This is a guest post by Megan. You can read the guidelines to guest posting at our write for us page.
Operating an online business can be a great way to bring in money and retain the freedom of working from home. Though your business might not occupy a corporate space and onboard hundreds of employees, it will still accrue expenses that are tax deductible.
An online business owner might rarely see his/her clientele in person, especially in the case of out-of-state customers, but allowances still apply.
It is extremely important that you keep a track of all these deductible expenses because you would not want to pay extra tax when you can claim an exemption for it and thus give away your hard earned money.
Deductible expenses for online business owners
Here are five deductible expenses that online business owners might overlook.
While it’s no surprise that you can deduct the cost of a computer for an online business, keep in mind that computer accessories are also part of the deal. Whether you need monitors and desktop systems or a laptop and a spare laptop battery, it all applies.
Remember to include expenses like the purchase of memory sticks, rewritable CDs, and even batteries for a mouse. Keeping track of myriad expenses in your online business can be time consuming but you’ll be glad you did when it’s time to fill out tax forms.
While most of your business will likely be conducted through your website or online store, especially if you’re operating a crafting business through a site like Etsy, being able to stay in touch with customers is paramount.
Online businesses that use an Internet service like EarthLink will be able to deduct its cost when it comes to tax time. The IRS defines business expenses as “ordinary and necessary” and email certainly qualifies. The permissible expense might encourage online business owners to use “plus” versions of ordinarily-free email services, like Yahoo! Mail, as well.
Online business Shopping Cart Service
Online business owners can use any number of shopping cart services, including PayPal, Google Checkout, or Americart, for their businesses. These services will come in handy for persons who are operating a business on their own – that is, independently of a site with its own cart service.
Allowable deductions will also apply to the supplies used to mail out products, including padded envelopes and postage.
Internet Ad Service
Promoting your online business will obviously help bring in more clientele, so don’t forget to deduct the cost of a pay-per-click service like Google Adwords. The cost of advertising your online business in a print publication, like your city’s daily newspaper, is also applicable, as are ads that run in conference programs or on billboards.
Though you may only turn to its services when you are offline, you can still deduct the cost of administrative supplies, like bookkeeping software. Using a program like Quicken can help keep expenses in order and make tax time easier by helping you prepare and export necessary information.
Business costs might start out inexpensive – a box of pens, for example – but they can quickly add up. While you probably won’t be furnishing your office with mahogany desks and silk curtains, your online business is not that different from any other company.
Your needs as an online business owner will be a bit different than others but you will still benefit from deducting the expenses that help you keep things running smoothly.