Tax benefits that self-employed people can enjoy
When you decide to be self-employed, your business is likely to incur various expenses. Some of these can be deducted from your taxable profit but this is only possible if they are allowable expenses. However, your expenses need not weigh you down as the plus side is that, as a self-employed individual you also have certain tax benefits that you are entitled to.
Starting your business
Being self-employed obviously involves being open to risks. You need to attract customers and at the same time generate a sizeable income that is capable of covering all your costs. In order to make a profit, you need to minimise your costs and maximise your resources so the best way of doing this is by making use of every tax reduction you are capable of getting.
Here are some tax deductions that you can avail of:
- Home Office Deduction –Any space that you make use of for your business needs can be deducted as a home office expense. To be on the safe side, it is good to have a proper outline of the area of your work space if it needs to be submitted as proof before availing of the reduction.
- Self-Employment Deduction Tax – This is the tax that covers the employed portion of Medicare and Social Security. It has to be paid by every working person. The amount was just 15.30% for people who are self-employed. This income threshold covers combined wages, self-employment as well as compensation.
- Health Insurance Premiums – Self-employed people have the opportunity to deduct their health, dental and certain other insurance premiums. You can also deduct the insurance premiums that were meant to cover your spouse or family members.
- Meal Deduction – A meal is considered an expense that is tax deductible by law. By keeping your receipts, you are entitled to deduct 50% of the actual cost of the meal. Or, if you make use of a standard meal allowance, you can avail a 50% deduction on that.
Hence, being self-employed may be hard at first, but there are benefits to help aid your business. By being aware of these, helping your business grow will no longer be hard.