Owning a small business, or working from home, has become everyone’s dream, not only for the prospect of earning more than what a regular income provides, but also for the possibility of having more control over your time and effort.
The only downside is that working from home makes tax quite complicated. But there are ways to deal with the problem by lowering your tax or increasing your tax refund.
Tips For Saving Money On Your Tax
- Make a home tax deductible by turning it, or part of it, into a home office used specifically for business activities. If your home office becomes a legitimate business expense, you can deduct tax from some of your housing costs.
- Home utility bills, such as heating and electricity, are deductible when used for business purposes. Internet and telephone bills are also deductible. But you must be able to identify which percentage was used for personal or business needs.
- All office supplies used for business are also tax-deductible. These include paper, postage, paper clips, ink toner and other items you purchase. In the case of a computer or laptop, it is only 100% deductible if used solely for business. Otherwise, you need to calculate which percentage was used for business alone.
- Business-related travel expenses, such as transportation costs and lodging during out-of-town business trips. 50% of your meals for business days are also deductible.
You can also deduct expenses incurred when you meet clients outside of your home office, take a client out for lunch, your health insurance and office upgrade.
As if these aren’t complicated enough, you may also need to pay self-employment tax if you are a sole proprietor. But you can enjoy a bit of relief, if you run a corporation or LLC.
Think you may be due a tax refund? Apply here to get your tax back.