It’s National Work From Home Week, which means it’s time to celebrate all the reasons that make working from home so excellent. Working from home, for many people, is part of an evolving view on the American dream. Cutting the commute the office, dropping the dress code, and getting work done from the comfort of your own home is the envy of many traditional workers today. For those who own their own business, the added benefit of being your own boss can make working from home that much better.
Along with added freedom and comfort, running your business from home can have some serious financial benefitsIf you’re still not sold on moving your business to your own home, it’s important to understand the tax benefits for doing so. Here, then, are five tax benefits to running your business from home.
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1. Expense a portion of your home
By working from home, your home becomes the office. Overhead is one of the costliest parts of owning your own business, and can be listed as an expense. Having your home as the office, however, doesn’t automatically mean you can write off your entire mortgage payment and electricity bill, but you can certainly claim a portion of it as an expense.
You’ll want to speak to your accountant to calculate the exact percentages, but based on the amount of your home you use as the principal location for running your business, you can deduct a certain portion of your mortgage interest, homeowner’s insurance, and property taxes.
2. Deduct repairs to your home office
Running your business from home may bring some additional wear and tear to certain portions of the house. Not to worry, any repairs or upgrades to your workspace can be deducted as a business expense. This includes upgrades to furniture or equipment intended to be used for your business (you can’t just write off the leather sectional in the living room).
Just like any improvements you would make to an office outside the home, your efforts to improve your home office can be deducted.
3. Write-off utility, internet, and phone bills
Similar to your mortgage write-off, you can also deduct a portion of your utility, internet, or phone bills by running your business from home. Again, you should consult your accountant to know exactly what percentage of your expenses you can deduct when tax time comes around. Between deductions for your mortgage, property taxes, and other home expenses, running your business from home can certainly help curb your cost of living.
As homes age, things get worn down and may decline in value. By running your business from home, you can deduct that depreciation as it applies to the portion of your home used as a home office. This also goes for any equipment or furniture you use to run the show at home.
5. Disaster Relief
Knock on wood, but if your home is ever involved in a natural disaster, the cleanup effort can be a nightmare, to say the least. For small business owners, the nightmare is made double by having to repair both a home and a workspace. If your workspace is at home, however, there can be some additional, unique help.
The Small Business Administration issues special loans in the wake of major disasters meant to help repair damage done to small businesses. These funds can be used to help recover the portion of your property used to run your business, perhaps taking some of the strain off of repairing the whole property. You should check with FEMA before applying for any SBA Disaster Loans, as they may have funds available to help.
As far as taxes go, if your home business was impacted by a presidentially declared disaster, you may be able to declare your losses on your taxes and receive some relief for the trouble.
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