Some graphic designers work for Mad Men-type agencies where the tools, materials and resources are provided. However, many designers are freelancers working from home and paying for business expenses themselves. As a freelancer, once you’ve got your business set up, what you really want to know is what can you deduct as a business expense on your taxes. Tools like QuickBooks Self-Employed help with organizing these expenses. Here’s a go-to list broken down by category to get you started —
- Your website (it’s the face of your portfolio)
- General advertising that might include ads, social media, registrations to various sites where you showcase your talents.
- Applications for awards and contests that give you visibility
- Mileage for business-related tasks (since you work from home, your business mileage starts at your door)
- Car repairs and maintenance
Office Expenses & Supplies
- Bank charges and fees (this includes PayPal and other similar fees)
- Office supplies like toner, paper and pens
- Upfront costs and monthly fees for software (like Adobe Creative Suite), financial tools and subscriptions (like Shutterstock). If the software license costs more than $1,000 as a one-shot purchase, you may have to depreciate it over three years.
- Communications costs such as internet fees, landline phones, cell phones and fax lines. (Be careful because if you have a fixed price for your lines and you use them for both business and personal, you can only deduct extra charges over the base fees.)
Use the IRS’s new simplified method that lets you claim 300 square feet at $5 per foot, or $1,500 per year. Another option is to use the detailed method that lets you deduct a percentage of your home’s costs for mortgage interest and property tax (or rent), insurance, utilities and repairs.
Travel, Meals & Entertainment
Travel costs include airfare, shuttles, cabs, other forms of transportation, tolls, parking and lodging. Your family can tag along, but none of their expenses are deductible (like if you got an extra hotel room for them, for example).
- Trips to seminars, conventions and other events
- Travel costs to meet or work on projects with clients
- Travel for research
- Travel to build a portfolio that you will use regularly in your work
Meals and entertainment get their own line on the Schedule C.
- Meals or shows must be directly involved with or come right before or after a business meeting, pitch session or other business-related activity.
- Meals count while you’re traveling away from home overnight, but not day trips. You can use standard (per diem) rates for meals, found on the General Services Administration (GSA) and the Department of Defense websites.
- Dues to all the organizations that market you or train you to market yourself
- Education expenses for in-person courses, online courses and webinars and videos with how-to guidance
- Self-employed health insurance as an adjustment to income
- Legal fees (contracts, consulting, copyrights, etc.), professional fees (tax preparation, software, etc.) and commissions (affiliate fees, referral fees and agent fees)
These are just some of the ways you can take advantage of tax breaks for your business. Get started on tracking these expenses today with QuickBooks Self-Employed.