If you are preparing to file a tax return for your new business or startup side-gig, this checklist might help get plans in order to pay the lowest taxes without making mistakes that can cause problems later.
1. Auto and mileage expenses
- Record your odometer reading at the beginning and end of each year.
- Keep a mileage log that separates trips into business, personal, and commuting.
- Track date, destination, purpose, and miles for each business trip or each business‑use day.
- Do not stress about recording every trip; focus on building a credible, representative record of your business driving patterns.
- A phone app or simple spreadsheet is fine; keeping solid records for a representative few months each year will usually suffice if your pattern is consistent.
- When you are just starting out in your business recordkeeping, using the standard mileage rate will usually be best.
- Keep receipts for parking, tolls, and other vehicle costs that may be deductible in addition to or instead of mileage, depending on which method you use.
2. Marketing and promotional expenses
- Review what you have spent in past years on donations, events, memberships, media, printing, meals, etc., and consider whether any of it can be repositioned to promote your business.
- Document the business purpose of each marketing‑type payment (who, what, when, where, and why it helps your business).
- Consider converting some purely personal giving into marketing‑oriented sponsorships; for example, instead of a private weekly church donation, sponsor a church‑run community event and have your business name shown on signage or programs.
3. Home office and household expenses
- Decide whether you will use the standard (simplified) home office deduction or the actual‑expense method.
- Remember: you cannot “double dip” by deducting the same home expenses both as a home‑office deduction and again as separate business expenses.
- List separately any business‑related home or subscription costs that are not already captured in your home office deduction (for example, a second business‑only internet line, separate business insurance, or a dedicated business storage unit).
- Keep records such as lease or mortgage statements, property tax bills, utility bills, and service invoices in case you use the actual‑expense method in a future year.
4. Education and professional development
- Identify courses, workshops, conferences, and subscriptions that maintain or improve skills in your current trade or business.
- Track registration fees, travel specifically for the event, required materials, and related subscriptions (journals, professional sites, learning platforms).
- Do not treat costs for a degree or program that qualifies you for a new trade or business as current business expenses; those costs are generally not deductible as business education.
- You may deduct skill‑enhancing professional development, continuing education, and similar programs that directly relate to and improve your existing business activities. In today’s fast‑moving business culture, all of us must be lifelong learners.
5. Avoid gimmicks
- Be cautious about strategies pushed by social media influencers; the best tax strategies are rarely broadcast to the world by online marketers.
- Remember that sound business decisions come first; tax consequences are important, but they should not be the sole driver of your choices.