Just like any group of freelancers or workers who run their own businesses, one of the advantages of being an internet marketer is that there are quite a number of expenses and deductions that you can claim when it comes to filling in your tax return. There are of course a number of items specific to your particular business that you will be able to claim and these should be discussed with your accountant. But there are certain areas that every one who works freelance and online will equally be able to claim as a legitimate part of their business expense and some of the more common areas will be outlined here in this article.
The first and most important thing to note is that no matter what it is you are going to claim for you will need to keep records of each and every transaction and keep hold of all your receipts. If it is for a piece of online software or a hosting account, print it off and file it for later. This will save you a massive effort and printing session when it comes time to do your taxes!
Secondly, no matter if your entire business is online, the first place to look for expenses is the physical space of your home or office. If you work from home, add up what percentage of your home is dedicated to conducting your business. You will then be able to claim this back as a percentage of your rental or mortgage payments. In addition, any expense related to the running of that premises for the purposes of business will also be deductible This includes the cost of utilities such as electricity and phone, as well as anything to do with the maintenance of the property for business purposes. Your computer is essential business equipment so this should be deducted too. This also applies to the furniture surrounding that computer, so keep receipts for the desk, chair, monitors and printers and anything else you use in the office.
Once you have taken care of the physical space of your business, you should look at deductions for the virtual space. Obviously, just like electricity and phone, you can claim for your broadband service. Your website (or for most internet marketers your multiple websites) are also rented space so you can claim for their domain name purchase, their hosting accounts and any maintenance or site add-on’s you might get from your hosting provider. Any support calls will also be deductible. After that, think about any plugins or scripts, software or ebooks you might have purchased for the business – most of them will be deductible. Most importantly, think about any outsourcing you might have done, from backlinks to paid articles, design work to a virtual assistant. All of these expenses can be reclaimed.
Lastly, think about your advertising. Did you spend any money on adwords or Facebook ads, or even put an advert in a trade publication or website? All of these can be fully reclaimed.
Remember, there’s no point in not claiming. Through use of a good accountant and a bit of discipline each time you make a payment through the year, you could find that when it comes time to pay your taxes, you have significantly reduced your arrears.
Alex Simmonds is a journalist and blogger. He currently writes a blog about the contracting sector covering everything from contractor mortgages to payday loans.
- Little Deductions You May Miss (2009tax.org)
- Tax Deductible Expenses for Small Businesses (2010taxes.org)