Finance Tax Time

This coming tax season you may be able to deduct more than you thought. If you operate a home-based business, especially if you work at home on the computer then you can use your home office as a deduction. This applies whether you own or rent and the deduction extends to utilities, insurance, and repairs to name a few. There are of course some general requirements as to whether or not your home-based business qualifies as a deduction that the IRS has imposed.

First of all whatever area you designate as your home office must be exclusively and regularly used as an office. You can’t put your desk and your computer in your bedroom and write a few emails and call that a home office. It has to be a functioning area set aside for your business where you work at home on the computer every work day. Secondly, the place that you designate for your home office must be where you principally do business in order for it to qualify as a deduction. In other words all of your administrative activities must be done in your home office and can only be done at that location.

When you are preparing to utilize your home office as a deduction you can only deduct a percentage of the rent, utilities, taxes, and others based on the percentage of your house that you use for your office. So, if you know the square footage of your house then measure the square footage of the room that acts as your office, calculate the percentage of that room compared to the whole house and use that percentage to calculate the deduction. For example, if your office is 25% of your house than deduct 25% of your rent and 25% of your phone bill.

Of course you will want to remember to save all of your receipts for purchases like office furniture and computer components. A filing cabinet is a great way to keep all of your records in an organized manner. You’ll want to save your utility bills also in order to calculate how much was used towards your home-based business. Remember when you work at home on the computer, using computers as a deduction you will deduct a percentage per year since they depreciate throughout the years. A good accountant can help you with all of these intricate details.

In order for your home-based business to be successful you must make sure you have certain key elements in place before you begin and organization is definitely one of those key elements. No one wants to be in the position of sorting through a pile of papers in a box come tax time. Take the time now to set yourself up properly and set yourself up for success!

Author - Harold Reisner
http://www.SummitGlobalGroup.com
Home Based Business Success Coach & Mentor

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Taxes are the great bane of most businesses. Alas, tax deductions act as a salve to cool the burning and itching of your bank account.

The tax system in the United States is an undeniable mess. With tens of thousands of pages of laws and regulations, the phrase cruel and unusual comes to mind when it is time to pay your taxes. President Jimmy Carter called the system a disgrace to the human race. Albert Einstein said the tax system was the hardest thing to understand in the world, much harder than physics. The system is such a mess, that some large corporations file one tax form every four minutes! The only way to fight the good fight against taxes is to understand and maximize deductions.

Business taxes can be summarized simply as calculating your total revenue, reducing this amount by as many deductions as you can and then paying tax on the remaining amount. Obviously, this represents a major simplification, but I offer it highlight the importance of deductions. They act as your lifesaver when you are floating in the ocean of tax codes and regulations.

Most people get caught up in the finite issues of tax deductions and miss out on deductions. To this end, it is important to understand the theme for deductions for small businesses. When considering whether an expense is a deduction, you should ask yourself the following:

1. Did it occur as part of my small business?

2. Was it an ordinary expense associated with my business?

3. Was it a necessary expense?

Many people ask for a more specific of an “ordinary” expense. Alas, the tax code is vague, but this typically means an expense that another business in your industry would also claim. Admittedly, it is a vague term, but you will just have to determine how comfortable you are with claiming the deduction.

The second area people get confused with is the “necessary” element of the test. Alas, the IRS has been kind enough to help us out here. A necessary expense is one integral to the development and maintenance of your business. Okay, the IRS hasn’t helped much, but it is a guideline of sorts.

In many situations, small businesses can be fairly aggressive with their deduction claims. If audited, it important that you be able to state why a claimed deduction is an ordinary and necessary expense of your business. While obvious deduction such as business cards can be claimed, these vague definitions give you lots of wiggle room in other areas.

How aggressive should you be in claiming tax deductions? It really depends on your comfort level. The more aggressive you are, the more you should consider getting some professional CPA help to back up your claims.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on tax deductions.

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Running a home based business reaps many wonderful tax deductions that other businesses some times may not claim. Unfortunately to many small business owners end up paying the government taxes every year because they are unaware or several small business deductions that are available.

Most of the time any expenses that are related to your business can be added as a deduction on your taxes. If you do not pay taxes through out the year, deductions can help you from paying a large amount of taxes each year and can also adjust earned income. Try to avoid paying large amounts of taxes or owning any money by keeping track of simple things!

Each business is a bit different so be sure to mention these ideas to your tax advisor or accountant to see if your business can qualify for these deductions.

1- If you join any business or purchase into any franchise, the expenses such as kits, or franchise fees may be claimed as a deductions.

2- Business Supplies. Be sure to save all receipts for any supplies you purchase for your business use. Computer paper, business cards, pens, catalogs, or any items you purchase and use for your business.

3- Advertising- Most advertising can be claimed on your taxes. Keep all receipts for any newspaper ad’s you may run, or any advertising you do online. Advertising is a business expense and in most cases can be written off.

4- Items Given Away- Keep a list of any items you may give away, and the costs of these items. Most freebies may also be written off.

5- Phone bills and internet access- If you have a phone line for business use or have the internet in your home or office for business use, save all receipts for each bill paid. These items are business expenses and may also be written off.

6- An in home office- If you have an office in your home, make sure to let your tax advisor know. Using a room in your home as an office can also be added on taxes.

7- Long distance calls- If you make any long distance calls that are related to your business, make sure you keep all phone bills showing the calls and the amounts charged. If these calls are related to your work, the cost of the calls may also be written off in most cases.

8- Returned Checks and Bank Fees. If you incur and bounced checks from customers and can not collect on them, those amounts may be deducted, along with any fees you were charged from your bank. Be sure to keep the returned check, the letter from your bank and your bank statement to show the fee you were charged.

9- Postage- All postage costs paid by you or shipping fees may be claimed. Keep receipts for all shipping supplies, and postage.

10- Computers- If you purchase a new computer for business use, the cost of the computer may be claimed. You may also claim depreciation for 3 years after the computer was purchased.

Danni is a proud work at home mom of 3 that enjoys teaching work at home
parents how to run successful work at home businesses! Let Danni teach you how you can make a great income at home! Visit http://www.homebaseddream.com for more info on a business that offers a great home based business opportunity.

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