It’s important to know what your tax obligations are when starting out as well as how you can keep as much of your hard-earned money as you can.

If you’re already, or becoming, an independent professional with high overhead expenses but without a storefront per se, such as a carpenter, mechanic, locksmith, photographer or videographer, taxes can a little more complicated than it may be for a web designer or a leadership consultant whose capital assets are the sum of a mobile phone and a laptop. The main difference is what you’re able to deduct—since you have so much more invested in gear.

Most of the example professions listed above are professions that start out by friends asking you to provide a service that you seem to have a knack for. And what starts out as a side business becomes a full-time job.

This guide is intended to get you on the right track but its not all inclusive of all you need to know. It’s always best—especially owning your own business—to have a professional tax preparer help you do your taxes and help with tax strategies. You have your thing you’re good at doing, well, so do tax professionals.

Expenses

Expenses can be broken down into 2 categories: Overhead and Travel.

Overhead Expenses

Essentially, overhead expenses is the “cost of doing business.” Expenses are costs incurred that are not what you invest in products. Expenses are things you buy in order to provide a service or product.  Expenses are things like your equipment and gear. It’s also the costs of marketing yourself, buying insurance, renewing licenses, hiring contractor help, and maintenance and repairs of your equipment as well.

If you are claiming a portion of your home as your office, you can deduct this cost as well. You use form 8829 for that.

Using a 1040 form, you’ll use Schedule C to deduct expenses. Schedule C is a Sole Proprietor form that essentially, is populated with your profit and loss.

For Mileage, there is another form for the Standard Mileage Deduction and that is form 2106.

Travel Expenses

The basic principle is that if you incurred a cost as a result of travelling for business, it’s deductible—deductible to a point. For example, if you’re a photographer and travelled to LA to shoot a wedding, your flight, meals, ground transportation and gear you rented are all deductible (rented gear isn’t exclusive to travel expenses, that just goes along with your equipment expenses). Meals are deductible when travelling because it’s understood that you’re not at home and are required to go out to dinner. However, a meal in your hometown can be expensed as long as it’s ordinary and necessary to doing business. Taking a client out as a thank you or meeting a potential client over a cocktail can be deducted but there is a limit to how much you can deduct.

If you think you can fudge a little here and there on what you count as a travel expense, you’re treading on thin ice, travel expenses commonly raise the audit flag.

Make sure you keep all your receipts, should you be audited, you’ll have to prove and justify your deductions to the IRS. Deductions for travel expenses also go on the Schedule C form.

Depreciation

This is where you really need to pay attention. Because many sole proprietors have gear and equipment that can be a total of $10,000 to $25,000 dollars and even more sometimes, depreciation can be what really helps bring your taxable income down.

Using form 4562, you can deduct new equipment bought in the tax year you are preparing for—again, if you have your receipts. And because equipment depreciates in value, you’re able to deduct a portion of the cost of the major item by about 20% per year for the following five years depending on what the law states at the current time. As of 2012 in the Taxpayers Relief Act, you were allowed to deduct up to 50% of the original cost of the equipment in the following year. So a table saw bought in 2014 can be deducted for the full amount for 2014 and then, for the 2015 tax year, you can deduct 20% of the original cost—or 50% should you qualify.

So, if you bought a studio camera body that cost $6,000 and made $75,000 in a year, you’ve brought your taxable income down to $69,000. And if you have another 15,000 in equipment sitting around, you can deduct another $3,000 bringing your taxable income to $66,000. Now add in other deductions such as home office, business insurance, marketing costs and so on, you could really bring your income down to a bracket that can be truly advantageous for you. And if you’re married and have 3 kids, even better.

Social Security and Medicare

Don’t forget about this. You’ll need to fill out Schedule SE of the 1040 form to calculate these taxes.

Estimating Quarterly Taxes

Using form 1040-ES, you can estimate and pay your quarterly taxes and avoid being hit with a huge tax burden in April. Think of this as an employer that withholds taxes from your paycheck. You’re not having to pay it with every paycheck, but you’re paying it. Since you’re the employer of you, you’re taking out your own taxes and then making the payment to the IRS and state on your behalf.