What impact can a home-based business have on your taxes?
April 15th is the day that most American’s look towards with doom. Are you one of them? Are you sick of working hard every day, and having to give such a large percentage of your money to the government? Do you wish there was a way to beat the IRS, but legally? If so, you are one of millions.
There IS an under-utilized solution to this problem. I would like to take this opportunity to educate you about the benefit that a home based business can have on your tax burden.
When people think about the benefits of a home-based business, they often first think of the following: Financial gain, independence (not having to rely on your boss or a company to provide you with everything you need), and a sense of self worth and accomplishment.
Have you ever thought of a home-based business as a venue for Tax Relief? Most people don’t realize how much money they can save by starting their own home-based business. Even if your business doesn’t turn a profit right away, you can still benefit from the mere fact that your business exists and that you are attempting to turn a profit.
Also, your home-based business doesn’t have to be a full time deal. It is something that you can fit into your current lifestyle. You can continue to do what you are doing today, and add a home business.
The fact is that many people struggle with finances. But there are things that you can do legally to ease that burden. If you operate a home-based business, there are many deductions you will be able to take that will dramatically decrease the amount you have to pay to the IRS. I recommend that you consult with an accountant to find out exactly what you are legally able to deduct for your home-based business, but here are some possibilities:
Home Office Expenses:
Business expenses can include a portion of your rent or mortgage, real estate taxes, utilities, insurance, painting and repairs. The actually amount you can deduct depends on the percentage of your home used for business.
Traveling Expenses:
You can deduct your traveling expenses. This such as airfare, transportation, hotel, and other lodging expenses are all included. There is a limit to meal deductions. The best part is, if you plan properly, you can mix pleasure with business and still get benefits.
Entertainment Expenses:
You can deduct 50% of the cost of meals in restaurants, or an entertainment/sporting event as long as business take place before, during, or soon after the event.
Depreciation Expenses:
You can deduct property you purchase for the business that is intended to last longer than a year. This includes things such as: computers, office furniture, and machinery. You have the option of deducting a little each year or all at once.
Professional Services Expenses:
You may need help getting your business established. Fortunately, you can deduct any fees you pay for attorneys, accountants, consultants, and any other professionals related to the operation of your business.
Advertising Expenses:
The key to any business is advertisement. There are countless ways to advertise free, especially on the Internet. However, any advertising that you do will count as a business expense, and therefore can be deducted.
Taking a Loss:
Most home businesses do not turn a profit right away. Due to this, your home business expenses may exceed your income for a while. You may not deduct more than you make in any one tax year, but you may carry a loss over to the next year if it cannot be used in the tax year in which it occurs.
Starting Your Own Home Business
As you have read, there are many tax benefits to starting a home business. You don’t even have to return a profit immediately to take advantage of these benefits. Starting your own business is something that everyone should take into consideration.