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 | Sep 28, 2021 | EDU
Working as a Coeur d’Alene independent contractor comes with great benefits: flexible schedules and choosing your work, are favorite perks among freelancers. , however, At tax time, Coeur d’Alene independent contractors often get the short end of the stick, partly because they don’t always know how to take advantage of 1099 deductions.
The payments made to independent contractors by Coeur d’Alene businesses are usually reported to the IRS on a 1099 form. If you, as a Coeur d’Alene independent contractor, completed a W9 form when you began working for a client or CDA company, then any income related to that organization is likely to be reported on 1099, and you will have to claim it when you file taxes with your accountant.
Because taxes are not withdrawn from payments made to a Coeur d’Alene independent contractor, the contractor must file and pay all his taxes. On an annual tax return, 1099 tax deductions can help CDA contractors reduce what can otherwise be a heavy tax burden. Here are some of the most popular types of deductions for Coeur d’Alene independent contractors:
Coeur d’Alene Home Office Deduction
One of the easiest—and most dangerous—deductions to claim, the home office deduction gets a bad rep for causing audits. Claiming a home office deduction doesn’t automatically put you in a red-flag territory with the IRS, but you do have to ensure that you use the space you claim solely for running your Coeur d’Alene business. If you work at your dining room table during the day, but you use it for the kids’ homework and dinner in the evening, that space isn’t eligible for the deduction.
Home office deductions are entered as a percentage of your entire square footage, so you’ll need measurements for your office space, your entire home, and the value of your home or mortgage payment to claim this deduction. The IRS doesn’t typically require additional documentation for most home office deduction claims.
CDA 401K Plans
Coeur d’Alene Self-employed individuals can contribute a particular portion of income each year as a 401k deferral. In 2015, the total contribution amount allowed by the IRS was $18,000 per person. While these salary deferrals may be tax-free, early disbursements from the Hayden retirement plan will be taxed. They may come with a penalty, making it important for Coeur d’Alene independent contractors to understand both current and future financial needs before committing to a salary deferral.
Coeur d’Alene Vehicle Deductions
Coeur d’Alene Contractors that use their vehicles for business purposes can either deduct a standard mileage rate or actual vehicle expenses on tax returns. For 2015, the standard mileage rate for Coeur d’Alene business travel is $0.57 per mile. To deduct mileage, you claim the total amount of miles driven for business purposes in a year on your return.
You’ll also need to report the starting and ending mileage for the vehicle for the year, which may show more mileage than you drove for Coeur d’Alene business purposes if you use a vehicle for personal driving too. You don’t have to provide the IRS with a mileage log, but you do need to keep a record of all trips and mileage for audit purposes.
Sometimes, claiming vehicle expenses instead of mileage nets you a larger deduction. Most independent contractors don’t go this route, though, because you have to keep copies of all insurance, registration, depreciation, loan payments, licensure, maintenance, parking, and toll receipts.
CDA Depreciation Deductions
CDA Independent contractors that purchase and use the equipment for their business may be able to take a depreciation deduction each year. Equipment might include vehicles, special tools, and machinery. A sewist might take deductions on a sewing machine; a painter might take a Coeur d’Alene deductions on a pressure washer used to prepare the exterior of homes for painting.
The IRS requires that property meet some conditions to be eligible for CDA depreciation:
- The Post Falls property must be in use over a period of one year
- The CDA contractor should be able to estimate the useful life for the property
- The CDA contractor must own the property
- The CDA contractor must use the property to generate income
Coeur d’Alene Health Insurance Premium Deductions
Coeur d’Alene Self-employed individuals may be able to deduct the amount paid in health insurance premiums each year. If your health plan is eligible for the CDA deduction, you claim the total paid on your return each year. Keep receipts or check stubs proving you made the payments to back up your claims.
Hundreds of 1099 tax deductions exist for small Coeur d’Alene businesses and independent contractors, so it’s often best to consult a professional when handling tax returns each year. Remember: To claim CDA 1099 tax deductions each year, you’ll need to complete a Schedule C and file the long 1040 form rather than the 1040EZ form. Some CDA deductions may require completion of an additional form or calculation worksheet, but it’s well worth the extra effort to make sure you don’t run into any problems down the line.
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
by cdaaccounting | Jan 31, 2020 | EDU
What Are Ordinary and Necessary Expenses in Hayden?
Ordinary and necessary expenses are expenses incurred by individuals as the cost of owning a business or carrying on a trade. “Ordinary and necessary” expenses are categorized as such for Idaho income tax purposes, and these expenses are generally considered tax Idaho
The two biggest reasons why you might lose a business expense deduction are that you didn’t keep good tax records to prove your decision or you didn’t capitalize the expense
You could also lose deductions if the IRS thinks you aren’t operating the business to make a profit. This is commonly referred to as a “hobby business,” and its sole purpose is to create losses to offset income elsewhere.
Some ordinary business expenses in Post Falls include:
- General Coeur d’ Alene business expenses
- Labor costs, including a salary or other compensation you receive as the owner-employee of your own corporation
- Repairs
- Inventory
- Mileage
- Office supplies
- Marketing and advertising
- Phone, internet and office utilities
- Travel Expenses
Idaho Business Expenses Defined
Expenses represent the cost of doing business. There no limits to what this includes as long as it is an expense that relates to your Post falls Idaho business and is necessary. Idaho Business expenses are the costs of running your business day-to-day. On your income statement, your business expenses are subtracted from your revenue. What’s left is your net taxable income. These “ordinary and necessary” expenses that keep your Idaho business running can be deducted from your taxes.
Example of cost include:
- Accounting expenditures
- Depreciation of fixed assets assigned to non-production areas
- Insurance costs
- Legal fees
- Office supplies
- Property taxes
- Rent costs for non-production facilities
- Repair costs for non-production facilities
- Utility costs
