Have you started preparing your taxes yet? Maybe you dread every year getting all your books in order. It seems tax time comes around so quickly.

Here are some things you should know about taxes and your virtual assistant business:
 

* You are a business owner and need to report your taxable income, both on Federal and State tax returns.

* Most likely you will file as a Sole Proprietor using your Social Security number.
* You will need to file a Schedule C to report income or loss.
* Schedule SE needs to be filed to show self-employment tax due.

Keep track of all business expenses to reduce your taxable income. Business expenses may include:

* A portion of your telephone bills; this may include a cell phone, land line, fax machine, any payments for Skype and internet access charges.
* You work from a home office. You may be able to deduct for the portion of your home used for an office.
* Did you buy new equipment this year? Office equipment such as a desk, chair, computer, and headphones can be deducted.
* Other office expenses that can be deducted are supplies such as copy paper, ink cartridges, pens, postage.
* Don't forget about software you use to run your virtual home office.
* Do you subscribe to tools you use in your home office? ie.; QuickBooks, HootSuite, Office365.
* Subscriptions fees paid for industry related magazine, in print or online.
* Membership fees for Chamber of Commerce or other business groups or organizations you participate in (such as VirtualAssistants.com) can be deducted.
* Your costs for domain name, website hosting, website updates.

There may be other things you can deduct as business expenses as well. It's always best to consult with a tax professional to be sure you are taking all the deductions possible for your business.

I can highly recommend contacting Deb Howard Greenleaf of Greenleaf Accounting. Last year about tax time she wrote a great blog post with a checklist of bookkeeping tasks to help you get organized. You can read it on her blog here: http://www.greenleafaccounting.com/bookkeeping-tasks-done-check. I especially liked her weekly reminder that if you pay estimated taxes, set aside a percentage of your income for taxes.

Deb also provided me with some additional information about being independent contractors and deducting for a home office:

Independent Contractors. Be sure to learn the difference between independent contractors and employees and be sure to keep good records about the vendors that you designate as independent contractors. Be prepared to send a 1099-MISC form to any independent contractors to whom you pay commissions, referral fees, or for services if over $600.00 is paid for that year.

Home office. If you maintain a room in your home for the purpose of managing your business, you can deduct the expenses associated with this room on your taxes. Home office expenses include a portion of the mortgage interest and property taxes (or rent), insurance and utilities.  The simplified home office deduction now allows you to simply deduct $5 per square foot.  Even with the simplified deduction, though, you still need to use the room solely and exclusively for business (no beds, workout equipment or other personal use!)

Using an online tool such as QuickBooks makes it easy to track all your income and expenses in one place. If you have a tax professional prepare your taxes, you can print out a Profit & Loss statement showing your gross income and net income with all your expenses detailed. Other options are TurboTax or Taxcut Home and Business. They will walk you through your home deductions.

Start preparing now for tax time and reduce your stress by having everything in order early.