Running a home-based business can be a great way to be your own boss and set your own hours. However, it can also be challenging to keep track of your business expenses and maximize your tax benefits.
Here are some specific deductions and credits available to those running businesses from their homes:
- Home office deduction: If you use a portion of your home exclusively and regularly for business purposes, you may be able to deduct a portion of your rent, mortgage interest, property taxes, utilities, and other expenses.
- Business expenses: You can deduct the cost of any expenses that are ordinary and necessary for your business, such as office supplies, computer equipment, travel expenses, and marketing expenses.
- Health insurance deduction: If you purchase health insurance for yourself or your family, you may be able to deduct the cost of the premiums.
- Education expenses deduction: If you take courses related to your business, you may be able to deduct the cost of the tuition and fees.
In addition to these deductions and credits, there are a few other things that you can do to maximize your tax benefits as a home-based business owner:
- Keep good records: It is essential to keep good records of your business expenses so you can substantiate your deductions when you file your taxes.
- Use the correct business structure: Choosing the correct business structure can affect your tax liability. For example, if you are a sole proprietor, you will be taxed on all of your business income on your personal tax return. However, if you are a limited liability company (LLC), you may be able to shield some of your personal assets from liability.
By taking advantage of the deductions and credits that are available to home-based businesses, you can reduce your taxable income and save money on your taxes.
Not exactly sure how to get there? Contact the professionals at Pennywise Tax Strategies today!