The Power of Maximizing Expenses for Tax Write-offs in a Design Business

Maximizing expenses for write-offs, as an interior designer, can greatly reduce your taxable income, allowing you to retain more profits while effectively managing your business. Start by tracking and categorizing all business-related expenses, which are often diverse in this field. For example, materials used in design projects, such as furniture, fabrics, and decor items, are all deductible. Additionally, the tools of the trade—like sketching software, CAD programs, and design books—should be accounted for as business expenses.

The first thing you need to do is separate your personal funds from your business funds. So, open separate business checking and savings accounts for your business. After that, make sure to also keep your business expenses separate from your personal expenses. Consider applying for a business credit card to simplify your efforts to maintain clear differentiation.

Most design firms operate as “for-profit” businesses.  We all have many expenses, necessary to operate our firms.  However, many designers and architects are not maximizing the power of deductions. Below, we will delve into a variety of purchases that can and should be expensed, saving you money on taxes.

Creatives have so many business expenses that they may not be accounting for.  If you need to be on a photo shoot – add the miles driven by you and your team to the client’s site, any equipment or furnishings you have to rent, the florist, stager, and food for staff and trades during the shoot.  A retail showroom might cover the cost of carrying inventory, storage, and employee wages.

Purchases of equipment, like high-end laptops, plotters, printers, or professional-grade cameras for photographing projects, can be depreciated over time, offering long-term tax benefits. Marketing and branding costs, including website maintenance, online advertising, and promotional materials, are also deductible.

A major write-off opportunity for interior designers involves travel. If you are visiting client sites, showrooms, or attending design fairs, you can deduct travel costs such as mileage, airfare, lodging, and meals.

Another key area is client meetings and consultations—anything from renting a co-working space to hosting a client lunch can be written off, provided it is directly related to conducting business. Many creatives use their vehicle for both personal and business, and you would need to keep track of miles driven and deduct based on the IRS’s standard mileage rate or by figuring out the percentage of car use that goes toward your business, while also applying your vehicle operating expenses, which include maintenance, fuel, repairs and insurance costs as a deduction. Be sure to keep receipts for everything.  Many finance apps allow you to photograph receipts and save/document them in your app.  My Platinum business AMEX has been great for this. 

Sometimes you can mix business and pleasure, and still have a valid expense.  If you use part of your home as your office, then you may be able to make a home office deduction. However, you must designate a specific area of your home solely for business purposes and, per the IRS, it must be the “principal place of your business.”   For example, if your office represents five percent of the square footage in your home,  you may deduct 5% of the cost of your rent, mortgage interest, utilities, insurance and other related expenses at tax time.

We all have cell phones, and if you use yours for business 50-75% of the time, then that portion of your phone bill is deductible (if you are using it as an employee, then it is 100% deductible).

While many small business owners manage their business accounting on their own, it is a good idea to get professional advice. A Certified Public Accountant (CPA) provides expertise and can guide you in filing your taxes and maximizing deductions. And, their fee is a deductible expense!