Income and Deductions for Self Employed Individuals and Partnerships

​Income

• All receipts from the sale of all goods and service of your company. 
• Including bartering for property or services. Also, Virtual Currency will need to be included. 

Interest and Dividends 

• Sometimes Cancellation of debt. 
• Gains or Losses of a sale of an asset 

 
Generally, you are self-employed if you carry on a trade or business as a sole proprietor or an independent contractor, or you are otherwise in business for yourself (including part-time business)
 
What can you deduct: 
(A business expense must be both ordinary and necessary, in other words any expenses that is necessary to conduct your business or grow your business)

Here is a short list of deductions: 

• Cost of goods 
• Cost of product or raw materials, including freight 
• Storage 
• Direct labor for workers who produce the product (Sub-Contractors) 
• Capital Expenses 
• Business Startup costs 
• Business assets i.e.:  vehicle, machinery, Improvement (just to name a few) 
• Employee Pay and all related costs 
• Rent Expense.  Space and Machinery etc.… 
• Business Interest 
• Taxes: payroll, sales tax, ad valorem on business assets, real estate, state, and local tax 
• Insurance Premiums used for business purposes.  Liability, malpractice, workers’ compensation, insurance employees-Health, Insurance on assets and equipment. 
• Repair and maintenance on business property 
• Legal cost, cost to organizing the company, professional services, including accounting. 
• Research and development 
• Vehicle expenses either by the mileage rate, or actual expenses, fuel, repairs and maintenance, insurance, parking, or rent on a rental vehicle, used for business purposes. 
  • Regardless how you chose to deduct these expenses a detailed mileage log must be kept., also work with your accountant to determine which method is best for you.  Once the method is chosen for the vehicle it must be use each year on the vehicle. 
  • Click here for Milage rates! 
• Meals, 50% of deductible meals (unless you’re in transportation industry it goes up to 80%) this includes travel meal and business meetings and conventions, and a qualified reimbursement plan. 
• Advertising 
• Charitable Contributions related back to the business 
• Credit Card collection fees 
• Education Expenses related to the business 
• Internet related expenses 
• Licenses 
• Moving Machinery 
• Supplies- Office Supplies that are not included in your Cost of Goods. 
• Small Tools and Equipment 
• Telephone  
• Cost of maintaining an office or shop, this can include home office deduction, if the space is used  
• exclusively for the business. 
• Beginning Inventory and Ending Inventory 12/31/2022 if applicable.  

 
If you have question about whether something is could be categorized as income or expense, please contact us at 706-677-2700.  We are here to help!
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