5 Tax Deductions For Ecommerce Businesses

December 4, 2020

If you are a new ecommerce business owner, you might be wondering what tax breaks are available. Learn about deductions you do not want to miss, and remember that your Los Angeles accounting service is here to help with all of your tax preparation needs. 

Fulfillment Costs

The packing materials, tape, boxes, labels, and ink you use to send products to your customers are tax write-offs. They along with all other business-related supplies such as laptops, printers, pens and pencils, copiers, fax machines, paper clips, software, postage meters, and office furniture are all deductible to reduce income tax costs. 

Subcontractors

Perhaps you hired freelance writers, graphic designers, web developers, photographers, and bookkeepers during the previous tax year. Anyone who did work for you but is not on your payroll is a tax deduction, which can save serious money if you worked with a long list of independent contractors. 

Home Office

If you run your ecommerce operation out of your home, a portion of the building is tax deductible. The IRS provides calculations that determine square footage percentages and subsequently the amount of money you can write off. A dedicated home office space makes the calculation process easier. If you rent a coworking space, that is also deductible. 

Internet, Phone, & VoIP Costs

The internet service you use to operate your business is a tax write-off, as is all related phone and VoIP costs. As a general rule, it is best to have separate internet and phone services so they do not get confused with personal uses. Writing off any personal expenses as business costs is one of the ways to get audited. 

Marketing & Product Purchase CostsAll of the money you put into marketing your business during the tax year is a deduction. Your Los Angeles accountants emphasize calculating all digital as well as print marketing expenses to save extra money. Any products you purchased from vendors for business purposes are deductible as well, so remember to make copies of invoices for easier tax prep. 

Work with the Encino tax consultants at Wallace & Associates to streamline the tax preparation process.