Tax season is almost over and you’ve probably filed your business taxes for your independent insurance agency. Could you have done a better job of tracking your business expenses and deductions?
According to the IRS, your business expenses must be ordinary and necessary to be considered a tax deduction. An ordinary expense is an accepted and common expense as an insurance agency. A necessary expense is one that is appropriate as an insurance agency.
The 2017 Department of the Treasury IRS Business Expenses Publication 535 discusses common business expenses and explains what is and what is not deductible.
Anything used for both home and business must be divided up into percentages. If you have a 3,000 square foot home and your home office is 300 square feet, you can deduct 10% of your mortgage payments and other home expenses including insurance, utilities and repairs.
Reference Publication 535 for a checklist of tax deductions for your insurance agency including car allowance, mileage, gasoline, repairs, oil changes, registration fees and tolls. Deduct your Continuing Education expenses including classes, state licenses, renewals and subscriptions insurance related publications. The list goes on detailing deductions for insurance, office space, office supplies and equipment and more.
Consider apps to help you organize and track your expenses and receipts. There are smartphone apps that let you scan receipts and organize them for you. These applications make it fast and easy to search and retrieve your receipts.
There’s a great free app called Evernote that will track your receipts. For expense reports, try Expensify which automatically creates reports from a photo of a receipt. Shoeboxed lets you scan receipts with your smartphone’s camera and extracts the information where you can then organize and store it. Receipts by Wave scans your receipts and makes them fully searchable. It can link receipts to your bank records automatically.
These are just a few suggestions to help you make next year’s tax preparation for your independent insurance agency a little bit easier and hopefully a lot more organized.
Vikki Thomas has been working in the insurance industry since 1995. Vikki has worked for several carriers in customer service, quality assurance, underwriting, product management and marketing. Vikki has worked at AccuAgency since 2008.