Tax Write Offs for Your Small Business

With tax season just around the corner, it's essential that you have all the information you need to make the most of filing your taxes this year. Tax write-offs are a part of your tax deduction assessment process, and can help you accurately your income and expenses and find out what funds you owe; or better yet, are due in refunds! Since it's likely that you are using various parts of your home to manage your business, it's important to allocate specifically how much this equates to, and calculate what you have a right to write off. Here are the key tax write offs available for your home business:

1. Your home or place of residence. If any part of your house is used exclusively for your business, this portion of your mortgage or rent payment can be written off. This could be the primary place of business, or it could be the place where you frequently meet customers and clients. You will need to deduct a portion of the house or apartment. The IRS is very specific about what can and cannot be deducted as a home expense, however, so be certain that you're following all of the key guidelines.

2. Customer expenses. This can include restaurant or hotel expenses during your sales call, or any client expenses incurred as part of your business operations.

3. Business expenses. These can include items such as dry cleaning bills, cab fares, and even parking or garage fees. As long as you're keeping your receipts, you can easily manage and track what these purchases add up to. Computer use or depreciation is an important one. As long as you're being clear about what percentage is used for the business, and how much of it is actually personal use, you shouldn't run into any major issues.

4. Car expenses. If you're running an independent operation, it's likely that you're using your personal car for many client meetings, and day-to-day transportation. Here you can deduct depreciation and repair expenses, as well as leasing payments and insurance.

5. Insurance premiums for your home, health, and credit. Qualifying premiums include medical, vehicle, credit, disaster, and theft. Be sure to keep all invoices, statements, and receipts for the accurate amounts.

6. Interest expenses from business loans. You are allowed to deduct interest that accrued from loans over the course of the year.

7. Legal fees. Any accountant or law services you invested in over the course of the year are tax deductible. Make sure to keep all statements and invoices, and list all applicable expenses.

8. Retirement plans. If you've been able to set up an IRA account with your income from the business, you will be able to write off any SEP, SIMPLE, and self-employed 401(k) plans.

9. Wages paid to friends and family. If you managed to round up a crew of local workers to help you with the business, it's fine to write off wages accordingly. Just be sure to log these expenses in detail, and provide a brief description of the work completed.

There are a number of advantages of owning and running a home-based business, and managing your accounting as accurately as possible should be on your administrative agenda. Tax write-offs for home businesses are plentiful, and there are many categories that qualify as expenses and are eligible for tax deductions. Still, it's important to review and record each deduction carefully; many business owners overlook the importance of keeping receipts and accurate records of all expenses. Getting help from a professional tax accountant is one way of assessing your tax standing; using some good accounting software such as Quicken or Microsoft Office Accounting also offer advantages in tax preparation.