Prepare for year-end taxes at the
beginning of the year
Writing off
expenses is incredibly helpful way to for a consultant or other self-employed
security business entity to decrease the tax burden. As traditionally ethically
minded professionals, we understand that we must pay what we owe. Understanding
how to claim deductions or what to claim is a little trickier. However, it’s an
important and sometimes time consuming part of doing business.
In all cases,
consult the IRS and a tax accountant as often as necessary. I've found both
resources very helpful and patient in leading me through what I thought were
difficult questions. The challenge of collecting sales tax and reporting income
tax is difficult at first, but it is part of doing business, and is a must for
maintaining that business. Failure to do so could result in fines or worse.
Doing the right thing will help you better sleep at night, and increase your
business savvy.
What expenses can
be “written off”
There are myriad
expenses that self-employed professionals can right off. However, I would issue
a word of caution: speak with the IRS, state and local sales tax
representatives, and tax accountants. The laws are not always clear, so any
research you do can only help to solidify your responsibilities while also
dispelling any rumors you may be hearing concerning taxes.
I decided to
increase my knowledge of what expenses I can write off after going to a new
business orientation sponsored by our state and local tax office. The
orientation was very helpful as it allowed me to ask specific questions concerning
sales tax, who I should tax and how to do so. Though I initially engaged with
fear and trepidation, I left with only some frustration about having to pay
privilege business tax, but a whole lot of confidence in how to manage sales.
This piqued my curiosity to discover what could actually be a write off expense
to lower my tax burden. Since then, I've filed my sales taxes on time and with
little difficulty and have learned what I can do to reduce my tax burden.
So, what can security
professionals write-off?
Self-employed
professionals can write of anything that justifiably supports the profit making
business. Red Bike Publishing, my publishing company has many
moving parts, which I have to maintain. Though I've written Get Rich in A Niche to teach
publishing and marketing books for little or no expenses, there are costs that
lead authors to book products that should be tracked and added as expenses
during tax filing. These include research, business development, doing
business, supplies, and equipment. The same write-offs may apply to those of
you who are not self-employed, but work as full time company employees. Paying
out of pocket to support career enhancement opportunities, training, business
development, supporting charities or business development often qualifies as a
tax deduction.
Certification
Certification is
part of what may make your security business attractive. More and more security
professionals are becoming certified. Certification requires preparation and
final testing. The books, study resources, test fees, professional organization
fees and other costs add up. However, these costs can be tax deductible in most
circumstances.
Research
I currently have a
book idea that is maturing. I've been working on it for about a year and soon
will have enough experience and know how to present this idea as a book. The
topic is exercise and how to prepare to be competitive in popular race events
called mud runs. In this book I demonstrate how I was able to shave off six
minutes from my performance over five kilometers of mud and obstacles. I also
update http://Runinmud.blogspot.com, a blog that supports the upcoming
book and is packed full of exercises. Hopefully this book and blog will help
people in average physical condition improve their performance and increase
their personal record. This type of book requires preparation, going to events
and other research, and that research requires resources. I am keeping track of
my fuel, room and other expenses required to make it to the events.
Similarly as a
self-employed security professional, you could be involved in career building
research, such as NISPOM or ITAR training. You might attend conferences to improve your skills and keep current
with the latest industry information. This is a necessary expense to remain
cutting edge and relevant as you provide products and services to your
customers. They demand the best and you want to meet that demand. You can write off the cost of research.
Business
Development Costs
In effort to
increase sales, you might have to advertise, join subscription services that
manage your communication, set up a booth at a professional conference, join a
professional organization or network to get the word out. These expenses do
help generate revenue, but can be deducted as they also chew into your profit.
Entertaining clients such as potential customers can be written off as well.
You should document these events with dates and receipts and be prepared to
show a relationship to your business. You might also account for the cost of
attending conferences, giving out pamphlets, capability demonstrations and etc.
Businesses need a point of sale and this includes website development and
hosting. Also, shopping carts are needed for taking payments online and these also
have associated fees. Business cards, marketing efforts, client dinners and
other business developing and marketing costs should also be captured.
Cost of Doing
Business
Website
maintenance, email, newsletter services, advertisement, supplies, printing
costs are just a few costs authors and book sellers may face.
Supplies
Paper, pens,
pencils, markers and other expendables associate with your writing should be
annotated. These expenses should be tracked and documented for tax returns.
Most professionals write and store files on the computer. A related expense is
printer ink, so don't forget to add it. Fuel is also an expense for business
related errands. Be sure to have a log that lists the distance driven and a
date at the minimum. The IRS will give a cost per mile credit of 56.5 cents per
mile.
Equipment
Computers, printers,
and publishing services are some relevant costs with getting a book to market.
These are usually sunken costs that go into preparing a book for market. These
expenses can be claimed for tax purposes both as an expense and as
depreciation. Some printers have built in capability to fax, copy and scan. Be
sure to keep receipts for any equipment that you use for book publishing
purposes. Post office box fees should be itemized as well.
It's hard enough to make a living
writing for a living or running any other type of business. Expenses add up
quickly and taxes should be filed on time. The good news is that much of your
hard spent expenses can be itemized for tax deduction. This article discusses
but a few expenses you might write off. Be sure to check local laws as well as
those that allow for deductions. It's worth the effort.
Jeffrey W. Bennett, ISP is the owner of Red Bike Publishing Red Bike Publishing . He regularly consults, presents security training, and recommends export compliance and intellectual property protection countermeasures. He is an accomplished writer of non-fiction books, novels and periodicals. Jeff is an expert in security and has written many security books including: "Insider's Guide to Security Clearances" and "DoD Security Clearances and Contracts Guidebook", "ISP Certification-The Industrial Security Professional Exam Manual", and NISPOM/FSO Training".
