Posted by Fletcher Accounting and Tax Service Inc.

Some Useful Home Business Tax Tips

Some Useful Home Business Tax Tips

Although it has become a cliché, yet one of the greatest perks of a home business is that you can enjoy significant tax breaks. A self-employers or an owner of a small scale home business will find it difficult to sail across taxes levied by the IRS. At this point you need to take refuge in finding some useful home business tax tips.

 Although you can and should make use of the services of the Tax Preparer and software, it is still recommended that you, from your side, should have some fundamental know-how on how to tackle the possible tax issues in your home business. Personal income tax can be a hassle in itself and filing these taxes as a business can be devastating. However, if you willing to go through the hassled paperwork and ready to incur stress upon you by reading through the fine print, you can save significant sums of money through tax deductions.

So, here are some of the fundamental home business tax tips that can allow you to reduce the amount of income that is subjected to tax:

The location and the design of your home office

If you want that your home office do not fall prey to the scrutiny of the critical auditors then you need to manage an organized book-keeping. Such book-keeping will act as an evidence that your tax deductions are only for business outlays. Furthermore, there are some pointers for you to consider regarding home offices:

  • You need to specifically make sure that you designate a separate distinctive area for your home office. This area should be a clear cut line of separation between your workplace and the rest of the area of your house. Also, do not open your home office in a spare bedroom or a kid’s playing room. The place should be separate from the main household.
  • Moreover, if you happen to own a single computer then it will be almost impossible to say that it is for office use only. No auditor would believe in your claim. So how would you proof that it is not for personal use but for office you? Here you have two option; either you dedicate the computer totally for office purpose or you remove the computer from your office area.
  • Calculating the percentage of home expenditures that can be deducted from the home business is quite easy. All you need to do is measure the area your home office occupies and divide it with the total area of your home and multiply by 100. The percentage figure you get will contain the expense of your business such as rent, mortgage, utilities and taxes.

Deducting business travel expenses as one of the useful home business tax tips

If you own a small business at home and it fulfils your dream of business travelling, then you home business will definitely move to a next level. As such travel is dedicated for solely business purposes for example expansion and growth, these travel expenses, in this case, are completely tax deductible. So, one of the most important useful home business tax tip is that you engage in book-keeping of all your travelling expenses such as airline fares, accommodation expense, commuting expenses at your destination, rent a car expense, laundry and food costs. Keep in mind that the food expense accounts for 50% deduction only as the government assume that you need to consume food whether you are traveling or not. 

Nevertheless, if you are undertaking business trips that are related to your home business, you need to keep these pointers in mind:

  • You can take your family or spouse with you on your business trip. However, only the travel expense that surround you and your business will be subject to tax deduction. The responsibility of bearing the travelling expense of your family will be on your shoulders.
  • If you decide to take your clients out for a lunch or dinner meeting to a restaurant, those dining expenses are only 50% deductible. All you need to do is that when you get the receipt or bill, you write the reason for having such and such meal.

So, if you want to ensure that your home business is successful and for the most part, is tax deductible then keeping records of all your instances and details of your purchases in the form of book-keeping is advisable. In this respect, book-keeping is the useful and foremost home business tax tip. 



Fletcher Accounting and Tax Service Inc.
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