Tax Benefits of a Home Based Business

If you have a home business then you need to make sure you take advantage of all the tax breaks that are available to you. Many home businesses are unaware of all the tax breaks that are available to them and do not claim them on their yearly tax return. This is unfortunate because small home businesses more than anyone need all the tax help they can get. The following tax benefits are just a few suggestions every home business owner should consider claiming this tax season.

Tip #1 Business Space

You can claim a portion of your utilities, insurance, mortgage, and more, for your business space. As long as there is a percentage of your home that is used solely for business purposes then this consists of your "office." To find out how much you can claim of the above expenses you need to do a little math. Determine the square footage of your home and then the square footage of your "office." Once you know the percentage then take that amount from your yearly mortgage payments, insurance payments, utilities, repair, and the like. An example would be that if you used 15% of your home as office space then 15% of the bills associated with the home could be claimed as an exemption on your tax return. This can result in some major savings when tax time rolls around so be sure you investigate what expenses relate to your business and can be exempted.

Tip#2 Transportation Expenses

You have a car, you buy gas, and you pay for car expenses. This can add up over a year's time so you want to make sure you claim all uses of the vehicle for home business purposes. This could include trips to the post office or to buy home business supplies. It might be to pick up lunch for clients or driving to meet potential clients. As long as you keep a record of where you drive, how many miles it is, and who you are meeting with then you can claim the transportation expenses and be covered in case you are audited.

Tip #3 Furniture

Believe it or not but you can deduct furniture as long as it is used for business purposes. That means your desk, tables, chairs, even a sofa used in the office space may qualify for a deduction. Keep records of how the furniture is used and be sure to always keep receipts for the price of the furniture. When you claim deductions, even if they are legal ones, you want to make sure you can cover yourself if you are ever audited in the future.

There are actually many other tax benefits a home business can take as long as they qualify for them. Some of these include telephone charges, social security, computer equipment, restaurants and hotels, and even child labor! There are ways to reduce your tax liability each year as long as you are savvy enough to figure them out. Sure, you can always hire an accountant, but then you would have to pay him. So, figure out where you stand and how you can help your home business save money on taxes each year.

Article Source: http://www.rightbiz.com

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