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Home › Articles › Managing Your Home Based Business › Taxes › Paying taxes

Paying taxes

“We are born, we are taxed, and then we die.”

There is no escape from paying taxes as a small or home based business. Taxes are an unfortunate part of living in a civilized society. Taxes enable our society to build roads bridges and hospitals. Without taxes there would be few affordable schools or colleges. Once one has come to terms with the fact of taxes, we need to ensure that our home business is correctly registered and in a position to take advantages of all tax breaks applicable to home business. It would be unfortunate to overpay on taxes through ignorance or incorrect structure.

Here are some of the expenses that you may be able to deduct depending on which state or country you reside in. These are not an exhaustive list, but merely an illustration of what is possibly available to home based businesses. Some of these deductions are specific to the home based business.

1) Automobile Expenses
Many home based business owners use their personal vehicles as business vehicles. You may be able to deduct the costs of fuel and oil, licensing, insurance and maintenance and repairs. As a home based business owner you can also deduct interest on money you borrow to buy a motor vehicle, automobile, or passenger vehicle you use to earn income. You can also deduct the cost of leasing a vehicle that you use to earn income. Vehicles used for business and private use will be allowed to deduct a pro rata amount based on the business use as a percentage.

2) Insurance
A home business may be able to deduct all commercial insurance premiums you incur on any buildings, machinery, and equipment that you use for your business. Home based business insurance is essentially commercial in nature and is entirely separate from a person’s home insurance.

3) Office Expenses
Most of your office expenses will be able to be claimed as an expense or written off over a number of years as a depreciable asset.

4) Mortgage Interest & Property Taxes

It is possible to claim mortgage expenses and property taxes in proportion to the area used for home business purposes as a percentage of the total area of the home. If you are renting, you can deduct the cost of your rent.

5) Other Home Business Expenses
Other home expenses that may be able to be claimed in the running and maintaining of the home business are:

• Heat
• Lights
• Water
• Maintenance
• Cleaning materials
• Telephone
• Internet connection

The expenses will most probably be deducted in proportion to that relating to a business expense.

These deductible expenses form an important part of the viability of running a home based business. It is essential that proper detailed records are kept of every expense that the business incurs. Proper vouchers for each expense also need to be kept. Good accounting records are a prerequisite to being able to claim successfully.

There are many tax breaks applicable to home based business. It is important as a home based business owner to fully acquaint oneself with all the tax laws governing your business not only to be legal, but also take advantage of all the tax deductions allowed.

Controlling you Taxes

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Paying taxes

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