7 tax strategies for coaching and agency businesses
Some tax strategies for coaching and agency businesses include:
– Claim the home office deduction.
– Claim business deductions for equipment, supplies, and other expenses.
– Claim the deduction for self-employment taxes.
– Consider forming a business entity.
– Take advantage of tax deductions for business-related travel and entertainment.
– Consider making tax-advantaged investments.
– Take advantage of the Section 179 deduction
Let’s discuss them one by one.
1. Claim the home office deduction
Claiming the home office deduction can help coaching and agency businesses by allowing them to deduct expenses related to their trade or business, such as video cameras, lighting equipment, laptops, and subscriptions.
Free 30-Min Strategy Session
By the end of this Strategy Session, you will have a clear understanding of the next steps you can take for your business to take advantage of the tax deductions you are missing out on.
This can reduce their overall tax burden by allowing them to deduct these expenses from their income. It also helps ensure that they are able to claim any applicable deductions related to working from home or running a self-employed business.
2. Claim business deductions for equipment, supplies, and other expenses
- Determine if you are eligible for the home office tax deduction. To qualify, you must be self-employed or a small business owner and meet the two additional criteria of exclusive and regular use of a portion of your house, apartment, or other living space and principal place of business for your trade or business.
- Identify any equipment, supplies, or subscriptions related to work that have become necessary to earn a living in your trade and which can be deducted on your tax return if they are used exclusively for coaching or personal fitness work from home (e.g., video cameras, lighting equipment).
- Keep track of these expenses throughout the year so they can be included on your tax return when filing next year’s taxes
3. Claim the deduction for self-employment taxes
- Determine if you are eligible to deduct self-employment taxes. To qualify, you must be self-employed and filing as either a sole proprietor or a Schedule C taxpayer for tax years 2018 through 2025.
- Gather all of your work-related expenses that are both “ordinary and necessary” to your coaching work, such as supplies and equipment, uniforms, education and certifications required for your job duties, medical exams required for work purposes, meals when away from home overnight on work-related business trips or travel/transportation costs associated with business travel expenses, etc.
- Use TurboTax Self-Employed to search 500+ tax deductions relevant to small businesses or self-employed individuals such as those listed above in step 2; this software will help you maximize all available deductions so you can get every dollar possible back on your return!
4. Consider forming a business entity
Forming a business entity for coaching and agency businesses can provide many benefits, including:
- Reduced tax liability through favorable capital gains tax rates on the sale of assets.
- Increased flexibility in structuring profits, deductions, and other items for tax purposes.
- Ability to take advantage of certain deductions and write-offs that may not be available to sole proprietorships or other types of entities (such as LLCs or S Corporations).
- Reduced complexity in dealing with taxes due to the use of qualified accountants or other experts who are familiar with all applicable rules and regulations related to business entities such as LLCs or S Corporations).
5. Take advantage of tax deductions for business-related travel and entertainment
For coaching and agency businesses, you can take advantage of several types of travel and entertainment tax deductions including:
Meals (but subject to certain limitations on business tax deductions like the one-half rule and only when away from home overnight on work-related business)
Transportation costs related to work (such as airfare, car rental fees, and public transportation passes)
Subscriptions related to work (such as magazine subscriptions for industry research purposes)
6. Consider making tax-advantaged investments
There are a variety of investments that can be made for coaching and agency businesses to take advantage of tax advantages. These include:
- Depreciation: This allows businesses to deduct the cost of certain assets over a period of time.
- Charitable Giving: Donating money or goods to charities can result in significant tax deductions.
- Retirement Savings Plans: Setting aside funds for retirement can result in tax-free growth on contributions and withdrawals when used for qualified retirement purposes.
- 529 Plans: These plans allow parents to save money for their children’s college tuition without having to pay taxes on investment gains or withdrawals used for qualified educational expenses.
7. Take advantage of the Section 179 deduction
The Section 179 deduction allows businesses to deduct the cost of certain qualifying property, such as equipment and software, in the year it is purchased. This can help reduce your taxable income and save you money on taxes.
By taking advantage of this deduction, coach or agency businesses can reduce their taxable income and potentially save money on taxes.
3 more tax strategies that are very important:
8. Seek professional tax advice
Professional tax advice can help coaching and agency businesses in several ways. It can help them make the right business structure decision, keep up to date with quarterly estimated taxes, understand current tax changes and requirements, keep accurate financial records, take advantage of any available tax breaks or write-offs, avoid scams and misinformation, correctly classify workers as employees or contractors, and more.
By taking advantage of professional tax advice, coaching, and agency businesses can save time and energy while also maximizing their potential for long-term growth.
9. Understand the state tax implications
The state tax implications for coaching and agency businesses include:
– Understanding the different business structures available, such as sole proprietorships, LLCs, S corporations, and C corporations.
– Keeping up to date with quarterly estimated taxes to avoid penalties.
– Keeping financial records (and record-keeping systems) up to date.
– Take advantage of any available tax breaks, deductions, and write-offs that may apply to your business structure or income sources.
– Avoiding scams or misinformation related to taxes by sourcing guidance from reputable sources only.
– Classifying workers correctly (employees versus contractors) in order to ensure compliance with applicable laws related to payroll deductions/withholdings etc.
10. Take advantage of tax savings through the Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a federal tax credit available to individuals and businesses. It provides incentives for people with low-to-moderate income levels to work, save, and invest.
The EITC can help coaching and agency businesses by providing them with extra cash to reinvest in their business.
It can also reduce their overall tax burden by allowing them to deduct certain expenses associated with running their business. Additionally, many states have additional tax credits available for businesses that are adding software components or performing other R&D activities.
When you are running a coaching or agency business you need to make the tax strategies that can benefit you.
Various specific content producers can get expert tax and accounting services from Free Cash Flow. It’s a business that values you, your endeavors, and your grit and wants to collaborate with you.
Contact Free Cash Flow for a consultation if you have any inquiries, require assistance, or believe that you might need assistance.