Tax Deductions: The Expense Report of the Self-Employed

For those of us running an independent business, there is nowhere to send expense reports. They're simply our costs to absorb. But, alas, it doesn't mean we are forever freed from the tethers of expense tracking. That's because many expenses are tax-deductible or part of your LLC's cost basis.  So of course, there must be an AI for that. And there is:  FlyFin, a phone app that uses AI to download, track, and categorize expenses.

If you have a credit card 100% dedicated to your business with no bleed between that and your personal bank and credit card accounts, FlyFin can handle this very easily.  It simply gives its best guess as to where an expense belongs and asks you to confirm if deductible or not and if it got the categorization right. If it doesn't, it learns for next time.

The more challenging environment is when, as a new business-owner, you had to co-mingle costs into personal accounts while setting up your business accounts. In this case FlyFin wants you to review literally thousands of transactions. Luckily the interface is simple, intuitive and fast -- Swipe right for deductible, left for non-deductible, up for "consult a CPA", and swipe down to review later (for unsure, tricky or forgotten vendors).

My initial take is that with FlyFin being a new AI, it has much to learn. While it correctly assigned about 75% of expenses, it made some very odd choices like assigning my Midjourney subscription to "business meals". This happens often enough to be irksome.  But I'm hoping that the machine learning will kick in and not make this mistake twice.

I was impressed by the "Consult a CPA" function for which there appears to be no limitation. It's unclear if this too is handled by AI, by human CPAs, or a combination as needed by exception.  But within 24 hours I received pretty sophisticated answers to complex tax situations.

FlyFin is not going to replace my tax advisor this year, but perhaps in the not-to-distant future it may. In the meantime it's a smart and consistent way to stay on top of your tax-deductible expenses.