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
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Recent Comments
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Thank you for this post. Very interesting information I had not thought of before. I'm going to have to delve into this are a few more times to understand it a bit more.
Great success to you! WA!
Yes Adrian its always best to look these things up for info pertinent to your own particular circumstances.
Hope you went away with enough info to start your own research.
Have a good day.
Robert
Hello Dominick and thank you for your visit.
happy to pass on my tips and advice but always best to do your own research as well.
Onwards and upwards.
Robert
Hi Vicki
Thank you for dropping by and hope the info in the blog was helpful.
Of course not being a US citizen my knowledge is limited to my research but I hope I have given some insight to the tax benefits of other members who are US citizens.
There is actually much the same benefits for UK citizens as well.
Enjoy your weekend to come.
Robert
No probs Juan and happy to pass on any info I believe will help the membership.
Thank you for reading and commenting.
Enjoy your Friday.
Robert
Thanks Robert! Vital information for all of us looking to treat this like a business and not a hobby!
Thank you for your visit John and for leaving a comment.
Of course its up to the individual how they see their home business.
If they treat it like a hobby then they are never going to make enough money to pay taxes.
If they want a business that will enable them to earn reasonable amounts of cash then of course the tax man will want his cut but there are many ways you can reduce your tax bill as my blog shows.
Enjoy your weekend.
Robert
thank you i already have a business and deduct any expenses i can and i keep very good records monthly and at the end of the year i give it to my accountant .
Hi John and thank you for reading the blog and for your input.
Good to know you have yourself sorted with the taxes that affect you.
Will you be any better or worse off when the new taxes come into force though?
Enjoy your Friday.
Robert
Well timed. Was just thinking about this. Does this include the recent tax changes as I understand that some dedications for home businesses were eliminated?
Steve
Hi Steve and thank you for taking the time to read my blog and leave a comment.
As I don't live in the USA I only know that as you say some of the taxes where eliminated but don't know exactly what ones.
Always best to check for your particular circumstances.
Robert
Yes, there are changes, mostly to business expenses. I didn't see anything that impacted the deductibility of home offices. There is a new 20% deduction for passthrough businesses (sole proprietors, S Corps, partnerships, trusts). Entertainment expenses are no longer deductible. The IRS has a webpage for the tax reform related changes.
Hi Glen, thank you for your input to Steve, appreciate your extra info.
Enjoy your Saturday.
Robert
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Thank you as always for your informative post
Hello Sandy and thank you for taking time out to read the blog.
Always happy to pass on info that will help my fellow members.
Have a great Saturday when it dawns for you.
Robert
Thank you, Robert, you as well
your friend Sandy
No probs Sandy.
You have an awesome Sunday.
Take Care.
Your Friend Robert