As a home based business owner what you must do is not confuse your personal tax returns with that of you home based business. It is important to create and maintain a filing system whereby receipts, bills, and so on are not just recorded in a spreadsheet but filed safely in case the IRS requests for it.
Did you know as a home based business owner you are eligible for many tax deductions that individuals are not entitled to? Check whether you have been availing the following:
1. Tax deductions for business related expenses. Make a note of your business related expenses and check with the IRS website or a tax advisor whether any of the expenses are eligible for deductions.
2. Membership to any business chain or purchase of a franchise, expenses for kits and so on get tax deductions.
3. Office supplies like stationary, computer paraphernalia, business cards and so on are all eligible for tax deductions.
4. Advertising in magazines and newspapers or sending out direct mailers is a tax write off. However you need to maintain detailed documentation.
5. If you have a promotion in place that entails giving away of freebies then the cost of freebies can be written off in your business taxes.
6. Phone bills, fax bills, and internet connections all used exclusively for business purposes warrants a tax deduction. So be sure to file all bills and receipts properly.
7. If a room or space at home functions as the home based business office then the space ‘rent” warrants a tax waiver as the rent is clubbed as an expense.
8. Costs of postage, courier, bank fees, and credit card fees for business related use, and memberships to professional bodies are all eligible for tax deduction in the case of a home based business. So, keep a track of all expenses and always keep business related credit cards separate from ones for personal use.
9. Purchase of machinery for the business as well as its maintenance can be claimed even purchase of a computer for business use. Depreciation can be claimed on cost of computers, fax machines, and other machines purchased for business use.
10. Cost of fuel and maintenance on automobiles used for business purposes can be claimed as a business deduction.
11. If family members help in running the business then any allowance you give them is eligible for deduction. So your kids to help clean, file or run errands can become tax deductions.
Before compiling your taxes and filling in your tax return forms read the detailed information given by the IRS for home based business taxes at : http://www.irs.gov/pub/irs-pdf/p4035.pdf . If you need any clarifications call the IRS at: 1-800-829-1040. Access the information and publications at: http://www.ustreas.gov/irs/ci/ and http://www.irs.gov .
Home based business owners can benefit greatly by educating themselves on tax laws and staying abreast of new developments in taxation and filing of tax returns.
Barry Allen is a freelance writer for Online Tax Firm, the premier website to find tax, return tax, tax software, free tax filing, sales tax, services tax,income tax, property tax and many more.