| If you're a sole proprietor, here's the lowdown on three | | | | Where do you report accountant fees on Schedule |
| small business tax deductions you can report on | | | | C? Line 17 is the most logical place, "Legal and |
| Schedule C. They all start with the letter "A". | | | | professional services". |
| 1. Accountants. | | | | 2. Attorneys. |
| The fees you pay your accountant are generally | | | | Legal fees you incur in the course of business are also |
| tax-deductible on Schedule C, provided the fees are | | | | deductible. And again, it's critical that you only deduct |
| for services rendered on behalf of your business. So, if | | | | attorney fees related to your business. Personal legal |
| you pay an accountant to prepare your income tax | | | | fees are not deductible on Schedule C. Examples of |
| return, that tax prep fee is deductible to the extent it | | | | business-related legal fees include the drafting of |
| applies to the forms required for your sole | | | | contracts and any other documents for use in your |
| proprietorship, such as Schedule C, Schedule SE, Form | | | | business. If you pay a monthly fee to a company like |
| 4562 and Form 8829. | | | | Prepaid Legal (for business legal services), that is a |
| But what if your accountant also prepares Form 1040, | | | | deductible business expense. Put your attorney fees |
| Schedule A, and any other non-business forms on | | | | deduction on Line 17, right along with any accountant |
| your personal income tax return? You cannot take a | | | | expense. |
| deduction on Schedule C for the fees paid to prepare | | | | 3. Advertising. |
| personal income tax forms, so ask your accountant to | | | | Any expense you had to promote your business, |
| itemize his tax prep fees on the invoice, separating | | | | either offline or online, is deductible as advertising. Think |
| personal form fees (like Form 1040) from business | | | | about all the possible ways to hang out your shingle: in |
| form fees (like Schedule C). Only the business form | | | | the offline world, this includes print media ads, (be sure |
| fees are deductible on Schedule C. The personal form | | | | to include not only newspaper and magazine ads, but |
| fees are deductible on Schedule A. | | | | also ads in your local neighborhood association |
| Does your accountant provide other business-related | | | | newsletter and your child's school PTA phone |
| services? Fees for these other services are also | | | | directory), television and/or radio commercials, coupon |
| deductible, such as bookkeeping, payroll, payroll tax | | | | decks, yellow pages, billboards, etc. If you use direct |
| returns (including all the year-end reporting such as | | | | mail, you can deduct the cost of printing as well as the |
| Form W-2 and Form 1099-MISC), business consulting, | | | | postage. |
| software training, financial statement preparation and | | | | Do you advertise via the internet? Online ads are just |
| analysis, and so on. Should you ever be audited and | | | | as deductible as offline ads: banner ads, ezine ads and |
| pay your accountant to represent you before the IRS, | | | | email ads are all deductible. Advertising expense has |
| such fees would also be deductible. | | | | its own line on Schedule C, line 8. |