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22-Aug-2020 By - Anna Eydlish

What can I deduct if I am self-employed?

Freedom, responsibility, and a significant increase in costs all come hand in hand with self-employment. Most self-employed individuals rejoice in the first two benefits, but they dread the third, particularly when it comes to doing their taxes. In addition, there is a possibility that they are unaware of some of the tax deductions that are available to them.

Do not be afraid to make use of the perks that come with holding the position of boss when the time comes for you to submit your taxes. You have earned them as a success story of someone who is self-employed.

The cost of one's education is a deduction that is frequently disregarded. However, it is possible to deduct the costs of furthering one's education, such as enrolling in classes or purchasing study materials, in order to become a more efficient worker.

Finally, self-employed individuals deduct business expenses on Schedule C of Form 1040. These expenses include advertising, utilities and other business costs. Your income less all expenses equals net profit, and the Schedule C profit, is added to other sources of income on Form 1040, the personal tax return.

Self-employed allowable expenses list
  • Stationery.
  • Printing costs / ink.
  • Postage.
  • Phone and internet bills.
  • Software used for under two years (or on subscription)
What Can Be Written off as Business Expenses?
  1. Car expenses and mileage.
  2. Office expenses, including rent, utilities, etc.
  3. Office supplies, including computers, software, etc.
  4. Health insurance premiums.
  5. Business phone bills.
  6. Continuing education courses.
  7. Parking for business-related trips.
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If you are self-employed or an entrepreneur, you should always seek methods to lower your expenses while raising your profits. What would you do if you knew that just filling out some paperwork might cut your annual spending by hundreds or even thousands of dollars?

Although deductions are an excellent technique to lower one’s taxable income (and one’s overall expenditures), the typical individual may find it challenging to comprehend how they work. Therefore, here is the information you ought to be aware of to benefit from self-employment reductions.

Common deductions for the self-employed

This list is significant for a huge number of self-employed professionals, such as drivers for ridesharing companies like Uber who claim big deductions for mileage and writers who may take the deduction for working from home at their office.

These tax breaks for businesses are also available to self-employed designers, housekeepers, photographers, construction workers, consultants, and other professionals who work independently. The following are some of the most often made deductions:

Travel and hotel

You might be eligible to deduct the cost of your travel expenses if you travel to see customers or participate in trade events. Expenses incurred while travelling for business include those associated with travel and lodging. The ATO permits a deduction of up to fifty percent of the amount spent on meals related to work-related meals modification to the tax legislation makes it more difficult to compute the deduction. Have your company lunch costs reviewed by a certified public accountant.

You shouldn’t try to deduct any costs linked with sightseeing and leisure travel because doing so can result in an audit being conducted on your account.

Many self-employed people do their business from their own houses.

Part of your house

A few self-employment tax deductions might earn you a discount on the expense of keeping the lights on if you work from home or if you use part of your house for your business. If this describes your situation, read on.

What you can deduce is A percentage of your mortgage or rent; the cost of your property taxes; the cost of your utilities; the cost of repairs and upkeep; and other comparable expenditures. Unfortunately, home office deductions are often unavailable to workers and may only be claimed by those who are self-employed or run their own businesses from their homes.

Home office

The Australian Taxation Office (ATO) permits people who are aself-employed people part of their mortgage (including property taxes) or rent that goes towards a home office if they are in business for themselves. However, many self-employed people operate out of their homes.

In order to be eligible for this deduction, you are required to have a distinct location in your house that is allocated for working, and you are not allowed to use that area for any other reasons. You can calculate the value of this deduction in one of two ways: either utilising the standard home office deduction option or the simplified home office deduction option.

A percentage of your house’s utility expenditures might potentially be deducted if you run your business out of your home.


regarding the cost of utilities as an expense for a home office. The share of your monthly utility bills that can be deducted from your taxes is directly proportionate to the square footage of your house that you devote to your business.

Those who are self-employed can deduct not only the cost of gas and electricity but also the cost of heating, air conditioning, and phone service. You should be aware, however, that if you claim the simplified home office deduction, you will not be able to deduct the real costs of your utilities.

There’s a possibility that you can deduct the money you spend on professional development.

Professional development

If you are self-employed, you have the responsibility of finding methods to differentiate yourself from other people in your industry. Many self-employed people believe that continuing their education is essential to maintaining their competitive edge.

Due to the fact that the cost of these fees may pile up over time, the Australian Taxation Office (ATO) permits those who are self-employed to deduct costs associated with professional development from their tax returns. In addition, self-employed individuals have the ability to deduct their membership fees and dues paid to professional organisations.

Every company has to attract customers’ attention and pique their curiosity.

Advertising and marketing

Self-employed people really need to participate in marketing and promotion if they want any chance of remaining competitive in our more linked world. The Australian Taxation Office (ATO) allows self-employed individuals to deduct marketing costs such as flyers, web adverts, business cards, and print advertisements.

It’s possible that your website is the most important instrument for marketing your company.


Because the vast majority of customers conduct purchasing research online, developing a mobile-friendly and responsive website is necessary for a self-employed person’s success.

Self-employed people are eligible to deduct business expenses linked to their websites, such as domain fees, web design fees, web construction fees, and website maintenance fees.


The majority of people who are self-employed in today’s world spend their days glued to computer screens. The software may be rather pricey, and this applies to anything from complex video editing tools to more fundamental solutions such as Microsoft Office and Adobe Acrobat. Nevertheless, software expenses are a typical tax deduction for self-employed individuals and those who operate their own small businesses.

Kilometers Travelled and Petrol

Do you frequently travel by car to meet with customers or vendors? If this is the case, you should make use of the tax deductions available for mileage driven or for the regular wear and tear on vehicles.

You can choose between the normal mileage deduction and the actual expenditure deduction when it comes to deductions linked to your automobile.

Using standard mileage enables you to claim a deduction proportional to the number of kilometres driven for business reasons. However, with the real expenditure choice, you are responsible for calculating how much it costs to keep and run your vehicle solely to conduct business.

You may rely on us whether you are searching for Business Accounting Services or a start-up business accountant to set up your accounts. We are available for you whenever you have either of these needs.


In the future, you could think about incorporating your freelancing firm if it turns out to be profitable. The Australian Taxation Office (ATO) allows newly formed firms to deduct expenses linked with the incorporation process, such as state registration fees and legal fees.

It’s possible that paying for health insurance may be one of your major expenses.

Self-employment health insurance deduction

The great majority of people who are employed full-time have the opportunity to receive health insurance coverage via their workplace. However, many people who work for themselves as professionals are required to pay for their own healthcare out of pocket, and the monthly premiums for such coverage can quickly add up to a significant sum of money. This is a problem because many people who work for themselves as professionals are required to pay for their own healthcare out of pocket.

People who are self-employed and meet certain qualifications may be eligible for a tax deduction that allows them to deduct the amount they pay for their health insurance premiums. This deduction may only be claimed if the person meets all of the requirements for the deduction. This deduction takes into consideration coverage for long-term care as well as short-term care, as well as expenses for dental and eye care. Therefore, if you, your spouse, and any dependent members of your family have health insurance, you may be able to deduct the cost of that coverage from your taxes.

Keep the paperwork in perspective

Filing your taxes as a self-employed individual may be a stressful experience, and the tax forms that are designed specifically for self-employed individuals can be challenging to comprehend. You may, however, alleviate the financial burden of paying taxes and develop your business if you use all of the deductions available to you and know what is needed of you. Therefore, take advantage of all the deductions available to you and know what is required of you.

It’s possible that putting together your tax return may also take a lot of time. You will, however, have a smaller total tax burden if you take the time to claim each and every one of your deductions. But unfortunately, taking this step is a time-consuming process.

Utilize accounting software such as QuickBooks, MYOB, or Xero to track the charges you have incurred during the year and record them as deductions on your tax return automatically.

Check out our guide on taxes for the self-employed if you’re seeking for more help around the time of year when taxes are due. This will allow you to learn about expenses that could be eligible for a deduction on your own taxes.

We are always excited to learn new ways in which our bookkeeping services for small businesses might assist you in streamlining your accounting processes.

Long-term tax-saving strategies

When considering tax deductions for self-employment, you shouldn’t limit yourself to just concentrating on write-offs that may be done right up to the deadline. Instead, you should give serious attention to building a long-term strategy for saving money from one year to the next, especially if you have a substantial salary. This is something you should think about doing.

In general, accountants will advise you of what you need to pay if you consult them. However, they won’t always provide you information on how to reduce your payments, so be prepared for that.

If you want to reduce the percentage of your gross income subject to taxation, you should consider creating a pension plan that offers defined benefits. This plan takes into consideration both your age and your salary in the following way: As you become older and make more money, you will be able to contribute a greater amount of money since the contribution limits will increase proportionally with age and income.

Some strategy that high-earning business owners may use is to pay themselves rent. This strategy can only be utilised by business owners who own their own premises and run their company as a limited liability corporation (LLC) or another analogous corporate structure. This rent is accounted for as an expense for the company when it comes time to file taxes, but it is also used towards the reduction of the mortgage balance.

If individuals in certain professions are required to purchase liability insurance but would like to work independently, they have the option of beginning their own insurance company. A captive insurance company, also known as an insurance firm that covers the risks of firms that are members of the cooperative, is an example of a cooperative. In addition, you may be able to take a tax deduction for the amount that your premiums cost.

If money is taken out of an account after it has accumulated and there have been little demands placed on it, then the money is considered to be a capital gain and subject to taxation. However, it lets you “pay yourself” rather than an insurance company while still permitting you to deduct the premiums can help you save money. Again, this is because it enables you to pay yourself rather than an insurance company.

It is in your best interest to discuss any of these more involved and long-term ideas with a business attorney or a financial planner if you want to guarantee that you have the best strategy possible for your company. If you want to guarantee that you have the best strategy possible for your company, discussing any more involved and long-term ideas is in your best interest.

The good news is that you do not have to confront this tax monster all by yourself in order to bring it under control. If you want to be sure that you are deducting your purchases of products in the most effective manner, you may want to seek the guidance of a tax adviser. You will increase the amount of deductions to which you are entitled if you use the services of a specialist, which will reduce the likelihood that you will be the subject of an audit, guarantee that you are in compliance with the applicable tax rules, and reduce the likelihood that you will be subject to an audit.

Check out the variety of Business Planning Services we offer so that you may work towards your company’s success.

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