You have probably heard that there are two tax programs in the United States. One program which is used the most is for the "employee". This is the programs where the employee works for a wage but before he receives his paycheck, Uncle Sam has already dipped in his hand and taken a chunk of change.
The other program is for the "business owner". This program is set up such that after all the bills have been paid, then Uncle Sam gets to take a portion but only from the amount that is left. For more information on these two methods, please read my earlier post.
Now lets go over some of the more popular key tax breaks that a owner of a home based business might be able to incorporate.
Business use of the home.
If you have a home office where you conduct your business you may deduct this. You will need to know the square footage of your home as well as the square footage of your office. Once you know this, you can figure what percentage of your home is your office. That percentage is the amount you can deduct. For example, if you have a 1000 square foot home and your office is 100 square feet. The amount you can deduct is 10%.
Use of your vehicle.
If you use your personal vehicle for your business you must keep a mileage log. This mileage log should include date, purpose of trip, and the odometer reading before your trip and after your trip. This will allow you to calculate the number of miles. You will then be able to write off your mileage.
Business equipment/furniture.
If you have need to purchase a new computer, desk, software, etc., keep the receipts. These items are deductible in that they will be figured into the cost of doing business.
Utilities and home maintenance.
Once again, if you have a home office the percentage you figured for your home office will be the amount you may deduct for things like electricity, telephone, water, gas. This can also be figured into maintenance such as painting, even remodeling if you remodel your home for a home office.
Meals/Entertainment
If you take clients or prospective clients out to dinner and you discuss business, you may deduct a portion of these meals. Lets say that afterwards, you take that client out for round of golf. That as well will be eligible for a partial deduction. Make sure your keep your receipts. Record the date, the amount, where you went, who you went with and a brief description of what you talked about.
Business trips/Vacations
Business trips are deductible. If business trips are deductible, why not center your vacations around a business trip.
These are just a few areas where the home based business owner may look for tax breaks. Remember, keep good records.
Make sure you always check with a good tax accountant who is knowledgeable about home based businesses. It is important to make sure they are current with the ever changing tax laws.
Marie Northrup lives in the beautiful panhandle of Idaho in a small town called Bonners Ferry. She is happily married had has two wonderful young adults as her children.
Honesty, integrity, humility and friendliness are important.
Marie is involved in several opportunities that focus on her interests. She believes strongly that one should never stop learning. Because of this belief, she is involved with iLearningGlobal. To learn more visit http://overallwealth.com
Marie also believes in helping others achieve their dreams. SponsorDaddy is an opportunity that helps take people's businesses and primary business opportunities to the next level. To learn more, visit http://networkmarketingprospect.com
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