Nothing beats having a home based business to call your own that you can rely on to pay all the bills and let you have the freedom to say goodbye to the nine to five grind. What many do not consider however is that because you will be working for yourself you will be responsible for paying your own taxes as there will be none withheld unless you set up to do so with a payroll company. Either way you do go however, there are some tax advantages that a home based business can offer a small business owner.
While there are a wide variety of tax advantages for a home based business, here are the top four that are easy to use and often overlooked:
1. Home Office Deduction: This deduction allows you to deduct all or some of your office expenses for the office that you have set up in your home. To qualify for this deduction you must have your home office be the principle place that you conduct your business and your office space must be used strictly for business. You may also be able to deduct improvements done to your home office such as painting and decorating.
2. Education Expenses: If you further your education in a direct relation to your home business field then those classes or coursed are more than likely deductible. This is a great opportunity for you to learn more about your specific industry and be able to enjoy a tax break as well.
3. Technology: When it comes to a home based business the IRS will consider the first phone line into your home to be a personal line and therefore not deductable. However, if you have a cell phone and you use it for business purposes then the cost of the phone and the monthly service fees are deductable. You can also deduct your Internet provider costs as a percentage of its use in relation to your business. For example, if you are using your Internet for 50 percent work and 50 percent pleasure, then you will be able to deduct 50 percent of the monthly fees associated with it.
4. Transportation: If you home based business requires you to travel to and from client’s homes or businesses then you can deduct the miles that you travel in relation to the business. For every mile you travel the IRS will allow you to deduct a certain amount of money and if you travel quite a bit then those miles can really begin to add up. A word of caution here; this is one of the most abused tax deductions in regards to home businesses so if you plan on using this deduction it is a good idea to keep a journal that logs all of your business miles you travel.
Of course the best way to find out all of the tax advantages that you will be able to enjoy with your home based business is by seeing a Certified Public Accountant. It may cost money to do so, but these professionals typically make up for what they charge you by what they can save you in deductions.
Author Resource:
Jason Kay has been a successful internet marketing professional since 2004. He recommends learning how to start a home internet business at http://www.easyhomeinternetbusiness.com .
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