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A small business blog featuring tips to help entrepreneurs succeed in the small business world. Topics include family business, human resources, marketing, money, networking, operations, ownership, startup, taxes and technology.
The Right Way to Write-Off Business Expenses (Part 2)


As a continuation of yesterday’s post, below are some additional tax deductions you should handle carefully.

Home Office
If you work from home, you can only write-off the percentage of your bills related to the area dedicated solely to your business. For accuracy, which is something the IRS appreciates, hire a contractor to measure your home office space professionally and provide the square footage that your home office occupies.

Once you have the measurements, figure out what percentage of your home is dedicated to your business. You can then write-off that percentage of your mortgage/rent, utility bills, etc. Keep in mind, however, that this area of your home must be used exclusively for your business. If it is, in any way, used for personal matters (i.e., your home computer is used for both business and personal), then you cannot right off percentages of your household bills.

Home Computer
If your home computer is used for both personal and business matters, then the expense of the computer is not deductible. Instead, you will need to keep a log of the time you use it for business purposes, much like with your home office. Then, determine a percentage of your time in which you use the computer for business and that is how much of the computer is deductible.

Another option would be to invest in a laptop that you use for business purposes only. This will allow for the entire expense of the laptop to be deductible.

Phone Bills
If you have a home office, phone bills do not fall under the category of bills you can write off a percentage of. As long as your phone, whether a mobile or landline, is not used a lot for personal calls, then you can write off the entire bill.

However, if you use the phone for both, then you will have to be sure and get an itemized bill from the phone company and indicate which calls, both incoming and outgoing, were business related. It’s a good idea to also indicate which client each call was related to.

The best and easiest way to avoid extra time and effort is to simply purchase a separate cell phone or get a separate phone line in your home for business calls only. If you opt for the separate cell phone, you can also write-off the phone itself.

As a general rule, if you can wear it outside of your job, such as a new suit you wore for work but also to church or a funeral, then it is not deductible. However, if you perform as a clown for children’s birthday parties, then your clown costume is deductible. Another example would be the costume a Las Vegas showgirl might wear.

These are just a handful of the vast expenses that you might be able to write-off each year. It’s a good idea to consult with a professional accountant if you are not familiar with all the regulations. It’s better to spend a little extra money getting some help the first few times than to make a mistake and get audited.

Part 1: Travel Expenses and Vehicle Usage

• Top Tax Write-Offs That Could Get You in Trouble

Recommended Readings:
• Google Answers: Tax Write Offs When Self-Employed
• Top Business Write-Off Audit-Triggers
• 5 Year-end Small Business Tax Tips

Related Small Business Buzz Posts:
The Right Way to Write-Off Business Expenses (Part 1)
Moving from a Home Office to a Commercial Space
Building Your Office
How to Secure Your Business Against Computer Viruses
Aprils Fools Day Office Pranks

By Michelle Cramer
Sunday, January 6th, 2019 @ 12:00 AM CDT

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