Spin-off thread: Business Expenses

[dr.girlfriend]

My husband is taking the leap to be 100% freelance.  We need to consult with an accountant for taxes we know, but in the meantime I'm wondering if anyone has any ideas for what are considered business expenses that we might not have thought of?  So far we have

Dedicated work space (this is only 2% of our house square footage so pretty negligible)

cell phone/internet

mileage 

Zoom / Airtable software subscriptions

LinkedIn professional account 

computer / monitor purchase

office supplies purchase (e.g. standing desk converter, bluetooth keyboard)

postage for mailing out promo copies of his book

eventual travel to conferences/talks if not paid for by conference/talk

eventual use of a bookkeeping service if he decides he needs it

use of a CPA for taxes

He wrote a book and gives talks about something that is not something he's likely to ever get sued over and has no licenses/certifications he needs to maintain for his industry. THANKS everyone!

[jwright]

Service industries are tough to find deductions because there is so little overhead. Here are some ideas in addition to what you listed:

- Home office which you mentioned (if you don't take the simplified method be prepared to track use of utilities and office specific maintenance
- Rent expense if he uses flexspace or temp office
- Insurance (malpractice?, General liability for your home if he is going to have clients, loss of income protections?)
- Continuing Education and/or research activities (what does he need to keep up knowledge in his area of expertise?)
- Networking events, professional organizations, professional conferences (including meals/coffees with potential referral sources or clients)
- Software for bookkeeping, scheduling, virtual assistant, professional website
- Develop logo, website, advertising "pitch", business cards printing

Also speak with your CPA about deductions for retirement (there are many ways to structure this) and health insurance. If he elects to be treated as an S-Corp, the payroll taxes related to his salary would also be deductible.

[puppylove64]

Travel expenses to conferences. Some people get all giddy and run up huge food bills thinking they are deductible, but only 50% is FYI.

[ellipses84]

I’ve been figuring this out over the last few months, too. I have really low overhead but due to my profession I had to create a corporation.

Here’s what I track:
Lawyer
Accountant
Any other professional services like Marketing even if it’s a one time social media consultant meeting or admin. support (he may not need this yet)

Training / continued education - this could be a Linked-In / Learning subscription
Membership/ licensing dues
Travel cost / vehicle use
Business meals
Office supplies
Hardware
Software (Microsoft Office, photoshop, anti-virus, etc.)

Insurance (even if it’s travel insurance if he ever speaks abroad in the future)

For office costs, track utilities

I’ve been tracking expenses but I did a really simplified quarterly tax payment one time so far, so I need to go through it all with my accountant. I meant to comment on your other post to say your accountant should be able to give you a much better/lower, but still safely conservative estimate for taxes. If you are MFJ, tell her your income too.

You have to pay quarterly taxes at least a day BEFORE the due date and can set them up in advance.

It seems like his new career would require a lot of networking and social media presence so he may want to invest in some things to support that even if he is DIY.

[aksinger]

I have run a business out of my home for the past 11 years and these are my regular expenses. Some are 100% business and some I split the % between business and personal. I do have clients come to my home music studio 35 hrs/week, so I count a % of almost all my utilities towards the business.

Mortgage
Electricity (which is also heat for us)
Trash/recycling
Water/sewer
Internet
Landline phone
Snow removal
Any upgrades to the property that deal directly with the business

Business only:
Professional organization fees
Business credit card fee
Accountant fees (tax prep mainly)
Office supplies (post it notes, pens, printer paper/toner, binders, light bulbs, staples, tape, envelopes, stamps, snacks and drinks to offer clients, cleaning products, TP)
Computer
Printer
Website development and hosting fees
Advertising (minimal as most of my business is word of mouth, but I donate a lot to local music nonprofits and kid organizations/sports/shows and that helps keep my business name out there)
QuickBooks online accounting software fees
Event rental fees (for my recitals during non-Covid times)
Sheet music (I’m a music teacher so that’s more specific to me but it’s one of my largest regular expenses)
Covid safety measures - air purifiers, masks for me (I switch out in between each client), extras for my clients, extra cleaning supplies and soap
Continuing education/professional development courses/webinars fees
Travel to/from professional events

One time costs - when I set up my studio I bought a baby grand piano, sound equipment, lamps, and furniture (desk, nice office chair, coffee table, couch, two wing back chairs, two end tables, coffee station, microwave and mini fridge).

Hope that was helpful, best of luck to your husband!