Save Those Receipts!
June 12, 2007 by Solitary Dancer
In response to the comment left regarding home business deductions, I did some poking around the IRS web site. I did find this little lesson about running a business out of your home. Good stuff for sure and YES, I am saving all receipts.
I haven’t quite decided where I will open a separate account of if I actually need one right now. For now, I have every receipt that is exclusively business related. What I have to learn is how to calculate the percentages of other bills that are shared by the household and the business. For now, here’s an excerpt to the information found on the IRS site. Click here for the full story “Virtual Small Business Tax Workshop”
Virtual Small Business Tax Workshop - Lesson 4 What you need to know when you run your business out of your home - Transcript
Hello and welcome to lesson four.
This is a lesson for small business owners who operate their business out of their home.
In lesson four as with previous lessons, there are learning objectives.
At the end of this lesson you will be able to determine if you are eligible for the business use of the home deduction, and determine the deductions you are eligible for.
The purpose of this lesson is to provide information on figuring and claiming the deduction for business use of the home.
The term home includes a house, apartment, condominium, mobile home, or boat.
It also includes structures on the property such as an unattached garage, studio, barn, or greenhouse.
Most taxpayers with home based businesses accurately report their income and expenses while still enjoying the benefits that a home based business can offer.
However, some individuals have received advice that they can operate any kind of unprofitable business out of their home and claim personal expenses as business expenses.
Non-deductible personal living expenses can not be transformed into deductible business expenses no matter how convincing the information and marketing materials may seem.
If you encounter what looks like a home based tax avoidance scheme check it out. . .
So far this month my budget looks great. Well, it could be better but I’m sticking to the figures for the month. July will be a bit different and I don’t know if I can pull it off without really sucking it up. I want to have a lawn service and I want to budget in for web hosting for the business. I’m not sure if I can cut down far enough. The only thing that may help is I switched back to DSL Lite from BellSouth (The New AT&T) after I got a mailer from them stating that the DSL Lite speed would increase to 756K on June 16 and to reboot your modem. Also, it said if I wanted to switch to DSL Lite I could get it for $19.95. DSL Lite was $24.95 and the speed sucked. I am using DSL Ultra at $32.95 so I jumped at the chance. The switch has been made and the speed really sucks. But, the new speed will start on June 16. I hope they aren’t lying.
Anyway, with the drop in internet fees I can budget some of that for the extra stuff. I have to keep within the confines of my budget no matter what. I do not want to stop the momentum of my Debt Snow Ball.
All in all things are moving along quite nicely. I have an offer for someone to review my book and I got the rights back from the worst publishing company on the face of the planet. So, we’ll see where that goes.
Busy, busy, busy!!!!!
One Response to “Save Those Receipts!”
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I would suggest getting the separate checking account efore you make any further purchase. I always recommend this to everyone who is interested in starting a business, this way if they need to incorporate, they can pay the set-up fees out of that account. Neat and Tidy is the Business Way.
One nifty way to show the IRS your office is separate from your personal use if you do not have an extra room is to use the largest closet you have. Throw everything out and use the close square footage to deduct the percentage you pay for as your office space. Excellent for storage and hiding office mess when your guests visit.