When you run a business, it can feel like you spend far too much
of your time worrying about tax. Here's a quick guide to the
what you need to know about tax.
What Do You Qualify For?
There are all sorts of tax breaks for home and small businesses,
to try and make it easier for them to survive. To qualify for
them, though, you will need to be using your home as the primary
place where you do business. If most of what you do takes place
in some space elsewhere that you rent, then you won't qualify
for home business tax rules. You also are unlikely to qualify if
you haven't set aside a specific part of your home as the
'business area'. Be prepared for the fact that you might be
audited, to make sure that you are running a legitimate business
from your home.
Records You Need to Keep
You need to keep records of everything -- literally everything
-- you spend on your home business. You should especially keep
records of things when their use might be shared between
personal and business, such any business-related travel expenses
you run up on your car. If you have stock, you need to go
through and inventory it at least once a month.
What You Can Deduct from Your Home Expenses
Because your home office is in your home, you can claim any tax
back that you pay on that part of the home. You can also claim
back tax on part of your utility bills. For example, if your
home is 2,000 square feet and you use 100 square feet for your
home office, you can claim back 5% of your utilities. If you
rent, then you can claim back this percentage of the rent, and
if you have bought the house then you can claim it as a discount
off your mortgage interest. Any equipment you have that
depreciates (becomes worth less) because you use it in your
business may also be eligible for a tax deduction.
Self-Employment Taxes
When you work from home, you are legally self-employed. This can
put you in a sticky situation, meaning that you have to pay for
medical and other taxes that your employer would normally pay
for you. In the US, for example, you will be responsible for
your own social security and Medicare payments, while in the UK
you will need to pay national insurance.
Get Tax Software
If you're not sure where to begin, get some tax software.
Choosing your circumstances from its lists and giving any
additional information it asks for should show you most of the
tax rules that apply to you.
Get an Accountant
If you want to save as much as you can on your taxes, don't rely
on things you read on the Internet, or even on computer software
-- get an accountant. They'll be up-to-date with all the latest
tax laws, and will know thousands of tips and tricks that
there's no space to list here. See if you can find one who will
take a percentage of what they save you in tax as payment
instead of charging a flat fee -- this is an ideal solution for
you and for them.
Do Your Taxes Online
Most developed countries now give the option to do your taxes
online, eliminating a big paperwork headache. You may even find
that your tax software can send its tax report directly to the
online service, without you doing much more than clicking a
button. Of course, if you do things this way, be sure to call
and confirm that everything went through alright.
Don't Be Late
Whatever you do with your taxes, you absolutely must not file
them late or pay them late. It's an all-too-easy trap to fall
into, but there are automatic fines. Tax collection agencies
will look upon you very unfavourably if you pay late, and are
likely to start immediately charging interest on any money you
owe them. Write your tax dates on your calendar and underline
them in red. Twice.
About the author:
Original Source:
Articles-Galore.com
Information supplied and written by Lee Asher of The Home Income Portal
Home of Serious Online Business Options.
