If you aren’t tracking your business expenses or waiting to the last minute to recreate a year’s worth of traveled miles, phone bills, office supplies purchased, or any other deductible expenses, you may be missing out on significant savings.
Expense Tracking for Agents
Whether you’re self-employed or working for a brokerage from your home office, there are a number of expenses you should be tracking. And, with a smartphone and the wide variety of available expense tracking apps such as BizXpenseTracker, Expensify, Shoeboxed, etc. capturing these expenses has never been easier. Don’t wait to the eleventh hour. Start tracking these expenses now:
Cost of Doing Business
Maintaining a home office, computer equipment, and cell phone expenses are some of the expenses you may be able to deduct.
- Home office – As a sole proprietor, your home office must be your principal place of work and used exclusively for business. If you are an employee using a home office, you may qualify for a deduction if the space is used for the convenience of your employer. To calculate the size of your home office deduction use the total square footage of your home / divided square footage used as an office = the percentage of direct and indirect expenses (rent, utilities, insurance, repairs, etc.) that can be deducted.
- Business insurance – Health insurance, business auto may be deductible.
- Professional services – Includes outside consulting fees, accountant, tax prep, etc.
- Office supplies – Paper, pens, printer ink, folders, and binders purchased throughout the year. Does not include items purchased and used as promotional items.
- Computer, tablet, business furniture, and other equipment – Depreciation for capital equipment has dropped from 50 percent to 40 for 2018. This deduction will no longer be available beginning in 2019.
- Software – You may deduct the full cost of small business software.
- Cell phone/cell plan – Deduct for exclusive business phone and the cost of calls.
- Vehicle and mileage – You may choose between deducting your actual vehicle expenses — gasoline, maintenance, parking, tolls — or use the IRS standard mileage rate of 54.5 cents per mile.
- Meals – Take 50% of business related meals.
- Photocopying and printing
- Bank charges – Fees charged to your business account may be deductible
- Courier services – Shipping expenses directly related to your business
Sales & Marketing Expenses
So much of your day is focused on finding new business. Many of the costs associated with developing new business are often deductible. These include:
- Advertising, including, signs, flyers, brochures, door knockers, etc.
- Business cards
- Client gifts
- Open houses
- Website design and development
You may deduct the cost of business-related educational events including seminars, conferences, and workshops.
The Trump administration’s Tax Reform Act was passed in December of 2017 and went into effective as of January 29, 2018. The fast implementation of the new bill has raised many questions, which even the IRS has yet to completely answer.
For example, as part of the new law, rules regarding pass through businesses including sole proprietorships, partnerships, LLCs and S-Corps, may now be eligible to deduct a full 20% of their “qualified business income.”
We are not tax professionals, so for more details, consult with your accountant, tax professional, or visit IRS.gov , to see if you qualify and confirm that all the expenses you’re deducting are applicable prior to filing your return.
You work hard throughout the year and spend to invest in the success of your business. You deserve to take the legitimate deductions available to you. Track the above expenses. It won’t hurt, even if you find that some may no longer be deductible. When tax time comes, the last thing you want to do is leave money on the table.