Tax Advantages of Your Home Based Business

Tax Advantages of Your Home Based Business
Copyright Ali Brown http://alib.ws

Summary: I started this with the intent this would be a short dissertation on some of the basic tips I have gathered over the years for clients. It has grown into a rather lengthy document. Therefore, in the interest of brevity in my blogs, I will put the links I have for some good small business information for both our Canadian and American partners here. If you’d like to read the document in it’s entirety, please visit my website @ http://alib.ws.

I want you to start thinking about your business as a BUSINESS. Any and all of the expenses that you would incur if your business were located out of your home still apply (you simply pro-rate them with respect to the percentage of your home you are using for your business). When you are calculating these expenses, be sure to include the use of common areas that would be used by your business as well.

You also think about your entertainment and vacation expenses from a business perspective. Our businesses are based on “networking”. If you are networking at your Sunday BBQ, this becomes a business expense. Plan a vacation at the same time and location as your primary’s convention.

A few Canadian references I am sure you will find useful
http://sbinfocanada.about.com/od/taxinfo/a/bizexpenseslist.htm - reference information
http://www.cra-arc.gc.ca/E/pbg/tf/t2124/t2124-05e.pdf CCRA Statement of Business Activities
http://www.cra-arc.gc.ca/E/pub/tg/t4002/t4002-05e.pdf CCRA Publication: Business and Professional Income.

These are some equivalent US information I have been able to locate.
http://www.irs.gov/pub/irs-pdf/p583.pdf IRS - Starting a Business and Keeping Records
http://www.irs.gov/pub/irs-pdf/p587.pdf IRS - Business Use of Home publication
http://www.irs.gov/pub/irs-pdf/f8829.pdf IRS - Business Use of Home form
http://www.irs.gov/pub/irs-pdf/i8829.pdf IRS - Business Use of Home form instructions.

I write this with an obvious Canadian flavour - but my research tells me the principles will stand true for our partners in the United States as well. (For those of us who reside and build our businesses in other countries, I can only suggest this may give you a starting point for research into how each of your countries applies taxation with respect to Small In Home Business)

By the nature of the beast, the Income Tax Laws are open to interpretation, therefore, I cannot stress it strongly enough that you must ensure you are not in contravention of any legislation. In Canada we have tax avoidance law as well as tax evasion law, if you are in doubt of any legitimate expenses you must seek professional assistance. It is irresponsible to not do so. Again, as your business grows you are going to contract out these tasks, your time will be too valuable to be doing clerical work.

About the Author:
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Simply knowing what you read in this article isn't enough. You have to put it into action to be successful. To learn how you can do exactly that – and to learn more about how Ali can help you with your online marketing business, you will want to visit her website at the following URL:
http://alib.ws
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Ali Brown is a friend and, I as well as many others look towards her for help, guidance, and support. She is a very patient, knowledgable, and very kind person who is always willing to share her time to help others. If you ask Ali a question, she will find you the answer. Thanks Ali for being you!

I am passionate about turning peoples Dreams Into Reality
Faye Brown