Your lease payments, gas, insurance and repairs are all deductible based on the percentage that you use the car for work. (State vehicle registration fees are always deductible, whether you're a business owner or not.)
Let's say your lease payment is $500 a month, you pay $250 a month for auto insurance, and you shell out an average of $100 a month for stuff like new tires, maintenance and repairs. That's $850 monthly, or $10,200 a year. Assuming that you now use the car 75 percent for business, you get to subtract $7,650 from your business income.
What if you have an old car that's paid off and rarely needs repairs? You might be better served writing off the mileage, MacMillan said. Currently, you get to deduct 55 cents a mile, or $55 per 100 miles driven.
One caveat: The IRS can be pretty persnickety about checking these deductions, so keep a mileage log in your car that shows your starting mileage and ending mileage before and after every business trip.
WRITE OFF YOUR HOUSE
If you dedicate a room of your home to your new consulting business, you've opened up a world of write-offs, Seltzer said.
First, figure out what percentage of your home is used solely for the home office. If you have a four-room apartment and use one room exclusively for work, for example, one-quarter of your expenses could be deductible. Those expenses can be anything that is reasonably required to operate the business. So if you have clients at your home, that would include the cleaning fees and gardening, Seltzer said. If not, it would simply be the water, gas, electric, repairs, insurance, pest control, garbage collection and, where applicable, rent.
There are strict rules about home offices, though, so you really can't use this office space for anything else -- pizza parties, a guest room, watching television. Whatever portion of the home or apartment that's written off as a home office should be used exclusively for business.
EXPENSE THE SUPPLIES
All the stuff you buy to get started -- besides those business cards -- is deductible. The printer ink and printer, computer, phones, fax, desk, chair, etc., can be written off against your business income in the year they're purchased. If you need to buy software or register a domain name on the Web, it's deductible. If you have a dedicated phone line for work or must pay for Internet or cable, that's also a write-off. If you need to attend conferences or get your own consulting help, not only are the registration fees deductible, but so is the gas to get there, your lunch and every other incidental that you can legitimately claim was purchased to advance your business interests.
If you have a loss, you can write it off against any other income, including your spouse's wages.
But be careful. If you continue to post a loss three years after launch, the IRS will say your business is a hobby, not a profit-making enterprise, and then all your deductions are lost -- including the past ones.