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6 expenses solopreneurs should track for taxes

July 11, 2019 by Guest Post 1 Comment

by Paul Koullick

As a solo-entrepeneur, you’re juggling a lot of balls at once — sometimes flaming torches — and so expense tracking often falls between the cracks. It isn’t until April 14th at 11 pm that you really start kicking yourself because “I’m sure I’m forgetting something!”. At Keeper, we’ve helped thousands of freelancers through tax time, and we’ve seen some patterns. Last tax season, Keeper ran a study to discover the most often missed tax write offs.

The resulting list, below, represents the tax write offs that are most often forgotten. The smart thing to do is to keep track of during the year, so that when tax time comes around, you’re not giving Uncle Sam more than he deserves.

 

Rideshare trips

Uber / Lyft rides on the way to a work event are considered tax deductible transportation expenses. Unfortunately, since these services offer no physical receipts, it can be difficult to keep track of them during the year. At tax time, remembering whether a particular ride 8 months ago was work-related is near-impossible. That’s why marking trips down when they happen is critical and will save you a huge headache at the end of the year.

 

Software expenses

Like rideshare trips, digital purchases often don’t leave a paper trail. That means it can be hard to keep track of them. Whether it’s buying a stock photo, paying for a domain hosting software, or other work-related software purchase, it’s important to keep track of it so that you can get a discount at tax time!

 

New phone or computer

With the pace of technology updates, most people buy new electronics every year. Whether it’s a phone upgrade or a new laptop, these are large expenses that are also easy to forget about at tax time. Think about it this way: by remembering to claim it on your taxes, you’re effectively getting a 30% discount. That’s a lot!

 

Home office expenses

Many solo-preneurs work from home but forget to claim the home office deduction. You don’t need a separate room in your home to claim this massive tax deduction. Also, it’s important to record actual home expenses rather than just relying on the “standard” square footage method. The vast majority of solo-entrepreneurs will save more on taxes by claiming actual home expenses.

 

Business meals

You don’t need to be eating filet mignon at a white tablecloth restaurant in order for a meal to be considered a “business” meal. As long as you discuss work and learn something valuable for your work, you can write it off on taxes. Over the course of a year, it really adds up!

 

Miscellaneous car expenses

When it comes to getting money back on your car expenses, there are two options: you can track miles, or you can add up your actual car expenses. If you don’t already have a mileage tracking habit, the easiest thing to do is to just track miscellaneous car expenses and then go back and add in gas expenses at the end of the year. Maintenance, registration, parking, tolls, and so on are all tax deductible expenses!

 

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Paul is the co-founder and CEO of Keeper, a service which automates expense tracking for solopreneurs. In his free time, he loves running marathons, and spending time with his family in San Francisco.

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Guest Post

Filed Under: Accounting, Entrepreneurship & Business, Guest Post Tagged With: solopreneur, solopreneur accounting, solopreneur taxes, taxes

Solo-Entrepreneur? 5 things you should know about your taxes by Paul Koullick of @keepertax

June 14, 2019 by Guest Post Leave a Comment

Solo-Entrepreneur? 5 things you should know about your taxes

by Paul Koullick

Whether you’re earning money in a side hustle, or have your own small business, it comes with some serious tax burdens. Many first-time self-employed don’t realize this and wait until the end of the year only to discover that they owe thousands of dollars to the IRS and forgot to keep expense receipts. In this guide, we’ll cover the basics of what you need to know to avoid getting slammed by taxes as a freelancer.

#1 No, taxes aren’t being withheld from your paychecks

If you’ve previously only worked as an employee (W2), it may come as a shock that the money you earn on a 1099 contract or invoice does NOT have taxes already withheld. That means you’ll need to consciously remember to set money aside throughout the year to avoid needing to take a loan out at the end of the year.

#2 Keep track of work expenses throughout the year

Everything you buy and then use for work, whether it’s a new phone or gas for your car you drive for work errands, is at least partially deductible. Trying to remember expenses from nine months ago at tax time is really difficult, so it’s best to track these expenses throughout the year.

Sometimes, what counts as a tax write off isn’t entirely intuitive but you can use online guides like this one to learn more about what expenses you should be keeping track of during the year.

#3 If you work from home, you can likely claim the home office deduction

Even if you don’t have a separate room dedicated for work, you may be eligible to claim this valuable deduction. As long as you have a workstation located somewhere in your house or apartment where you tend to do work (rather than entertaining guests or watching TV), you get to write off of rent, utilities, wifi and so on.

#4 All of this matters even if you’re only self-employed part-time

Even if The standard deduction does not trade off with itemizing 1099 work expenses. It’s additive – meaning that you can claim both! That means even if you have a full-time W2 job and only do limited part-time 1099 contracting work, neglecting to claim work expense tax deductions is like donating money to the IRS!

#5 If you earn more than $1,000 per year, file quarterly (estimated) taxes

If you earn above the $1,000 threshold from self employment work, you’ll need to file quarterly taxes. Also known as estimated tax payments, this is the IRS’s way of simulating a salary tax withholding so that you aren’t caught off guard with a huge tax bill at the end of the year.

The good news? It takes just 15 minutes. You can use free online tools like Keeper’s quarterly tax calculator to quickly estimate how much you’ll need to pay, and file online. It takes just 15 minutes, and allows you to avoid a nasty penalty from the IRS.

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Paul is the founder and CEO of Keeper, an app that helps freelancers and 1099 contractors save money on taxes. In his free time, he loves jogging, chess, and spending time with his family in San Francisco.

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Guest Post

Filed Under: Accounting, Entrepreneurship & Business, Guest Post, Money & Finances Tagged With: accounting, entrepreneur, Freelancer, freelancing, Paul Koullick, small business accounting, small business taxes, solopreneur, solopreneur accounting, solopreneur taxes, tax tips

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