Common Tax Benefits For Home Based Businesses

Home OfficeIf you’re running a business from home, you already know that it has plenty of advantages.. My personal favorites are the commute and the dress code.  Another big advantage is the savings in overhead costs as compared to a typical “brick and mortar” business.  But did you know that running your business out of your home can land you some nice tax breaks as well?

It’s true.  While we suggest you check with your own accountant on these (Read: We are not accountants, don’t pretend to be, don’t play one on TV, etc) here are a few of the ones we’re aware of:

  • You can deduct some of your housing costs as a business Expense
    There are a couple of “tests” you have to meet in the tax law, but as long as you meet the criteria, you can write-off a portion of your rent or mortgage, real estate taxes, utilities, insurance, repairs and some other costs.  To get this credit, your home generally needs to be either your primary business location or you need to do a substantial amount of there and you need to have a section of your home that’s sole purpose is dedicated to your business – no kitchen tables or living-room recliner, sorry. :)
  • You can deduct certain travel costs from the moment you leave your driveway
    So let’s say you need to go visit a customer or client.  The mileage you put on your car or truck from your home (after all, this IS your primary business location, right?) can be deducted.  As long as the purpose of your trip is a valid business purpose (Visiting clients or vendors, going to the bank or office supply store, etc) Keep in mind though, you need to keep good records that include the data, purpose of the trip and your starting and ending mileage for anything you deduct.
  • You can write off the cost of your computer and office equipment
    For most people, if you use a computer for both personal and business purposes, you need to keep a log of its use, kind of like with vehicle mileage.  For those of us working from home, since we use the computer and/or equipment at our primary business location, it is not considered “listed property” and can be deducted in full.
  • You can write off the cost of your cell phone and service plan
    If you’re like most of us, your cellular phone is your primary link to your clients.  If you put the billing of your cell phone in your company’s name, it automatically becomes a deductible expense.

As you can see, even Uncle Sam think’s it’s a great idea to work from home.  Actually, when you think about it, our President works from home too.. :)

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