If you own a craft business, you are eligible for a great deal of money in tax deductions. The only catch is, you have to figure out exactly what you can file as a deduction. At home craft businesses have a lot of business expenses in the form of supplies, and every cent of these expenses can be filed as tax deductible. To learn how to get the most money out of your tax deductions for your crafting business, read on.
Pretty much every single expense on your business' behalf is tax deductible. For a craft business, this is especially useful - vital, even - since you're likely purchasing a lot of crafting supplies. Thousands of dollars can be saved every year in tax deductions if you remember to take advantage of all your business expenses. For example:
- Supplies: Every scrap of lace, bottle of glue and package of stickers that is used for business purposes is a business supply, and as such, is fully tax deductible.
- Equipment: If your business owns a hot glue gun, pair of scissors, etc., you can list those pieces of equipment as a tax deductible. Be careful not to combine equipment and supplies, however, as this may result in your deductions being nullified.
- Software and Subscriptions: If you have a graphics program which is solely for business purposes, or a subscription to a crafting magazine, these are considered business expenses and are deductible.
- Transportation: If you use your personal car for a business purposes, such as picking up supplies or making a home delivery to a client, you can get a tax deduction for every mile you drive. You can also deduct your parking fees and any tolls you had to pay while driving.
- Travel: Suppose your business funds a trip in which you go to a crafting seminar. The cost of your transportation there and back (plane, train, bus, car...) is 100 percent tax deductible, as is the cost of your hotel and any other business related expenses. Restaurant dining while on business travel is only 50 percent tax deductible, however.
These are all examples of expenses which your crafting business might incur. and which are tax deductible. The general rule is, if it costs money and is for a business related purpose, it's probably tax deductible.
Recording Your Expenses
You can't take advantage of tax deductions if you don't keep a record of what those deductions should be. Keep a pen and notebook handy, and every time you do anything that costs money (on behalf of the business), write it down. Record the business purpose of the expense, the date and time, and any other relevant information at all. Save receipts or any other documentation of your expense.
By being aware of what expenses (all of them) can qualify as tax deductions, and by keeping careful track of what all your deductions should be, you can save as much money as possible in tax deductions.