This year, Get ALL of your Self Employed Business Tax Deductions

Self Employed Business Tax Deductions

Watch this video on YouTube.

Here’s a review of QuickBooks: Self employed. It is a simple solution for doing your self-employed business taxes in the US. This is what I’m using now, after the 4.5 years I’ve had my business.

I was doing things awkwardly using excel spreadsheets and word documents. I now have a simple solution. I’m sharing it with you because I want you to have the chance to have something that works easily for you.

I show using it in this video so you can see exactly how this works. I don’t care if you use this tool or anything else. I’m showing you this because this is what works for me. I don’t get anything for telling you this except the satisfaction that I’ve helped you have an easier time doing your business taxes.

Business taxes has been a pain in the butt for me since I started my business in 2011. Now, they’re easy because of the system I use. If you already use TurboTax, you might love this because it uses your same Intuit account. You can take everything from QuickBooks self-employed and stick it into TurboTax. I’ve spent a bunch of hours doing my taxes in the past, this will make it so much easier. The average business owner spends hundreds of hours doing their taxes. This system eliminates the majority of that work.

Before I just had business bank accounts and credit cards to track my expenses. Then I put in everything through exporting in Excel documents and trying to put them back into TurboTax. It was a total nightmare and every year I would have inconsistencies. I would stick things in the wrong category. I wouldn’t remember doing things a certain way the year before. As far as getting audited goes, that is a nightmare. That is a sign you’re not doing things well which suggests you need to be audited. Consistency is often the sign that you’re doing things well.

QuickBooks will pull the transactions from all your business accounts automatically into one view. Over time, it has forced me to learn more about each expense and then to set things up in the beginning. I wasn’t sure what category to put various expenses in. When I had to categorize it from the beginning and not do it at the end of the year, then I was motivated to do it more. I set iTunes expenses as advertising. I have a website but the web hosting and back end is a part of your advertising if you’re using the website to make sales. These iTunes transactions are a part of things for my advertising system.

Some things like Delta for travel is obvious, but what about Alexa? Where do I put that one? That supports my tracking for my website. It allows me to see what visitors I’m getting and what rank so that is a part of advertising also.

Then the same thing with Microsoft expenses for buying Call of Duty points. I use them to make videos but then I’m buying advertising to promote my videos which makes sales. That all goes back to advertising. If you’re buying things to make the creative material you use in your advertisements, then that goes back to advertising.

This could also help you find a bunch of business expenses you are not taking advantage of. For example, I used to spend money on things that I thought were only personal. If it’s for a video game, I didn’t think I could write it off. For my business, I now use video games as a part of my advertising because it costs less to advertise a gaming video. The actual background of my inspirational videos is gaming. Now I’m able to funnel the gaming I do into my advertising business.

This allows me to plan what I do based around my taxes also. Even with this League of Legends expense. I spend the money to buy things I use in the game, then I advertise the videos. All the things I do in the games are recorded and used as raw material for advertising and I’m able to write that off also.

When you use something like this, I’m able to plan everything out. The cool thing is being able to split business and personal. I use audible.com to have the books and supplies I would have for an office. So if I bought physical books to have around for my office, those would be in materials and supplies.

I listen books like How To Build a Business Online or Personal MBA. It’s the same kind of books I would put around in my office. I buy them on Audible. I also buy books for personal use on Audible like Harry Turtle Dove. I don’t do anything with my business for 30% of the books I read because they have no business application. The other 70% have a business application to the advertising or general business knowledge. I have a rule that splits my Audible subscription between business and personal automatically.

The same thing applies to my cell phone bill. QuickBooks splits it automatically. I have about 6 phones, some are used for business and some are not and some overlap. With 6 phones it’s 50/50 business and personal.

This is such a simple business system and the beauty of it is that I’m able to track my income. Before I started using this, I had a hard time tracking my income. Before I tracked my income and my expenses in my business, I consistently lost money. Even now as my business is doing well, it’s still making up for all the mistakes I made in the past. The first year I had my business, it was completely haphazard, I didn’t track my expenses. It was a total disaster because I didn’t see when I was wasting money on things in with all the other money I was spending. It just cranked up my overall expenses.

Now, this gives me a simple interface. I was using Mint.com to try to track everything. The problem is then my personal and business expenses were tracked together in Mint.com. This isolates my business and I can see what business income I have separate from personal.

My personal expenses tend to be fixed. Yet, there’s sometimes buying a house or random things that come along. Then if I’m tracking all that with my business income it’s hard to see. Now I see how my business is doing. I’m grateful my business is doing well now. It was doing poorly for most of the time I had it. I was literally paying to work the first three years of my business. Any job I had I would’ve came out much further ahead up until this year and the last several months of last year.

The key to this is to track everything. When you watch the numbers go in the red every month, it forces you to do something about it. If you don’t track itand you don’t see how much money you’re making, it’s a lot easier to waste a lot of money. If you track your business and personal together, it’s easier to misunderstand your income. Spending money on personal expenses could create the appearance that you’re breaking even. In reality your business could be doing well.

Sometimes you get money that’s not from your business and your business isn’t making much. If you track it all together, it looks like the business is doing well, even though the money was from a relative. QuickBooks breaks it down and keeps everything in one spot. The best thing is now I have peace of mind. I’ve learned about my taxes enough that I can go forward and do my taxes. I can be confident that I have a good system in place within the rules that I understand.

Ignorance of the rules does not make you exempt from them. Often, people start their business and spend a ton of money getting professional help. A professional costs between $2,000 and $10,000 to do the same thing I can set up through QuickBooks. The cool thing I like is that this thing is only $11/month. I paid for the whole 12 months. It’s cheap compared to paying for a tax professional and it gives me the ability to do these things myself. The key thing to making all this work is adding your accounts and getting all your business account sync up. If you have PayPal, you can get your PayPal in there. Whatever you’re doing in your business accounts. You can get these synced up in here so you do it automatically.

If you have to do this manually, it’s a nightmare. It takes so much time, which is why small business owners spend hundreds of dollars a year doing taxes.

I’ve spent a lot of time doing my taxes and I’m sick of it. Now, when I have these rules set up

quickbooks tutorial

Every time iTunes or Google Adwords bills, it automatically sticks it into advertising. Every time Upwork bills or a contractor sends an invoice, it falls into contract labor.  Every time Verizon wireless bills, it automatically spits it into business and personal. That’s really sweet.

It even tells me what my estimated tax due is. This was one of the most difficult things I had the way I was doing it before. I have a pretty fat estimated tax due coming up. I just made the payment they required and I’ve had the chance to make a bigger payment before the deadline. I know my estimated tax should be now without having to calculate it every few months.

What did I do before?

I was just lazy. I didn’t bother calculating my estimated tax. I just paid whatever the IRS told me to pay. Last year they told me I had to pay $1700 every 3 months so I paid that. Then when things went well at the end of the year, I paid an extra 5 – 10k just free styling it and figuring I had to pay extra. I had to pay a $3 fine for underpaying. I’m grateful $3 is not too bad. That said, without doing that this year, I’m likely to pay a lot more.

Since I know what my estimated tax due and I haven’t put in all my deductions are. I actually can deduct healthcare now because I am paying that now with my wife now finishing her job off. I have to put the payment in for our healthcare coverage that the business is now paying for. You can add these deductions including my car miles and then take a look at my estimated tax again. You can see how simple this is compared to how I did it before.

A pre-requisite to this is having your business bank account set up already. I made it almost a year and I have a friend that has been working with me as a contractor. He’s been working with me as a contractor until now and you can do it that way. The IRS doesn’t say that you have to segregate your business and personal expenses from each other. However, it makes it a lot easier. If you don’t have a business bank about and business credit cards set up, you can’t use this effectively.

If you had all your personal stuff, you would have to click on things and set them over to personal. Then you’d have all these things that would be split or set up as personal spending it would be a lot of extra work. If you don’t already, you would want a business account set up that actually has online banking.

quickbooks self employed

QuickBooks has the options to connect with all of these banks. It has all of these options for you where it can directly import it. The automation is the key to this. If I had to do this manually, I might as well just save up until the end of the year and keep doing what I’m doing. The automation is the beauty of this. Being able to export this at the end of the year should save me 20 – 40 hours on my taxes. That is worth quite a bit to me.

I hope that this has been useful for you because this is the kind of thing that I didn’t think to think about. I didn’t even realize that I didn’t know there was a better way to do my taxes until this year. Until this year, doing taxes was aggravating at the end of every year. I almost missed 50k of expenses last year in payments for contract labor. Then I said I’ve got to have a better way to do my taxes because this is a disaster. Thank you for reading this. I hope you have a great day today.