Sales. There’s no job like it, particularly if you are often on the go, whether it be via airplane, personal vehicle, or a rental vehicle. If you are willing to make the sacrifice of traveling, independent salespeople can earn one of the highest salaries out there in commissions.
But as any highly paid salesman can attest to, with those highly paid commissions come tax time with a big, open palm from the state and federal tax agencies that wave their fingers suggestively at you and gesture, “Give me, and generously too.”
Fortunately, many expenses in sales are deductible. Knowing what tax write-offs a sales rep can use can make a big difference in overall, year-end takehome pay, and that professional salespeople should take every opportunity to write-off various expenses not compensated by your company.
Do you know if you can write off business cards and other printing expenses? Along with having a separate banking account for business purposes only, keeping track of your expenses for business helps you keep track of taxes at the end of the business year.
Another idea is to have, at a minimum, a spreadsheet program on your computer to keep track of every expense that may possibly be deducted.
You may need half a dozen different spreadsheets in order to keep track of everything deductible, but once you’ve initially created the spreadsheets, the hard work is done. After that, it’s a mere matter or disciplining yourself to actually type out the expenses, and you’ll have a monthly hint of how you’re investing your money in your business. And by the way, you needn’t invest in a program to keep track of your expenses. It’s entirely possible on the Internet to find Excel templates for doing the job with ease.
Examples of business expenses that are write-offs for salespeople
Your Business Mileage
According to Andersonadvisors.com, the IRS 2019 mileage rate is the number one tax write-off used by most independent salespeople. There are two actual ways to deduct business mileage on your taxes. The standard rate, which is 58 cents per mile, or the actual cost of driving your vehicle for business.
Using the latter method, you can deduct depreciation, lease payments, licenses, registration, parking or garage rent, the cost of tires, vehicle repairs, fuel, and automobile insurance. So obviously, the latter method will generally give more deductions, however, there are two caveats.
One is that with this method, you must keep a careful log of your business mileage (although there are log books and apps available for your cellphone for doing so). The second is that if you start out using this method, you must continue using that method for the life of the vehicle.
As there are other rules considering mileage, you might certainly consider hiring a tax accountant to do your taxes.
Cell Phone Expenses
Salespeople are communicating with clients practically 90 percent of the day and chance are you pay upwards to $100 per month for a quality cell plan. If your cellphone is used for business, that $1200 is deductible as a business expense.
Chances are you use a computer as well as a fax machine and printers to transmit business proposals. If the equipment is necessary to do business, the equipment is tax deductible.
Letterhead, pens, pencils, business cards and the like are all potential write-offs if they are not being reimbursed by someone else.
If you are working for yourself but have a receptionist/secretary to answer phone calls and do other administrative tasks, his or her wages are tax deductible as the cost of doing business.
Rent, Utilities, and Insurance
If you rent or buy a place to do business, you can deduct rent, mortgage payments, property taxes, licensing fees, and the cost of insurance off of your taxes.
Consult an accountant
There are many other things that may be deductible but don’t come to your attention immediately. Consider finding a competent tax accountant to get the full details on how you can minimize your tax bill at the end of the year.