RSSTax Tips for your Home Based Business
There are many benefits to owning your own home based business, or even running an internet business. One of the biggest problems, however, is dealing with taxes. Not only is the code complex, it is long. Some of our legislators, who are responsible for the code’s ever growing length, have said that the code has more than 5.5 million words. That’d be almost 7 times the length of the bible! Here are some great tips for your internet and home based business!
Be Organized!
You can’t get in control of your taxes until you are organized. A personal or business coach can help you with this. If you’re in a state of Chaos you can’t get in control of your taxes. Tax deductions can be found many places in the home based business but you need to be sure you have all the facts about what the IRS code says on deducting home based business expenses.
Before you can actually deduct, you must qualify.
For the most part, expenses, like mortgage interest and real estate taxes, aren’t deductible. You may be able to deduct expenses related to the business use of part of your home if you meet specific requirements but even then, your deduction may be limited.
To qualify to claim expenses for business use of your home, you must use part of your home:
- Exclusively and regularly as your principal place of business,
- Exclusively and regularly as a place where you meet or deal with patients, clients, or customers in the normal course of your trade or business,
- In the case of a separate structure which is not attached to your home, in connection with your trade or business,
- On a regular basis for certain storage use
- For rental use, or
- As a daycare facility.
Once you decide that your home based business is eligible for deductions, you can then begin to figure the deductions. There are professional advisors in this area of home based business strategies
Here are a few things that you can deduct when the time comes to fill out your Schedules SE and C.
Internet Usage
Do you use the Internet to conduct a great deal of the business from your home office? If so, you can deduct a portion of what you spend each month for that broadband connection. All you have to do is figure out what percentage of the time you use the Internet to complete your e-commerce transactions, and then deduct the amount paid. For example:
Your broadband Internet connection costs $50 per month. When the Internet is used, about 70% of the time it is used for your home business purposes. You multiply that: .70 x 50 = $35. Then you multiply that $35 by 12 to get your deduction for the year: $420.
Web Hosting
If you have a Web site strictly for your home business and you pay for Web hosting, this can be deducted as well as a business expense. After all, you pay a monthly fee for the hosting. And, if you had to pay a fee for domain registration, that is also tax deductible in the year that you paid it.
Telephone Use
In a process similar to figuring your deduction for Internet usage, you can figure out a tax deduction for your business phone use. Many people choose to get a separate phone line for the home office so that it is easier to keep track of the expenses related to this particular tax deduction.
As always, you should consult your accountant or a tax specialist to make sure that you are deducting eligible expenses. And you should keep careful track of your expenses so that you can more easily figure your deductions at the end of the year.
When you stock your home office with the proper business supplies, you should impress upon your family the importance of certain supplies being used only for business as much as possible. When you buy them for your home business, these supplies can be part of your tax deduction.
Here is a list of some of the basic home office supplies:
Phone (one with its own line is preferable, if your start-up finances allow it)
Stapler
An “in” box
Handy file on hand (to file papers immediately after they have been taken care of)
Clock
Calendar
Paper clips
Pens
Notepaper or notebook
Filed Under: Home Based Business
August 4, 2011 at 3:06 am |
I really couldn’t ask for more from this arctlie.