It doesn’t matter where you live in the world, if you’re a self-employed professional, there are quite a few expenses that you can claim. The thing is, even though there are government websites that explain what you can write off, people end up missing out on tax deductions because they didn’t know they are entitled to claim them.
It’s easy to miss out on these things, I certainly could have done a bit better with my accounting when I started freelancing, but the last thing I was thinking about was tracking my expenses while I was growing my business. To help ensure you don’t make the same mistakes I made, here are some common expenses you can claim.
1. Your home office
For some reason, I thought you could only claim your home office as an expense if you owned the property or if you had a registered business. Since at the time I was renting and earning some income on the side, I didn’t even bother looking into it. A few years later when I hired an accountant, he told me I had been missing out.
Generally speaking, you’re allowed to claim the rent or mortgage that’s associated with your office space. In other words, if your office takes up 10% of your home, you could claim 10% of your rent. The same would apply to your heat, home insurance, and electricity.
2. Travel expenses
Although I knew I could claim meals and entertainment, it never occurred to me that I could also claim public transportation costs to get to these meetings. I’m not sure why I thought that since I knew I could claim gas when I was driving, but I ended up missing out on hundreds of dollars in eligible expenses. You can even claim any travel expenses such as the cost of your hotels, transportation (flights, trains, etc.), and meals when you’re travelling for the purpose of business.
3. Telephone and internet
Just about everyone has a mobile phone and internet plan, so it seemed odd to me that it was an eligible expense as someone that’s self-employed. How wrong I was. Since I use my cell phone and my internet 20% of the time for business purposes, I’m allowed to claim 20% of my bills as a business expense. It’s similar to my home office expenses, but I just never thought to claim it since I’ve been paying for my phone since I was a teenager.
When it comes to advertising expenses, most people think about placing an ad in the newspaper, on the radio, or on TV. However, digital ads that run online only have been typical for decades and qualify as an eligible business expense. Fortunately, I figured out this pretty early and always claimed the ads I ran on Facebook and Twitter as an expense.
Technically speaking, what you pay subcontractors isn’t tax deductible, but the amount you pay them offsets your income. Since I didn’t know this, I was always hesitant to outsource some work which prevented me from scaling up my business. Self-employed individuals tend to want to do everything themselves, but sometimes you need to hire people to finish or get bigger jobs.
Understanding what you can deduct as a self-employed individual will help you reduce the amount of taxes you have to pay. Be sure to keep all of your receipts or use Sensibill to ensure you have all your paperwork in order.
Header image created using Creative Common assets from Pablo Stanley.