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Let’s talk about write-offs!

wait what money
wait what money

WHAT ARE THEY? AND HOW CAN WE GET MORE OF THEM?

tax deduction / taks dih-duhk-shuhn / noun :
 
A purchase of something “ordinary and necessary” for your business, and the subsequent use of that amount to lower the taxable income you have made.
 
 

HERE IS A VERY SIMPLIFIED EXAMPLE:

Someone pays you for graphic design work : $1,000 

Adobe Creative Cloud monthly charge : -$54

Notebook for sketches : -$10

Creative market charge : -$20

Total: $916 

THAT MEANS you aren’t paying income tax on $1,000 – you’re paying it on $916. See what I mean? The more legitimate expenses you have, the more your income is lowered – MEANING YOU PAY LESS TAXES

It grinds my gears when I hear a small business owner say, “The IRS already knows what I owe, can’t they just send me a bill?” NO, they don’t. You have to tell them how much money you made AND all the wonderful business expenses you incurred that lower your taxable income. That’s the game. 
 

HERE’S WHY YOU SHOULD CARE

YOU WILL OWE LESS TAXES. 
 

THREE THINGS YOU NEED TO DO RIGHT NOW (if you haven’t already)

1. Get Quickbooks Simple Start (this is always going to be my number #1 piece of advice every time), so that you can organize all your tax deductible expenses. At the end of the year, give a P&L and a Balance Sheet (which you create in Quickbooks) to your CPA, and they will go through your business expenses and determine what is tax deductible (lowers your income) and how much.

THIS IS HOW YOU “WRITE IT OFF”

2. Make sure you have a separate business checking account. This will help keep your business and personal accounts separate! This insures that at the end of the year, you don’t have to comb through your personal checking account to find business expenses.
 
3. KEEP A PAPER TRAIL. The thing about tax deductible business expenses is that you need proof. Make sure you are getting receipts for EVERYTHING and saving them online. Also, download the QuickBooks app and snap photos of your receipts. 
 

See below for some helpful examples:

list of tax deductions written in white on a pink background list of items that are not tax deductions written in white on a purple background
 
Need help pulling it all together? Check out our Quickbooks course, Artistic Accounting!
 

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