Common Tax DeductionsThrough out the course of running your business, you will have to keep track of both your expenses and your income. Ultimately, your goal obviously is to have your income be greater than your expenses. As your business grows, hopefully so will your income. Uncle Sam of course wants his little share of the income that you produce. However, while running your business, you are going to have expenses that occur in order for you to get that income. Those expenses could possibly be used as tax deductions for you. What is a tax deduction?? A tax deduction is an expense that a taxpayer incurrs that is then subtracted from the taxpayer's gross income. As a result, the taxpayer then lowers his or her taxable income and the overall amount of tax paid. Below I have listed some common tax deductions that a person running a home business may have. As always, be sure to contact a tax professional to make sure you are getting as many deductions that are allowed to you by law.
The two most common deductions that you will most likely run into are vehicle mileage and product from your NM business. I will go over each one of them seperately. *Vehicle Mileage - This is an important one. If you have a seperate vehicle for your business, then any cost with that vehicle is deductable. But it MUST ONLY be used for business. Having the vehicle titled and insured in the business name is also recommended. However, most of us do have that luxury and need to use our personal vehicles for business use. In this case, you will need to have a mileage log in your vehicle and anytime you make a business related drive, you need to record the date, starting mileage, starting point, destination, and ending mileage for each trip. For doing so, you will be able to take a deduction based on the total mileage driven for the year. As of 2007, the rate was 48.5 cents per mile. This deduction helps to offset the cost of gas, oil changes, and additional wear and tear of the vehicle. *Business product - Another big one comes in the form of business product. Most NM companies sell beauty or health products that both the business owner and customer buy. During the course of running your business you will ultimately have to buy product for yourself. As far as deducting that product goes, you can ONLY deduct it if you bought it then used it for sampling or advertising purposes. You CAN NOT deduct it if you used it for personal consuption. Be sure to keep track of any and all purchases related to your product that you bought and then handed out as samples in case of an audit. Here are some other common deductions that you take for your business. *Office supplies
|
