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