Do you enjoy all the perks that come with running your own home business?
If so, then you’re one of the millions of people nationwide that call home their workplace.
With all the positives that come from working out of one’s home, there are some perceived negatives too.
Worse yet, missing out on a number of home business deductions when it is time to do your taxes can be frustrating on several levels, most notably your pocketbook.
Know What You Can Deduct
So that you can be sure you have hit all your home business deductions for this tax season, did you include the following?
- Home office – The notable deduction should be the space set aside in your home for work. While you can’t deduct the entire residence, you can declare the space where your office is (note the approximate square footage). Most people working out of their homes have a small office area set aside for work only, though others will incorporate their work into a portion of a living room, kitchen, bedroom etc.
- Office supplies – There is little doubt that you will need supplies to run your home business, so always take stock of them when doing your tax prep. From paper for the printer to pens and notepads, those trips to the supply store add up over time. In order to save some money during the year on some purchases, look to buy in bulk. Some dealers will give you a discount when doing just that.
- Communications – Given you likely talk to clients on a daily or weekly basis, be sure to include charges for your phone and Internet service dedicated to work. If you spend time and money (mileage, gas etc.) traveling to meet with clients, be sure to note such trips. No, you can’t deduct the ice cream cone you may have purchased on the way home from a client meeting, but you can write-off a business lunch etc. In the event you are traveling to conferences and/or networking events to meet with prospective clients, that can also be noted on your tax preparations.
While there are some other tax deductions you can look into, those mentioned above are the main ones to not drop the ball on.
Speaking of taxes, while no one ever wants to get that letter from the IRS, there is always the chance of an audit.
In the event that happens, having a New York tax attorney or one closer to where you reside on your side is a good idea.
With an experienced tax attorney in your corner, you can feel more confident in stating and winning your case.
If by chance you do get audited, be sure that you have all your records in place (you should do this anyhow) so that you can back up what you originally stated on your tax forms.
Another area of importance added to your tax situation over the last few years is health insurance.
Given you are running your own home business; you in all likelihood do not have an employer-sponsored health insurance plan covering you (unless you have an outside FT job and do the home business on the side).
The government now requires that individuals be able to prove they have some form of health insurance covering them. For those individuals who are not covered, they are subject to a fine. That fine has increased rather substantially in the last year, so being covered certainly makes sense in more ways than one.
Running a home business opens myriad of doors for men and women all across America.
Yes, there are issues like not having co-workers around to mingle with, not having an employer paying for your health insurance, and not having someone to handle other H.R. related tasks.
On the flip side, you don’t have someone standing watch over you eight hours a day, your commute is literally from the bedroom to your home office, and you don’t have to deal with the office politics that encompass so many offices on a daily basis.
If you’re running a home business, make sure you get each and every one of those deductions coming to you.
About the Author: Dave Thomas covers business topics on the web.