The timing could not be better for working from home. In our current economic climate, having a home based business is not only a great way to earn additional income, it has great tax benefits in the US.
1. Get organized and automate your record keeping.
Like it or not, one of the necessary parts of being a business owner is dealing with expenses, in other words accounting, a task that many of us dread. It is crucial that you maintain good records since your documents (bills/receipts) are your proof of your deductions. Keeping good records doesn’t have to be hard or expensive.
2. Set up a designated area in your home as your office.
Did you know that if you qualify, you can deduct a percentage of your home by having an area as an office? If you can, a spare room is ideal, but you can even designate a space in your home (like a desk cubicle) and deduct a portion of your mortgage/rent and associated home utilities if your space is used exclusively for business.
3.Deductions for office equipment and furniture.
Did you buy a new laptop or printer for your business in 2010? What about that desk or file cabinet? This year, the 179 Deduction limit is up to $500,000.00 for qualified expenses. You can write off the entire cost of these items if used 100% for business.
4. Deductions for the cost of doing business.
Did you buy office supplies? Postage? Business cards? What about advertising costs, web hosting fees, professional fees, software, education expenses (if directly related to your business)? These are some examples of expenses that you can include in your home business deductions. See IRS Pub 535 for additional information.
5. Travel, meal and entertainment expenses.
In 2010, we took two trips for business events. We will be able to deduct our air fare, hotel, meals, and fees associated with these trips, which will save us hundreds of dollars on our tax bill!
The good news this year? Taxes aren’t due until April 18th, 3 extra days! Don’t let the task of filing your taxes be one you hate; with your home based business, you may find tax time a pleasant experience, especially when you see how much you save!
Written by Deb Lane