How to Stay Organized for Tax Season
Operating your own home-based business at a KHM Travel Agent provides a wide range of benefits: Flexibility, independence, unlimited income potential … and even some potential tax advantages. But don’t wait until income tax season to start thinking about your taxes! The key to maximizing your tax benefits is staying organized as you operate your business throughout the entire year.
Most of the expenses to operate your home-based travel business can be deducted from your income, which will reduce your tax liability. Potential deductions may include office supplies, advertising costs, travel and vehicle expenses, having lunch or coffee with a client, business equipment purchases like a laptop or printer, and more. Even your cell phone bill and internet access charges may qualify! It is highly recommended that you consult a professional tax accountant, who can help you understand exactly which expenses can be legally deducted.
Once you know which expenses you will need to report, develop a system to track and document these expenditures. As you make each purchase, take a moment to make a note on the back of the receipt. Write down a few details about why the purchase was relevant to your business. For example, if you take a client to lunch, make a note of the client’s name and what was discussed.
Periodically—perhaps weekly or monthly—enter the information from these receipts into a tracking system. You can use accounting software, a simple spreadsheet, or an expense-tracking app on your smartphone. Whatever you choose, you will want to record several details about each transaction: The date, where the purchase was made, the item purchased, and which expense category it will fall under on your tax return. Find a central place to save hard copies of these receipts, or scan them and store them electronically.
One expense category that deserves particular attention is the use of your personal vehicle for business reasons. Accurate record-keeping and mileage documentation are essential! You will need to keep a written or electronic record of the date, the distance driven, and the specific reason for the trip. A copy of your calendar or appointment book will also help to document your mileage claims.
Keeping track of your expenses and mileage throughout the year will ensure that you don’t miss a single deduction. And instead of being buried in a pile of paperwork at tax time, you will be able to breathe easy and reap the rewards of your home-based travel business!
Not a KHM Travel Agent yet? Visit www.KHMTravel.com to learn more about the training and support available to start your career as a home-based travel agent.