Small Business Tax Deductions
March 15, 2007
Welcome Moms! Please register as a user and feel free to submit your posts and comments often! We are link friendly and super excited about what you have to say!
Your new business venture should be a source of confidence and future financial security not a pain in the neck and a drain on your pocket. Understanding a few standard rules when it comes to claiming deductions for your small business could bring you out ahead of the game.
The majority of small businesses are run out of the home. Starting a business in this way could decrease your taxable business income and increase your net profit if you know how to interpret the Internal Revenue Service (IRS) codes. They provide deductions for the small business venture.
The main thing everyone wants to know is if they can claim home office deductions. The answer is “yes”, but you must be clear on exactly what these deductions require on your part. In order to do this and comply with the IRS codes concerning this issue, your home office space must comply with the following: the area in question must be used exclusively and regularly for business purposes only.
Say, for instance, you set up your computer and printer on the dining room table to conduct your internet business. If you also clear off the table to use as a buffet island on Thanksgiving and Christmas, then the rules for deductions don’t apply. The area must be kept as an office all of the time. If you are unsure if you made room for the turkey last year, don’t claim any portion of the square footage or utilities for this space on your taxes. It’s better to be safe, than audited. If you set up meeting with your clients in your home, then the office space and an appropriate portion of the utilities can be deducted provided that the home office is the only office. Keep careful records of the client meetings including dates and times.
Even if the home office deduction can’t be claimed, you can still deduct the cost of equipment and supplies. Paper clips, filing cabinets, printers, ink cartridges, paper, pens, notepads, you name it, you can claim it if it was used for your business. These may seem like small deductions, but anything that can decrease your taxable profit is helpful.
If you can’t claim these deductions this year, don’t worry. Be prepared for next year:
- Install a separate phone line for business calls and conferences
- Choose a room of your home for business
- Dedicate a computer workstation and printer that the rest of the family will not have access to
These tips will give you a leg up on maximizing the profits of your small business. Let the IRS work for you by learning all of their guidelines for home business deductions. For more information, visit http://www.irs.gov.
To learn more, check out the Mom’s Talk eBook’s Guide to Family Budgeting - Step-by-step guide to help you establish a workable budget.
Posted by admin | Filed Under Home Business & Telecommuting, Money & Finance
Similar Posts
- Tax Benefits for Work at Home Business Owners
- Tips for Minimizing Stress for the Work at Home Mom
- Top 7 Ways to Reduce Your Income Taxes
Comments
One Response to “Small Business Tax Deductions”
(Join our Ad Spinner)
How to finally bring a hot meal to the table every night of the week - even if you work full time or think you have the craziest schedule on earth!
[...] are just a handful of the tax benefits available to work at home professionals. The important thing to remember is to be aware of the tax benefits for home based business owners [...]