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If you’re running a home business, have we got some good tax news for you! By popular demand, here are even more tax write-offs that are especially suited to home businesses.
Employing your kids
Being around your children can be one of the biggest lifestyle advantages of a home-based business, of course. And if you hire them to help you with your work, having your kids just upstairs from your office also can yield significant tax benefits.
Whether they do internet research for you or comprise your focus group for the toy you’ve invented, paying your kids a wage can represent a legitimate expense. “You just have to keep really good logs of what they’re doing, and when they’re working, to prove that they’re actually performing a function,” Rosenberg says.
And, of course, you can’t pay them any more than what the market wage would be for their tasks.
Processing your expenses
Both to keep financial tabs on your home business and to maximize write-offs, you should organize your records in two ways.
First, thoroughly document expenses while you’re making the outlays. Don’t lose track of a single penny. Get receipts for everything, every day, and stuff them in an envelope; or at least jot your expense and date on a piece of note paper.
Second, organize a thorough record of your disbursements. An off-the-shelf accounting software package works marvelously for this. And some home-based business owners hire a bookkeeper just for this and other mundane financial chores that they can’t or don’t want to handle.
You should consider obtaining a separate credit card just for business use and running all your expenditures through that card. “It’s a great organizational tool to make sure that everything related to your business is on your books, and you can maneuver the information however you need to,” says Stephanie Schank, a home-based corporate-meeting planner through her company SpotOn Events, in San Francisco.
And for tax time, most credit-card companies will give you a print-out categorizing your expenses over the course of they year, which you can then happily hand to your accountant.
Getting expert help
Hire a competent accountant to optimize your tax preparation. There’s just no substitute for a professional who can size up you, your company, and your particular situation to make sure no write-off goes unexamined – whether the accountant thinks you should claim it or is protecting you from yourself!
Our Bottom Line
As always, StartupNation highly recommends that you consult a professional tax accountant before taking any of these deductions or write-offs. StartupNation is not licensed to provide tax advice, and cannot make tax recommendations for individual small business owners.