- Line 8: Advertising
Include all marketing and advertising efforts. For me this included (from largest to smallest costs):
- Convention expenses, except business mileage or gas for your personal car (line 9), lodging, air travel, rental car and rental car gas, public transportation, tolls, parking (all in line 24a), and food costs (line 24b). You might ask, what is left of convention expenses? Registration fees, booth fees, insurance, banners, tshirts and giveaways, etc.
- Marketing sponsorships
- Costs for getting games to reviewers (e.g. prototypes, shipping, reviewer fees)
- Backing other KS projects to increase my backed project count
- Website costs not paid to a developer (instead list that on line 11)
- Website ads
- Business cards
- Giveaways (e.g. board games, gift cards, swag)
- Product samples to prospective customers
- Demoing expenses (e.g. renting community center)
- Line 9: Car and truck expenses
Since I elected to deduct business mileage I only included business mileage here (from my Mileage Log.) Otherwise, list gas and a proportional amount of maintenance attributable to your business travels. You are better off deducting business mileage or going the simple route of just gas receipts.
- Line 10: Commissions and fees
Include Kickstarter and other payment processing fees (e.g. PayPal, Stripe, Square, etc).
- Line 11: Contract labor
Include amount paid to contractors or non-employees that you pay to do work (e.g. artists, graphic designers, videographers, website developers, voice-over artists, etc).
- Line 18: Office expenses
Include software costs (e.g. Adobe, Dropbox, etc), office supplies, furniture or organizational items for your office. Regarding office supplies, you should categorize the cost of supplies to build prototypes in line 8 (Advertising) if you gave the prototypes away or line 27 (Other expenses) if they are general game research & development.
- Line 23: Taxes and licenses
Include business fees (e.g. state business and sales tax registration, standard manufacturer code registration fee, etc). Deduct sales tax from income in line 1.
- Line 24a: Travel
Include lodging, air travel, rental car and rental car gas, public transporation, tolls, parking.
- Line 24b: Deductible meals and entertainment
Include 50% of food/drink or per diem allowances (see details above). Also include 50% of reasonable entertainment costs, which must involve substantial business discussions or take place before or after substantial business discussions with clients, customers, and/or employees. Note that entertainment expenses are closely scrutinized in the case of an audit. Refer to Publication 463 for specific guidelines.
- Line 26: Wages
If you have employees, you probably aren't filing Schedule C anymore.
- Line 27a: Other expenses
Include all expenses that do not fit in any of the other expense lines. You must summarize each grouping of expenses included in this line in Part V (Other Expenses). For me, I included the following expenses (from largest to smallest costs):
- Shipping. You may want to split out shipping to prospective customers (Product samples within Line 27a) or for marketing/advertising (line 8) to have a better handle on shipping related to actual customers, prospective customers, and other marketing efforts.
- Research and development. Include prototype costs you accumulate over time. If you make purchases to build a prototype to mail to a reviewer, I would include those in line 8 (Advertising), but it is acceptable to list all of those here as well.
- Market research. Includes costs of buying new board games. Determine whether to include cost of Kickstarter games in line 8 (Advertising) or here.
- Product samples. Shipping costs to prospective customers. In future years I will probably roll this up into Shipping (line 27a) or line 8 (Advertising).
- Start-up expenses. Include all business costs before you officially started your business. Hopefully these total less than $5,000 so you can deduct them all easily on this line. Otherwise, it gets complicated quickly. You should refer to Publication 535.