Why settle for standard business deductions, when there are more opportunities to lower your tax bill, some of them seemingly tailor-made for eCommerce businesses? Before you prepare your return this year, check out this list of possible deductions.
1. Home office.
In order to qualify for this one, you must use at least one room in your home exclusively for business; working on your laptop in the living room doesn’t count. If you meet that requirement, you can deduct a percentage of nearly every house-related expense you can think of, including rent/mortgage, utilities, repairs/maintenance, and insurance premiums. (The percentage deducted is based on the percentage of the house’s total square footage that your office occupies.)
2. Office supplies, equipment, and software.
Furniture, computer, printer, camera gear (if used for photographing your merchandise), postage meter, inventory management software, paper clips — if it’s used in your office it’s usually 100% deductible.
You can deduct a portion of your phone and internet charges based on the percentage of time that you use them for business.
4. Transportation and travel.
Any car used for business purposes is eligible for deductions; even if it’s also your personal vehicle you can still deduct a percentage. There are 2 deduction options: a flat amount per mile or a total of actual costs such as gas and parking fees.
Other travel-related deductions include airfare, cab fare, tips, meals, and conference tickets.
5. Fulfillment costs.
You can deduct the costs of packaging materials and shipping to customers.
Whenever you use independent web developers, graphic designers, photographers, content writers, bookkeepers, temporary office staff — anyone not on your payroll — their fees are 100% deductible.
7. Merchant processing fees.
You probably use one or more credit card processors such as PayPal, Stripe, or Square. But did you know you can deduct their fees?