As freelancers, we only pay taxes on our profits. What does that mean? If you bring in a total of $20,000 in a given year (your gross receipts), but have $9,000 in business expenses, then your profit is $11,000. Wouldn't you rather pay taxes on $11,000 than $20,000?
This isn't just fun with numbers, it's an acknowledgment that it costs money to run a business. If you're a graphic designer who pays for expensive software and licenses lots of stock art, for instance, those are business expenses that impact your profits. And so you want to keep really good track of what you spend money on to keep your business running.
We've created a helpful expense tracker that you can download, which you can access here. We've also got some helpful information about what kinds of things our clients often have as business expenses in our freelancer 101 packet. You can also learn more about what counts as a business expense here.
Still got questions? Reach us at firstname.lastname@example.org. And we can also talk through some of your business expenses during your annual tax appointment. Create an account now to get started and book your appointment today.