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What are the Tax Benefits to being Self-Employed?

It is necessary to pay taxes if you are a self-employed individual, but there are also tax benefits that are available which you should take advantage of. In this article, we are going to discuss the top 10 tax benefits for self-employed persons. If you have any questions, you can contact Tax Force Inc for more information.

Home Office Deductions - If you use part of your home exclusively and regularly for business, then you may claim it as a home office deduction. It may even be possible for you to claim a secondary building, if it is used exclusively for business as well. Taking home-office deductions can be complex but the professionals at Tax Force Inc can help you to make the most out of this benefit.

Self-Employment Tax - This tax is in regards to Social Security and Medicare, which is something that must be paid by most individuals that are self-employed. Although paying self-employment tax is not a benefit in and of itself, self-employed individuals can deduct half of that amount from their net income. In addition, the self-employment tax that you pay is only incurred on your net business income, which is left over after your business expenses are deducted.

Communication - Even if you are already claiming a home-office deduction, it is possible to deduct for communication, including Internet, fax and phone. It is going to be necessary for you to separate the amounts that you spend on business versus personal, or to have Internet service or phone services that are specific to your business.

Entertainment - Both entertainment and meals that are associated with your business can be deducted. It is necessary for you to conduct business during the time that you are eating or directly before or after the meal takes place. Although you normally only get a 50% deduction from this expense, it can make a difference on your taxes.

Automobile - If you use your automobile exclusively for your business, you can deduct any expenses that are associated with it. If you use the automobile for both personal and business use, it is required for you to determine how much it is used for business purposes. You may also be able to use the standard mileage deduction, which is available from the IRS.

Travel - If you travel overnight outside of the city limits where your business is primarily operated, the trip may be tax-deductible. There are specific considerations for these types of business trips. Be sure to call Tax Force Inc for additional information on this deduction.

Education - If you further your education in direct regards to your business, it may be able to be deducted from your taxes. This would not include classes which are not associated with your line of business.

Interest - It is possible to deduct the interest on any loan that is associated with your business. This may be easy to determine if you are using one credit card exclusively for business purchases. It may be necessary for some calculations to take place, however, if you use a credit card or other revolving line of credit for both business and personal use.

Publications - Any books or magazines that are related to your line of business can be deducted on your taxes.

Retirement Plans - Finally, you can deduct self-employed retirement plans, such as 401(k) or simple IRAs from your taxes. This may result in a significant deduction, depending upon how you structure those plans. Call if you have any questions about retirement plans and we would be happy to refer you to a trusted financial advisor.

Mailing Address

Silicon Valley Offices
7052 Santa Teresa Blvd. #305
San Jose, CA 95139
TEL: (408)912-7692
FAX: (877)229-5269
Ohio Valley Offices
9219 US Hwy 42 #D-293
Prospect, KY 40059
TEL: (502)709-7879
FAX: (877)229-5269
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