Taxes are inevitably one of the things that most people wish didn't exist. Unfortunately they do, and we all have an obligation to pay them at some point. The same is applied if you own your own business. You may want to deduct all your business expenses from your income tax, but knowing how many business tax deductions you can get away with is difficult. Paying taxes for a small business may seem daunting to you, but with the help of tax software, paying taxes can now be done online. This software can help you determine how to calculate your tax deduction for a home business.
Professional Tax Advice Online
Because there are income tax deductions specific for home run businesses, there are certain criteria your business will have to meet before income tax deductions for home businesses will apply. You can only claim the home business tax deduction if your house is your main operating point. This means that everything you do is run from the house. This does not apply if you're running your business from elsewhere or if you only run your business at home part of the time.
Once you fulfill the first requirement, the second thing to do will be to establish a work area dedicated solely to your business. Since you're operating from where you live, your tax deduction would be a percentage of your whole home area. In other words, if you use an office that is 200 square feet and you live in a house that is 2000 square feet, your business takes up 10% of your home. This would be much easier to work out if you are working in one specific room only. All you'de have to do is calculate the entire area of the room and divide it by the total area of the whole house. In order to claim a home business tax credit, you must have an area of the house specifically dedicated to the business and nothing else. A computer desk in the family room doesn't count.
Next, use the percentage of your home used for business to calculate what allowable household expenses are spent maintaining the business. This is done by deducting a part of your house expenses that relate with operating your business directly. This can include heating and cooling, mortgage, electricity, plumbing, etc.
There is online help for business taxes in the form of online tax software. The software comes with the whole package in form of error and deduction texts, online filing, and imports information from popular accounting programs, state forms, and phone contacts with tax preparers and full text IRS publications. This is not all that you can expect from this software. You can also get valuable financial advice such as retirement planning, family tax strategies, and home ownership/rental information and small business advice. This will greatly cut down on the costs of financial consultants when you can purchase such tax software and get that kind of information for free.
One of the things tax software should have is intuitive navigation whereby the user can access the program and move about without getting confused. The program should be as user friendly as possible. Secondly, the software should be easy to install on your business computer. Best of all, the purchase price of tax software for small businesses can also be considered a business expense, and therefore, a tax write off.
