Home Business Tax Tips
If you have recently started an Internet or home business,
you're probably a little intimidated by having to submit a tax
return and the possibilities of being audited.
Simply follow these guidelines and rest assured that filing your
next tax return will go smoothly.
Get yourself an accounting ledger booklet The first thing that
you need to do at the beginning of every year is purchase
yourself a accounting ledger booklet. These can be found at your
local office supply store and can be found for under $10. You
can deduct your mileage and the accounting ledger also. Keep a
mileage tracking sheet in your car Each year I make myself a
simple spreadsheet that I keep in the glove compartment of my
car. Each time that I need to get office supplies, or I go to
the post office to mail flyers, I write my beginning and ending
mileage down on the spreadsheet. At the end of the year, I just
transfer the mileage over to my accounting ledger.
Keep track of your Utilities If you have a room in your home
that is used only for your internet business and nothing else,
you will be able to deduct a portion of your utilities. I
especially like this because I have to have these things anyway
with or without the internet business and now they are tax
deductible. Everything from gas, electricity, long distance and
garbage pick-up are allowable deductions. Be sure that you keep
your payment receipts in your accounting ledger.
Other Business Expenses You will also be able to deduct any
payments to your internet service provider. If you have a
website you will be able to deduct your domain name and hosting
plan expenses. Other deductible items could be anything you have
purchased to maintain your business such as: fax machines, copy
machines, scanners, ink cartridges, desks, chairs, phones,
pencils, paper, etc.
Advertising / Membership Fees If you pay for advertising or your
internet business has a membership fee, these expenses can be
Labor Expenses Many home business owners pay members of their
family to help with the home business. Be sure to keep track of
the wages that were paid to employees or family members.
Entertainment Expenses I don't have too much to deduct in this
category, but several times a year I will meet a potential
client over dinner. Keep track of your dinner expenses;
including tips...this is all deductible also.
Income In addition to all your deductible expenses, you will
also need to keep track of any money that you make with your
In closing, simply keep track of all your mileage, utilities,
office supplies, labor and income in your accounting ledger. Be
sure to attach a copy of your receipts. Total up each category
at the end of the year and take the entire booklet into your tax
You will find that having a home business can be hassle free at
tax time if you have taken the time to keep track of your
expenditures and income.