When you own an e-commerce business navigating the tax code can be tricky. There are a lot of deductions for your business that you may not be aware of.! In fact, you could be leaving money on the table because of what you don’t know! Even though tax season is a few months away, it is never too late to educate yourself and prepare yourself for the inevitable. Knowledge is power, and when it comes to filing your taxes for your e-commerce business, knowledge means dollars. Here are some e-commerce tax deductions you don’t want to overlook.
E-Commerce Tax Deductions You Don’t Want to Overlook
Everywhere you look there could be a tax deduction. The name of the game is taking a deduction on common expenses you’re already spending your money on. The name of the game is finding them. Why take minimal deductions, when you could lower your tax bill with e-commerce tax deductions your previously overlooked? Here are some of the most common e-commerce tax deductions your business may qualify for.
Make the Most Out of Your Deductions
Your home office may qualify as an e-commerce tax deduction. If you work out of your home you may be able to deduct a portion of your rent or mortgage. However, you must have a designated work space. For example,, writing off a portion of your kitchen table where you do some work won’t qualify. Other components of your home office including office furniture, computers, and software may also be eligible for a deduction. In addition, you may also be able to deduct a portion of your utilities and insurance premiums as office expenses if you properly document your work space. We usually recommend creating a floor plan and shading in the dedicated work space. That way, you can easily justify your home office based on square footage.
Office supplies are often an overlooked e-commerce tax deductions. Any supplies you use to operate your business on a daily basis are deductible. These can include all your trips to Target and Walmart. All the IRS needs to justify a business expenses is a vendor, place of purchase, date, amount and business purposes. You think you could do that with a properly documented Target receipt? Absolutely.
Internet and Cell Phone
You may be able to deduct a portion of your internet and cell phone expenses as an e-commerce tax deduction. When it comes to running an e-commerce business, internet and cell phone usage is vital to your
everyday operations, and therefore is considered a business expense that is deductible.
Marketing and advertising expenses may also provide an e-commerce tax deduction. The money you spend marketing your business on social media, running ads on Google, or any printed promotional pieces may be deducted from your taxes.In addition, the money you spend on your website may also be tax deductible. This includes registration fees for domain name, hosting fees, and subcontracting expenses if you hire a professional to design your website.
Operating costs like merchant account fees and shipping costs also qualify as an e-commerce tax deduction. If you process payments online you can deduct the service fees. Likewise, if part of your business requires you to ship product or merchandise, the shipping charges may also qualify for an e-commerce tax deduction.
Any goods you purchase for resale are typically 100% deductible. Depending on your margin, product purchases typically represent the largest e-commerce tax deduction available. Be sure to document your vendors’ company information and get invoices for your records.
Staying up to date with the latest in your industry is important to help you remain competitive. Fortunately, continued education can be a great e-commerce tax deduction. This can be a great way to deduct the expenses for a trip to relevant conference to New York City, San Francisco, Honolulu, or another favorable destination. Just make sure it is relevant to your business.
Plan Your Write-Offs Throughout The Year
When it comes to e-commerce tax deductions it is best to navigate this journey with a professional. This way, you leave no stone unturned, and you can focus on what matters most to you, your business. In addition, have systems and steps in place to help your plan your write-offs throughout the year. This makes tax season less daunting and easier to manage. Request a consultation today!