TAX ADVANTAGES & LEGALITIES OF WORKING AT HOME

Working at home is a growing trend. It is a great way to spend more time with your family and cut household costs – gas, work clothes, etc. If you have an idea, a product or service you want to market into a money making business, you may want to think about running it from home.

There are some things you may want to consider before opening shop.

What are your local zoning codes? You business venture may be illegal if you live in an area zoned "Residential Only." This zoning code may mean you can not have customers or clients coming and going from your home. Prohibition of selling or storing products from your home can sometimes be included in restrictions. Contact your local zoning office to make sure your business is operating legally and to see if you need any special permits to operate your business from home. You might find out that by making a minor adjustment to your business plan you can meet the zoning standards.

Examples of requirements might include off-street parking for your customers. Signs are usually not allowed. A limit will likely be imposed on the number of students you have at a time at your home.

Another issue you may want to give some consideration is your Homeowner’s Insurance – Will your home insurance cover liabilities your new business may incur. Contact your insurance agent to make sure you have adequate coverage. You don’t want to lose your home over a simple oversight.

There are tremendous tax advantages to having a home based business. The list below will give you an idea of some of the things you can deduct from your taxes.

• the portion of your home used for the business
• telephone/fax lines solely used for business
• other utilities
• office supplies
• software
• computer, printer, fax, etc.
• office furniture
• dues and subscriptions to related journals
• meals and entertainment
• travel expenses
• auto and auto expenses
• health insurance
  

To qualify for these deductions, your work must be in pursuit to make a profit. You will meet this condition if your business profits two years out of a five year period. Tax laws are continuously changing so make sure to consult with a tax professional regularly.

To get started on making your dream a reality of working at home, please consider one of our helpful and information packed guides;