New NSA here. I want to be prepared for tax time. I am fully employed and do the signing on the side. What sort of receipts and other documents should I be keeping for writing off expenses on my taxes? Do I get to subtract mileage?
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You can take the IRS rate for mileage, which right now is $.535/mile - keep track of your mileage and your accountant/tax preparer should be able to calculate it for you. If you do your own taxes, your tax software will do it.
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Receipts for everything you spend on your business - advertising, insurance, memberships, business cards, supplies (ALL supplies), commissions, etc etc.
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Make sure to keep good records of how many notarizations your perform as your notary fees are exempt from self-employment tax (our equivalent of social security/medicare taxes withheld from standard paychecks). However, please note notary fees are exempt from SE Taxes only - they ARE subject to federal income tax.
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You can also deduct the space in your home that you use as an office - however that gets really tricky, especially if you’re only doing this “on the side”.
Keep records and receipts for every penny you spend on your notary business- keep in your mindset that you’re going to have to prove yourself at some point in the future (you probably won’t but act like it) - you’ll be ready if it ever happens.
Good luck.
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Get an EIN # for your name that you can use on w9’s so you are protecting against identity theft, then you can use that name w/ dba
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Get a mileage tracker for vehicle that tracks personal and business mileage. IRS recognizes it and you don’t have to remember to do it every time you get in a vehicle. It is automatic, you download reports to computer and review to confirm all business trips are noted as such, print the report and you have mileage. I have taken 10K for mileage that last 2 years because of my little device. HUGE!!
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I personally do NOT use my home as a tax write off. If you ever sell your home, it is a paperwork nightmare, it usually doesn’t total that much, and its a red flag for tax audits.
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I scan all receipts, monies received, fees, overhead costs, etc into OneNote, that what I have everything on computer and don’t have a bunch of paper laying around. Besides alot of those receipts fade and are useless in a few months. When I put it in onenote, I code it also at that time so when entering into accounting books, I already have it marked and easy for transfer data.
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Don’t wait til year end to keep books. Do it regularly throughout the year.
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KEEP RECORDS!! Most small businesses fail due to lack of paperwork. Basically what you have is that you own a job that has to be conducted like a business.
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Determine your worth. So many notaries don’t realize that they are not making any money, especially with the low fees being offered today. I have a set fee of $100. I rarely, RARELY, leave my house for a less fee on mortgage docs. I have a trip fee for mobile notary work along with price per signature.
Ok, enough from me. I would appreciate hearing from others.
Good luck!!
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Agree - I never did either. It’s a nightmare every year - not just when you sell.
Using your home as a tax write off is an automatic audit by the IRS. Your tax returns go to a special area within IRS for scrutiny and most likely the write off will be disallowed. It is definitely not worth the little bit of write off you would get. I personally know of someone who deducted the full of amount of apartment rent as a business write off. It took a few years for the IRS to catch up on that, but the person was hounded for the rest of his life year after year for additional taxes, penalties and interest amounting to $60,000 owed for each year of the disallowed deduction. Definitely not worth it.
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Get a good accountant / CPA and they can advise you on the best way to structure your business, handle your taxes and what you can or cannot write off. The best way to not get audited is to hire a professional.
Also, use accounting software such as Quickbooks to keep track of your sales and expenses. You can connect Quickbooks directly to your bank account and at the end of the year you can create a Profit and Loss statement quickly.