39 Reasons to Become a Home-Based Business Owner

There's a million more reasons why EVERYONE in the US should have some kind of home based business, even if they're not making a whole ton of money... a home based business is one of the BEST tax advantages you could ever possibly have. I'm going to share a list of advantages from a friend of mine who put this together for my own home business partners. Here is his list of potential deductions for your business:
1. Your Business portfolio or business kit, whatever you have to pay as in fees or whatever you have to buy to "startup".
2. Your Monthly Purchases. If you are in a business that requires you to buy a certain amount of products for personal use each month, these are tax deductible because they are required for you to buy before you get your paycheck! Don't forget the sales tax and shipping is included in this deduction!)
3. Your Home Office. Create one area in your house to do your Business from. It can be out of a closet, a desk in the corner of a room, a full room, or an office created out of some of your garage space, the only requirement is that it be used exclusively for business. If your desk is in the TV room, you cant deduct the whole room, just the area that you actually work in. The percentage of the house used for business calculates the part of the following that you can deduct from your taxes: (Document with receipts.)
1. Rent (If you own your home with the bank, the interest, taxes, etc. are applied elsewhere) 2. Electrical Bill 3. Sewer Bill 4. Insurance (not deductible at all, unless you have a home business! 5. Cleaning Service (as long as they clean where you office is too! 6. Garbage service 7. Water Bill 8. House Repairs 9. Landscaping (if people come to your house on business)
10. Personal Training Expenses. (Document with receipts)
Training/Learning 1. Seminars Attended 2. Books 3. Cassette / CD programs 4. Any kind of training resources you purchase 5. Training Conference calls 6. Advertising Expenses. 7. Like business gear?Anything you buy that has the logo is thus an advertising expense. 8. Giving a gift? If you purchase from your own business, treat as Advertising. 9. Newspaper ads 10. County Fair / expo booth fees.
11. Flyers
12. Product Samples
13. Company Literature
14. Reproduction costs (photocopies, etc.)
15. Labor Expenses paid to your children for Business related work. (Up to $4700 in 2003). Keep track of what is done, and how much paid, pay by check, canceled check is proof. NO SSN OR INCOME TAXES need to be paid on your children! 1. Emptying the Garbage 2. Mowing Lawn, other Landscaping 3. Cleaning your office. 4. Filing. 5. Computer work (Most kids are better at computers than we are!) 6. Envelope stuffing/postcard stamping, other mailing tasks. 7. Other business related items.
16. Business Travel 1. Conventions/launches/seminars 2. Travel to pre-arranged presentations. Going to visit your sister? Put an ad in their local paper two-three weeks before, coordinate several appointments, and your trip is deductible (within some limits). Is your wife/husband going? Are they working with you in the business, and will they be at the appointments? Their trip is deductible too! 1. Air fare, train fare, and car mileage. 2. All "fees" related to travel _ parking, tolls, security, etc. 3. Meals while on the trip (subject to limitations). 4. Entertainment expenses (subject to some rules and limitations) 5. Out of area training.
17. Office Expenses
18. Paper clips, printer paper and toner, light bulbs, pens, pencils, highlighters.
19. White boards, easels, presentation flip charts
20. Furnishings (Chairs, desks, lamps, carpet, etc.)
21. Equipment (Computers, printers, fax machines, PDAs, phones, etc.)
22. Phone bill (If you only have one phone, only the long distance calls related to business, the IRS believes that one line is a necessity and will not allow that as a deduction).
23. Special services on your phone bill (Three-way calling, call waiting, voice mail)
24. Second line used for business. (Document business usage by adding to your business card/stationery)
25. Cell Phone. (Document business usage by adding to your business card/stationery)
26. Internet service and e-mail account. (Document business usage by adding to your business card/stationery). (Document fees by printing billing from internet service)
27. Data processing costs for business report.
28. Postage for business mailings.
29. Any kind of costs incurred from business reports you pay for.
30. Business Meals. When you do a presentation/visit a client or business partner at a restaurant/coffee shop, pick up your receipt! This is a deductible expense (50%)
31. Celebration Expenses. Giving a party to celebrate? Make it a business event. Invite your business associates/prospects and deduct the entire cost! (Make sure you celebrate your business!) Document via receipts and invitation list, have attendees sign a "guest book" to document who attended.
32. In-home expenses.
33. Baby Sitters
34. Product cases (for carrying display product in/out of house)
35. Demonstration supplies.
36. Assistants (read: your children, if old enough)
37. Food provided (100%).
38. Snacks/Tea/Coffee/Edible product samples
39. Mileage to/from presentations, training events, Product Launches, etc. (42¢ per mile this year!) Document with mileage log. Do for three consecutive months, or three like periods, extrapolate totals to full year (multiply by four). IRS requires some sort of logical, written documentation of this. If your day planner does not have a good sheet for this, check out on the web for one, or make your own. It needs Date, purpose, start mileage, end mileage, total mileage on the trip, and total mileage for the month. You will also need the years start and ending mileage numbers off of your cars odometer for the tax form (easy way to do this; at the very beginning of the year, get an oil change, keep receipt. Get another one 12 months later, keep receipt). C-9 AUTO EXPENSE: As long as you have a car available for personal use, you can usually deduct your business car. You may choose actual expenses (save every receipt for gas, oil, repairs, etc.) or standard mileage. Most experts agree that standard mileage is the best way to go. IT’S EASY! Add up all the miles you drove for business from January through December and multiply by the standard mileage rate. (The rate is 37.5 cents per mile in 2004!) If you had a business appointment and you made an unplanned stop at the grocery store on the way home (and you did NOT drive out of your way) then deduct the round trip! Every trip you make must FIRST be associated with business. Record keeping for the standard mileage deduction is easy. One of the best ways to prove your car actually put on the miles is your oil change receipts. Get your car's oil changed at the beginning of the year and again at the end of the year. The odometer readings are documented on your receipt. Then keep a record of your various appointments in your day planner or calendar. Keep receipts from your various destinations. (Buy a candy bar at the 7-11 store in Eagle River, Wisconsin and save the receipt to prove you were there.) No sweat! Happy driving! C-11 CONTRACT LABOR: Hire your kids! You can deduct wages paid to your children in your business! If you pay them under $4,750 in 2003, you don't even have to file a return for them! Of course the wages have to be reasonable for real work. Nobody’s going to believe you pay your 8-year-old $100 an hour to vacuum your office! Paying your kids doesn’t really cost you anything if you require them to use that income for piano lessons, sports, lunch money, clothes, fun activities, etc. C-13 SECTION 179 EXPENSING: This tax law (also called First Year Expensing) allows you to write off certain business expenses (up to $100,000!) incurred in 2003 without having to depreciate them over time. The amount you deduct may not exceed your total income. Consider a $3,000 computer used 75% of the time for business. You can deduct $2,250 (75% of $3,000) on the tax return for the year you bought the computer! (If you don't use 179 expensing on your first return for the year, you cannot change your mind and add it later on an amended return.) You’ll need form 4562. C-18 OFFICE EXPENSE: Think of your office as a big demo room! You can use section 179 to deduct many expenses, so long as your business use of those items exceeds 50%. Think about the things you can have! Chairs, sofas, file cabinets, lamps, book-shelves, artwork, computer equipment of all kinds, carpets, phones, cell phones, T.V., DVD, hot tub – well maybe not a hot tub – but you get the picture! And while we’re on the subject, let’s not forget to deduct your HOME OFFICE EXPENSES. New rules (!!!!!): Tax payers are not required to use the space exclusively for the storage of inventory or product samples in order to be eligible for the deduction. The new rule adds 'product samples' to clarify the current rule, so taxpayers need not attempt to distinguish between inventory and product samples. Example: Joe uses space in the study of his home to store product 'samples.' Joe may deduct the study even though he uses it for other purposes." If you use 20% of your home for business purposes, you may deduct 20% of your utility bills, house insurance, repairs and maintenance costs, etc. You’ll need form 8829. Hint: Don’t claim a home office deduction in the year you sell your home. C-20 AUTO LEASE: If you lease your car you cannot take the standard mileage. Just figure out what percentage of the total year-end miles are for business use. Example: You drove 20,000 miles on your leased car in 2004.. 80% was for business. Your payments are $400/month or $4800/year. You may deduct $3840. ($4800 x .80) C-21 REPAIRS AND MAINTENANCE: Did your cell phone need to be repaired? Did your office chair break? Did you have your carpet cleaned? (Be sure to use your own products if you can, to do all your office cleaning!) You can’t deduct the cost of your own labor - but you can pay your kids! C-22 SUPPLIES: If you purchase any products for your own use, display them in your home, AND they are open and intended for use as DEMOS, they are deductible. It is expected that you will have to refurbish your demo kit on a consistent basis. What you do with discarded demo products is irrelevant (ie: you display a tub of body butter or whatever your home business deals with; people smell it, look at it, maybe try a little. When they leave, the body butter is now yours... completely tax deductible). C-23 TAXES: You may deduct the tax on the purchase of all your business supplies and demos, and any tax associated with a business asset. C-27 OTHER EXPENSES: All shipping and handling, postage, Convention tickets, awards and recognition, cost of holding a meeting, etc. – deduct away! HEALTH INSURANCE: If you had net profits for 2004, you may deduct part of your health insurance for the entire family (not provided by an employer). Enter 70% of your health insurance premiums on line 30 of form 1040. The rest goes on Schedule A and is subject to the 7.5% of the adjusted gross income floor.