Your Home Business and Your Taxes

With the internet in its phase two of a bubble, the growth in home businesses has been large as well. Your home business is convenient to you, only involving going places through the internet, and it also helps to lower your taxes. You have to keep track of your expenses, and try to separate your business expenses from your personal expenses. If you can keep track of simple things, the tax deduction benefits can be enormous. Talk to your tax advisor about the possibility of tax deductions from your home business. Possible deductions include educational expenses on courses you need to run your home business. Also, if you are joining a business or franchise you may have to pay fees or join various buying “clubs” and these can be claimed as a deduction.

Of course a telephone line for business use is necessary. If it is a separate line for only business this is obviously a tax write off. Having a room in your home that functions as the home office means that part of your mortgage or rent can be written off as well. There may be limits to how much of your home expenses to write off, so working with a tax advisor or an accountant who is familiar with these things is always a good idea. Other devices you may need include a new computer for your business, a fax machine, a printer, a copier. For certain phases of your business in the real, non-virtual sector, you will also have to use your car or possible a truck. Advertising can be claimed on your taxes. Advertising is a business expense and in most cases can be written off. If you suffer bounced checks from customers and can not collect on them, those amounts may be deducted, along with any fees you were charged. There are also state and federal tax deductions, which are “above the line” for alternative fuel vehicles, including hybrid vehicles, which use electric motors as part of their energy mix.

The biggest and best tax deduction is to form your own business. All you have to do is prove that you have a profit motive. You don’t have to actually make any money doing your job, at least not immediately. You may decide to go into business as a sole proprietorship, or it could be advantageous to form an LLC, or S-Corporation, as a pass through entity on your taxes that still protects your personal assets from seizure.

Adam Heist is an expert in the field of loans and runs a highly popular and comprehensive personal loan web site. For more articles and resources on loans related topics and much more visit his site today.