Home Based Business – IRS Tax Advantages To Know About

This post was written by Internet Marketing John on December 8, 2009
Posted Under: Home Based Internet Business

Home based business tax advantages should not be the main reason for starting your online business, but they definitely help with the decision making when you realize just how much you can actually deduct.

Many United States citizens operate their home based businesses for the sole reason of taking advantage of the liberal tax deductions associated with this type of work.

Most of us know how great it can be to work from home, but do you realize just how many tax advantages there are?

Claiming partial use of your home for your business, can give you several nice deductions when tax time arrives on April 15th.

Before you jump into anything that is tax related; you need to be sure that you meet the requirements of the Internal Revenue Service.

Their guidelines change almost as regularly as the weather, so either give them a call and discuss your intentions, go online and search for information on home businesses, or talk to a qualified tax accountant to be on the safe side.

Always cover your bases with the IRS; it’s better to be safe than sorry at tax time.     irs

  • Generally, you can claim a percentage of your home, when you use one room, or several rooms for your business.
  • This can lead to a significant home based business tax deduction, at the end of the year
  • You can also include portions of your gas, electric, and water bills that are specifically related to the area of your home that you work from.
  • All home renovations, and any improvements that are made for your work area can also be fully deducted.
  • Any office services and expenses such as FedEx charges, postage stamps, PayPal charges, credit card fees, or part time office help is also deductible.
  • If you install a separate telephone line for your business, or use a cell phone or BlackBerry for business purposes; all costs including installation and equipment can be expensed.

You need to be careful that the service is strictly for business, and not personal use.

This can be difficult if not impossible to separate, unless you assign a different telephone number for your business.

You MUST keep your personal environment, entirely separate from your business working environment, when dealing with the IRS.

  • If you use your car in your business, you can deduct the mileage, and any other vehicle related expenses that you incurred during the course of doing your home based business.

It is very important to maintain good records and keep all your receipts.  It’s also a good idea to keep a mileage log, and jot down any vehicle expenses as they occur, during the course of doing business.

Incidentals always pop up with any business.

  • You can deduct office supplies, advertising materials, your computer, computer software, fax machine or copier, post office box costs, and any other costs associated with your home based business.
  • You can even hire your spouse or other family members as employees for your business.

This is especially beneficial because it enables you to deduct everyone’s health insurance premiums, as well as other employee related expenses from your gross.

The down side is that you are responsible for FICA and other taxes.

To be sure about the home based business tax deductions that are currently available to you, talk to an experienced tax adviser.

Although the IRS imposes some fairly strict requirements; if you maintain good records, and follow the advice of an experienced tax adviser, you can conduct a lucrative, successful home based business.

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