As you start your birth business, you may have heard that you are able to take a deduction of your business expenses on your annual tax return. Be sure to keep good records of your spending, and develop a system to store your receipts and financial statements to make preparation for tax season easier for you.
What Kinds of Expenses Are Deductible?
Here is a list of deductible expenses today for your doula or birth business. It's by no means comprehensive, but maybe there are some items that you haven't thought of:
- Books – required reading for certification, your doula library, professional development
- Educational aids for use during prenatal/postpartum
- Clothing and shoes purchased for use at births
- Business cards and stationery
- Advertising and Marketing fees – print advertising, Google and social media ads, tools to manage and post to social media accounts, and email marketing services
- Cell phone expenses
- Business phone line expenses
- Office supplies
- Post office box
- Copying services
- Meals and/or beverages during client interviews at coffee shops or restaurants
- Meals with professional colleagues for networking purposes
- Fees to networking events
- Food and supplies that you take to a birth
- Certifying doula organization and other professional membership dues
- Professional publication subscriptions
- Percentage of internet and utility fees used for a home office deduction (I highly recommend tax advice on deducting use of your home and utilities for business.)
- Website fees – hosting, domain, online subscriptions for services tied to your website
- Fees paid to professionals for outsourced services (logo and website design, accounting, legal advice, business coaching, etc)
- Business mileage
- Interest and annual fees for business credit cards
- Bank fees for business bank account
- Software for use in business
- Parking and toll fees
- Conferences and travel expenses – conference fees, meals, flights, car rentals, hotel accommodations, tips, taxi fare
- Professional development training workshops – for your profession as well as courses that help you build your business
- Liability insurance
For more information from the tax man himself, visit the website for the Internal Revenue Service. They also offer a variety of opportunities to learn more about small business taxes, by DVD, streaming online video, phone/webinars and in-person classes. So, there's really no excuse to not be more in the know about taxes for your small business. To find out more about specific business expenses, do a search on the IRS site for Publication 535 – Business Expenses.
Tracking Your Expenses
On another note, how are you tracking your expenses? Here are some tips:
- Save all your receipts. Organize them in a way that makes sense to you. Some people have an envelope for each month of the year and store receipts by month. Others may have something as simple as a basket, folder or manila envelope to save all of them for the year.
- Keep up with recording your expenses. Some business owners use a program like Quickbooks or Quicken. Others track expenses by category in a spreadsheet program like Excel. Yet others manually record their expenses in a notebook.
- For expenses such as meals and coffee, write on your receipt who you went out with and the purpose of your meeting. For example, if you had a cup of coffee at Starbucks with a potential client for an interview, write "Name of Person, Doula Interview".
- There are all kinds of rules for deducting the use of your home for business. It's a good idea to get professional advice about whether you should deduct these types of expenses, especially if you choose to do your own taxes. Sometimes these types of deductions can raise flags with the IRS. Your taxes may be affected if you have been deducting home use expenses and buy and sell your home within a certain time frame.
- If you are seriously building your business, you may want to consider hiring an accountant to do your taxes or get advice. They can often point out many deductions, business and otherwise, that lower your tax liability and be well worth the fees you pay to them. To find a good accountant, consult with other small business owners. If you have small business networking groups (doula or non-doula groups alike) in your area, consider joining one or two to get business advice.
Were there any that I missed? How do you track your expenses? If you need to set up your bookkeeping system so you can keep track of your expenses throughout the year, here's a complimentary download for you to help you get organized:
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