Having your own business is fulfilling and fun, but it also means you are responsible for the bookkeeping. Tax season comes with its own set of frustrations and questions as you try to balance your business books. Self-employed individuals get some tax breaks that others don’t. But you want to be sure you don’t make a crucial error that could cost you more down the road. 

For example: Did you know that some small businesses pay taxes more often than once a year? Or maybe you don’t know how to categorize your business expenses for tax purposes. Even the amount you pay your children for helping out with business chores could count as a tax deduction! The details are almost never-ending, but knowing them could save you a big headache. 

8 Tax Tips for the Self-Employed 

It takes a lot of thought as you pay your business’s taxes. That’s why we’ve put together a basic list of need-to-know info for you to consider: 

• Keep your business simple. Sole Proprietorship is the easiest way to file your business for tax purposes. 

• Make sure the IRS considers you a for-profit business with deductible expenses. If the IRS considers your business as simply a hobby, you won’t be able to deduct nearly as many expenses. 

• Know which tax bracket your business falls into. Find this out before tax season, if possible. 

• Keep track of mileage and charitable contributions. If you just drive to the post office to deliver a business package, this could count as business mileage. And if your business helps a local charity, that could be a business expense. 

• Deduct healthcare expenses for yourself, your family and your dependents. Even if the policy is in your personal name, it is worthwhile to check if you can qualify your healthcare costs as tax deductions. 

• Create a dedicated home office space. If you have an official workspace, you can deduct rent, utilities, home insurance and more. 

• It matters when you receive your income and when you make business purchases. You can time your income to your advantage, as well as big business expenditures. 

• Make bookkeeping easy. Don’t try to keep track of your expenses with paper and ink. Plenty of computer programs exist to help do your bookkeeping automatically. 

While this certainly isn’t an exhaustive list, it should help you know some basics about tax season. Our biggest tip is not to stress as you dive into taxes. Your business is growing, and you are learning how to be a successful self-employed individual. We know it takes time, patience, and a lot of hard work to take your business to the next level. Go easy on yourself and remember to enjoy the process!