This guest post is brought to you by Outright.com, the simplest way to manage your small business finances online!
Want to make the most of your taxes as an online seller? While you may be tempted to fly through them as quickly as possible, it’s to your benefit to slow down and do them properly.
There are often a ton of deductions and you could factor into your taxes that can lessen your tax burden or even give you a refund. Some deductions are a little more trouble than others.
But – as with anything in life – the troublesome deductions are usually the ones that make a huge difference in your tax bill at the end of the year.
Some will even mean the difference between paying the government and breaking even, or even getting a refund. So what are the two troublesome deductions?
Right now you’re probably wondering if everyone at Outright has gone off the deep end. After all, you’re not a traveling salesperson, you’re an online seller. You sit in your home office or in front of your craft table and sell things through the Internet. How in the world are you supposed to take advantage of mileage on your car?
The main thing to remember about tax deductions is how quickly they can add up. Sure, one little trip to the post office isn’t a big deal. But after two, three, four trips, you start to see some dollars add up – and those dollars are deductions. Plus, you’re forgetting about that one craft fair you went to completely across the state. That was more than a short little trip! Even if you think you never leave the house for real, you do. Remember when you had to make those endless trips to the craft store when you first started out? Those all count – add them up. Check out this article for the specifics of deducting your business mileage.
Last year, we decided to take a look and see how much money small business owners were leaving on the table when it came to tax deductions. Our findings weren’t entirely surprising – many crafters and other small business owners didn’t take the home office deduction. As a result, they were almost literally leaving money on the table and walking away.
The home office deduction is clouded in mystery. Many people hear that it could trigger an audit or other tax consequences. But it’s very true that if you use a specific area in your home exclusively for your office (or storage space), you can deduct it on your taxes, saving you a ton of money. Even better, that can lead to further deductions like office supplies and utilities, a woefully underused deduction. Check out this article for more on claiming the home office deduction.
We were very surprised to see marketplace fee deductions like you find on PayPal and eBay were only taken by roughly 25% of our respondents. After all, that’s money directly taken out of the money paid by your customers! Make sure to track and add those expenses up and deduct them for a great break on your taxes.
One last very important thing to remember: make sure you have records for all these purchases. Every tank of gas, every utility bill, every PayPal fee must be logged correctly. If not, the IRS may question your totals. If you’re at all concerned about your taxes, we advise checking with an accountant. You can find many accountants, enrolled agents, professional bookkeepers and others willing to answer your tax questions over at the Outright Community.