How to Track Expenses to Maximize Deductions
Maximizing your tax deductions begins with one simple but powerful habit: tracking your expenses consistently. Whether you are a YouTuber, Shopify store owner, Amazon seller, doctor, dentist, or a high net worth individual, knowing exactly what you spend and how to categorize it can save you thousands of dollars each year. At Velin & Associates, Inc., we help clients across industries streamline their expense tracking to ensure they capture every legitimate deduction.
Why Expense Tracking Matters
The IRS allows deductions for ordinary and necessary business expenses—but only if you can substantiate them. Without proper documentation, deductions can be denied during an audit. Careful tracking:
- Helps you maximize deductions and reduce taxable income.
- Simplifies year-end tax filing, saving time and stress.
- Protects you during an IRS audit by providing organized records.
For creators and business owners, even small expenses can add up. Missed deductions like software subscriptions, home office costs, or mileage can result in paying more taxes than necessary.
Tips for Tracking Expenses Effectively
- Keep a Digital or Physical Record
Use accounting software like QuickBooks, Xero, or Wave to log every expense as it occurs. Even a simple spreadsheet can work if maintained consistently.
Example: If you are a Shopify store owner in Los Angeles, track expenses such as advertising costs, Shopify fees, packaging, and shipping daily. This ensures you don’t miss small recurring costs that add up over time.
- Separate Personal and Business Expenses
Mixing personal and business transactions is a common mistake that can lead to deductions being disallowed. Open a dedicated business bank account and credit card.
Example: A dentist with a private practice should use a business account for office supplies, equipment purchases, and professional memberships, keeping personal purchases separate.
- Use Expense Categories
Organize expenses into categories such as:
- Office & Home Office
- Travel & Meals
- Advertising & Marketing
- Software & Subscriptions
- Professional Services
Example: A YouTuber creating content for multiple channels can categorize software subscriptions for editing, camera equipment, and content promotion to ensure everything is properly deducted.
- Track Mileage & Vehicle Expenses
If you use a vehicle for business, log miles driven for business purposes separately from personal miles. Use apps like MileIQ or Everlance for accurate tracking.
Example: A TikToker who travels for content creation can deduct mileage for trips to photoshoots, collaborations, or events, but personal commuting cannot be included.
- Keep Receipts & Proof of Payment
Save receipts, invoices, and bank or credit card statements. Digital photos of receipts are acceptable and make organization easier.
Example: An Amazon business owner can keep screenshots of software subscriptions, receipts for packaging supplies, and bank statements showing payments to couriers—all supporting deductions if audited.
- Review Expenses Regularly
Don’t wait until tax season. Monthly or quarterly reviews of your expenses ensure nothing slips through the cracks and helps identify areas where costs can be optimized.
Example: A doctor reviewing office supply expenses quarterly may discover that switching to a more cost-effective vendor saves hundreds of dollars annually.
Why Work with Velin & Associates, Inc.
Proper expense tracking can be complex, especially for creators, online sellers, and medical professionals with multiple revenue streams. At Velin & Associates, Inc., we:
- Help YouTubers, TikTokers, and online commerce professionals categorize and track expenses for maximum deductions.
- Assist doctors, dentists, and medical practices in documenting professional expenses properly.
- Guide high net worth individuals in maintaining organized records for audit readiness and strategic tax planning.
By combining meticulous record-keeping with expert tax advice, we ensure your business keeps more of what it earns while remaining compliant with tax laws.
For more information about our tax planning services, contact us today: visit our website.
Velin & Associates, Inc
8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.