Guest Post – The Home Office Deduction & Direct Sales
Guest Post – The Home Office Deduction & Direct Sales
A direct sales business has benefits beyond meeting new people and generating your own income.
2 Incomes One Effort = Home Office Deduction
As a home-based company, your direct sales business also offers tax deductions that you could not normally take. When you use your home as an office, it is like generating a second income
To take full advantage of the potential benefits of tax deductions associated with a home office, become familiar with the different kinds of information you need to collect for your tax accountant. Determining the full extent of your home office tax deductions is something you should leave to an expert. But you can help your cause by collecting all of the information needed to lower your income taxes when working from home.
What To Deduct?
There are many things that are deductable. A few of the things that are deductable inlcude:
- Office Equipment
Any kind of equipment you use for your office could be a deduction on your income taxes. Keep receipts for every phone, computer, monitor, printer and any other office equipment you purchase. If you do not have a receipt for the equipment you are using, then make a note of the model, manufacturer, serial number and retail price for your accountant.
- Office Supplies
When you use office supplies in home-based business, you could be creating tax deductions for yourself. Supplies such as printer ink, blank CDs, labels, paper, envelopes and pens are all deductible if you used them for your business.
The major difference between office supplies and office equipment is that you will need to have receipts for every office supply you purchase. Keep a log of all of your purchases and make sure you have a store receipt to back up every purchase.
- Office Area
Measure the size of the area you use for your office space at home and bring that number to your accountant. It is easier if you have your work area in one central location in the house and you can measure the whole thing with one set of dimensions.
You will want to collect all of your utility bills for your home along with any Internet access bills to bring to the accountant as well. Your accountant will use the size of your home office to determine how much of your utilities are deductible on your income taxes.
- Mileage
The miles that you drive while setting up and attending home demonstrations are all deductible on your federal taxes. You can purchase a log book that will help you keep detailed records on the miles you have traveled and the purpose for each trip.
Tax deductions associated with a home-based business can act like a second income. Once you have learned how to collect all of the pertinent information, the rest is up to your tax accountant.
Deb Bixler teaches home business owners how to increase cash flow at home. Learn more about the home office deduction by visiting her site.
