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Tax Deductions for the Small Business Owner

Last month everyone in the United States had the responsibility to file income taxes. In some cases people gained a handsome return likely accompanied by feelings of both joy and relief, while others disappointedly wrote a check to the IRS. To avoid the latter, personal trainers should know their taxable status and function to optimize profitability by not wasting monies they are entitled to with legal deductions. A freelance personal trainer is considered a business even if a person has not formally created a business in their city or county. Personal trainers who train clients outside of a corporate employee status (W-2 tax form) are considered sole proprietors unless formal documents have been filed to denote a partnership or corporation. An easy way to determine if you in fact are considered a small business is if you receive checks in your name from clients you train or if you receive a 1099 tax form from a company you work with. If you are receiving direct funds for your work and no company is claiming the income or paying your withholdings than you are responsible for the taxable income. This is a blessing and a curse as now you must pay taxes on the total revenue, but on the bright side, you have the ability to reduce that tax burden through legal tax deductions. Essentially, the more tax deductions your business can legitimately take, the lower the taxable income and the more money you potentially take home. Tax code provisions that govern deductions can also be used to provide personal benefit beyond that found in a traditional employee-employer relationship. For example, using your vehicle to transport equipment from a client’s home or driving to different training environments can justify deductions. Likewise, combining business trips and vacations can be afforded a small business owner. In many cases, complying with IRS rules allows numerous deductible expenses that may be incurred in whole, or in part, in the process of day to day activities, thereby reducing the total taxable income at the end of the year. Who wouldn’t want to reduced annual car or vacation expenses and add an extra couple of thousand dollars a year income.

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