What Costs Can Be Deducted As Business Expenses On Income Taxes For A Home Business?
Many people dream of running their own home business but may be afraid it will be very expensive to get started. While this may be true depending on the type of business, there are ways to get back some of the money you spend to get your business running smoothly. When you file your taxes, there are many costs that can be considered business expenses. By claiming these, you will not need to pay as many taxes, and you may actually get some of the money back. These are some of the things that are considered business expenses when filing taxes on a home based business.
Home Office Equipment And Supplies
If you must set up a home office to run your home based business, you can count the cost of everything you must buy as a business expense. This includes your office desk and chair, computer equipment, telephones, printers, and even small supplies such as pens, paper, printer ink and file cabinets.
If you must do remodeling in your home to build the home office, these are considered business expenses as well. You can count the cost of having landline phone and internet service added to your home office as long as it is used for business purposes only. If you must buy new furniture, floor covering, window treatments or wall coverings to make your home office a usable space, this is also deducted as a business expense.
Travel Expenses
Just like with a business outside your home, there may be times when you need to take trips concerning your business. This too can be counted as a business expense. You can include the cost of gas, hotel stays, and the cost of dining out for any potential clients that you may purchase meals for. If you have a separate vehicle that is used only for business purposes, you can also count the cost of insurance and licensing the vehicle as well.
Health Insurance And Retirement Plans
As a self-employed home based business owner, you will most likely have to purchase your own health insurance and pay into your own retirement plan. These expenses can also be claimed as business expenses because you otherwise would not have to pay for them in full if you were working for an employer.
If you have a separate mobile phone service that is used for only business calls, the total cost of these services can be counted as business expenses. However, if you use the same phones for personal calls, you must determine how much time they are used for business only. For instance, if you only use your cell phone for business purposes 50% of the time, you can count 50% of the total cost for the year as a business expense.
For more information, contact Sandoval Tax or a similar company.