Part of operating a home-based business is taking care of your own budgeting and business finances. When figuring out an expense budget for the year, don’t overlook the “little” expenses like bank fees, internet service fees, and other expenses that may just seem like nickels and dimes. All of these add up to possibly deductible business expenses.
While you may remember to budget and keep track of larger, more obvious expenses like computers, other equipment, postage and mailing, and transportation–little monthly or annual fees can get overlooked. All of these little expenses should make it into your expense records. Places to look for those over-looked expenses? Try your bank statement for your business account and any business loans or investments you might have. Also look over any homeowners insurance you carry, and other “household” expenses that may actually be attributed to your home-based business. If you are confused or have doubts about what tiny fees and items might be considered business expenses and which are just ordinary household expenses, see your tax consultant or tax preparation professional. He or she will be able to let you know what current laws and regulations are. You may also be able to find an easy book at your library or book store on current tax laws affecting the home-based business.
If you do most of your work and only occasionally travel or go out for a business-related meal, you may forget to include these in your annual expenses. It may just be a matter of becoming more attuned and diligent about what is actually related to your home business operations. It may seem like too much of a hassle to track these tiny expenses–but tiny expenses can add up and can make a difference on your tax return. Not to mention, it will help you get a more accurate picture of your actual income and expenses from your home-based business.
See Also: Understanding Meeting Expenses and What You Should Know About Receipts