Home-Based Business Tax Deductions
Running a business from home generates many wonderful tax deductions that other businesses are sometimes unable to claim. Unfortunately for many small business owners they end up paying government taxes every year because they are unaware of the small business deductions that are available.
Most of the time, expenses related to your business can be added as a deduction from your taxes. If you don’t pay taxes for the entire year, deductions can help you pay a large amount of taxes each year and can also adjust earned income. Try to avoid paying large amounts of taxes or having money by keeping track of the simple things!
Every business is a little different, so be sure to mention these ideas to your tax advisor or accountant to see if your business may qualify for these deductions.
1- If you join any business or buy into any franchise, expenses such as kits or franchise fees can be claimed as deductions. Receipts for these business start-up costs should be kept.
2- Commercial supplies. Be sure to save all receipts for supplies you buy for your business use. Computer paper, business cards, pens, catalogs, brochures, or whatever items you buy and use for your business.
3- Advertising: most advertising can be claimed on your taxes. Save all receipts for any newspaper ads you may run, banner advertisements, or any advertisements you do online. Advertising is a business expense and, in most cases, it can pay for itself.
4- Items Delivered: Keep a list of the items you can give away and the costs of these items. Most gifts can also be canceled.
5- Telephone bills and Internet access: If you have a telephone line for business use or you have Internet in your home or office for business use, keep all receipts for each invoice paid. These items are business expenses and can also be written off.
A cell phone used for business is also a deduction.
6- A home office: If you have a home office, be sure to inform your tax advisor. Using a room in your home as an office can also be added to taxes.
7- Long distance calls: if you make any long distance calls that are related to your business, be sure to keep all the telephone bills that show the calls and the amounts charged. If these calls are related to your work, the cost of the calls can also be amortized in most cases.
8- Returned checks and bank commissions. If you incur bad checks from customers and are unable to cash them, those amounts can be deducted, along with any fees charged by your bank. Be sure to keep the returned check, your bank letter, and your bank statement to show the fee they charged you.
9- Shipping costs: all shipping costs paid by you or shipping costs can be claimed. Keep receipts for all shipping supplies and shipping costs.
10- Computers and software: If you buy a new computer for business use, the cost of the computer can be claimed. You can also claim the software that you can use for business.
You can also claim depreciation for 3 years after the purchase of the computer.