Home business tax deductions are just one reason (of many!) that a home based business is so attractive. Home businesses are blessed with a variety of tax write-offs. Expenses that you have to pay on a daily, monthly or yearly basis in your home environment can become deductible.
Tax laws vary depending on the state you reside in. Talk to your accountant about your individual situation and which expenses you need to keep track of and which expenses may or may not be deductible. Remember, deductions and business expenses can change from year to year.
Possible deductions for your home may include the business portion of various household expenses. The "business portion" refers to how much of your home you use actual running of your business. For Example, a room used for an office, located in your home environment that is used to commission the daily tasks of your business is approx 10% of the size of your home. Approximately 10% of the following deductions may apply to your business expenses which in return could be deducted from your business taxes. Please check with local professionals to determine whether there is a size limit to the area you may claim as an office. You may be able to claim the business portion of:
In addition to the business use of home expenses above, you may also be able to deduct:
Equipment you purchase for use in your business, such as a computer.
Home business tax deductions can vary widely from situation to situation. Each individual type of business falls under predetermined codes by your state. And again, Tax laws can change from year to year. Just make sure you've done your homework to avoid being audited.
I have two forms to guide you through your personal business needs. The first one is a monthly worksheet. I find it easier to keep track each month of expenses incurred the previous month. For easy reference, I staple receipts and bills to the monthly form. Everything is all together in one place.
The second form can be used for consolidating totals of each expense category for the year. This is then easily shared with your accountant for tax preparation.
These forms highlights the most common expenses to keep track of during the year.
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Erik Boh and Lynn Pistacchio are the contributors to our