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Home-based-businesses--tax-deductions-for-your-home-based-business
By Elaine-Currie
One of the many advantages of working from home is that you are legally entitled to claim tax exemption on some of your everyday household bills provided the amounts you claim are legitimate costs involved in running your home-based business.
If you work at home, you can claim exemption on a percentage of your mortgage interest (but not capital repayments), insurance, maintenance, lighting and heating. If you have a whole room set aside exclusively to use for your business, you can claim a proportion of your household expenses in respect of the whole room. If the room is 20% of your living space, you can claim exemption on 20% of the mortgage interest, lighting and heating etc.
If you use a room that doubles for another purpose, or if you only work at home part time, it is wise to take advice from your tax office on the correct way to work out your entitlement. If you get the calculation wrong and this comes to light at a later date, you will have to repay any underpaid tax (plus any interest due) and you will have the hassle of going over your records to check and revise the figures. It is much better to get this right when you start.
If you use the phone and Internet for your work, you can claim a percentage of the cost of your phone line and calls. If you have broadband you can claim whatever percentage of the cost is exclusively for your home-based business. If you have a separate dedicated phone line for your business, you can claim exemption on the full amount you pay for the service. If you have a broadband connection that is used exclusively for your business, again, you can claim the whole cost. It is important that you don't claim the whole cost
of any service that you share with your family or that you use for social/domestic purposes.
If you use the family vehicle for your business, you can claim the relevant proportion of running costs and fuel. Note, however, that you will need to be able to provide evidence of your use of the vehicle for business purposes.
Some home-based business owners fail to take full advantage of the tax relief available to them. If you are a small business owner and do your tax returns yourself without the aid of an accountant, you might think that claiming these tax benefits will be difficult and complicated or that it would be inviting an investigation by the tax office. These fears are completely unfounded. Running a small business from home might be a new thing for you but it holds no novelty for the taxman, he is quite used to seeing tax returns from self employed home-based business owners. Your tax office will give you full details of how to calculate your entitlement to tax relief. There are plenty of leaflets available to help you and in some areas, the local tax office will run special workshops to help newly self employed persons to understand how to claim tax exemption and exactly what they can legitimately claim. Article Source: http://activeauthors.com Taxation might be inevitable for the home based business owner, but it's not all bad news when you work from home.
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