Consider the idea of a sole proprietorship. When the company you are running is entirely in your hands, you have no employees or business partners, which means all the profits, business refunds, expenses, and all the responsibility are on you. As we dive deeper into deductions solo practices can see, we’d like to encourage you, the reader, to keep in mind that each person’s situation is unique and that most of these suggestions should apply to you. This means that if you still have questions by the end of this article, please do not hesitate to reach out.
Possible deductions (Business Refunds)
These expenses usually start with labor costs and materials but can also go into discretionary expenses that you find to benefit your business. Home office deductions can be a considerable tool for solo practices, given that they allow you to deduct a certain percentage of your home costs as business expenses. The Exact percentage that will be deducted can vary depending on the size of your home office. You must at the very least prove that you have a designated area within the house that is used primarily for your work stop.
Meals for networking are another great deduction for solo practices, especially if they are on a tighter budget than other businesses. For example, say you are at a business meeting, and your client wants to meet at a more expensive restaurant than what you would typically offer, but because they are potential clients, you are willing to spend more than you would want to. When at a networking event or business meeting, solo practices are often eligible to deduct 100% of the cost of meals involved in the networking activity.
Solo practitioners can also take advantage of more robust retirement plans. Since most solo practitioners have no employees, your retirement plan can be heavily skewed to benefit you! Speaking with a financial advisor or pension professional is key to maximizing your business refunds now. While these deductions may be taxable later in retirement, generally speaking, most individuals are in a lower tax bracket during retirement than while still working.
One final major deduction we would like to highlight in this article is marketing. Most marketing or advertising costs are 100% deductible. So consider sponsoring your child’s team or other after-school activity and get your tax deduction!
Strategies to implement for business refunds
Make sure you are updating your books and records frequently. Hiring a bookkeeper or accountant (like Interactive Accountants…shameless plug here) to keep track of your business profits is the single best way to capture all your expenses to maximize your business refunds. Also check into tax credits that are now expanding, especially for electric vehicles or research and development activities. All of this can help you get more business refunds than you expected.
The Next Step
Here at Interactive Accountants, assisting businesses to grow and succeed financially is our number one goal. We are here to help because the better you do, the better we all do! If you’re still not convinced yet to give us a call, feel free to look at our other blogs regarding the help we offer various businesses and offices. Beyond the information we have presented in this article, we also focus on accounting for law firms, accounting for medical professionals, accounting for eCommerce, and accounting for amazon DSPs. If you are a professional in any field that these tips apply to or are simply curious about a topic in this article, please schedule a free consultation here with our owner Matthew Shiebler, CPA. He’s been practicing accounting for over 25 years and is a business owner, just like you!