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Tax Deductions

03 Jun 2020 6:10 PM | Cordina Charvis (Administrator)

One of the perks of owning a virtual paralegal business is tax deductions. However, be careful that you do not become a victim of an IRS audit.

You should track every business expense with your CPA at the end of each year to ensure you only take legitimate deductions. Tax obligations vary depending on the legal structure of the business. If you’re self-employed (sole proprietorship, LLC, partnership), you’ll claim business income on your personal tax return.

Corporations, on the other hand, are separate tax entities and are taxed independently from owners. Your income from the corporation is taxed as an employee.

Self-employed people need to withhold taxes from their income, and remit these to the government in lieu of the withholding that an employer would normally conduct.

Below are some possible tax-deductible items to consider:

  • Advertising
  • Banking fees
  • Business and paralegal association membership dues
  • Business travel
  • Charitable deductions made for business purpose
  • Computers and technology supplies
  • Consulting fees
  • Continuing legal education
  • Discounts to clients
  • Entertainment for clients
  • Equipment and equipment repairs
  • Gifts for clients ($25 deduction limit for each)
  • Home office
  • Incorporation
  • Interest
  • Legal fees
  • Newspapers and magazines subscriptions
  • Office supplies and expenses
  • Outside services
  • Parking and tolls
  • Postage
  • Safe-deposit box
  • Software and online services
  • Subcontractors
  • Taxes
  • Telephone
  • Utilities
  • Website design

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