by cdaaccounting | Oct 30, 2021 | EDU
1. Rent and utilities
Do you lease office space for your Coeur d’Alene business? Regardless of whether it’s a desk in a co-working space or an entire commercial building, CDA freelancers and entrepreneurs can claim CDa business rent as a tax deduction.
The same goes for any utilities you pay for your office space—yes, the government cuts you some slack for keeping your lights on. This includes electricity, gas, telephone bills, and water bills.
2. Home office
For many of us freelancers, our homes pull double duty as both a residence and our workspace. Many Coeur d’Alene freelancers and sole proprietors work from home, so their residence is technically also their place of business. Don’t fret—you can claim a portion of the cost of your home office as well.
According to Publication 587 (Business Use of Your Home), you can deduct a portion of expenses for your home office. But don’t confuse these necessary costs of running a Coeur d’Alene business with your personal rent and utilities. The two are completely separate CDA deductions, so make sure you treat them as such in your paperwork.
Some of the typical costs you can include as part of Coeur d’Alene business-use-of-home deductions are:
- Utilities (heat, electricity, water, Internet)
- Maintenance
- Mortgage interest
- Property taxes
- Home insurance
Before you jump on this deduction, however, make sure your home office meets the basic criteria. According to the IRS, your home must meet these two basic requirements:
- Regular and exclusive use
- Principal place of your business
You can also lean on this IRS guide to using their simplified or regular method to calculate these costs.
3. Advertising expenses
Whether you’re a sole proprietor or have a growing team, you likely spent some of your hard-earned dollars advertising your business last year. If so, those expenses could be deducted on your year-end filing.
Whether you spent your advertising budget last year on business cards, billboards, or anything in between, you can claim those Coeur d’Alene expenses.
You can also claim:
- Promotional and branded swag (think keychains, pens, coffee mugs, tote bags)
- Website costs (hosting, design, maintenance)
- Online advertising (banner ads, Facebook ads and other paid social media ads)
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4. Insurance
Many Coeur d’Alene entrepreneurs and freelancers have insurance policies to protect themselves, their business, and any equipment. And many of these expenses can be deducted on your filing.
That includes:
- Liability insurance premiums
- Commercial property insurance costs
- Coeur d’Alene Business interruption insurance
- Insurance on any equipment (other than vehicles, which is deducted as part of vehicle expenses)
5. Legal and professional fees
Did you seek advice from a lawyer to start up your business? Or did you rely on an accountant to file your taxes last year?
If so, you can likely claim those professional fees as a deduction on your year-end filing. You’re able to deduct the cost to consult external pros like lawyers and accountants, membership fees to professional organizations and even costs for business books, industry publications, and online subscriptions
6. Retirement plans
For those freelancers or self-employed workers contributing to personal retirement plans, you can likely deduct those payments.
Note that all accounts must be qualified retirement plans: that means you can deduct contributions to plans like SEP IRAs, SIMPLE IRAs, and 401(k)s.
7.Coeur d’Alene Health insurance premiums
Staying fit and healthy can get pretty pricey—especially if you’re self-employed. That’s why freelancers and small business owners can deduct the costs of their health insurance premiums in some cases.
Those who own their own Coeur d’Alene sole proprietor business or own more than 2% of their Coeur d’Alene S corporation also have some deduction options here.
If you’re self-employed, you can deduct the health care premium payments for yourself, your spouse, dependents, and any child under the age of 27.
8. Bad debts
No matter how hard you may try, many small businesses end up with a certain amount of “bad debts” each year. Essentially, bad debts are any liabilities you can’t collect on. For many self-employed workers and freelancers, that often means outstanding invoices your customers simply won’t pay.
Depending on whether you sell goods or services, bad debts you can claim include:
- CDA Funds you’ve loaned to employees, vendors, or other businesses
- If your Coeur d’Alene business sells goods, you may deduct the costs of unpaid purchases
- The same rule applies to companies who sell services
9. Office supplies and tools
It takes innumerable supplies to keep office functioning. As a small business owner or freelancer in Hayden, Post falls, Sandpoint, or Coeur d’Alene, you need specific tools to stay sharp and ready to work—think stationery, pens, notebooks, and the litany of other items found on your desk.
While many of these items are relatively inexpensive, these small costs can add up to some serious savings when used as a Coeur d’Alene deduction on your year-end filing. Some of the more common supplies and tools included in this category are:
- Pens and pencils
- Stationary
- Staplers and paper clips
- Stamps
- Day-to-day shipping for products
- Courier expenses
- Cleaning supplies
10. Salaries and wages
As your Coeur d’Alene business grows, you may want to bring on hired hands to run certain aspects of your biz. Not only do those CDA employees and contractors provide a valuable service (i.e., their skills and work), but you can also deduct their gross salaries and wages.
If you’re a Coeur d’Alene business with employees, you can deduct:
- Payroll taxes like:
- Coeur d’Alene Employer contributions for social security and Medicare (FICA)
- Employer contributions for federal (FUTA) and state (SUTA) unemployment taxes
- Salaries and wages like:
- Bonuses and commissions
- Employee benefits (life insurance, education reimbursements)
- Per diems and allowances
- Contract wages for workers paid more than $600 in a year
by cdaaccounting | Aug 7, 2021 | EDU
Whether you are a career eBay seller in Sandpoint Idaho, or just making some extra cash, taxes can be a very daunting part of your new venture.
Do Idaho eBay Sellers Have to Pay Taxes?
Any profit from your eBay sales is considered when you determine your taxable income in Post Falls. In addition, you may need to pay Idaho self-employment tax if you generate more than $400 in profits.
And don’t forget about the sales tax that you are required to collect from buyers in those states.
PayPal Did Not Send You Form 1099-K on Earnings
PayPal is only required to report payments you receive if the total payments for the year were over $20,000, and more than 200 transactions.
Even if you do not receive a Form 1099-K, you are still required to declare the income and pay the associated taxes. PayPal must disclose these payments to the IRS and most states, so the fact that you got paid didn’t get swept under the rug and forgotten.
Tax Deductions for Your Idaho eBay Business
Products.
Every time you make a sale on eBay, you should record the expenses. For instance, how much the item originally cost you, labor, hauling, shipping, advertising, and fees along with any taxes associated.
Making it yourself.
If you are making the product yourself, including the costs of direct materials, tools, and supplies.
Idaho Home office.
You’re only eligible to claim the Home Office Deduction if an area of your Coeur d’ Alene home is used exclusively for managing your Idaho eBay business.
Office expenses.
This includes the office computer, office chair, and office desk associated with your Idaho business on eBay. You may be able to claim a portion of your router and Internet subscription, as well.
Vehicle use.
The most common vehicle deduction in Sandpoint is done by using the Standard Mileage or Actual Cost method.
Professional services.
Fees associated with Idaho tax preparation and tax-filing are deductible in Sandpoint.
by cdaaccounting | Feb 7, 2020 | EDU
Idaho Business Financial Statements Explained
Accountants supply information to people both inside and outside the Idaho business by issuing formal reports that are called financial statements.
The financial statements are usually issued at least once a year. In many cases, they are issued quarterly or more often where necessary. A set of rules, called General Accepted Accounting Principles GAAP, govern the preparation of the financial statements. GAAP has been defined as a set of objectives, conventions, and principles to guide the preparation and presentation of financial statements. These rules can be found in volumes of documents issued by the American Institute of Certified Public Accountants AICPA, the Financial Accounting Standards Board FASB, the Internal Revenue Service IRS, and the Securities and Exchange Commission SEC.
The basic financial statements include:
- Balance sheet
- Income statement
- Statement of cash flows
- Statement of retained earnings
Hayden Idaho Business Retained Earnings Defined
Understanding cash and retained earnings can be confusing. These earnings in a business are not equal to cash; this is money in the bank. Just because a Hayden Idaho company has kept profits in the Idaho business over the years does not mean that all of these profits have been retained in the form of cash.
After an Idaho company earns a profit, it may take that cash and purchase assets or pay off some of its liabilities (expenses, loans, bills, etc.). Hayden Idaho Business owners often assume that they are doing well because they are making profits without considering the amount of cash they have at their disposal. If they do not have sufficient cash, they will find themselves in dire since they may not be able to make the payroll, pay their taxes or general bills.
- It is essential that Hayden businesses have a good cash management plan.
by cdaaccounting | Feb 7, 2020 | EDU
Some Coeur d’Alene Idaho businesses are naturally suited to be operated out of home, and others, of course, or not. Ideal home businesses are those where the location of the business is not a significant factor in the success of the business; Idaho businesses that require little physical space; and businesses that d not intrude on neighbors and the character of the neighborhood so, retail stores, manufacturing operations, restraints, auto repair shops, and businesses where a lot of customers come to the business premise are usually not suitable for operating out of the home. Also, most jurisdictions place restrictions on, or outright prohibit, the use of home kitchen for preparing foods for public sale or consumption.
Ideal Idaho home businesses in Hayden include:
- Internet businesses.
- Professionals, consultants, freelancers, designers, writers, computer programmers, paralegals, bookkeepers, and other office services.
- Service business where you go to your customers instead of having them come to you, such as repairs, cleaning, sales agent, or contractor,
- Crafts, as long as the workshop isn’t too noisy or smelly, and assuming you deliver your goods to your customers as opposed to having a retail shop or showroom at home.
- Inventors (don’t blow up the garage).
- Setting up Your Idaho Business Home-Office
The luxury of a home office in Sandpoint is that you can spread out wherever you want. However, when home and home business overlap, chaos starts creeping in. It is too easy to mingle personal and Idaho businesses equipment, computer, files, and paperwork, the result is inaccurate business records, inaccurate tax returns, and wasted time sorting out what’s business and what’s personal keep your Post falls Idaho business and your personal life as separate as possible.
7. Keep It Separate
If possible, have a separate room, or at least a separate area, desk, files, and shelves, dedicated to your Idaho business and nothing else. The simple act of physical separation will make your desk area more organized, your business manageable, or lifesaver. Most studies have shown that people who mix residential space with work-space tend to become disenchanted with working at home.
8. The more office equipment you have, the more electricity you’ll be using. If you find you are overloading your home with circuits, tripping circuit breakers, you may need an electrician to rewire the house.
by cdaaccounting | Feb 7, 2020 | EDU
Opening a new Idaho business starts by forming your Idaho business’s legal structure, finding a location, obtaining necessary permits, and operating licenses.
Are You Buying an Existing Sandpoint Idaho Business?
You may also be buying unpaid debts, unpaid taxes, worker’s compensation, and unemployment insurance experience ratings. You should require the owner to provide a Tax Status Letter. However, most people will purchase (assets only) using their new Idaho business entity instead of assuming that of the old owners.
What is Idaho Business Entity Right for You?
Before you can decide on what business structure is right for your new Idaho business in Sandpoint, you must fully understand your liability, future goals, ownership, and personal needs.
Idaho Sole Proprietor
An Idaho sole proprietorship is allowed for individuals or married couples in community property like Idaho. Forming an Idaho sole proprietorship requires filing a certificate of Assumed Business Name. The Idaho business owner has full control of management and operations and is exposed to unlimited liability for business debts and taxes.
Idaho General Partnerships
An Idaho General Partnership is created by filing a Statement of Partnership Authority with the Secretary of State. Idaho general partners have similar exposure to personal and tax liability as sole proprietorships.
Idaho Limited Liability Partnership (LLP)
Usually formed by doctors, lawyers, accountants, and CPA firms. An LLP gives individual partners protection from personal liability for the actions of other partners that could negatively impact all partners.
Idaho Limited Partnership (LP)
A Sandpoint Idaho LP consists of two or more individuals who jointly own an Idaho business in an unequal capacity (general partners or limited partners). Limited partners are usually only financially liable for debts equal to their investment in the LP and have limited control over the partnership’s management.
Idaho C-Corporation
This is the most complex entity type to establish but could be beneficial for the right Idaho business. Idaho corporations are a separate legal entity from its shareholders/owner and may be privately or publicly held. Corporate profits may be taxed twice if dividends are issued, once as corporate income and once as shareholder dividends.
Idaho S Corporation (S Corp)
Sandpoint Idaho S Corporations offers the protection of a corporation and the flexibility of a partnership. Profits and losses pass through to the owners. Idaho S Corps must file “Articles of Incorporation,” adopt bylaws and hold regular documented meetings. Idaho S Corps are prohibited from having more than 100 shareholders, being owned by another corporation, partnership, or a non-U.S. resident.
Idaho Non-Profit Corporation (Non-Profits)
Idaho non-profits are formed to provide a community service. Funding comes from donations or grants received from corporations, foundations, individuals, and government agencies. Idaho non-profits must first apply for and maintain tax-exempt status from the Internal Revenue Service before registering with the state. After obtaining IRS approval, the non-profit registers in Idaho. To reserve a name while awaiting IRS approval, “Application for Reservation of Legal Entity Name” can be filed. The “Articles of Incorporation” must contain a clause stating the specific purpose of the business in Sandpoint and a provision for the disposal of assets should the non-profit cease to exist.
Idaho Professional Service Corporation in Sandpoint
Registered by individuals engaged in a limited number of professions, such as medical, dental, or legal.
Idaho Unincorporated Non-Profit Association
Commonly used by homeowner’s associations, sports leagues, and other organizations that offer a benefit to a large group of individuals and whose officers or agents regularly change.
Idaho Limited Liability Company (LLC)
A Sandpoint LLC provides liability protection like a corporation with the federal tax benefits of a partnership or sole proprietorship. All LLCs must file a “Certificate of Organization” with the Secretary of State and operate under the provisions of its written “Operating Agreement.” Taxes are reported based on the way the LLC has chosen to be taxed. This choice may include a corporation, partnership, or sole proprietorship.
File Formation Documents
