Taxes for the Self-Employed Webmaster
Let me preface this article by saying that the information contained below is only for educational purposes, if you have a specific tax problem you should consult with a C.P.A or tax lawyer.
If you're self-employed taxes are a big issue. You not only have to worry about paying every quarter, but also your taxes will be substantially more complicated than the average person's because you will have numerous deductions that they do not have. Due to the complexity of your taxes you should never do them yourself. Having a professional do them not only lowers the chance of an audit, but it also will likely save your money as the professional knows exactly what you can deduct. Additionally accounts are fairly cheap, you can get your taxes professionally done for only a few hundred dollars, and of course, its tax deductible.
Still though, even if you do have your taxes done professionally, there are some things you should know.
Expenses
It is fairly common knowledge that you can deduct business expenses, but what exactly counts as a business expense? I've outlined the various deductions in the list below.
1. Supplies - Anything you use to run your business can be deducted. This includes paper, stamped, envelopes, pencils, ink cartridges, etc. You can even deduct the gas used to drive between meetings (you get a credit for each mile driven).
2. Merchandise - If you sell merchandise the amount you actually paid for that merchandise, including freight costs, is deductible. Also if you make your own merchandise the amount you paid for the supplies is deductible as well.
3. Employees - Wages and benefits that you pay your employees, if you have them, are deductible. You need to keep track of how much you pay each individual person as you will likely need to send them either a 1099 or a W2 at the end of the year. Also make sure you send employees a W9 to fill out before you pay them. You can actually deduct a portion of your health insurance costs if you are self-employed as well.
4. Equipment - Any equipment you require for your business is deductible. Your printer, your computer, your telephone, a fax machine, if you need it for your business you can deduct it. Even if you use your computer for personal things too you can still deduct all of it because without it you wouldn't be able to run your business. Software would also fall under this category.
5. Services - Your phone service, your Internet service, web hosting costs, advertising costs, credit card processing fees, these things can all be deducted. Search engine optimization or submission could be grouped under advertising as well.
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