A salesman's write offs?

Scott Larrabee

Curious, what items can I write off as expenses at the end of the year? For instance, I do a lot of advertising/marketing on my own to draw in my own traffic, and word of mouth traffic. I create different campaigns containing images, blogs, videos, Facebook Page, LinkedIn Page, I create my own email campaigns and physical mailings as well.. all using my own computer 80% + of the time and almost always on "off" hours. Would I be able to write off my internet, computer, cell phone, etc. Just curious!

Mark Hoffman

A CPA would be the best person to answer this..so with that out of the way..if we're talking federal income tax, then you can almost certainly write off expenses that are related to generating income. But you can only deduct the portion that is used for business. So if your cell phone is 80% business, then you can deduct 80% of that expense. Expensive purchases like computers are likely to be different; you typically have to capitalize them and aren't able to deduct them in a single year. That's where you are definitely going to want a tax expert helping you set that up. 

Dealer Guy

Thank God I don't have the over head my dealership does, and most dealers for that matter - between the floor plan costs, utilities, employees costs, inventory mark downs, employee lot and off lot accidents you can't claim on insurance, advertising, the radio ads, newspaper, digital, all the extra digital costs to get seen online - geez it's a lot, so I am feeling lucky to be able to literally PLUG & PLAY at a car dealership and be a star.

Scott Larrabee

@DealerGuy, Plug and Play.. I like that!   :-)

Chris K Leslie

You can even write off a portion of your rent/mortgage and utilities by claiming a home office. You could even get down and dirty and write off Starbucks and lunches if you’re busy doing work. Pretty much anytime you are doing work stuff you can write off whatever you’re spending. 

Mark Hoffman

You can only write off 50% of your own meals, and even then, you can only do that if you are traveling for business and it's an overnight stay. Otherwise, if you're in town working, the IRS says you're going to eat anyway and it's not deductible. The dealership gets to deduct the cost of that Starbucks if they bought it for their employees, but if you bought it yourself then IRS has their hand out on that income...

One thing about deducting portions of your home as an office; you can depreciate the portion of your home (just as you would depreciate a fixed asset like an office), but when you sell the home, the IRS wants you to pay a recapture tax on that office portion, which is the difference between what the home sold for and what the depreciated value is.

My dad always told me : "There's 3 key people you need to have in business: A good banker, a good lawyer and a damn good accountant."  The first two might be optional until a certain size, but find a good accountant now. Preferably a CPA. And build a long-term relationship with them.

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