Business Write-offs

write off bigA guest post by accountant, bassoonist, and piano teacher, Tairsa Mathews

This is my favorite topic! When you buy things for your business, you get to write them off!!  This means every time you purchase music, every time you service your instrument, when you buy rewards/prizes for your students, etc., you can write them off as a deduction to your taxes.

I’ll use my own personal business as an example. I travel to my student’s homes, so my biggest expense is travel. This can be tricky to account for. You are not supposed to write off the amount you spend in gas, because it’s hard to determine how much of the gas you put in your car went to your business and how much is personal. Instead, tax law deducts 55 cents per business mile driven. It is important to keep track of your miles carefully if you plan to use this deduction. I keep a notebook in my car and at the end of the day I write down the miles I used. At the end of the year I total this up.

Another deduction related to vehicles is the interest. If you are currently making payments on your car, you can deduct the business percentage of your interest. For this you need your total miles for the year, as well as your business miles for the year. For instance, let’s say I drove my car 10,000 miles in 2015, 6,000 of which were for business. I end up paying $500 in interest. That means that I can deduct $300 interest expense on my vehicle. I cannot deduct any of the principal payment on my car though, just interest.

My next biggest expense is my cell phone. This is another area that can be kind of gray. Most accountants will just have you deduct your entire cell phone bill each month if you use your phone for your business as it is nearly impossible to separate how much of your bill is for personal use vs. business use.

My favorite business write-off is for business supplies, such as books. Every time I buy music, it lowers how much I have to pay in taxes! It’s excellent! One of the greatest benefits of being a business owner is you get to spend your money BEFORE the government gets to it.

Other miscellaneous purchases you make for your business may need to be discussed with your accountant. If you make any big purchases, such as recording equipment, or new instruments, there are proper ways to account for that, which will be discussed in a future post.

One thought on “Business Write-offs

  1. Great post, Tairsa! My accountant has let me write-off room decorations, window treatments, lightbulbs, an ipad, and more (all for my home office). Like you mentioned above, my entire cell phone bill is written-off. I haven’t asked about my internet bill. I will have to ask my accountant!

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