While many people dream of owning their own home-based business, many of those same people may not be aware of how to prepare for filing their income from it. If you have just started a home-based business, learning more about filing your end of the year taxes is a good idea. By starting ahead of tax time, you can be better prepared and know about the deductions that you are legally entitled to. Follow these tips for helping you add the most home-based business deductions at tax time.
About Your Home Office
You can use your home office as a deduction, but only if you legitimately dedicate a certain area in your home to your office. For example, if you write online for a living and you do so on your laptop from your couch, you cannot use that as a deduction. However, if you have an area in your home with a desk that you use only for freelance writing, you can use it as a deduction. Your tax professional can help you decide how much of that space to use as a legal deduction.
The Power And Internet For Your Home Business Computer
If you have an office you use for your home business, you also have electricity in it for running your computer. You can deduct some of the money you spend on electricity for your office. If you use the internet in your business, you can also deduct some of the money you spend on it each month. Again, each case is different so asking your tax professional about how much you can deduct from your electrical and internet usage is best.
Desk Supplies Can Be Deducted
All the supplies you use at your desk for your home-based business can be a deduction on your taxes. Supplies like paper, pens, paperclips, envelopes and stamps are considered business supplies. Every time you purchase any kind of supplies for your home business desk, be sure to keep the receipt. At the end of the year, you can add up the amount of all the receipts you collected for the figure you can legally deduct for supplies.
Meeting Clients For Business
When you meet a client over lunch to discuss business, you can also deduct a portion of your restaurant tab from your taxes. Be sure to keep all the receipts from the times you took a client out to eat because you can deduct 50% of that from your taxes at the end of the year. Also, make sure you write down on each receipt the date, the nature of the business lunch and the name of the client you treated to lunch.
Tax time can be a confusing time for new home business owners. However, by following these tips and those of an experienced tax professional (like those at Wiggins, Smit, Burby, Reineke, & Company P.A. and similar locations), you can rest easy at the end of the year knowing you have everything you need to file legally.
Share11 May 2016
Hello, I’m here to talk to you about small business finances. My name is Neil. Welcome to my site. When I started my small business, I was unable to keep my finances straight. The process of calculating my profits and losses took more effort than I ever thought it would. I was confusing many of my receipts between jobs at first. Luckily, I started utilizing an accounting system that helped me keep my small business finances organized. I hope to help other people make sense of their finances as their company grows. Please continue visiting my site to learn more.