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Interview with accountant and entrepreneur, Melisa Gage
Do you have an online business? Here’s what you’ll need this year for tax time.
Owning and operating your own online business can be overwhelming. Add tax season to the mix, and your head might be spinning. From small business tax deductions to keeping your receipts organized throughout the year – definitely some things you’ll want to be on top of.
In the past 15 years (and many business ventures later) I have dreaded the tax time prep every year. And, with tax season fast approaching, I thought it might be great to have an expert come on to help us with some of the details so that we don’t fall into the tax abyss.
Just kidding – it’s not as complicated as you might think. And, our lovely gal, Melisa Gage is here to save the day!
I sat down and asked her some of the most pressing questions about tax time for small business owners and she gave some great tips!
Tell us a bit about your background as an accountant.
I have been an entrepreneur since I was about 12 but my accounting experience started about 25 when I began doing management for physicians and therapists.
After many years I decided that if I could help other people go from literally $0 to 6 figures then I wanted to see what I could do for myself.
I have enjoyed owning my own accounting business as well as a physical therapy center and health food store for about 7 years. Why mention this? Because I understand both the challenges of owning a business as well as how to make your business become profitable.
Do all online businesses need to file taxes?
Yes
(I asked this question because funny enough, there are so many people that think that you only need to file if you are a brick and mortar or only if you are making a certain amount of income. If you have an online business making any money, you’ll need to file a tax report)
What information do small business owners need to have to prepare for tax time?
They need their income, expenses, assets, liabilities and tax structure information.
Are there any small business tax deductions to be aware of?
MANY! Let me give you my Top 5 Deductions for 2019
1. Apps-so many different applications run our businesses especially when they are online. There is our website, appointment scheduler, Amazon, ect. These are all deductible.
2. Cell Phones-We all have one and use it primarily for business.
3. Vehicles-mileage or actual expenses are the choice of deductions. If you have an online business it is likely the best idea to use actual expenses because most virtual businesses do not drive a lot. These expenses include gas, oil change, other maintenance and repairs, tires, insurance and tags.
4. Home Office Expenses-utilities, security, the space where your office is and if you sell a product or make the product all that area you store inventory and supplies in, these are all tax-deductible.
5. Advertising and Marketing-many times a business owner will spend money on learning how to offer a masterclass, hire a marketing coach, join a group that helps us market. These have a cost but are not directly related to your industry (unless you are a marketing expert) and should be listed as advertising and marketing.
These are some of the most common expenses I have seen this year.
Do you recommend any small business tax software programs to help with keeping documents organized?
You should most certainly have one and there are many on the market. My personal favorite is Quickbooks Online. Some business owners use a spreadsheet and that is great but likely you will outgrow it after 1 year or so.
The main downfall to not having your information in an accounting program is that when you need a loan or have an interested investor, which commonly occurs in year 2 of business, they are going to want a well organized Profit and Loss with Balance Sheet. It is challenging to get this from a spreadsheet.
Any tips for helping reduce your tax repayments?
Yes, I have two recommendations:
- Be diligent at recording business expenses to take advantage of all deductions. I would like to specifically mention ‘Meals’. This is a deduction that you only get 50% of, however, keeping a record of who you were dining with and what you were meeting about can allow you to take this deduction more often.
- Reconcile your bank account every month to be certain you have not duplicated any income. There are several ways this error can happen but the fix to stopping it is a reconciliation of your bank account.
When do small business taxes need to be filed?
April 15th for the US
(For business owners in Canada, April 30 is the deadline)
If you aren’t a DIY and want to outsource, is there anything that we should look for in a qualified accountant, especially for online business entrepreneurs?
- We give our accountant all the most sensitive information and because of this IRS recommends that they be in business longer than 2 years. This reduces the likelihood of them running a scam.
- Are they familiar with online business in your specific industry? This ensures they will be familiar with all the tax deductions related to you.
- Do they have a secure way to share sensitive information?
Any other tips for tax time?
Don’t procrastinate-if you decide to secure professional help it gets more expensive the closer your deadline gets.
DIY is great but sometimes it can cost you more than it saves. This is not just in tax deductions but also time. Doing something that is not your expertise takes alot of time that you could be using to grow your business. Is it really cheaper than hiring an expert to make certain it is done correctly and in a timely manner?
How can my readers contact you to outsource their tax filing needs?
Facebook-https://www.facebook.com/advancedaccounting.services/
Website-advancedaccounting.services
Call me: 228.224.3254
Email me: melisadgage@advancedaccounting.services
Are you ready to file? Have all your small business tax deductions and paperwork organized? I’d love to hear how you keep your taxes organized below!
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Great tips, I’m finishing up my taxes so this is extremely helpful! Thank you!!!
So glad the post found you at a great time! I needed some tips as well 🙂
This was extremely helpful as a new blogger & to know what info I should keep track of this year so I not scrambling around at the end of the year. Thanks for providing so much important content to ensure your readers success.
You’re so welcome, Liz! So glad that you got some helpful info out of it. It’s really great if you can get a head start on things so that you’re not struggling every time. Thanks for reading!
Ahhhh the dreaded taxes. I have done much better with last year’s and this year’s expenses because now I know what to check but I’m always happy when people like Melisa help us out! Thank you both! I forgot about the 50% of meals.
Right!? Every year I dread them too… So glad that Melisa could help us out with her knowledge to get ut all through this crazy time of year.
This is a great post with wonderful tips for the business owner. I think that sometimes new bloggers forget about some of the “hidden” expenses like monthly fees for stock photos, photo editing software, etc., that can be deducted. Thanks for sharing your expertise with us!
So glad that you found this helpful! It was so great to have Melisa on the blog to help us all get sorted with our blogging taxes!
Does this all apply to freelance/contractor work as an individual/sole proprietor?
Sure does! 🙂
Great information! Definitely can use these tips!
So glad that you found this helpful! Thanks for reading!
Wow! I had no idea I could write so much off of my taxes! Thanks for the tips. I have tried Quickbooks a little in the past but will be sure to check back into it. I have also heard Freshbooks is decent? Have you tried that one yet/ would you be able to compare your experiences?
You’re welcome, Melinda! I have tried both Quickbooks Sepf-Employed and Freshbooks. I stuck with QB because it had direct integration with PayPal which is what I use but lots of people love FB as well.
Great, thanks for the info.
This is what I was dreading most about starting a business, but this made sense to me. Thank you!
Ughh. I dread tax time. But so glad that this might have eased your mind a little. 🙂
This is such a useful post! So many bloggers don’t realize that their blog is a business and how much they can write off. Best side hustle ever!
YOU BETCHA! 🙂
Thank you for these outstanding tips! Sometimes we spend so much time working our business we forget to take care of the business and accounting details. Thanks for sharing these great reminders!
You are welcome, Michelle! It’s definitely not one of those things I LOVE to do, but planning and organization can definitely make things so much easier! Thanks for reading!
Thanks for the tips! These will come in handy for our taxes with fishing next year.
You’re welcome! It was so great to be able to share some expert tips with everyone! CHeers 🙂
These were great tips. Our accountant is a real stickler. I try to keep really good records so I don’t get audited.
Thanks Linda! I try to keep organized and get a bit better at it each year. It’s definitely one of those business things that needs to be done well. Thanks for reading!