What’s that saying “the only certainties in life are death and taxes?” Well we would like to add a third thing: questions about taxes. It’s not a matter of if you have questions it’s a matter of when. So we’ve compiled our FAQs and we’re gonna help you start to see some ~clarity~ instead of confusion. (Ahh, can you feel the zen already?) 

First things first, do I have to file a separate tax return for my business?

That depends on your business entity type aka how you’re legally registered. If your business is a corporation (S corp or C corp) or partnership, then yes, you will need to file a separate business tax return. And it will be completed before your individual tax return. If your business is a sole proprietorship or a single member LLC, your business income will get reported on your personal tax return.

What things do I deduct for my business and what things do I deduct personally?

As a general rule, you can deduct expenses directly related to your business. This includes things like advertising, office expenses, dues & subscriptions, insurance, merchant fees, and shipping. You can also deduct the business use portion of certain personal expenses, like vehicle mileage, phone, and internet. If you work from home, you can deduct a portion of your mortgage interest or rent, real estate taxes, utilities, and repairs and maintenance as part of the home office deduction. Certain personal expenses, like health insurance premiums, medical expenses not covered by insurance, student loan interest, and donations to charity, can be deducted on your personal return but are not deductible as business expenses. So yeah there’s a lot you can deduct. So much that we’ve got a WHOLE GUIDE for you on this one. So, don’t just count on this little paragraph. Get the whole skinny here 

Can my business pay for my health insurance?

It depends. Sorry I know we’ve been using that a lot buuuuuut it does. If your business is a corporation, then yes. In this case, your health insurance should be run through your payroll. If your business is a partnership or a sole proprietorship, the business can’t pay for your health insurance, but you can still take a deduction for self employed health insurance on your personal tax return.

Can I deduct the cost of clothes and hair/makeup supplies?

Typically, the answer is no, but there are some exceptions. Any uniforms or branded clothing (like a polo or t-shirt with your logo on it) can be deducted. You can also deduct any clothing items that are required to do your job, like aprons, smocks, helmets, protective goggles, or gloves. If you have a deal with a company to promote their product (clothing, makeup, hair products, etc), then you can deduct these expenses, since you are required to purchase the items in order to review and promote them. If the company reimburses you for these expenses, then you need to also report that reimbursement income. For a more detailed explanation, check out this blog post (link to Karen’s blog  post about deductions for influencers).

Do you need my receipts?

Probably not. As long as your bookkeeping is accurate and up to date, we can rely on that as proof of all of your expenses. The exception would be for occasional large purchases, like property, equipment, or property improvements (like replacing the floors or upgrading the HVAC system). If you bought a new business vehicle or property, we would definitely need that purchase information as well. Basically, stuff you’re most likely gonna want a receipt for anyway. So bye bye dusty shoebox of receipts! 

I just started my business and didn’t bring in any sales this year. Do I still need to report it on my tax return?

Yup. If your business is a corporation, then you’re required to file a return each year once you officially start your business. If your business is a sole proprietorship and you had any expenses, you should still report that information on your tax return, since you can take a deduction for the business loss.

How can I work with you guys?

Well, let’s chat! We wanna make sure we can help you with whatever it is your business needs whether that be accounting, tax, coaching, or a few random questions. Click here to book a discovery call! 
And while you wait, stalk our other blog posts or become our besties on Insta.