Running a home-based business reaps many wonderful tax deductions that other businesses sometimes can’t claim. Unfortunately, many small business owners end up paying government taxes each year because they are unaware of the small business deductions that are available.
Most of the time, any expenses related to your business can be added as a deduction on your taxes. If you don’t pay taxes during the year, deductions can help you avoid paying a large amount of tax each year and can also adjust earned income. Try to avoid paying large amounts of taxes or owning money by keeping track of the simple things!
Every business is a little different, so be sure to mention these ideas to your tax advisor or accountant to see if your business may qualify for these deductions.
1- If you join any business or buy into a franchise, expenses such as kits or franchise fees can be claimed as deductions. Receipts for these business start-up costs should be kept.
2- Commercial Supplies. Be sure to save all receipts for supplies you purchase for your business use. Computer paper, business cards, pens, catalogues, brochures or any item you buy and use for your business.
3- Advertising: most advertising can be claimed on your taxes. Save all receipts for any newspaper ads you run, banner ads, or any advertising you do online. Advertising is a business expense and, in most cases, can be written off.
4- Gift Items: Keep a list of the items you can give away and the costs of these items. Most gifts can also be cancelled.
5- Telephone bills and Internet access: If you have a telephone line for business use or have Internet at your home or office for business use, keep all receipts for each bill paid. These items are business expenses and can also be written off.
A cell phone used for business is also a deduction.
6- A home office: If you have a home office, be sure to let your tax advisor know. Using a room in your home as an office may also be added to the tax.
7- Long Distance Calls: If you make long distance calls related to your business, be sure to keep all phone bills that show the calls and the amounts charged. If these calls are related to your work, the cost of the calls can also be waived in most cases.
8- Returned Checks and Bank Charges. If you incur bad customer checks and are unable to cash them, those amounts may be deducted, along with any fees charged by your bank. Be sure to keep the returned check, the letter from your bank, and your bank statement to show the fee you were charged.
9- Postage- All shipping costs paid by you or shipping costs can be claimed. Save receipts for all postage and shipping supplies.
10- Computers and software: If you buy a new computer for business use, the cost of the computer can be claimed. You can also claim software that you can use for business.
You can also claim depreciation for 3 years after the purchase of the computer.
