So I finally sat down with my accountant to go over the business taxes and I've been stressing about it for weeks. I run a small Etsy shop selling handmade candles and I was expecting this huge, complicated explanation of why I owe so much. Turns out I actually owe way LESS than I thought because of how I can deduct home office space, supplies, and even part of my internet bill. I feel kind of silly for panicking. But also... why did nobody tell me this earlier? Has anyone else been surprised by their tax bill going the opposite direction?
Taxes
My accountant explained the tax difference and it wasn't what I expected
lol yes. the first year I filed for my business I was convinced I'd be eating ramen for a month. ended up getting a refund. accountants are basically wizards who speak IRS.
My CPA told me something that sounds fake but apparently is true: a lot of small businesses overpay beecause they're afraid to deduct things. The home office deduction is a big one people miss because they think it's too complicated. glad you got a good surprise!
can i deduct my netflix if i watch it while packaging orders? asking for a friend
Wait back up. Home office space? Does that actually work if you also live there? I thought you basically needed a separate building or something. I've been ignoring this for years.
no you can absolutely do it in your house. the space needs to be used regularly and exclusively for business though. so if it's a corner of your living room where you also watch tv, that's trickier. but there's a simplified method where you just multiply the square footage by a set rate. it's worth asking about.
Also don't forget to keep receipts for literally everything. My first year i missed out on a bunch of supply deductions because I couldn't prove the purchases. Now I have a shoebox. It's not pretty but it works.
I love that the big mystery of taxes is 'the system is confusing on purpose.' congrats on the refund though. maybe treat yourself to something that isn't candle wax.
serious answer to my own joke, I looked it up and no. unless it's literally only for business. so no netflix. devastating.
The exclusive use thing is what always got me. My desk is also where my kid does homework. Guess I'll ask my accountant next time instead of assuming.
This thread makes me want to actually call an accountant instead of just hoping for the best. My current strategy is 'file it and pray.'
Honestly the best money I ever sPent was a one-hour consultation just to learn what I was missing. Didn't even do a full return with them the first year, just got answers.