
I wish you all of the best in your business endeavors and hope you are rewarded success to your dreams.
Please remember to consult a tax adviser to make sure you are filing your taxes appropriately.
Please feel free to leave a comment below, either good or bad. In addition, please share anything that you have found on the web that had helped you achieve your business goals and success.