It's that time again -- time for many of us to start considering when and how we'll prepare our taxes for 2007. If you have a small business that you run out of your home -- like babysitting, writing or even a cleaning franchise
, you should know about all the tax breaks and deductions you are entitled to. that is, if you prepare your own taxes with the help of software like Intuit's TurboTax
Taking every legal deduction you can is standard practice for those that own a small business or are self-employed. Expenses, home office deductions and receipt tracking are just the minimum requirements for really getting the most benefit from taxation procedures in the U.S. Do you know about these deductions, for example?
- The home office -- if you have dedicated space in your home for running your business, you can deduct the footage and most items used in that space for various purposes.
- Office supplies -- this is where it really gets hairy. Keep a huge file for all receipts -- from inkjet paper to staples to pens.
- Office furniture -- bought a desk or chair this past year? You can deduct these items as well.
- Deduct mileage -- if you drive from home to client locations or for other business purposes, you get a decent deduction for mileage spent. Keep a pad and pen in the car for tracking these miles.
- Travel and entertainment expenses -- take a client out for lunch? Deduct it, and the mileage to get to the restaurant.
- Social Security 50% deduction -- yes, small business owners must pay 100% of their own Social Security taxes. You can claim 50% of that amount as a deduction, however.
You can deduct all the above expense types if they are used for your business. Get used to finding plenty of IRS forms
as well (such as Form 1040 Schedule C, Form 1040 Schedule F, Form 1065 - a US tax return for partnership income, Form 1120 - forms for US corporation income tax returns, Form 1120S - used for income tax preparation for an S corporation, Form 4562 - used for amortization and depreciation, Form 8829 - used for expenses for business use of your home). All of these forms are included in the TurboTax Small Business Edition
as well as other software packages that help you self-prepare your taxes.