Tax time is just around the corner! This is a time most businesses owners dread especially if they have not been diligent with their record keeping. Of course they also want to pay as little taxes as possible.
You might think that your online business has its own set of rules, but the rules are the same across the board. There are specific deductions that you can claim to reduce your taxes, but you must be aware of them. Get professional help if you’re not entirely certain what you can claim for. The following tips will give you a head start.
It’s important to keep your receipts of all your purchases and income in a safe place. Your receipts should be filed according to categories which will make it easy to sort when you’re filling out your taxes. You can also scan and file your receipts electronically.
Deductions For Your Home Office
Deduct a portion of your home expenses if you have a dedicated space in your home that is allocated for your home office. This office must be your primary place of business and it cannot be used for any other purpose in the home. For instance, a home office by day and bedroom by night doesn’t qualify. You can make deductions for utilities, mortgage, repairs and other claims if you have a dedicated home office.
Donations To Charity
Cash or property donations to charity can be deducted if you have accurate records of your donations. You’ll need to have your non-cash donations appraised if the deductions are over $5000.00. All donations need to be itemized and should not be placed as a single large item on your tax form.
A carefully recorded mileage log should be prepared if you use your vehicle for doing business. Some specific things that you should record are dates, destination, mileage for the beginning and end of trip and the purpose for the trip. Writing that you drove 25 miles will not be accepted by a tax agent.
Employ Your Kids
Want to teach your kids responsibility and still help your taxes? If they’re older than 6 years you can hire them to help out in the home business, and as long as they’re under 18 it will be a deductible business expense.
You’re allowed a telephone deduction if you have a second phone line at home that is dedicated for business. Long distance charges made for your business can be deducted if you have one phone line, but it’s better to have a second line for business.
Any seminars, training or extra classes that you take to enhance your business are deductible. Books, newspapers and similar publications are also deductible in this category.
Any costs, associated with the setup and maintenance of your website, are also deductible business expenses. Therefore your web hosting, domain name, website design and related software costs are considered valid business expenses. Review the rules as it relates to website design since they are very specific.
Greeting cards and postage used for business purposes can be considered as a business expense. Email addresses, leads or mailing addresses that you purchase for business are also deductible.
As a business owner any non-reimbursable health costs are also tax deductible. Insurance premiums, co-pays and similar health costs can be deducted for considerable savings to you.
Always consult with an accountant or tax advisor for rules that are specific for your state. The deductions presented here should serve as a general guide to what type of deductions you might be entitled to as an online business owner. Get advice from a professional since your tax deductions might be more or less than the information provided in this article.
What has been the biggest tax benefit for you as an online business owner?