Since we talked about tax deductions last week, we will finish off the month with a few more words about the way you can save money on your taxes. There are many things that people think they can deduct but that in fact not deductible. The one thing that comes to mind is the expense for clothes. I have talked to many women who think that the expense for business clothes is tax deductible.
Much as we can justify paying for business suits and using those suits to make a great impression, the expense is not a business tax deduction. Since the business outfits can be worn outside of business meetings, these expenses are not exclusively for business purposes, and therefore the price of the business clothes is not deductible. The only clothes that you can deduct are those that have a logo. If you wear apparel with your company logo you can take a deduction for the price. Besides, when you wear this outside of business meetings, you will be advertising your business all the time.
The opportunity to share your business with everyone you meet is also an advantage when it comes to tax deductions. You may not want to spend a lot or money on personalized apparel in the beginning, however it could be something to consider in the long run. This is one more reason to create a logo that you like and that represents you and your brand well. Of course, nothing is set in stone - there is always an opportunity to do better once we know better. And the same applies to your branding.
One tax deduction that a lot of people miss out on is the expense they incur with their car. Most women in business that I have talked to take the deduction, they are aware of the fact that the auto expenses are tax deductible, however, they don't keep good records of the mileage driven for business and therefore the tax deduction is many times a guesstimate. The biggest issue is that without good records, the IRS can decide that the deduction is invalid in case of an audit. The second issue is the possibility of the deduction taken being smaller than the correct amount; in this case the women business owner end up paying more taxes than required.
There are a lot of apps now available for mileage tracking. The most common ones are TripLog and MileIQ. Some of the business programs used for accounting and reports can also be used for mileage tracking - the one that I know of is TaxBot. If there are others, I would love my readers to post their favorites in the comments. I would like to know what others use, and what programs can do, so that I can check them out, and also improve my tracking for business expenses and deductions.