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Managing a home business is a pretty heavy task, especially for solo owners. Because they juggle and oversee all of operations, some of them tend to overlook efficient tax planning, which could bring them considerable savings. Here are some tips to minimize taxes for home business owners, and to make sure these fiscal perks are availed of:
Maximize workspace deductions: A room or a space must exclusively be for business activities to be qualified for home office deductions. The office area should be divided by the total area of the house. This figure should then be converted to percentage, which represents the total home expenses that can be included in the home office deduction.
Deduct home utilities: In connection with the previous tip, a qualified home office means the owner can deduct a percentage of home utilities such as mortgage interest, utilities, insurance, etc. from the total home office deduction.
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Upgrade equipment: The costs of equipment which were purchased solely for the home office such as furniture or computers are also deductible as long as they were filed within the year the equipment were purchased. Even small office supplies such as ink toner, paper clips, etc. can also be fully deductible. The owner should be able to prove that all of those equipment and supplies arer regularly used in the home office.
Business trips: Expenses incurred from conferences, workshops, or client meetings can be deducted. Deductions include plane tickets, rental car, bus fare, lodging, and even half of total meal expenses for business trips.
Anthony Laxen is a tax manager and shareholder at Weber & Deegan, Ltd. in Edina, MN. He is also a member of American Institute of Certified Public Accountants. To learn more about tax management, visit this Google+ page.
