April 15th is quickly approaching and you’ve still not gotten your taxes done for your business. Large and established business’ use accountants to handle all of their filing. But, if you’ve just gotten your business started or it’s just a small home based business, you may not yet have the luxury of hiring a personal accountant!
Doing your own business taxes can be overwhelming. Tax laws seem to change on a yearly basis! But, with a little research you can fill out an audit free tax form!
The IRS says that a home office must be a space that is used for business and nothing else. However it doesn’t have to be a whole room, it can be just a corner you’ve reserved for your work space!
How do you know how much of your space is tax deductible? You measure the area and divide by the total square foot size of your home. The percentage you get is the percentage of household bills that can be deducted as a business usage!
The IRS even gives you a couple of choices on some deductions, one is on the office furniture you purchase and the other is on equipment such as computers and fax machines.
With office furniture you can either choose to take the full deduction at once or depreciate it over a period of seven years. With things like computers and printers, you can also take the full deduction the first year of purchase or spread it out over five years.
For 2007, the IRS is allowing up to $125,000 worth of expenditures on office furniture to be deducted. And, that amount will double for next year!
The software that you have to purchase to run your business is even tax deductible! Other things such as mileage, meals, entertainment and even some gifts are tax deductible expenses!
There maybe even other things that you can deduct depending on the type of business expenses you have. Just take the time to do your “homework” and make sure that you can claim everything available to you. And, don’t forget that you will have to be able to back up these deductions, so be completely honest and make sure you keep all your receipts!
Filed under: Uncategorized