It’s easy to skim over the tax stuff at first. You’ve got a lot going on. You’ve got professional drive and lots of ideas. You tapped the expertise of key people and feel secure in the guidance of your mentor. You are on your way to home-based business success.
So lists like “ home-based business tax deductions to know” might seem like a bit of buzzkill to your entrepreneurial excitement.
But hold on a minute. Do you really want to hand everything over to an accountant who doesn’t see how you operate your business at home and might miss some key deductions?
Of course not!
While you’ll need your accountant’s support, this is your business and you know you can’t afford to think like an employee anymore. You’ve got a whole new mindset, career path and tax situation to master. It’s important to save yourself time, money and future missteps by getting your tax filings right.
Alright then, here’s your money-saving master list:
Home Based Business Tax Deductions to Know: Benefits Programs
Health Care Expenses (dental and medical)
Expenses can be written off if they exceed 10% of your adjusted gross income (AGI) for any particular year. More if you or your partner are over 65 years old.
Career Education and Training
If you can prove that training is necessary for the improvement and maintenance of your business, this deduction applies to you and any employee. Conferences, networking mixers, and more qualify.
It’s possible to set up an account and write off contributions much like a corporation would do. Simply activate your 401(k) account, and deposit a percentage of your net income, up to the annual limit.
Home Based Business Tax Deductions to Know: Office Expenses
Supplies used for business are fair game. You can also write off a multitude of tangible and intangible office expenses from staples to the three-hole punch to website maintenance fees.
A myriad of postage-related expenses can be written off. Stamps, UPS, FedEx, P.O. boxes work. The main thing to remember is that any shipping and handling costs paid by customers are not write-offs.
Home Based Business Tax Deductions to Know: Work Space
For home office deductions to apply, your workspace must be dedicated (not shared with the kid’s crafts or nightly meals). Deductions will correspond to the percentage of your home used for work. Just divide the square footage of your office area by the total amount of square footage in your home.
Homeowner’s & Mortgage Insurance
Using part of your home as your primary place of business permits you to write off at the same percentage of your homeowner’s insurance bill. Also, retaining a part of your home as an office allows partial deduction of your mortgage interest in your business filing instead.
Repairs, Maintenance, Janitorial Services & Utilities
Repairs and maintenance directly related to your business space are write offs too. Shelves, upgrades, and the fees of a cleaning person (or your own cleaning supplies) all apply. Partial deductions of your energy costs, hot water and phone lines are allowable each year as well.
Home Based Business Tax Deductions to Know: Financial
Home-based business owners can deduct account fees and ATM charges.
You can write off any expenses connected to collecting or settling customer debts.
Credit Card Fees
Deduct the hefty costs of credit card processing, transactional fees, annual credit card fees, and any late payment fees for your business.
Home Based Business Tax Deductions to Know: Business Development
Advertising and Promotion
The deductions here may vary widely. Include printing, web and media, and sponsorship costs.
Conventions and Seminars
If the event is related to your business or function within the business the costs of these events may be deducted.
Your loyal customer gifts may be written off up to $25 per gift on your tax return.
Home Based Business Tax Deductions to Know: Professional Services
Your business accountant’s fees for the year are fully tax deductible.
Consultant & Subcontractor Fees
Bringing in consultants can be costly. It’s good to know that the fees are fully tax deductible. Individual subcontractors are also write-offs, just be sure to provide a Form 1099 for each subcontractor you pay over $600 for the year.
Contract development and various liability protections may require tax-deductible visits with your attorney. They are write-offs as long as they are what the IRS deems “ordinary and necessary business purposes.”
Home Based Business Tax Deductions to Know: Travel
Whether it’s to attend a conference or visit a client, you can write off many of the costs associated with traveling for business are write-offs. Airline tickets, hotels, and rental cars used for business are all tax deductible. Meals may be written off at 50 percent of the bill.
Home Based Business Tax Deductions to Know: Vehicle and Transportation Expenses
Just about anything related to your business vehicle may be written off: loans or lease costs, gas, and insurance. Time used for business only should be a write-off if use the vehicle personally too.
Home-based business owners can write off a base amount of 54 cents per mile from your home base to conferences, client meetings, networking events, etc.
Parking Fees & Tolls
Tolls and parking fees associated with business travel can add up to major deductions on your taxes.
All in all, when it comes to home-based business tax deductions to know, keep the IRS guideline “ordinary and necessary” in mind. Definitely, don’t forgo the help of your accountant (after all its a write-off)! Learn the tax deduction ropes to save money, avoid audits, and make the most of your home-based career.
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