From handicrafts, freelance work, graphics design, and online selling (e-commerce), there are a lot of home-based businesses out there that can be quite lucrative and very convenient for home-based business owners. You’d be able to earn and also cut expenses (such as transportation and rent), all while managing your business in the comfort of your home. However, working or doing business at home still doesn’t exempt you from taxes.
And, as with all small businesses (including home-based ones), every penny counts, which is why it’s important for you to be aware of certain tax tips to help you reduce tax through deductions and also avoid paying more than you should.
Do Your Research: Deductions
One of the best ways you can save up on taxes is by knowing what can be deducted. Home-based businesses are indeed quite different from businesses in commercial establishments, which is why you should focus on deductibles that are specific and applicable to a home-based business. Whether you’re using an entire room a portion of it as your home office space, or even just utilize your kitchen/living room table as your work desk, it can be deducted. Other expenses you can deduct are your home computers and printers, your office supplies, and even your lunch meetings with clients; you’d be surprised as to what expenses, activities, or parts of your home can be used in order to deduct taxes, and how much you can save.
Spring Cleaning? See What You Can Donate
If you have an upcoming spring cleaning or home de-cluttering scheduled, try to take a look at items that you can donate. Charitable donations aren’t only a good way to give back to your community, but you can be eligible for a tax deduction for doing so. So, watch out of any clothing, appliances, and furniture you no longer need when spring cleaning and put them in a donation box instead of the trash bin. However, you have to take note that there’s a limit to tax deductions and that you should donate to eligible/qualified organizations. Also make sure that you donate items in good condition, and get a receipt or any document from your chosen organization acknowledging your donation.
Use an Accounting Software
If you wish to save money by doing your own taxes, you have to be aware that you’re more likely to have errors when filing taxes on paper. Which is why it’s best to use accounting software that makes it easier, faster, and more convenient to file taxes. Not only that, many accounting and tax software can help you in keeping track of all your finances and expenses, and also help you identify possible deductibles in your home-based business’ taxes.
Consult or Hire a Tax Professional
Whether you’re doing your own taxes through an accounting software or you’re hiring an accountant to take care of your home-based business’ taxes, it’s still a good idea to consider consulting with or hiring a specialized tax professional or firm that could offer tax strategy help for your home-based business in Utah as there may be other deductibles that you or your accountant may have missed or advanced tax strategies you can employ to avoid overpaying. The amount you’d save on taxes may practically even pay for the consultation/services rendered by your tax professional.
These are a few of many other tax-saving tips you can take advantage of in order to help keep your home-based business lucrative, and also to avoid paying more than you have to. That said, whichever methods or tricks you decide to use, just make sure it’s done legally to avoid more issues down the road — and, if in doubt, consult your accountant or tax professional/strategist to help you out.