Owning your own business and working from home has its perks and its challenges. It’s nice to check your email in your pajamas and drink coffee out of your favorite mug. However, dealing with the accounting and taxes associated with your own business can really be tough.
When it comes time to deal with the numbers, there are three very important things to remember:
Keep the receipts for all transactions that pertain to your business.
Always keep the hard copy. If you can, scan them into your computer so that an electronic copy exists in the event that the paper copy is lost or damaged.
Deduct all expenses that pertain to your business.
Be sure to deduct as many things as possible when filing your taxes. Here is a list of common deductions for home-based small business owners:
– Your Mortgage or Rent
If you work from home, your mortgage or rent is tax deductible. If you didn’t work from home, you’d have to rent space or buy a building to house your business. You may only be able to deduct a percentage of your mortgage or rent based on how much of your home you use exclusively for business.
– All Utilities
Deduct your power, heat, air-conditioning, water, and any other utilities that are important to your business. You’d have to pay these if you were renting office space!
– Communication Services
Include your phone, fax and internet service in this deduction. Without these common yet crucial forms of communication, you would never be able to communicate with customers.
– Computers and Software
Any hardware or software used to conduct business can also be deducted.
When you insure your home, you are insuring your place of business. Also, see if you can include your health insurance, dental insurance and any other insurance you might be paying.
Any time you travel to see a client, that transportation is tax deductible.
– Meals and Other Entertainment with Clients
Dinners, drinks, concert tickets, baseball games or any other place that you go with a client to discuss business is tax deductible.
– Security Systems
If your home office houses confidential documents that require security, these systems are tax deductible. This includes surveillance and alarms. Fire-proof and thief-proof safes are also included in this list.
Hire an accountant if you feel uncomfortable with the accounting tasks.
While it is nice to save money by doing it all yourself, sometimes it is best to leave the money matters to the experts. It is important to educate yourself on ways to make accounting more efficient. You should always be aware of the financial status of your business. However, when it comes time to do the pencil pushing, it’s okay to hire someone else to do it. Unless your primary business is accounting, you may not be doing yourself a favor by doing it all yourself.