Home Business Ideas-Turning Trash Into Treasure
One of the major benefits of a having a home based business is the tax advantage. By changing a room in your home to a business office, you can qualify to deduct some basic household expenses into legitimate business expenses. The home computer that requires monthly payments can pay for itself when you use it as a business tool for your home based business.
A simple calculation will show you the basic savings advantage of using a room in your home for a home based business. Start by calculating the percentage of the house that you will use for your business.
If the total house is 1200 square feet and there are 5 rooms in the house, you can safely assume that approximately 10% of the home' will be used for business. If your mortgage payment is $1200 than you can deduct approximately $120.00 per month for the home business deduction. That is an instant deduction of over $1,200.00
In order to qualify for some business deduction, you must have the intent of making a profit. The time that the IRS gives small business owners to show a profit are usually 5 years. You can meet this qualification if you make a profit in any 2 year period within the 5 year period.
You should always consult with a tax professional who understands the tax code as it relates to a home based business. Seek out a competent tax accountant to get the maximum tax savings and deductions for your small businesses.
But the standard deductions that large Fortune 500 companies use can be utilized by small home based business owners. The Government provides some of the same tax deductions for small businesses that large companies enjoy.
There are some caveats to using a room in your home for your home based business. To meet the eligibility requirements for a home based business, the room designated for this purpose must be used exclusively for the business.
You can not allow the kids to watch TV or play bumper pool in this room during off hours. The room must be used exclusively and regularly as the primary business location.
However the positive news is that you can deduct basic business expenses such as office supplies, including paper, ink refills for your printer (which can be very expensive)and anything related to running your business. If you subscribe to trade magazines that have something to do with your business, this is a qualified deduction.
Other business expenses that are standard are: Business use of your car or truck (mileage can really add up) Percentage of your utilities Tax consultant, bookkeeper Magazines and books Software that you purchase to run your business
When you establish your home based business, you will use Schedule C, Profit (or Loss) for Business or Profession form to claim your business deductions. Even though the IRS states that claiming business-at-home deductions will not trigger an audit, it is better to be doubly safe and maintain excellent records.
Always consult with a qualified tax preparer so they can provide you with excellent insight into keeping the records for your home based business.
Related Tags: work from home, work at home, home business ideas, make money from home, home business new
Ken Shorey is owner/webmaster of www.ez-work-at-home.net. Visit his site for legitimate Work At Home Ideas and Opportunities.
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