I'm going to take a quick second to talk about a few tax write offs that most people didn't realize. These exact percents are based on my local tax law (ontario, Canada) but are very likely similar and worth looking into in your region.

Home Expenses (self employed, or business home office)

-Morgate or Rent payments 15%-35%
-Utilities - 15% (30% for direct business impact services like internet and electricity)
-House Repairs - 10%
-Property Tax - 30%

Vehical Expenses

-Fuel and oil
-Insurance
-Repairs
-Lease payments (or capital cost allowance if you own it)
-Parking
-Vehical registration
-Toll Charges

You are able to write off all the above to the extent at which they were used for business purposes. If the total cost of your vehical was $90,000 that year and 50% of the time it was used for business then you could write off $45,000 - you should keep all reciepts if you plan to do this as vehical expenses are frequently audited.

Business Write Offs (These are all 100% unless listed otherwise)

-Tax and Accounting Preperation
-General Advertising
-Internet
-Lease Payments
-Entertainment and meals (up to 50%)
-Rent
-Wages
-Contractors
-Telephone
-Website fees


Student Write offs If you are a student you can write these off your personal taxes

-Official student residency up to $400 per month
-Student Meal plan
-Text book cost (also apply for the Canadian governments textbook credit [$400 a year in cheques for text book support)]
-Vehical costs if far enough away for permenant address



Remember writing off can give you cash back but never more than you paid out in the first place. Also these values are general and based on my knowledge of taxes in my region, always check with a certified accountant and keep good finacial records.

Nice tips similar in UK. One of the best savings I made when I got an accountant was percentage of rent, tax etc (because I have home office) that I didn't know about before

What, in your opinion, would make the biggest impact in order to reduce the amount you pay in taxes? For example, Is setting up a corporation and paying yourself out of it to total right under a certain tax bracket a smart thing to do?

Also, you listed internet twice, is the internet under "business write offs" only for the internet at your business location, not if you have a home office?

Originally Posted by phatzilla

What, in your opinion, would make the biggest impact in order to reduce the amount you pay in taxes? For example, Is setting up a corporation and paying yourself out of it to total right under a certain tax bracket a smart thing to do?

Also, you listed internet twice, is the internet under "business write offs" only for the internet at your business location, not if you have a home office?

It's for Internet used for business so you can only write so much of it off.

Also the best method, which I wrote in another thread is to own a company declare income as profit, take a terrible salary but the rest as 100% profit dividends and then write of all you can

Hey,

Thanks for these pointers. Very helpful. If you don't mind, I got few questions.

I know that domain and hosting expenses can be written off but I would like to know the following.

I made around 5k last month and I am in the process of acquiring a semi-established website for 5k. So, can I write off the entire 5k? In fact, I plan to reinvest almost 85% of my income for the same purpose for the entire year(2012)

Also, how do you deal with the money that you were scammed off. For instance, last time someone scammed for around $800 ( website purchase) Didn't receive anything post the purchase. Can this expense be written off in any ways? thks in advance!

Originally Posted by super11

Hey,

Thanks for these pointers. Very helpful. If you don't mind, I got few questions.

I know that domain and hosting expenses can be written off but I would like to know the following.

I made around 5k last month and I am in the process of acquiring a semi-established website for 5k. So, can I write off the entire 5k? In fact, I plan to reinvest almost 85% of my income for the same purpose for the entire year(2012)

Also, how do you deal with the money that you were scammed off. For instance, last time someone scammed for around $800 ( website purchase) Didn't receive anything post the purchase. Can this expense be written off in any ways? thks in advance!

I'm no accountant but the full five grand can be written off for the business based on business income, as for scammed money no there is no write off for that..

Good post and could be very helpful to alot of people. Couple of things to add: as far as your vehicle, your mileage write off will almost always be worth more to the owner than the cost write off (you have the option to choose one or the other) unless you had to pay for a major accident or repair.
Second: if you are self-employed run as many everyday expenses as you can through your company-im talking about even the smallest of purchases even if they are for personal use.
Last and most important:find a GREAT accountant. Not a good one but a great one. They will save you more than any thing else. A great accountant can be found for the same cost as a by the book good one

Originally Posted by Winchester

It's for Internet used for business so you can only write so much of it off.

Also the best method, which I wrote in another thread is to own a company declare income as profit, take a terrible salary but the rest as 100% profit dividends and then write of all you can

Fuck, i wish i knew what that meant. Time to do some reading i guess

so basically, if you own a small business, and have spent, say 1000$ on advertising during this year, you get all that money back?
Sorry if this is a dumb question but I am not familiar with the taxation system in the US

Kickflip, thanks alot for that great post, i have a few questions.


1.) is there a specific service package we have to order @ H&R block that'll end up costing 100 - 200?, im not familiar with their billing systems or anything.


2.) Let's say, for examples, proxies cost you 200$ a month, is that deductible under any category?

3.) For renters, i was under the imprsesion that the % of total square footage that your office occupies is tax deductible, is this true? So if your home office takes up 25% of your apartment, 25% of your rent is tax deductable?

Thanks for the reply. What if i need general tax advice? like someone to talk to and tell them the details of the business and all that, and to get advice for everything i can do in terms of deductions and tax preparation. I honestly dont know jack about taxes point blank.

Well at least in the US you deduct your mortgage or rent based on the % of the square footage that you use.

One key thing to remember is that at least in the US, if you do not have a legit business, you can not take any business deductions at all. So you will be paying taxes on the money that you spent.

I personally went with a C corp and many will say you get double taxation... That only happens if you pay out dividends. You need to be smart about it. Well if I have 2 vehicles, one personal POS and one nice one, the company owns and pays for the nice one. Company invests in land etc. Guess who the renter is? The other way you could do this is a vehicle allowance. For internet and phone lines, the company can pay you a technology allowance because you have to have them to work or the company can install and pay for them. Can't do many of these things if you are a LLC or Sole Proprietor.

This is why I keep telling people to read and learn about the different types of businesses.

Originally Posted by Kickflip

No sorry. The way it works is like this:

I make $10,000 gross income for the year.
I must now pay the Government $1,000 for taxes (10%).

BUT I own a business, and I spent $1,000 on advertising.
Now I "deduct" the $1,000 from my earnings.
Now my net income is $9,000.
I must now only pay the government $900 for taxes (10%).

Hope that clarify!

its very clear now. Thanks a lot!