Let Your Home Business Help With Your Taxes

Let Your Home Business Help With Your Taxes Having a home-based business makes some very significant tax advantages available to you. Every year, many home business owners start worrying about how they’re going to file their taxes, or they start rummaging through everything trying to find the receipts and information they need to take to their tax accountant.

Some are worried about being audited by the IRS and are afraid that their home based business will be a red flag to get audited. But the truth is only 5% of taxpayers actually get audited, and if you are one of the chosen few good records will be a lifesaver for you.

Here are a few ideas of expenses you can claim towards your taxes. (Note: I am not a tax expert and make no such claims. Please be sure to consult with your own tax professional as to how these will affect you).

1. Your vehicle:  This is the most common write-off and most people know to claim it. If you use your vehicle to meet a client, that counts as a business expense. But keep in mind that you can also claim the expense of driving to the Post Office for stamps or to your local office supply store, even if you’re running errands at the same time. You can choose to keep track of all your expenses such as gas, insurance, auto maintenance, etc., and writing all that off, or you can keep track of your mileage instead. The mileage is easier, but you’ll need to find what works for you. Be sure to keep good records. If you’re using mileage, purchase a little mileage log from your office supply store and keep it in your visor or glove compartment. Make it a point to log your mileage every time you get into the car and keep track of any mileage that relates to your business. This is worth a lot to you at tax-time.

2. Office Supplies:  This is a given. If you use ink in your printer, or paper to print on, or even pens & pencils for your business; these are all tax-deductible. Be sure to keep every receipt.

3. Rent & Utilities:  If you rent an office space, you can deduct all your rent and utilities, even internet if it’s being used for your business. If you work from home you can write off a portion of your home expenses, including your mortgage payment or rent and utilities. This true if you’re using your garage, a separate room, or even a corner of your living room. To figure out how much you can write off, you have to determine the total square footage of your home. Then figure out how much area your home office space takes up. So, if your office space takes up 10% of your total home area and you pay $1000.00 a month for rent or mortgage, you are allowed to claim $100 a month for your office space as a business deduction. That amounts to $1200.00 a year!

4. Travel, Entertainment and Gifts:  Good news, small-business travelers. You might as well stay in a nice hotel, because the entire cost is tax deductible. Also the cost of travel – plane, train, boat or automobile – is 100 percent deductible, as well as the costs associated with travelling such as car rentals, tips for the bellboy or luggage handlers, etc. The only exception is eating out. You can only deduct 50 percent of your meals while traveling – unless you are entertaining a client to discuss business.

5. Insurance Premiums:  If you are self-employed and paying for your own health insurance, in most cases this can be deducted as well. Of course all insurance premiums for your business such as liability insurance are always deductible.

6. Telephone Charges:  When you receive your phone bill, circle all charges that were business related and those can be deducted. Because it is assumed that you have a home phone, regular charges & fees are not tax deductible, but if you have a second line for business all expenses are tax deductible.

7. Web Expenses:  If you own a website, that will include the costs of web hosting, site development and maintenance, and owning your domain name.

Of course, these are only a few of the expenses that you can claim. The most important piece of advice I can give you is to keep good records. If you keep track daily or weekly as the charges are incurred life will be a breeze at tax time. Be sure to check with your tax professional to ensure that you are taking all the deductions available to you.

<—— Did this article help you? If so, it would mean a lot to me if you would share it with others!!! And, share your comments below!  I would LOVE to know more about you and your thoughts on this subject!

Let’s have some conversation!

EXPECT Success!

By Lynn Huber

lynn huber

p.s.  As you can see, starting a home business can make you eligible for some serious tax breaks.  It is a good idea to get some professional advice, but for many people, starting a home business can be a great way to make extra money and save on taxes.

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