How does writing off expenses work?

In the last blogpost, I briefly touched on expenses at the end. Let’s dive into expenses more. Expenses can add up quickly: computer, notepad, pens, sticky notes, paid version of apps, an office chair, etc. When starting out as a Virtual Assistant, you really only need two things: a computer and your phone, but as you become more established and increase your hours and add a second or third client, you may start buying a few things.

For 3 years, I literally worked with just my computer and my phone. I did have a notebook I carried in my diaper bag to jot down notes or reminders when they came to me or if I was voxering with my client, but I did not have an office or any other expenses. Once I had 3 clients and had increased my hours, I started purchasing a few items: 

• $60 desk from Walmart for my little space in our guest room

• Giant sticky pads for me to plan out projects for clients (I love visuals)

• A big desk calendar  to help keep up with all 3 clients on one calendar at a glance

• A pack of colored sharpies

With these items, you can write them off as work expenses at the end of the year. The way this works:

$10,000 - revenue

($1,000) - expenses 

                 $60 desk

                 $10 pack of sharpies

                 $40 pack of sticky pads

                 $25 desk calendar

                 $5   pack of pens

                 $10 pack of 2 notebooks

                $850 laptop

$9,000 - gross profit (this is the number that you will be taxed, not the $10,000 because of your expenses) 

Instead of paying taxes on the $10,000, you will only pay taxes on $9,000 because your expenses added up to $1,000.

Another deduction is the “home office deduction.” Simply put, if you use a part of your home exclusively for your Virtual Assistant work, you may be able to deduct expenses for the business use of your home. You can read more about the details from the IRS here, but I always suggest talking to a CPA about what this looks like for you.