As a sole proprietor/independent contractor, your income is the most heavily taxed of all wage earners. You will be assessed a federal tax, state tax, local tax, and a self-employment tax. The best way to lower your tax liability (the amount of tax dollars you owe to these entities) is for you to take time to make sure you’ve properly captured and recorded the expenses you’ve paid in the course of doing business.
Here is a list of 20 of the most common business expenses for the sole proprietor/independent contractor:
- Commissions and fees paid to others
- Contract labor
- Business or other liability insurance
- Medical insurance*
- Fees paid to an accountant, attorney, or some other professional service
- Office rental/lease
- Office & postage supplies
- Supplies specific to your product or service
- Vehicles, machinery, and equipment or other business equipment
- Repairs and maintenance
- Business taxes and licenses
- Travel, meals, and entertainment*
- Communications (internet, cell phone, fax number…)*
- Professional development
- Other industry specific supplies
- Automobile/vehicle expenses*
- The value of barter exchanges
- And, other expenses that are “common and necessary” for your business field
Certain conditions must be met for *several of the items listed. Consult with your qualified, experienced tax preparer for help with your specific situation. If you’re in California (Bay Area or Central Valley) I can help you!
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Reblogged this on My Walk Tax Time.