By G. L. Giddings, Chairman and CEO, GLG and Associates, LLP®
(The POWER Group Organization Team®)
I have been involved in the home-based business industry since 1979 and today make a GREAT living from home. Even though I work from the comfort of a laptop and not-so-sophisticated phone systems (2 mobile and 1 business land-line phone), I do go out on appointments with business owners, meet with potential clients, and attend many networking events. I operate a home-based business, not a home-bound business. I regularly have to itemize ALL of my business expenses, which can add up very quickly with utilities, supplies, marketing tools, travel expenses, among other things that can pop-up out of the blue and throw one for a loop!
If you ever wanted to work for yourself, starting a home business can be very challenging, but I wouldn't change it for anything in the world! I have total control of my time, no glass ceiling to worry about, no one telling me what to do, and the BEST part, I can make as much MONEY as I want, whenever I want, wherever I want! But here's the catch. If you don't take your business seriously, you'll be BROKE in no time!
Since the holiday season is here and tax time is right around the corner, I wanted to share a couple of tips any home-based business owner can do to take advantage of the many deductions available to them so you can keep the MAJORITY of that tax money in YOUR POCKET instead of giving it all to the IRS!:
·-- Employ your children in your home based business and pay them up to $4,400 a year per child tax free to them and tax free to you. After paying them, you can then have that child pay his/her own expenses (with the parent’s supervision) such as clothing, allowances, college funds, entertainment, school supplies, etc. There has been a court case ruling authorizing a child as young as 6 years old can work in the home-based business to qualify, but if the child can answer the phone and take messages, they are old enough to justify paying them up to $4,400 a year.
·--Deduct mileage @ $.325 per mile when driving anywhere to conduct business. In addition, mileage back and forth from your home based business to your place of employment could be deductible as a Schedule A deduction (mileage between two places of employment). Providing you conduct some kind of business before you leave your home based-business and when you get back to your home based-business. By doing this, you can now convert a lot of your non-deductible mileage into deductible mileage.
·--All telecommunications expenses (except for basic residential service) such as long distance, call waiting, call forwarding, 3-way calling, internet, pagers, cellular phones etc. can be deducted 100% if they are business-related.
·--Travel expenses could be deductible for the entire family by properly structuring & planning your travel itinerary around business activities.
·--Employ your spouse and supply them with a 100% Medical Reimbursement Plan as an employee benefit. This makes 100% of all your medical, dental & optical expenses such as premiums or partial-premiums, deductibles, co-pays, prescriptions, teeth maintenance and repair, braces, contacts, eyeglasses, cosmetic surgery, etc. (for your spouse that is employed and the entire family which includes you, the business owner).
·--Deduct the business use % of all expenses associated with your house and/or apartment such as mortgage or rent, utilities, improvements and/or repairs, insurance, real estate taxes, security systems, lawn care, etc. (This deduction is one of the smaller deductions and can only be deducted to the level of gross receipts for your business. The amount remaining would roll to the following year.)
·--Deduct 50% of all entertainment & meals when in the activity of conducting or discussing business.
These are just a few of the many tax deductions available to you in a Sole Proprietor home-based business. Of course, you need to visit a tax professional in your state to get the details on each of these deductions.
·--Deduct mileage @ $.325 per mile when driving anywhere to conduct business. In addition, mileage back and forth from your home based business to your place of employment could be deductible as a Schedule A deduction (mileage between two places of employment). Providing you conduct some kind of business before you leave your home based-business and when you get back to your home based-business. By doing this, you can now convert a lot of your non-deductible mileage into deductible mileage.
·--All telecommunications expenses (except for basic residential service) such as long distance, call waiting, call forwarding, 3-way calling, internet, pagers, cellular phones etc. can be deducted 100% if they are business-related.
·--Travel expenses could be deductible for the entire family by properly structuring & planning your travel itinerary around business activities.
·--Employ your spouse and supply them with a 100% Medical Reimbursement Plan as an employee benefit. This makes 100% of all your medical, dental & optical expenses such as premiums or partial-premiums, deductibles, co-pays, prescriptions, teeth maintenance and repair, braces, contacts, eyeglasses, cosmetic surgery, etc. (for your spouse that is employed and the entire family which includes you, the business owner).
·--Deduct the business use % of all expenses associated with your house and/or apartment such as mortgage or rent, utilities, improvements and/or repairs, insurance, real estate taxes, security systems, lawn care, etc. (This deduction is one of the smaller deductions and can only be deducted to the level of gross receipts for your business. The amount remaining would roll to the following year.)
·--Deduct 50% of all entertainment & meals when in the activity of conducting or discussing business.
These are just a few of the many tax deductions available to you in a Sole Proprietor home-based business. Of course, you need to visit a tax professional in your state to get the details on each of these deductions.
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