More Home Business Tax Information....
Home-Based Business Owners Enjoy all Kinds Of Tax Advantages.. And we'll try to get some more home business tax information here to help you get that dreaded task out of the way! From the independence of working for yourself to making better income than you may currently make, there are many reasons that starting a home-based business might be right for you. One consideration that you might not have taken into account is the tax advantages that you will enjoy with a network marketing business or any business that is run from your home. The Home Office Deduction The deduction that usually comes up first is "The Home Office Deduction", which allows you to deduct some or all of the expenses of your office , depending where it is located...
To qualify for any deduction, first, your home office must be the principal place where your business is done. In other words, you can't be doing it at the kitchen table one day, and in the bedroom the next day or leaning against the kitchen counter for an afternoon!
Secondly, the office space must be used exclusively for business use to qualify. For example, if you use your kitchen as your primary workspace, it is likely that you cannot take the home office deduction, assuming that you use it for personal use as well. To be on the safe side, set aside a room as your home office where possible.... There will be times that you will be in other areas of your home as you work your business, especially if you are on the phone a lot, but have your computer, paperwork, filing cabinet, etc in one specific area or room. Home Office Building-Related Expenses Repairs and improvements to your home office are completely deductible. For example, painting your home office is an expense that relates directly to doing business out of your home, so it is deductible in full. As far as mortgage or rent deductions... Let's say your home office makes up 200 square feet of your home's 2,000 square feet total, you can write off up to 10% of the mortgage interest for your home as a business cost or if you rent your home, the percentage of your home used exclusively for business use would also be deductible. Property taxes paid for your home also qualify at the same percentage rate as the mortgage. Lawn care is not tax deductible for your home based business. If you own your home and pay home owner's insurance, you may deduct a percentage of that expense, as with mortgage or rent expenses. If you have additional insurance coverage that covers things specifically for the business, you may deduct these expenses in full as direct business expenses. Utilities You can write off the same amount or percentage on your electricity, heating, etc... as your rent or mortgage, as that is also based on the percentage used as a home business office. Transportation and Mileage Transportation is a deductible cost , and is one area where detailed records is critical. You will want to record the odometer mileage of your car before and after your trip to determine the number of miles traveled. Keep a booklet or small tablet handy at all times and record ANY mileage used for your business - like, trips to the post office, bank, when you run to get office supplies, etc. Combine all your trips into 'business trips' from now on - when you need to run to the bank for your business, do it at the same time you run one of the kids to their soccer game and it's a tax deductible trip! Alternately, if you have places that you travel to a lot for your business, you can just record the number of miles once and then multiply by the number of trips to determine total mileage. Phones, DSL and Communications For a home based business, the first phone line into your home is considered by the IRS as a personal expense. Additional phone lines for business use, including cell phones used for your business, are tax deductible. Internet service provider fees or broadband costs such as dsl connections are deductible as a percentage of business use to total usage... You will likely be asked what percentage of the total time used, is used for your home business. Meals and Entertainment If you take a client or prospective client out to lunch and talk about your business, it is often tax deductible as a cost of doing business. If you are doing business out of town or attend a training event, you can typically deduct the amount of meals. Meals and Entertainment is one area that is often abused by small businesses, so if you plan to take deductions for these kinds of expenses, be sure to keep receipts. You can only deduct 50% of the cost of meals and entertainment. Record Keeping Many small businesses let themselves get cheated every year by not taking deductions they are legally entitled to on their taxes for fear of being audited. As long as you stay within the IRS guidelines for what is and is not tax deductible and keep receipts and good records, you are safe to take the deductions you are legally entitled to. The home business office tax write offs in particular is a deduction that many have wrongly assumed makes them a target for an IRS audit. If ever in doubt, go directly to the source, the IRS themselves. They publish many articles defining exactly what deductions you are entitled to so that you can be sure that you are in compliance with the law.
For more information on home business tax information... visit this site. Whether you are looking at getting started with network marketing or already have a home based business, you owe it to yourself to know what your tax write offs are!
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