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There are two primary ways to
build home base based business wealth ... reduce
your "out-go" or increase your income. And
the best way to reduce your out-go?
Reduce your taxes
Tax reduction has never been a
more important issue to the home based business
owner. The average taxpayer today pays
combined federal, state, and local income taxes of
close to fifty percent of income. Reducing
this by just a few percent could save your home
business thousands of dollars. Owning a home
based business - part time or full time - is the
best way to earn these tax deductions. If so, your
home based business may qualify for a whole host
of valuable tax deductions. Deducting a portion of
your home or apartment expenses as tax-deductible
business expenses is one of the most significant
benefits of owning a small business. By operating
a home based business, the following home-related
expenses can become deductible: You can
deduct a pro-rated share (based on the percentage
of rooms or total space used for home based
business purposes) of your household utilities,
property insurance, home owners insurance,
property tax, mortgage interest. You can
deduct a relative portion of total maintenance
costs, maid or cleaning service, house painting,
rewiring, roof repair (except for repairs or
remodeling of specific portions of the home, such
as kitchen, that have no bearing on your home
based business use). Depreciation of office
furniture, equipment, lamps, desk, chairs that you
put in your home based business office. When
you buy equipment and supplies for your home based
business, save your receipts. All business
equipment up to $17,500 a year-including
computers, typewriters, fax, copier, answering
machine---can be written off each year. Reduce
your taxes $500-$5000. To qualify for a home based
business-office deduction, the area must be used
"exclusively and on a regular basis" as the
principle place of your home based business. (The
use of a portion of your home office space - such
as a den - for both business purposes and personal
purposes does not meet the "Exclusive" use rule.)
If you have an empty bedroom now that the kids
have moved out, or empty basement, you can run
your business from there and get these deductions
on your income tax, provided you use the space
exclusively and regularly as your regular home
based business. Because this deduction is so
valuable, the Internal Revenue Service may
question it. So be sure to keep good records.
Photograph your home based business office. Keep a
log of the work you do there, of whom you see or
call when you use it. Use this address on your
business cards, yellow page listing, stationery
and bank accounts.
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