WORK FROM HOME WITH COACHGRANT - TAX ADVANTAGES of HOME BASED BUSINESS

WORK FROM HOME WITH COACHGRANT - TAX ADVANTAGES of HOME BASED BUSINESS 

 Ever thought about work from home?  When you start up a home based business you can work from the comfort of your own home and, in most if not all, North American and other common law jurisdictions you have the ability to write various expenses off of other sources of your gross annual income.  That ability can lead to hundreds, perhaps even thousands of dollars, in income tax savings every year.

*** What follows is not financial or tax advice.  It is material that is provided for information purposes only, is not intended to be relied upon in your specific situation and does not constitute a lawyer-client relationship. *** 

This article sets out a general illustration of some basic tax principles that may be available to your home based business depending on your circumstances and locale.  For the specifics on how federal, state or provincial tax laws apply in your set of circumstances, you must check with your own accountant or tax lawyer.   

There are two general categories of expenses associated with work from home that may be deductible from other income (i.e. employment income).

Home office expenses:    If you work from home, you can generally write off a percentage of your home office expense based on the floor space of your home office in relation to the total square footage of your home.   There may be exceptions or limitations.   But what this means, for example, is that you may then write  off 10%, for example, of the interest expense of your mortgage and perhaps even your total  municipal tax bill from other income.    The cost of your home insurance, monthly utilities expenses (phone, heat, hydro, telephone, internet), as well as home maintenance expenses!  And, of course, the supplies you consume in your home based business (depreciation on items like your office furnishings and desktop computer, cartidges, paper, pens and other supplies, your cell phone bill as well) can be written off of other income.  I am sure most of you can quickly see that the opportunity to deduct a percentage of these expenses from your income can result in a significant income tax saving for you on an annual basis.  This ability can be extremely important in the first, or start-up, year and can minimize the financial, or 'after-tax' impact of the start-up.

Automobile expenses:   You may also have the ability to write off a percentage of the operating costs of running your automobile from other income.   That simply means you can deduct the business-use portion of the costs of fuel, car insurance, maintenance, depreciation, lease payments or the interest costs of the car loan!  These tax savings can be immediately available to you when you start to operate a home based business.

There are usually limitations or exceptions depending on where you live. In most jurisdictions, you will be deemed to use your car for some personal use at least a percentage of the time meaning that you cannot deduct the total cost of operating your car from other income.   You may have to record the mileage that applies to business use as the basis for the deduction.  Of course, once again, you need to check this with an accountant in your area for the specifics on what the tax-savings can mean for you in your home state or province.

Now the tax savings are really ancillary to your business opportunity itself.. the icing on the cake so to speak.  But...if you are thinking about starting a business you can operate from your home, your start-up costs can be minimized on an 'after-tax' basis and are therefore less than your initial actual cash outlay when you factor in the tax-savings that you can access simply by virtue of the fact that you are now self-employed.  And these tax savings are available to you even if you start part-time.

Do not forget to consult with an accountant or tax lawyer to determine how the tax laws in your jurisdiction may apply in your particular set of circumstances!

Learn how to generate a five figure monthly income from the comfort of your own home.  Click on the link below.  

WEALTHY AFFILIATE

To Your Infinite and Unlimited Success,

Grant Edward Rayner B.Comm., LL.B. 

BELIEVE and Achieve   

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