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Tax Deductions You May Miss as a Freelancer or Entrepreneur

If you’re a freelancer or small business owner, and you’re only using the 1040 form to do your taxes, you’re doing it all wrong.

You’re missing out on some very valuable deductions and expenses you could take, and if you’re not using a professional, you’re leaving money on the table. If you find you owe taxes each year, you’re definitely not doing it right.

My advice: find a tax professional you can trust and talk to them about using a Schedule C with your 1040.

The general rule of thumb is, if an activity costs you money to do the thing you make money at, you can deduct it. For example, I make a few bucks as a travel writer for the state of Indiana. This means I can deduct any expenses related to my travel-writing trips, such as mileage and hotels. A writer friend makes money from, and is taxed for, his book sales. This means he can take deductions for any readings and book signings he drives to, especially if they’re overnighters.

You’re going to be taxed on your income already, so you might as well reduce the amount the government takes by declaring each and every expense related to it.

Here are four important deductions you may be missing as a freelancer, independent professional, entrepreneur, or small business owner.

1. Mileage Related to Work

If you drive to client meetings, conferences, or other work-related events, you can deduct the mileage. However, this doesn’t include mileage driving to and from your regular work; you can only count special trips. Keep track of all your meetings in a calendar, and then list all the meetings and mileage in a spreadsheet. Turn all that in to your accountant and they can take care of the rest.

Erik, how exactly do you think I do this? —Cary, your accountant

Cary, I don’t know. Voodoo or physics or something? I’m a writer, I don’t pay attention to this stuff. This is why I depend on you. —Erik

I use Google Calendar and Google Drive, and I use Zapier to export all my appointments to a Google Drive spreadsheet. From there, I can clean it up, delete all personal/non-paying appointments, and then pop in the mileage for each appointment. This saves me roughly three hours from trying to do it all by hand.

Note: You can also take the mileage out of the company as non-taxable expenses. But once you do that, you can’t take it as a deduction on your personal return because it will be deducted on the business return. If you drive 400 miles to and from a conference, that’s roughly $200 in expenses. You can take the $200 in cash, or you can deduct it on your taxes. Ask your accountant which would work better in your favor. And if you pay for your gas with the company card, you can’t deduct your mileage either.

2. Cable and Mobile Phone

If you work from home, and you rely on the Internet to do your work (and who doesn’t?), you can deduct your cable/Internet costs. The same is true for your mobile phone. If you have a mobile number for clients to call, that’s another business-related expense, which means you can declare it. And if you keep a work-only landline, that’s also tax deductible.

(However, you can also keep your phone costs down if you use Skype as your primary means of communication. This also lets you keep a personal-only phone, and not have to worry about that second phone, or trying to total up the number of work minutes versus personal minutes.)

Remember, you’re not allowed to deduct costs if you’re reimbursed for them in any way. For example, if you work as a remote employee, and your employer pays your cable bill, you can’t turn around and declare it yourself.

3. Office Space

I found a low-cost office to rent, and it’s something I recommend, if it’s available where you live. In Indianapolis, we also have the Speakeasy, which is a shared co-working space. Other cities like Fort Wayne and Evansville also have co-working spaces. If you pay a membership fee or rent to be able to use that facility, that’s considered a deductible business expense. (Working every day from a coffee shop is not considered a business expense, however.)

If you work from home, it is possible to declare your home workspace on your taxes, but it can be rather tricky. There are formulas, and if you use part of a room to work, you need to measure the workspace, and there’s a formula to apply and more of that voodoo physics stuff Cary knows about.

It’s a bit easier if you dedicate one room, like a basement office, to your workspace. But if it’s the desk in a corner of the family room, that’s a bit more problematic. Talk to your accountant, but be prepared to justify it to the IRS, because this often raises flags with them.

4. Food and Entertainment

This is a tricky one. It’s not like the old days when you worked for a company, and you could expense big fancy meals with important clients. Deducting food costs on your taxes can be a problem if you’re not careful.

For one thing, says Cary, you shouldn’t buy food for “working lunches” on the company account. (My wife says the same thing, so this may not be a tax rule so much as a Toni-and-Cary-are-conspiring-against-me ploy.)

One reason is that you can’t deduct the whole meal, only your half. You can’t just take people out to lunch and deduct the entire meal on your taxes. It can also raise red flags at the IRS if they see a lot of entertainment expense deductions on your taxes. So keep this kind of spending to a minimum, lest you feel the cold, probing fingers of an audit.

The problem with doing your taxes yourself is that you may not know the latest rules about deductions and expenses. Basically, if you find that you owe money when you file your taxes, you need to speak with a professional. While you’ll have to pay the accountant, if you’re making a full-time living as a freelancer or entrepreneur, you could find your tax return is much bigger than what you could get doing it on your own.

Special thanks to my own accountant, Cary Hudson of Ashworth Accounting Services for helping with this blog post (and my business!). Cary is a CPA who lives and works in Carmel, IN. He specializes in working with small businesses for their tax and bookkeeping needs, and he’s saved me from hours of headaches for the last six years.

Photo credit: Alan Cleaver (Flickr, Creative Commons)

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Louisville Digital Association’s 6th Annual Digital Media Summit Schedule

I’m very proud to be one of the speakers at the 6th annual Digital Media Summit in Louisville on October 16. it’s a single day event held in Frazier Hall at Bellarmine University, and it’s sponsored by the fine fols at Brown-Forman and Bellarmine University’s School of Communication. You can get tickets here.

With the tagline, Improve your business and marketing through technology, several of us will be talking about how to do social media marketing better, including my two co-authors, Jason Falls and Kyle Lacy.

Tentative Agenda for Louisville Digital Media Summit

8 – 8:30 a.m. Networking, Breakfast, Setup

8:30 a.m. Introductions Jason Falls

8:40 a.m. Opening Keynote A Decade of Chasing What’s Next
Rick Murray, former president of Edelman Digital

9:30 a.m. 10 Professional Writing Secrets
Erik Deckers, Pro Blog Service

10:10 a.m. Break

10:20 a.m. The Mobile Commerce Revolution
Tim Hayden & Tom Webster, Edison Research

11:10 a.m. Paid Advertising In Facebook, How PPC Ninja’s Really Work Founder
Jason Brown, SERPWoo

12:00 p.m. Lunch

1:00 p.m. Bellarmine School of Communication
Dr. Lara Needham, Bellarmine University

1:20 p.m. 5 Technology Trends Disrupting Behavior
Kyle Lacy, Exact Target Marketing Cloud

2:10 p.m. Communicating at the right time, right channel and right situation in a crisis
Dr. Karen Freberg, University of Louisville

3:00 p.m. Break

3:10 p.m. Your Brand, Your Brain
Julia Roy, CoFounder, Workhacks

4:00 p.m. What Didn’t We Learn? Speaker Panel
Jason Falls, Moderator

4:30 p.m. Closing

You can register for the event here. By the way, if you’re interested in going, I’ve got a special discount code you can use. Just email me — erik at problogservice dot com — and I’ll give it to you.

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Ain’t No Party Like a PERQ Launch Party

If you’re involved in the Indianapolis tech startup scene, you already know about Verge, the startup community made up of entrepreneurs, programmers, and investors. We come together once a month, hear a few pitches from some exciting new startups, drink beer, eat pizza, and network with new people (and old friends).

Tonight was an especially huge night for Verge, because we were being hosted by PERQ, the new company formerly known as CIK Enterprises. They were hosting us because they were launching their new corporate identity and look. This was a mega launch party, the size of which I have not seen in Indianapolis in my nearly six years of doing social media and tech stuff.

PERQ was created when CIK consolidated several different companies they owned, and created this new enterprise. The previous three companies served clients in the newspaper, automotive, and retail industries. Because of this consolidation, they’re combining all forces to create a new marketing technology solution — FATWIN — to offer “business-branded games, contests, and sweepstakes with direct mail, email and advertising campaigns to attract in-store and online traffic.”

I first became acquainted with CIK and one of their companies, Tri-Auto Enterprises, when I worked at a local direct mail company years ago. In fact, I bumped into my old boss on the shuttle ride over from the parking lot, who was there for the PERQ launch. He hadn’t heard of Verge, so I was able to fill him in on what it was all about.

See? At first glance, you probably thought it was a real bookshelf too.
Not only were they launching a new company with new branding, they had a new look to their office. Everyone who attended got the grand tour of the office, including the conference rooms (complete with Legos for brainstorming, or at least looking creative), the open concept desks, the giant warehouse space turned meeting and collaboration space, the gym and weight room, and even the video broadcast booth. The whole building is so big, they even have Razor scooters for people to ride, like some sort of inter-office scooter share program. TKO Graphics created several of the wall decorations, including a gigantic bookshelf wall that I kept mistaking for a real bookshelf when I saw it from the corner of my eye.

All in all, it’s a gorgeous new space, and I kept wishing I worked there just because it looked so awesome. I might even be able to, because according to their press release, the company plans on hiring 30 new employees to deal with all their new growth and to help promote their new FATWIN technology.

FATWIN is an interesting new product that lets people enter promotional contests held by different companies using the service. From what I can tell, I can either join a company’s FATWIN promotion, or I can join FATWIN and join different companies’ promotions from there. My data is used only by the companies whose promotions I join, and they don’t sell it to third parties. From a data privacy standpoint, I appreciate this approach, because I can give my data only to the companies of my choosing, and not have to worry that some fly-by-night company is going to start spamming me two weeks later.

According to the FATWIN website:

FATWIN is a resource for people who love to win. It’s for people who love to play games, love to enter promotions, and hate to sign up for free stuff over and over again. Our goal is to be as transparent as possible — and for you to have a great experience while winning great prizes and discounts from your favorite brands.

For more information on PERQ, you can visit the website at . You can also follow them on Twitter at @perqmarketing.

Photo credit: PERQ

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6 Benefits of Evernote for Bloggers (GUEST POST)

Whether you blog about marketing or cooking, Evernote has a lot to offer. As a suite of software and services focused on “notes,” Evernote gives you a tool to save any information you need, from sentences and photographs to webpages and voice memos. It syncs info across devices, makes organization easy, and saves you time. Have you thought about all the ways this tool can benefit bloggers? You should. Here are six specific ways to use Evernote to improve your blogging efforts:

1. Build Common Templates: If you’re like most bloggers, you write posts that follow specific formats. For food bloggers, that might mean photos with text, followed by a list of ingredients and a list of directions. For business bloggers, that might mean an introduction, followed by main points in an outline. Whatever the case, if you use a common format, why not create a template that you can easily copy from and fill in when you write new posts? This makes your writing more efficient and your processes simpler.

2. Save Post Ideas as Notes: Make it easy to track ideas for blog post topics by saving them in Evernote as notes, with as much information as you can at the time. Whether you save the idea on your phone while you’re on the go, or on your computer while you work, the ideas get saved in one single place. Anywhere you access your Evernote account, you’ll find them. This means when you start writing a new post, you don’t have to waste time trying to drum up new topics or wrack your brain looking for that idea you had earlier: They’re all saved and waiting for you.

3. Write Blog Drafts: Maybe you don’t have time to write a whole blog post, but you’ve got several topic ideas stored in Evernote and a half hour to kill. Start writing a rough draft for one of the topics and keep it saved there. When you are ready to publish a post, most of the work will already be done for you.

4. Save Inspirations: Read an article that you’d like to reference later? Save it to Evernote. Find a blogger who inspires you? Save the link to Evernote. With Evernote, you have an easy way to clip quotes, emails, Tweets, photos, links, articles, and more—all in one streamlined place. If you tag all of these notes with the same tag, like “inspirations,” for example, finding them is as simple as searching that word or phrase.

5. Share Ideas with Co-Bloggers: If you blog with other authors, make it easy to share ideas with each other by doing it through Evernote. The tool lets you share all content publicly or share it particularly with the people you select on social networks or via email.

6. Stay Motivated: There’s a reason so many bloggers abandon their sites over time—without regular encouragement or results of some kind, blogging can get discouraging. Be proactive against these feelings by setting up a note dubbed “Encouragement” or “Comments from fans.” Whenever a reader emails or comments with an encouraging word, save it in your note. Then, when you face those feelings of inadequacy or frustration, remind yourself of what’s been good.

Your Thoughts

Do you already use Evernote? Why or why not? If you’re looking for a way to stay more organized and productive, there’s no better time to try Evernote than now. Download Evernote to your devices at Evernote.com today.

Guest author Shanna Mallon is a writer for Straight North, a Web development company with headquarters in Chicago, providing SEO, Web development and other online marketing services to B2B clients.

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Is the Forbes Top 50 Social Media List Flawed?

If you made the Forbes Top 50 Social Media Influencers list, you’re generally regarded as being pretty hot stuff. The Top 50 have a lot of influence, are extremely knowledgeable, and are connected to tens of thousands of people in their various networks.

If you didn’t make the list, you can tell yourself you were #51, or just try harder next year.

This year’s list was compiled by Haydn Shaughnessy using a “Pull Report” from PeekAnalytics.com.

There are also some basic criteria for involvement – experts must be creating their own content, and it has to be about social media. See more on the criteria here.

On the scoring, Peek Analytics gives people a score called Pull. If an individual has a Pull of 10x, that means that the audience the individual can reach is at least ten times greater than what the average social media user can reach.

Sounds pretty straightforward: if you’re a rockstar, you’ll be on the list.

Except it’s missing several notable names.

Seriously, these guys didn’t make the list? Jason Falls (l), Jay Baer, Chris Baggott (standing)
According to Judith Gotwald on Social Media Today (25 Social Media Influencers Forbes Ignored (And Why)), the Forbes list has snubbed a lot of pretty influential people, including several who were on last year’s list: Jay Baer, Jason Falls, Gini Dietrich, Charlene Li, Brian Solis, C.C. Chapman (Forbes did include his Content Rules co-author, Ann Handley), and even Mitch Joel.

Of course, Forbes does include some of the names you would expect: Mari Smith, Chris Brogan (but not his Trust Agents co-author Julien Smith), Liz Strauss, Jeff Bullas, Scott Stratten, and Dan Schawbel (disclosure: I write for Dan’s Personal Branding blog).

So what’s up? What happened to the names you would normally expect to see? Did Shaughnessy forget them? Did the non-Forbes people drop off on their Pull? Was PeekAnalytics having a bad day?

Admittedly, many names on both lists are names you expect to see year after year on a Top 50 or Top 100 list, but many of these missing names are glaring in their omission.

I’d like to see some better explanations for the list, and who did and didn’t make it, and why/how. I’d love to hear some of that “inside baseball” talk to explain how he went about determining who to measure, and who not to. How did he come up with the names to check? Is Pull based entirely on followers and reach, or is more like Klout, which could give a person with a very small following a high score because they the followers interact frequently? Or did Shaughnessy want to give some new people a shot at being on the Forbes Top 50? That’s admirable if it’s true, but then the list isn’t accurate or reflective.

It’s not that I’m suspicious of Forbes’ list, or will reject it out of hand, like it’s some partisan wing-nut website. It’s just that the exclusion of several noted social media experts is, well, eyebrow-raising, to say the least.

At the very least, Forbes’ list will be seen as problematic, which can be fixed with some basic explanations. At the worst, it’s a flawed list that is seriously lacking in its execution. I can’t wait to see what happens next.

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Mobile Phones Are Dying!

Yesterday’s blog post on LinkedIn by Martin Varsavsky, CEO of Fon, says that mobile phones are killing the laptop, and people will eventually quit using them simply because of the rise of mobile-only apps like Foursquare and Instagram. Also, laptops are $1,000 – $2,000, and smartphones are nearly free, and therefore people would rather buy phones than laptops.

Muh-huh.

Varsavsky’s reasoning reminds me of the old philosophy joke, “All men are mortal. Socrates is a man. Therefore, all men are Socrates.”

So people will no longer buy laptops to write blog posts, create spreadsheets, create websites, design magazine ads and logos? They’ll just whip out their handy-dandy iPhone and everything will be just as powerful and fast as a laptop?

The Technology Adoption Lifecycle shows the number of people who will adopt new technology, like smartphones and tablets
I don’t know what kinds of phones Varsavsky is using, but until I can use mine to tell my transporter chief to beam me aboard, there is absolutely no way a mobile phone is going to replace the laptop.

Besides, haven’t you heard, mobile phones are dying. At least, the technology experts are predicting that tablets like the iPad will outsell mobile phones in 2013.

Clearly — clearly! — this spells the mobile phone’s demise, right? Because with a tablet, I have a bigger screen than a phone. I can play games, watch Netflix without straining my eyes, and they’re faster and more robust, which means they’re better, right?

At least that’s what Varsavsky’s logic means, right? That our ringtones are slowly changing to death rattles?

If we follow his reasoning, the only reason tablets are outselling mobile phones is because the phone eco-system is dying.

And it has absolutely nothing to do with the fact that everyone already owns a mobile phone and that sales plateaued, but tablets are still new enough that people are constantly buying them. Also, Varsavsky is hoping you won’t realize that many people already own laptops, which is why their sales have plateaued, while smartphones are just reaching the Late Majority adoption phase of technology, and people are still buying them.

While the sky may be falling in Varsavsky’s world, the millions of us who use laptops and desktop computers to actually produce the things the mobile phone users consume will continue on our way, doing the actual work on computers big enough and powerful enough to create it.

To say one technology is dying just because another starts to outsell it does not mean the death of that first technology. That’s like saying the 2nd place Indy 500 finisher is a failure. Specious arguments like that — as well as the one about mobile phones replacing laptops — deserve to be laughed at.

Photo credit: Wikipedia, Creative Commons