Late this past April as I sat on-board an Amtrak train on my way from Chicago to Washington DC, I was calculating my internet home business expenses. I am not a tax attorney or an accountant. Any advice you take from this article should be reviewed by a qualified tax adviser. But, I have been in the Internet Home Business niche for five years, and I follow these same tax tips for a home business in my business. After all, I am a small business owner.
I decided to write an article on Tax Tips for a Home Business
Tax Tips for a Home Business: The Basics
Having you own home business means you are self-employed. You do not need to run your Internet home business full-time to qualify for itemized deductions. I list my profession on my tax return as self-employed. I do some contract work for two major insurance companies. In the past, they sent me a 1099 each year, but recently switched over to W-2’s. I like W-2’s better. Using this format, they deduct my Federal, State, Local and FICA (Social Security and Medicare) taxes. Under this label, I have access or complete Schedule C where I itemize my business expenses.
Tax Tips for a Home Business: Treat Your Business as Business, not a Hobby.
If you are earning more than $600/year from any venture, you will receive a 1099 from the paying company. By law, they must provide you a 1099. I’ve received 1099’s from a lot of Internet marketing affiliate programs. These are earnings! You pay taxes on these earnings. You spent money to earn this money. Claim these expenses on your taxes.
Tax Tips for a Home Business: Deductible Items
These are just a few of the deductions you can claim for your home business:
- Use of a home office
- Membership Fees… such as any monthly expense for your Empower Network Business. Or, the one-time charges for Costa-Rica, the $15K Formula, etc..
- Event Tickets: I bought a ticket for both the Austin and Chicago events. These are deductible expenses.
- Transportation: I spent about $300 for a round trip train ticket from Washington, DC to Chicago. Another deduction on next year’s taxes.
- Any local travel to meet with people to discuss your Internet home business. Don’t miss any opportunity to simply talk the business with someone wherever you go. If you take a trip to visit family two states away from you, tell them about your business and claim more deductions.
- Meals: These add up! The IRS does not need to see receipts for any expense under $25, but keep copious notes on all meals.
- Supplies: Anything you purchase anywhere that supports your business: stamps, postage, notebooks, pens, pencils. And, don’t overlook that new computer or pad or printer or fax you purchased this year. Or, that new smart phone! Did you purchase new office furniture for your home business? It’s deductible. I usually use a depreciation schedule for these higher ticket purchases. But, if you use a tax program like HR Block or Turbo Tax, these programs walk you through the process.
- Advertising: Google Adword campaigns, Facebook ads, traffic exchanges, safe lists, solo ads, etc. Anything that you pay for is tax deductible.
Tax Tips for a Home Business: Include Your Subscriptions
These are additional expenses that you should deduct in addition to those mentioned above. What are you paying for monthly, quarterly, semi-annually or annually to support your Internet home business. There are several tools that you need. For example, I use GetResponse as my primary email marketing program, HostGator for my web hosting. These are examples of monthly expenses. Additionally, I use Social Monkee to help build back-links and drive traffic to my website(s). And, I use a number of additional services that I pay for annually. I use a Microsoft Excel spreadsheet to track these expenses.
In summary, these are a some tax tips for a home business that you should be using. Treat your business as a business and manage your expenses. With 2013 quickly coming to a close, it’s a good idea to go back and add up all those expenses. Don’t let it wait until next year. And, for more information I would highly recommend that you seek the advice of a qualified tax advisor.