| Do you end up worrying about the financial aspects of your home business? What can you deduct and do you need to collect GST on behalf of the government? Tax breaks may be readily available for you as well depending on a number of factors. Whatever you do, make sure that you keep records so that you can prove to the IRS what you claim. 1. Tax Breaks If you run a home business you may be elidgeable for a tax break. Governments want to encourage small business and so they offer breaks to make it easier for small businesses to survive. To qualify for them, however, you 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. 2. Recordkeeping Keep records like they were going out of style. Literally everything must be documented carefully. You should even document things that you might use both for business and personal use, such as your family computer or your car. If you use your car 3. What Can You Deduct? If you have an entire room dedicated as a home office, you can deduct all expenses related to that room! You can also calculate what percentage of floor space that room occupies as part of your home and deduct that from your utility bills (electricity, heating, etc). If you pay rent, then you can claim this percentage of your rent as well, and the same is true if you pay a mortgage. Any equipment you buy, such as a work computer, a stapler, etc, is also tax deductable. 4. Taxes As They Relate To Tax Deduction If you work in the comfort of your own home, you are legally self employed. This can put you at a severe disadvantage meaning you have to pay for your own medical and other expenses that your employer would normally pay for you. Of course, this doesn't apply in Canada where health care is treated as a basic human right and is largely free. 4. Get Tax Software Not sure where to begin? Why not try investing into some of today's top tax software? It should automatically show you the rules that apply to you when you fill it out. Barring that, you should get your own accountant. An accountant can really save you a lot on your taxes. Also, unlike software, theyll be up-to-date with all the latest tax laws, and will know thousands of tips and tricks. 5. Don't Be Late No matter what you end up doing with your taxes, don't be late. There are automatic fines if you are late and tax collection agencies will look upon you very unfavorably if you are late. |
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