Sunday, February 24, 2008

Tax Time!

Yes it is tax time again. Didn't I just do this? Boy, a year really comes at you fast! I hate working on my taxes, but it has to be done and it definitely has its' rewards because I have a Home Based Business!

Since I run my business from home and it is an MLM or network marketing company, whichever you prefer, I must keep track of all of my expenses throughout the year and pay taxes on my income at the end of the year as well.

THERE ARE GREAT TAX BENEFITS WORKING FROM HOME! Whether you are involved in MLM, Network Marketing, or some other type of home based business you can benefit from the list below. To start here is a link to the IRS. When doing your taxes, if you are not sure about anything you should be able to find your answers on their site, IRS, or ask your accountant.

If you have been toying with the idea of starting a home based business then stop messing around and see what can become your legitimate tax deductions when you start working from home! If you already have a home business this will help to open your eyes and see why it is so important to keep track of all of your expenses.

1) The initial investment or the start-up costs you pay to become associated with your preferred MLM / network marketing opportunity, or other business venture. Also, your marketing materials. Do you share brochures, flyer's, DVDs, etc. with potential customers?? If so, you can use those expenses as deductions as well.

2) Your computer - If you are using it for your business and contact information then it is part of your business expenses. Computer and Computer supplies -- anything related to your business. If you have several people in your household, it may be a better idea to have one computer for exclusive use in your home based business and one for the rest of the family. Otherwise, keep good records of when you are working on the computer. Keep a log next to your computer so when you are on it you can log your time usage.

3) Your Internet connection - yes you are using your computer to market your product worldwide and to talk to your business partners and to drum up more business.

4) Furniture for your office or home office

5) Your long distance and cell phone service - If you are working a network marketing business or an mlm I know you are on the phone often and with people from all around the globe.

6) A percentage of your rent or mortgage - Do you have a space that you are using as your "home" office? If you are working from home it could be an entire room, a desk in the kitchen, your entire basement or any other place you set up your "stuff" to do business.
7) Gifts to business partners, associates or clients (speak to your accountant to find out how much per person per year is deductible)

8) Your utilities - Heat, AC, electricity. You are using all of these things when you work from home so a percentage of these can be deductions as well.

9) Travel costs to go to seminars and conferences. Deductible travel costs include hotels, airfare, taxis, car rentals, tips, and so on. Make sure to talk to your accountant and find out what and how much to deduct appropriately.

10) Most important - Get a good accountant that knows HOME BASED BUSINESS! Accounting and bookkeeping fees can also be a deduction! (including the portion of your tax return preparation fee that includes your business return can also be tax deductible)

This is just my short list of things that can be deducted if you have a home based business. I hope this list is helpful to you!
Make sure you plan ahead and keep track so that when taxes are due you are not looking around for all your receipts. I keep a file with individual folders labeled January through December. Each time I get a receipt, bill etc... I put it in the appropriate folder. At the end of each month, I enter what I need to into a spreadsheet and at the end of the year I give the spreadsheet to my accountant. I also give him the folders with the receipts so that he can make sure I did not miss anything. My accountant also knows the square footage of my home and he knows the space I have designated as my office. He does some type of percentage to handle the utilities.
As noted above...make sure you have a good accountant that knows how to handle a work from home situation. You want to make sure that can determine which expenses are deductible in your specific circumstances.


Houstonhotdeals said...

Great Blog. After looking at some of the adds....I'm tempted to do adwords. Thanx for posting to the Word Game.

Jack Payne said...

I just put up a blog piece, "Tax Time Scams--How to keep IRS from Knocking on your Door," so this piece of yours attracted me to it.

Big red light. I.R.S. has not let up on home businesses. Launching one now, I understand, is an open invitation to an audit. If you know otherwise, please correct me.
Key choking point is the big number of people who hyperbolyze the extent to which their house is dominated by business activity. Some claim up to 90% of the house's total floor space.

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