For me the biggest key has been getting organized. I personally chose to incorporate but that's something to talk to your accountant about. Whether you file as a sole proprietor or an LLC or corporation, here are some great tips:
- Stay organized throughout the year. Enter expenses and income into a program like Quickbooks or I use mint.com - which links to your checking and savings account and you can set rules so all costs paid to X vendor are listed as Business Expenses for X purpose.
- Scan receipts with an app like Shoeboxed or save emailed receipts into folder in your email system ie 2015 Business Expenses (or get more details and categorize)
- Use a separate checking account and credit card specifically for business expenses.
- If you use subvendors, send them a 1099 so they pay the taxes on what you paid them.
- Talk to your accountant about what is and isn't allowed as a writeoff. Some good things to consider:
- Do you have a home office? Part of your mortgage and utilities may be deductible.
- Which restaurant meals are deductible?
- Office & Business supplies including printing (flyers, brochures, business cards, applications)
- Gifts for clients & employees
- Mileage and/or car expenses including registration if you use your car for business
- Trips to conferences, training event, corporate retreats (if you have your own corporation)
- Online costs ie your monthly blog costs, advertising on Facebook or google, email systems like Aweber or mail chimp that you use to email customers
- Do you give away samples or product?
- Other costs specific to your field ie products purchased for research
**Talk to your tax professional about your specific situation.
