Tax Benefits Of Running Your Home Business

How To Save With Tax Deductions For Home Based Businesses

Hi Folks

I had a few questions this week from new members asking when they should start paying tax. I had to reply that it would depend on how quickly and successful they where.

However what I gleaned from the questions though was the question that wasn't asked.

That questions was - What tax benefits were there in running a business from home?

This blog is my reply to any member would like to know.

Tax Advantages Of A Home Based Business

A big advantage of working from home is the tax benefits of operating a home based business. Working from home allows you to deduct portions of bills that you are already paying to live there.

You can deduct home expenses if you actually work in your home. Its easiest to do this if you have a room set aside for your business. Figure out how big that room is in proportion to the house, and you can deduct expenses using that percentage.

For example, if your place of doing business takes up 5% of your house or apartment, you can deduct 5% of your heating expenses for the days you work. (In other words, if you don't work weekends, you can't deduct for weekends.) You can deduct items such as mortgage interest (though not your mortgage itself), electricity, telephone, insurance, and expenses for maintenance and repair. In general, you can deduct the portion of expenses that directly relates to your business.

You can easily make this image bigger with a mobile device but for a PC or Laptop you should right click and choose whatever method to enlarge the image.

You can also deduct costs for your internet service provider in proportion to the amount you use it on business, too. If it's used completely for business you can deduct it all, but be certain before you do this that you are not using it for other reasons.

The nature of your home based business is not critically important. What is most important is for you to review the related IRS regulations and make sure that your business and the manner in which you intend to operate it will qualify as a home based business.

The tax benefits of operating a home based business enable you to deduct things you would otherwise be paying in full. Therefore when considering a business from home, it's a good way to lower your costs. This is just one more advantage of working from home.

Onwards and upwards folks.

Have a great weekend and be successful.

Robert Allan