Tax Deductions For Home Businesses

Tax Deductions For Home Businesses



Tax Deductions for Home Businesses
For most home business owners,​ tax deductions may be the​ key that can help put a​ little extra cash back into their pocket .​
Tax deductions vary from business to​ business but it​ is​ worth your time to​ familiarize yourself with some of​ these common tax deductions .​
First,​ determine if​ you​ qualify for a​ home business tax deduction .​
a​ home office is​ generally defined as​ a​ place where you​ meet with clients,​ patients,​ or​ customers .​
Or if​ this part of​ the​ house is​ used exclusively for business purposes .​
Most people have a​ general image that comes to​ mind when they hear the​ words home office .​
In reality,​ tax deductions can apply to​ a​ variety of​ places .​
Your home office can be a​ garage,​ basement,​ or​ a​ studio .​
If you​ do qualify as​ a​ home business,​ it​ is​ crucial to​ keep all records,​ receipts,​ and paperwork that you​ have accumulated throughout the​ year .​
It will make tax time a​ much less stressful experience for the​ home business owner .​
Do not overlook the​ small things .​
This can be as​ simple as​ keeping the​ receipts when you​ purchase paper,​ staples,​ or​ toner .​
Any item that is​ purchased for your home business is​ usually considered a​ tax deduction .​
This may seem tedious and unimportant but nothing could be further from the​ truth .​
You might be amazed when all these little things add up at​ the​ end of​ the​ year .​
Home business deductions can be separated into two categories .​
The first is​ for Direct Expenses .​
These are expenses that are needed for your actual home office .​
Direct expenses include office furniture,​ decorating costs,​ or​ equipment .​
Indirect Expenses are the​ expenses that must be paid the​ entire house .​
This includes heating,​ electricity,​ or​ mortgage interest payments .​
You can deduct the​ percentage of​ your business expenses from your utility costs .​
Another tax deduction to​ consider is​ telephone expenses .​
If you​ have one telephone line,​ the​ IRS is​ usually not going to​ believe that you​ use this only for your home business .​
The second phone line installed in​ your home is​ purely one hundred percent deductible .​
Another common deduction that is​ often missed is​ the​ lost distance charges incurred because of​ business calls .​
An overlooked tax deduction for some home business owners are the​ meal expenses when they entertain an​ employee,​ a​ customer,​ or​ a​ client .​
Save all your receipts from these business dinners .​
It is​ possible to​ deduct fifty percent of​ meal expenses .​
Education expenses can also be a​ tax deduction if​ it​ is​ required by law to​ update your skills or​ if​ you​ are trying to​ enhance your skills for your current position .​
Most home business owners use a​ vehicle as​ a​ means of​ transportation for their business .​
This vehicle can be used for running to​ the​ post office,​ or​ meeting with a​ client .​
Keep a​ log book in​ the​ vehicle to​ keep track of​ the​ mileage on​ these errands .​
Vehicles can be vital to​ run your home business,​ and overtime these kinds of​ charges can hurt your profits .​
There are many valuable tax deductions for vehicles,​ such as​ car repairs and car insurance .​
Airline fare can be another costly,​ but necessary aspect for home business owners .​
The IRS does allow your trip expense as​ another tax deduction .​
As you​ can see,​ home business owners have a​ variety of​ options when it​ comes to​ tax deductions .​
Remember to​ keep records of​ all your home business activities and consult with a​ tax advisor to​ get the​ best deductions for your home business.




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