Running your own business as a freelance Graphic Designer can be rewarding, but also expensive. After all, you can rack up expenses on everything from computer equipment to business travel. The key to making the most of your business investments is knowing what you can deduct as a business expense to help you avoid overpaying your quarterly taxes and year-end-taxes.
According to the IRS, a business expense is a reasonable expense directly related to you making a profit and running your business.
Here are nine tax deductions Graphic Designers should not miss to help them save money on their taxes.
Generally, business start-up costs have to be capitalized, but both business start-up costs and organizational costs (like costs to create and research your business) can be deducted up to $5,000 as a current business expense instead of being spread over a period of years.
As a Graphic Designer, you have a lot of expensive equipment and tools. You can deduct items like your computer, desktop publishing applications, and camera as long as you primarily use them for work.
Advertising and Marketing
Finding customers can be one of your most costly expenses. Any and all marketing and advertising expenses are deductible as long as they are for your business. Some common advertising expenses you can deduct include your website, business cards, flyers, and online ads.
Home Office Deduction
If you have the luxury of designing in your PJs and you have a dedicated space in your home used only for business, you can take the home office deduction for a percentage of your home expenses like mortgage, utilities, and property taxes based on the percentage of square footage used for business. The IRS also allows you to take a Simplified Home Office Deduction up to $1,500.
Mileage and Vehicle Expenses
As a Graphic Designer you probably go out on countless appointments to meet clients. You can choose to deduct either your mileage at 54 cents per mile or your actual expenses like car repairs, new tires, and car insurance based on how much driving is allocated to business needs. QuickBooks Self-Employed will help you track and separate your business and personal mileage and vehicle expenses year-round.
Not every client will be accessible by car. If you are lucky enough to land a design job in a tropical location you may be able to deduct the airfare and hotel expenses as long as the trip was directly related to your business.
If it’s been a while since you took a class, go ahead and take that prototyping class this summer. You can receive a tax credit worth up to $2,000 under the Lifetime Learning Credit or a Tuition and Fees deduction worth up to $4,000.
If you don’t have health insurance coverage through a spouse, you can purchase it through private providers or the Health Insurance Marketplace. When you are self-employed, your health insurance is fully tax deductible, as is the cost for your dependents’ insurance coverage.
Helpful Business Tools to Run Your Business
Software used to help you keep your business on track, like QuickBooks Self-Employed can not only help you maximize your business deductions and get ready for tax-time, it is also tax deductible.
There are many deductions ranging from skill development to travel. Ensure you’re maximizing your tax savings by tracking relevant expenses. Better yet, leave it to an app like QuickBooks Self-Employed to identify these deductions for you, so you can focus on what you enjoy most about your work.
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