Home Business DeductionsI am not a lawyer. Always ask a lawyer / tax advisor about your specific situation. But in general, The IRS has information on paying people for businesses expenses here -
IRS Publication for Small Businesses
Part of the beauty of running a home business is that you get a TON of deductions. Not only that, but in general you are expected to lose money at the beginning of your business life. So if you lose money in the first year because you had to buy supplies and get your marketing rolling, that's normal! Just be sure to make money in the subsequent years, in order to prove that you really do get those deductions you've been claiming.
So what sorts of things can you deduct against your income? There are ALL sorts of things that now become deductible on your taxes:
* Mileage, driving to and from business-necessary locations
* Office supplies - pens, paper, tape, staplers
* Business cards, fliers, brochures
* Web access fees
* Computers, printers, answering machines
* Second phone line for business purposes
* Clubs and memberships to promote business interests
* Books on the topic of your business
Utilities deserve a special mention here because that is a HUGE deduction for most people. Let's say you have a 1,000 square foot home. Let's say your home office is 2,000 square feet. That is 20% of your home! So you can now deduct 20% of all of your utilities! That's 20% of your electric bill, 20% of your heating bill, 20% of your air conditioning, 20% of your lighting, 20% of anything related to your home. You can even deduct portions of your mortgage and other bills, plus outside landscaping, if it involves a benefit to your home business!
This can save you THOUSANDS a year and is well worth looking into. Read up on this on the IRS site or in your tax software!
Taxes and your Home Business
Working from Home