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Oh NO it’s tax time!
Well close anyway and while this can be a windfall for some and a mad scramble to keep all you can of your hard earned money for others.
For you who own your own business it is a time to learn how to get all the deductions that you are entitled to.
So here are just 10 deductions for your home business.
1. Your home office:
This deduction, however, isn’t limited to only if you use an entire room. Your home office can be just a part of a room. To determine how much of the space is deductible, measure your work area and divide it by the square footage of your home. That percentage is the fraction of your home-related business expenses — rent, mortgage, insurance, electricity, etc.– that you can claim.
{Note} Using the dinning room table in in the day time to work on your business and then feeding the family there a night DOES NOT count as a home office and that space cannot be deducted as such.
2. Telephone and Internet:
Regarding your phone use. You can deduct the cost of the business calls that you make from home (even on your cell). keep track of your business related use either circle them on your bill or make a list of each call if you are paperless total them up each month and keep a copy. At the end of the year add them all up and deduct 100% of the business charges.
Unless you have a deducted home line/cell for business only, then cost of the phone and usages/contact fess are not deductible.
Same with the Internet unless you had an account setup just for your business use, you would only deduct your monthly internet expenses in proportion to how much of your time online is related to business.
3. Your office furniture:
Deduction of the furniture for your office can be done a couple of different ways. Deduct 100% of the purchase price in the year that you bought it or take the depreciation by deducting a portion of the cost over the next seven years.
4. Office supplies:
Even if you choose not to claim your home office, you can still deduct the business supplies you buy. Keep and catalog your receipts, because these expenditures will offset your taxable business income.
5. Computers and larger equipment:
The computers, copiers, scanners, printers etc. also are tax deductible. And like the office furniture, you can take 100% deduction up front or depreciate it (but this time over five years).
6. Business periodicals, subscriptions and software:
The rules for deducting business and industry-related magazine subscriptions weren’t changed. You can still take the total costs as a full deduction in the year spent.
But, due to the IRS expanding Section 179 of the tax code you can now with off the shelf software you purchase for your business fully deduct in the year purchased 100% of the cost. Instead of deduct it over three years as it had been in the past.
7. Education and schooling:
Any education expenses that you want to deduct must be related to your existing business and are fully 100% deducatable.
8. Your mileage and vehicle upkeep:
If you use your car in your business, you can deduct car expenses. If you use your car for both business and personal use, you must divide your expenses based on actual mileage. Refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses. For a list of current and prior year mileage rates see the Standard Mileage Rates.
Transportation expenses can be considered an audit flag, so make sure you only take what you are entitled to and that you keep detailed records.
9. Travel:
When you travel for business, you can deduct many expenses, including the cost of plane fare, costs of operating your car, taxis, lodging, meals, shipping business materials, clothes cleaning, telephone calls, faxes and tips.
If you combine business with pleasure, you can still take a deduction as long as business is the primary purpose of the trip. But if you take your family or spouse along, you can deduct only your own expenses, just as if you had went by yourself.
10. Advertising:
Small business owners are also eligible to deduct their advertising and promotional costs. This includes any of the following promotional mediums: print like classifieds, trade journals and newspaper ads, direct mail and billboards. Search engines Pay Per Clicks (PPC) and voce like radio spots and TV/movie theater commercials
Any of these methods, are 100% deductible. But as with all deductions please keep detailed records.
This is just 10 of the many deductions that having your own business allows you. If you have a tax consultant talk to them about additional ways in which you can save, or do your own research. But, don’t forget to make that bite Uncle Sam takes out of our income each year a little smaller and easier to withstand by utilizing all the deductions that are allowed to you under the law.
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Sandy Metcalf
