It’s that time of year when I start to get a little itchy. No, I am not talking about dry winter skin here; I am talking about filing my tax return. There are a few different attitudes that people take when it comes to filing their tax returns. My personal take on taxes is that I like to file them as soon as I have all of the documents that I need to prepare them. That way, I get it done and over with and, more importantly, get my refund check. There are others who prefer to put it off for a month or two, or three and then rush to pull it together by the April deadline. I can understand this point of view, doing my taxes is not exactly the most entertaining use of my time. It can also be fairly intimidating too, especially if you have never owned your own business.
Whatever your tax preparation style, if you are a home-based professional, there are a few tips that can help you get through tax time more easily, and maybe even with more money in your pocket. Before I share them with you, I must remind you that I am not a CPA or accounting professional, and if you have questions about preparing your tax return there are many great people out there who can help you. Some CPA’s (Certified Public Accountants) are even home-based professionals themselves, as their work lends itself well to being a home-based business.
The first thing that you can do to make tax time a little less, er, taxing (sorry, I couldn’t resist) is to keep good records of your income and expenses throughout the year. Whether you keep your records in a notebook or on your computer with an accounting program is up to you, just make sure that you are recording what you spend and what you earn somewhere. Also, save receipts for things that you buy for your business in case you are able to deduct them. Keeping good records will help you to do your taxes more quickly and efficiently because you will not have to keep stopping to hunt for receipt and other scraps of information. It will also help you in the very rare event that you get audited because your records will supply proof that the numbers that you put on your tax return are accurate.
Another thing to remember if you have a home-based business is that you may be able to claim start-up fees, franchise fees, and other types of expenses associated with buying into a franchise or other type of home-based business. As with any deduction, be sure to read the rules on the form carefully so that you claim only eligible expenses. A third suggestion is to remember to account for advertising expenses, if you do advertising for your home-based business. Of course, both of these deductions as well as all of the other potential deductions are dependent upon my first suggestion of keeping good records. You cannot claim items as deductions if you do not know how much you paid for, say, your internet service this year. There are many other great tax tips out there and these are just a few of my favorites.