The Tax Benefits of a Home Based Business

Seeing the Economic meltdown & a huge number of job losses around the world more and more people are desperately looking for another solution-alternative income sources & surely NOT just another JOB. People are looking to be their own Boss just to make sure they are not going to face another Lay Off & more importantly they are not going to lead a financially insecure life. But vast majority of people can not even consider to go on traditional business as the amount of the investment is way too high & the risk of failure is enormous! So the only solution an average person is left-off with is having a Home Based Business.There are several reasons why a person should choose a Home Based Business, here are listed below
Little Investment
Minor Risk 
Flexibility of Working from Home.
Own Schedule ” Being Own Boss
Less Paperwork.
Few or No Employee (less management stress)
Multiple Income Sources
Secure Income
Residual Income
Tremendous Personal Growth &
Tax Benefit
The Tax Benefit of having a Home Based Business alone is mind-blowing! If you are Self-Employed (control when, where & how you work) or part of a Network Marketing Company as an Independent Consultant & Home is the centre of your Business activity then you qualify as a legitimate Home Based Business Owner & that can save thousands of dollars each year in Tax saving.The average American is paying over $14,000 a year on taxes.However,you could save well over $10,000 of that $14,000 with a Home Based Business. Now think you just invest $300 to $400 a few times a year-not only you make a Retail profit on that & build an ongoing Business -you also save $10,000 per year!! Now that’s pretty good Business-right??Now lets see in which areas you get Tax benefit for having a Home Based BusinessTAX DEDUCTION ON HOME OFFICE Tax deduction on your Home depends on these 2 criteria-you’ve to meet at least one of them.(1) Your Home is your principal place of business or (2) You use a specific area of your home exclusively for earning income from your business & you meet clients there on an ongoing basis. Once you meet the criteria there are number of expenses to consider tax deducting—–Rent, Mortgage Interest, Property Taxes ,Utility Bills (heat, hydro, water), Home Insurance, Repairs & Maintenance,Landscaping, Snow Plowing,Telephone (100 percent deductible if it’s a separate business line)One thing to mention-you won’t be able to deduct the full cost of those expenses listed above. Rather, you’ll be able to deduct the business portion only.HOW ABOUT YOUR TRANSPORTATION? If you are Self-Employed & using car for your Business you’ll be entitled for tax deduction. If you are using your car for personal & business use both then you have to keep the record of your trip & the usage for business purpose. Below the list of Automobile expenses to deduct-Auto Club Cost, Car Washes,License Fees,Gas,Oil,Parking fees,Tolls,Repairs,Insurance,Loan Interest,Lease Cost etc.In addition you can claim depreciation-called Capital Cost Allowance (CCA) on the cost of your car-however, the maximum you can depreciate is $30,000 (plus GST & PST) for 2008.But WAIT!! That’s not all! Nearly every trip you make can be Tax deductible if you choose to do so. Airline tickets, tips, parking, ferry’s, bus, train, subway, taxi, car rental all can be a total deduction!!FUN & FOODS You can deduct all your entertainment of clients and 50-100% of food that is eaten when you are doing business. If you go on a vacation and go skiing you can write off the trip if your spend even a few minutes a day having a board meeting or talking to someone on the chairlift about your business. The Government is quite liberal in this area. If you do Christmas party with clients that’s also tax deductible.Going to Disney Land, renting a car & motel all can be written off if you do or promote your business in anyway!! I know – now it’s more fun! Do business, have fun & even save money! Wohh!WRITE OFF GIFTS & PROMOTIONS Most gifts $25 or under are all a write off.So anything created to thank, reward or motivate is a write off. Like business pen, pad & calendar or gift baskets -all are tax deductible.DEPRECIATION Depreciation is understood as something that has a value that will last more than one year such as ” Home Computer ” Printer ” Soft-ware ” Desk ” Fax Machine ” Car, ” Boat, ” Trailer etc all are Tax deductible because you are running a Home Based Business!EMPLOY YOUR FAMILY You can hire your spouse or children and all of the wages paid are Tax Deductible as long as you pay reasonable wages.Money stays inside the family. The salary provides RRSP contribution room to the family member on the receiving end.MEDICAL & RETIREMENT PLANS With a Home Based Business you can write off all your medical expenses for your family. This includes Medical Insurance costs, co-payments, dentist, chiropractor, eye exams, medicine etc.You have to keep a plan filed in your business file, voted & approved.This can be a huge write off.WRITE OFF YOUR INTEREST Any time you need to borrow money, it is always better to get a Business Loan rather than a Personal Loan. WHY? ‘Cause you can write off the interest as a deduction but you can’t deduct the interest on a personal loan.[101 TAX SECRETS FOR CANADIAN by Tim Cestnick  and  relevant Online informations used as a resource.]+All the information provided above is not meant to be tax, legal, accounting or other professional advice. Tax solution depends on each individual’s circumstances. For maximum benefit one must consult with a Tax professional.+

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