Work At Home Benefit: Tax Deductions
If you have a home based business, it is important that you know your rights and obligations when it comes to paying business taxes. Unlike a regular business that has employees and business partners, a home based business is entitled to some tax deductions.
Take a look at the following home based business tax advantages:
Business Equipment and other materials
Common devices used for a home based business can be exempted from taxes. Examples are your computer, internet connection, as well as software applications that you use to operate your home business.
If you use research materials such as magazines and reference books, you can also write off these costs when you prepare your taxes. This is a legitimate tax exclusion unless of course you’ve made an incredibly large amount of purchase on these references.
Business Phone Calls
Business phone calls including long distance calls can be written off from your taxes so it is recommended to have separate phone for your personal and business use. This way, it will be easier for you to keep track of your business calls and write these off from your taxes immediately.
Business Travel Expenses
Keep receipts that you collected from your business trips so you can have a valid reference when it’s time to file your taxes. Business travel expenses such as going out the state for research, or purchasing products in other town can be legally written off from your taxes.
Freebies
One great marketing strategy is to giveaway freebies. Even if you have to spend extra on these items, don’t worry, you can still save a great amount because all freebies are tax free. So don’t forget to keep a record of all items you used as giveaways since the cost of these are also tax deductible.
Postage and shipping costs
All costs you paid for postage and shipping are tax deductible so don’t lose those receipts.
Home office
If you use a part of your home as your home office, this can be deducted as well. If you’re still paying for your mortgage loan or if you’re renting a home, you can also save a significant portion of your budget if you write off your taxes for the use of your home as a business place.
Health Insurance Policies
Since you are the owner of the business and you do not have any employees, you can write off the tax from your personal health insurance. If your spouse or your kids are helping you in the business, you can also apply the tax deduction from their health insurance premiums.
These are just some home based business tax advantages that you should be aware of. If you have any questions regarding these matters, it is best to seek assistance from a bonafide accountant regarding your taxes. An accountant can help you identity exactly which of your expenses can be legally excluded from your tax and he can also instruct you about the correct procedures in filing business taxes.
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