Your Home Based Business Could be Tax Deductible
Did you know that owning a home based business can help you with tax deductions? If you’re a home based estate sale company, or a real estate agent, there’s no better time than now to think about year-end tax savings, here are some of the areas to consider when you meet with your tax consultant.
There are a few IRS forms you’ll want to get yourself familiar with Form 8829 which encompasses home business deductions, publication Form 535 covers business expenses, and publication Form 463 covers travel related expenses.
Home Office Tax Advantage
Most businesses have an office, including rent and utilities, for a home based business it’s different, you can deduct your home office if you have a dedicated space you exclusively use for daily business activities. Using the couch to answer phone calls does not qualify as a dedicated home office.
If you’re taking a home office deduction, depending on the percentage used, you may be able to deduct internet fees, phone, electricity, even a portion of your mortgage.
Office Supplies Deductions
If you can prove you’re using supplies for everyday business in your home such as printers, computers, notepads, ink cartridge, etc. You can deduct them. If you’re using these supplies for both personal and business, you’re only able to deduct a percentage of the office supplies’ expense.
When you travel to meet with estate sale clients and sign the estate sale contract, potential home buyers if you’re a real estate agent, or attend a training seminar, you can deduct travel costs, lodging, tips, and meals associated with those business travel expenses.
Health insurance and retirement plans
If you’re self-employed you may be able to deduct your and your family’s health insurance costs. When you’re new in the estate sale business, it’s hard to think about saving, but when you start conducting estate sales and the cash flow is flowing, you may want to think about stashing away money in an IRA which is a tax-deferred retirement plan.
“Retirement plans are the last thing small businesses think about, but it’s one of the best tax-deferred options and I always advise my small business owners to take advantage of it when they can” says Michael Ellerd CEO of Ellerd Business Services, tax and accounting firm helping small businesses for over 25 years.
Professional Tax Advice
When it comes to the IRS and taxes, you want to make sure you’ve got everything in order; you should always consult with a tax professional to address any questions or concerns. Owning your own home based business is exciting and financially rewarding in so many ways.
Even the largest businesses and corporations have tax bills, questions, and issues. Being informed and relying on a professional tax adviser is the only way to maximize your tax benefits.