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Why everyone should be taking advantage of Home based business tax incentives
Written by: Peter CostabileArticle Overview: owning your own online marketing business, makes sense for the Tax incentives alone.
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Why everyone should be taking advantage of Home based business tax incentives
One of the great benefits of owning your own home based business or any business for that matter is that there are taxes incentives that can help you reduce the income tax you would have to pay at the end of the year.
Governments in North America offer and support small business, Entrepreneur’s and Home based business with these tax incentives, even more so now during this economic slowdown, in an effort to stabilize and reduce the impact of this recession.
Depending on the area and the country, government tax incentives will vary a little, but for the most part be very similar.
Most home based businesses should be able to capitalize on these types of tax incentives.
Overall family income can be reduced by deducting a percentage of most household expenses such as a percentage of the property tax. Also a percentage of the interest for a mortgage, a percentage of the utilities, internet services, phone costs and property insurance.
These percentages of deductions are calculated by the area your business occupies, less the total square footage of the living space of the house. As an example if your home business occupies 10-20% of the total square footage, this percentage would be used to rate your deductions.
100% tax deductions for a home based business is not realistic and never has been, a higher percentage of deductions can be used for expenditures directly related to your business such as, Accounting and legal fees, Advertising expenses, business tax, fees, licenses and dues, Insurance expenses, Interest and bank charges, Maintenance and repairs, Meals and entertainment, Office expenses, Salaries, including employer’s contributions and Business start-up costs.
Tax Tip: From the Canada Revenue Agency: “Purchases and business expenses must... be substantiated with a sales invoice, agreement of purchase and sale, a receipt, or some other voucher that supports the expenditure.”
You can’t use business-use-of-home expenses to create or increase a loss for your business. So if you end up with having more expenses than income for your home based business, you will have what the Canada Revenue Agency calls unused Work Space in Home Expenses which you can carry forward into the next year.
Like the unused Capital Cost Allowance claim, the beauty of this is that you don’t necessarily need to claim these expenses in the tax year following either. If your home based business continues to meet the conditions for claiming business-use-of-home expenses, “an indefinite carry forward is provided” (CRA) meaning that you can use these unclaimed expenses when it’s convenient to offset higher income in a later year.
Like everything else related to taxes, meticulous records are a must; all your home based business deductions needs to be documented with receipts. But if you have a home based business, these are tax deductions you don’t want to miss.
Referred by: http://jaykubassek.com
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About the Author: Peter Costabile RSS for Peter's articles - Visit Peter's website Hi my name is Peter Costabile I am a family man married to my lovely wife of 26 years with two wonderful children Chris and Brittany, my work history consist of Manufacturing and Production Management and supervisor positions for the past 20 years. I am a Entreprenuer with a vision to create wealth education in many, to help people obtain the knowledge to succeed and enjoy the freedom of self employment. Click here to visit Peter's website Why everyone should be taking advantage of Home based business tax incentives Digging Deep into Article Marketing How to adjust your Financial Thermostat with the support of Wealth Principles So you want to make money in the online marketing business are you carzy What are you going to do if Google slaps your account |
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