Being your own boss brings with it freedom - hence the term “freelancer.” But it also brings with it business obligations that you don’t have to worry about as an employee.
Tax obligations are one example of administrative work that you’ll need to manage, but there are benefits to being a freelancer if you have the right information. Taking full advantage of tax deductions for advertising professionals is one of the bonuses of running your own business.
Why care about my advertising business tax deductions?
Knowing about tax deductions for advertising professionals will help you when it comes time to file your annual income tax return. While they may seem small at the time, they add up and can make a difference.
That’s because each of the tax deductions for advertising professionals lowers your taxable income, which will mean less taxes paid at the end of the year. That’s good news for you, as it will help offset the cost of running your own business.
Common advertising tax deductions
We’ve put together a list of the most common expenses that advertising professionals can deduct from their taxes. With anything financial or tax-related, it doesn’t hurt to get some advice from an expert, like an accountant, before you embark on your business path.
What advertising expenses are NOT tax deductible?
It seems like you can use all your expenses as advertising tax deductions. But there are some costs that cannot be used as tax deductions for advertising professionals:
| Category | Tax deductible |
Business set-up expenses
As you start out, you need specific equipment that’s considered a capital expense, because you will use it for more than a year. Examples include a computer and monitor, a laptop, desk, printers and more. |  |
Software and hardware expenses
As an advertising professional, you may also need specific software to run your business, such as a client relationship management system, an email management system, or storage software. Along with a software deduction, external hard drives for storage also count. | |
Office expenses
Costs of maintaining an office space, like rent and renters’ insurance, are considered advertising tax deductions. | |
Home office
If you choose to have your office at home, you can deduct a portion of your home expenses like mortgage interest or rent, utilities like Internet and power, and homeowners’ insurance. | |
Vehicle costs
When you use your vehicle for business, that portion of expenses can be used as a deduction. So track the mileage and gas used for business, along with parking, road tolls, car insurance, and maintenance. | |
Other travel expenses
If you travel for work, or you attend conferences or seminars, then expenses like airfare, train, and bus tickets, and accommodations can be used as tax deductions for advertising professionals. | |
Professional development
Part of running a business means staying abreast of your industry, so conferences and classes, books and magazine subscriptions are all deductions. | |
Marketing and advertising
As an advertising professional, your own promotion needs to be top-notch. Those costs are all deductible: pay-per-click ads; social media; web design and maintenance; SEO and content marketing; advertising; brochures; business cards; and more. | |
Office supplies
Other office supplies are also tax deductions for advertising professionals, like notepads, pens and paper. | |
Licensing and memberships
You may belong to a professional association, and you likely need a business license to operate. These are considered tax deductions for advertising professionals. | |
Phone and internet
Advertising professionals definitely need a cell phone and Internet to do their work, so those are deductible costs. | |
Professional expertise
If you need to hire professionals to support your work, those costs are advertising professional tax write-offs. Examples are a writer to do your content strategy, a website designer, a lawyer, or an accountant. Even legal expenses for setting up your business structure are considered startup costs. | |
️ Sub-contractor or assistant
If you need to hire a contractor or freelancer for a project, or an editor, designer, or assistant, those costs are tax deductions for advertising professionals. | |
Health insurance
Any health insurance related costs can qualify as eligible tax write-offs for marketers and advertising professionals. | |
Bonsai taxes (software)
If you decide that an online platform like Bonsai will make life easier by helping you manage your tax filing and accounting, those costs are a tax deduction. | |
Personal expenses
As an advertising professional, you always want to appear well-groomed with a competent appearance. But the costs related to maintaining a professional presence are not deductions. Expenses like clothing, makeup, hair, or fitness are still considered personal. |  |
Bank loans
If a bank loan is for business and personal use, you can only use a portion of the interest as a deduction. For instance, if you use 50% of a loan for business, you deduct 50% of the interest as a business expense. | |
Cost to commute
While vehicle expenses are considered tax deductions for advertising professionals, the cost of a commute is not. You can’t deduct the mileage racked up traveling to and from home to work. | |
How to qualify if an advertising expense is deductible or not?
To know what you can count as a tax deduction, you follow the guidance of the federal taxing authority, the Internal Revenue Service (IRS).
Here’s how the IRS defines a business expense: one that is both ordinary and necessary.
An ordinary expense is one that is common and accepted in your trade or business. In the case of an advertising professional, an example would be a computer on which you do your work.
A necessary expense is one that is helpful and appropriate for your trade or business, although it doesn’t have to be indispensable to be considered necessary. An example would be hosting fees for a website that promotes your business.
So how can you know all the possible advertising professional tax write-offs? We can help you to lower your taxable income and maximize your tax return with these tax deductions for advertising professionals.
How can I use these advertising tax deductions?
Now that you know about tax deductions for advertising professionals, here’s how you can take advantage:
1. A software system like the Bonsai accounting and taxes tool.
2. Track expenses on your own (we have a free excel spreadsheet).
3. Use an accountant.
Remember, you can use Bonsai's free self-employment tax calculator to estimate your quarterly taxes!
