Tax Tips For Home Based Business
Owners - Do You Work at
Home?
© Workhomecareer.com
The information provided
here is not intended to be legal or official tax advice. Always
consult qualified professionals or the IRS for legal
tax advice and to determine whether you qualify for any deductions.
Here is some general
advice and information on what you may be able to consider as
a deduction on your taxes if you run a home based business.
1 Your Home Office
If you have an area of your home that is set aside for home based
business purposes, you can usually take a home office deduction.
Generally in order to deduct your home office your office must
be used regularly and exclusively used for business and must be
either your principal place of business or a place where you meet
with customers. A separate structure of the home used for business
such as a garage normally qualifies.
To determine your
home office related expenses take a percentage of your home's
total square feet that is dedicated to your business to figure
your deduction. For example, if your office takes up 20% of your
home's total square footage and your payment is $1000 a
month, you can claim $200 a month as a home office related expense
which amounts to $2400 a year.
In addition insurance,
taxes and utilities paid separate from your monthly payment, such
as electricity and water are calculated using the same formula.
Repairs, depreciation
and maintenance for your home office may also be deductible.
2 Your Automobile
Some or all of your
business related travel may be deductible. Document all of your
business-related mileage and the actual cost of travel. Keep a
mileage log in your vehicle to record each business trip, mileage,
date and your reason for the business trip. Record anything business
related, trips to post office, to buy office supplies or make
bank deposits, etc... You may also be able to write-off other
automobile related expenses such as depreciation (or lease payments),
insurance, tires, tune-ups, and parking costs, registration, etc...
Make sure you keep good records consisting of any and all of your
automobile expenses. They just might be deductible!
3 Business Supplies
and Equipment
If you purchase business
supplies or equipment, such as publications, books, stamps, catalogs,
order forms office supplies, printing supplies, scanner, cell
phones, calculators, phones, furniture, office equipment, computers,
printers etc... save your receipts, most of these are normally
deductible.
4 Advertising and
Promotions
A portion of or the
whole amount of the costs of advertising or promoting your company
using gifts may be deductible. Gifts are normally deductible up
to a certain amount. You can normally deduct all the reasonable
costs of your advertising expenses if they relate to your business
activities.
5) Other Deductions
Business travel and
expenses.
Paying a family member
such as a spouse or child as an employee to do general office
duties is normally deductible.
Phone bills or internet
access charge due to running your business.
A percentage of business
meals.
Educational expenses
and licenses
Legal fees and accounting
fees
Health and life insurance.
There are many other
deductions, these are just some of the basics! It is always a
good idea to find a good accountant and/or an accounting program.
Remember to keep records for all of your business related expenditures.
