Your Home Business Tax Deductions

If you operate your own home business, then you are probably aware that there a few drawbacks to being self-employed, just as there are a few drawbacks to any major decision you do in your life.

Being an entrepreneur and self employed often means that you lose some workplace benefits, such as group insurance, sick leave, paid vacations, etc. However, the government does provide solace balance to those who have an entrepreneurial spirit, and this solace comes in the form of tax breaks, because you the home worker small business owner, are the largest source of employment in America.

There are many possible tax deductions for home businesses; you simply have to be well-informed about them to make use of them.

There are good reasons for you to go through the trouble? Because you?ll earn more money that way. By knowing all the possible tax deductions, and more, that you can take, you?ll come away with more of the benefits that your business generates, instead of getting cleaned out by the government. When it comes to taxes, make no mistake about it ? knowledge is power. The government needs you to have this power to keep it working also so they will help you when they can.

If you run a home business, some of the possible tax deductions for you are:

Home office costs, such as those that involve office repairs and maintenance. Expenses racked up through janitorial services, for example, when shown to be needed by the business, are deductible, as are waste management and garbage disposal services. Business furniture and equipment may also qualify for deductions in their year of purchase, as long as the amount does not exceed a certain limit.

Utility costs, such as electricity and water. The deduction applies to those areas that are used regularly and exclusively for business.

Telephone costs. This only applies if you have a separate line for use in business. A single line that is used for both business and personal calls does not qualify. However, if you make long distance calls and/or incur fax transmission fees, those expenses are deductible no matter which type of phone you use. You need to make honest percentage estimates of how much is used and keep good records based on your bills.

Rent or lease payments. A percentage of your rent, lease, or mortgage interest payments can be deductible provided that you are using the property regularly for business purposes.

Employee wages and employee benefits. If you are an employer of labor, you can deduct a portion of your salary and benefit expenses. Employee education and training costs are also deductible.

Education costs necessary in your line of work. This applies especially to professionals. Those who need continuing education to maintain their expertise may deduct the cost of this education from their tax returns.

Real estate taxes on business property. A portion of real estate taxes are considered deductible by the IRS.

Personal expenses. Some personal expenses, when conducted in conjunction with business affairs, are deductible. A portion of your automobile expenses, meal allocations, and travel and entertainment cots may qualify for deduction, as log as they are related to your business.

A final reminder: Try to maintain as accurate records as is possible. Document your deposits, income, expenses and deductions. This way, you will have proof validating your tax deductions. Because tax laws are complex and often changed, it is often advisable to consult a professional. This will allow you to claim as many possible tax deductions for home businesses as you can. Keep a stenographers notebook with separate pages for every deduction you feel you might have coming. Even if you don't know if it is a deduction, for now, record it.

The above is very powerful. If you think something might be a deduction, write it in your notebook.

Have a CPA do your taxes for you. They cost more but you will get more back and have less trouble with the irs.They will find deductions you did not know you have coming from your possible list of deductions and they will also take off deductions you do not have coming. Some things they will be able to carry over for years in the future.

Your CPA will give you tips that will save you time and money and make your business better. They have software that will make your tax work far more efficient. If you get called in for an audit your CPA will do all the talking and you say nothing. I let the IRS call my CPA, regarding my taxes, if they have any questions.

You are less likely to get audited directly by the IRS because your CPA has a reputation to keep up and will keep your taxes straight. You will even save the IRS some money because they know your CPA will do better tax work than you.

Overseas tax services cannot go to an audit with you. This is a very important benefit of a CPA for you. Even though their charges are less they cannot know your business as well as your CPA to help you with many problems and questions. Buy Americans when it comes to taxes.

If you are going to be an entrepreneur the CPA will serve you better than an automatic tax software program and yes the software programs will result in mistakes. By the way, I am not a CPA or trying to sell you any tax services.

references; irs, cpa and 40 years of tax record business experience

 About the Author
James M. Lowe writes original articles, press releases, e-books, blogs and websites about home business opportunities. contenttomarket.com

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But Which Accounting Software Do I Need?

There's an abundance of Accounting Software packages in the marketplace, but even so, deciding which one would be best suited to your individual needs, doesn't necessarily have to be a difficult decision. You just have to break the process down to a few matching a few simple criteria.

Firstly, you need to ascertain what you want the product to do. Secondly, forget the sales hype that merely showcases all the "must have features" in each product, and thirdly, analyze each according to its functionality and suitability for your requirements.

Features:

There really isn't that much difference between the free software packages and the 'pricey' alternatives other than reporting capabilities, inventory management and the number of users allowed. Most of the other basic functions are quite similar from one product to another, and in some cases the free products out perform some of the more expensive options. One thing to always keep in mind though, are your future needs, but don't pay for features that you're never likely to need.

Ease of Use:

Always try the software before you buy it if you can. The product might have a steep learning curve that takes a lot of training before it becomes easy to use. A program that is relatively cheap might not be the best solution if it takes you 3 months to "get the hang of it!" You also need to consider how easy it is to integrate with any other specialty software you currently use?

Free v Purchased / Major Brands:

Are you prepared to risk using a free software product that may or may not be upgraded and supported, as opposed to a name brand product where these things are virtually assured? When you finally select the product that looks best suited to your business you may as well get the best value. Shopping around might just prove that the local computer shop can supply what you want for less than the big online merchants.

Scalability:

Whilst we think we know where our businesses will be in 2 years or 5 years times, things don't always go as planned, so be sure to buy a product that has the ability to cope with your future business directions. It may well be better to opt for a product initially that has more flexibility to be adapted or added to at a later date.

Product Support:

Which support program would suit your needs best? Will you survive with just email support, or do you need to have access to phone support. Maybe you'd sooner be able to call the supplier and have them come to your office for onsite support when necessary. The level of support you are likely to need will largely depending on the level of skills you have "in house". Down time is costly, so assess your likely support needs closely.

Make a list of everything you need in each of the above areas, and be sure you get all the features you need, or are likely to need, but don't waste money on unnecessary "bells and whistles" that you are highly unlikely to ever need.

If you do decide to minimize your costs initially, make sure there is a smooth process to expand the program later if necessary.

Making your decision with these basic factors in mind will go a long way towards getting you the accounting software program that will meet your needs. 

 About the Author
David Neehly writes extensively about Accounting Software on his website at accountingsoftwarefree.com, where you'll find many more interesting articles. Don't forget to grab his FREE newsletter, it's full of expert advice, freebies, and the latest updates about Accounting Software.

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Understanding Account Reconciliation

When you confirm that the balance in your checkbook is in sync with your corresponding bank statement, it is known as account reconciliation.

Any record that you keep regarding your financial transactions with banks, credit card companies, or retail stores is known as an account. It is an arrangement between buyers and sellers in which payments are to be made in the future. The different forms of payment are checks, bills of exchange, and promissory notes. These are transferable, signed documents, which guarantee to pay the bearer a sum of money at a later date.

Purposes of Account Reconciliation
Account reconciliation makes available a suitable method for reconciling the accounts to the monthly financial reports produced by the Financial Records System (FRS). Account reconciliation helps you evaluate departmental account records in regards to the reports, which have been generated by the FRS. This helps you to better verify the accuracy of each account statement. The person in charge of each account should verify the account every month. Account reconciliation helps ensure accurate reports on the account. It helps to identify errors and inconsistencies in your accounting.

In order to perform the reconciliation most efficiently, you should be certain that the person in charge of an account maintains full and accurate records. It is your choice to maintain the records in a manual filing system or on a computer program. You can develop your own filing and record keeping system. It should be capable of providing an effective means of reconciling your accounts on a monthly basis. You can make use of the following files to make the reconciliation process easier.

Open Transaction Files: These files hold all source documents that you may have started for the account, but have not yet processed. Some common types of source documents are Distribution of Deposit forms (for cash receipts), Check Requests, Purchase Orders, Prepaid Purchase Orders, Interdepartmental Billing Forms, Merchandise Orders, and Travel Authorizations.


Pending Files: These files hold source documents that had some activities posted on the FRS report, but await further activities before they can be completed. These include Purchase Orders, Inter-departmental Billing Forms, Travel Authorizations and Travel Expense Reports.


Closed Transaction Files: These files hold the source documents that are fully processed in the FRS. You can always refer to the Records Retention Policy to establish how long documents must be maintained on file.


Monthly Reports: You receive these after the end of each month. The accounts must be reconciled to the monthly reports. The FBM090, Account Statement, and the FBM091 and Report of Transactions can be handed over to the person handling each account. You then compare the open transaction and pending files to the FBM091 and the Report of Transactions, which has a detailed list of transactions posted in a particular month. Make a comparison of the source documents with the report to find out if the encumbrance was properly established, adjusted, or canceled in the correct account and the correct object code.


Additional Help
Software is available to help you in reconciling your accounts in an automated fashion. Apart from providing you with all the help, they are reasonably priced as well. 

 About the Author
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their site smallbusinessconsulting.com

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Understanding Bank Reconciliation

Bookkeeping is fundamental in running your business in an informed way. It is important that you have an organized, transparent and updated bookkeeping system in place. One of the ways to keep track of your company's books is bank reconciliation.

What is bank reconciliation?
The procedure of comparing the account balance given by the bank with that of the company's book of accounts and explaining any discrepancy is bank reconciliation. The discrepancy in the balances may be due to the different timing of registering the data in the bank's books and in your company's books. This discrepancy is normal and is rectified automatically within small time. However, sometimes the discrepancy is due to an error, which has to be rectified manually and to catch this error you need bank reconciliation. Companies generally do bank reconciliation at the end of each month.

 

Reasons for maintaining bank reconciliation
Regular monthly bank reconciliation keeps your company's financial records clear and updated. You never build up an erroneous backlog. Also, you can understand your accounting status all the time. It is important that you have a prompt and reliable communication system with the bank so that you keep your records accurate.

 

Bank Reconciliation Statement
It is better to prepare a bank reconciliation statement by yourself so that you are able to figure out the causes of discrepancy.

Structure: The statement is divided into two sections. The right section reflects your bookkeeping for bank transactions and the left side reflects the bank's records for your account with them.

Heading: The heading of the statement will have the bank's complete name with the date of reconciliation.

Items: The first item of the statement is your opening balance just before the reconciliation. Check each item of the statement further for the following. If the transaction is missing from you our company's account and it is on the bank's record then you need to enter it in your books. If the bank section has missed it then enter it under their section. If the missing transaction belongs to the bank such as any fees deductions or interest credits, then it is an error at the bank's end and it will rectify the error.

Adjustments: Once the reasons for the discrepancy have been figured out then you should include the missing information in journal entries.

 

Items of Bank's Statement

 
Credit: Banks may credit some interest periodically into your account as applicable on the account balance.

Debit: These will be any of the bank charges on your account as applicable.

Erroneous credit: Any incorrectly placed credit in your account is booked under this head. Sometimes, the bank makes a deposit in the wrong account.

 

Items on Your Account Books
Unpresented check: Your Company's books should record any checks issue immediately at the time of issue. The bank will, however, record it when the check is presented to it.

 

Software for bank reconciliation
There is a lot of bank reconciliation software readily available in the market. This software is compatible with all the latest accounting packages. The data is automatically imported, checked and reported through the software making your job easier. 

 About the Author

David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their site; smallbusinessconsulting.com

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Computerized Bookkeeping Is Fast, Simple, and Flexible

Every business needs to keep good records to ensure bills are paid, obligations are met and checkbook balances match up. Whether it's a home-based business, a Fortune 500 company or even the business of running a household, well-kept books can really help guide a "business" in the right direction when it comes to keeping finances in order. More and more people are turning to computerized programs for keeping money in check. The reasons for this are many.

Computerized financial programs are becoming the way most business gets done for a number of reasons. Not the least of which, of course, are ease of use, simplicity in seeing the bottom line and ability to track actions as they happen. Combining online banking services with online bookkeeping has made managing the books even easier.

 

For home use, computerized bookkeeping is fantastic, especially when combined with online banking and bill payment options. Programs abound that help regular people keep their books as neat and clean as any big corporation's and they're used for a number of reasons, including:

* Ability to instantly update and have the program track bottom line and types of purchases. Some programs will even help separate out all charity donations and other tax deductible items for future use on tax forms.

* Quick way to see the bottom line. Computerized checkbook registers, for example, can instantly show a user how much they have, what they need to meet regular obligations and more. This is great for those who combine their use with online banking and bill paying methods.

* Better ability to see where the money goes. Clean and clear registers help users track their purchases and bottom lines easier. This is great for those who are living within a budget to help guide decisions about future buys and where costs should be cut.

 

Computerized bookkeeping systems are especially loved by businesses for the way they can simplify even a complicated business' books. Computerized programs offer the following (and more) advantages for businesses:

* Ability to track expenses and income for different divisions while melding it all together into an overall budgetary plan.

* Quick and easy to see how money is being spent and even why.

* Ability to track trends in spending and income.

* Fast reports for a variety of things including expense categories such as capital outlays, salaries, benefits and so on.

* Easier earnings reporting. These systems tend to do all the calculations for a business, so running reports, getting projections and so on is simple and easy. All that really needs to be done is to purchase the correct program to meet a business' needs and input the proper data.

* Simplicity in cutting checks. Many financial programs come with check cutting tools that enable companies to run their payroll, pay bills and so on with ease while the program constantly updates the bottom line.

 

Making it quick and easy for individuals and businesses to track their bottom lines, computerized bookkeeping programs are becoming hard to replace. By offering ease of use and a lot of options, these programs can help virtually anyone institute a solid accounting system.

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Michael Jackson's Fiscal Disaster

When you live in Never Never Land, aren't things supposed to be fun? According to Michael Jackson's latest financial woes the answer is no. Earning large amounts of money since he was five, how can Michael Jackson have a fiscal fiasco?

It boils down to spending versus watching the bottom line. Although Jackson's bottom line included 50% ownership in The Beatles Catalogue, a stake in the Elvis Presley and Bob Dylan Catalogues estimated to be worth ? a billion dollars, not to mention his own catalogue how can anyone go broke? By not paying attention to the bottom line.

Here is what Ms. Rae has to say, "In the highly competitive world of the music industry, it is never wise to sail alone. Equipping yourself with the necessary resources can ensure safe passage through the often rough waters of show business, and lead the aspiring musician straight to musical success."

So what are some good choices for those seeking out high profile careers and the money earned in those careers?

Seek out great financial advice.
Learn from others who are where you want to be.
Contact those people you respect and admire and seek out their advice and get the names and contact information of accountant's and financial managers who have helped them.
Read veraciously on the Internet and in the library.
Most of all watch the bottom line. Oprah still signs her own checks and watches the accounting ledger like a hawk. If you don't do this, you will be giving your money away and walk away with nothing or bankrupt.

Jaci Rae has been talking about the bottom line in the music industry or any industry for that matter for several years. Countless hours on her radio show, aptly name The Jaci Rae - Rae of Hope Show and in her best selling music industry business manuals, The Indie Guide to Music, Marketing and Money and The Ultimate Guide to Music Success, Ms. Rae goes into great detail to help the struggling artist or star struck hopeful learn how to avoid financial disaster and still keep the creative juices flowing.

Perhaps Michael Jackson should pony up the mere $25.95 for one of these books and tune into her radio show every week. In any industry it is imperative to watch the bottom line so you won't fall off the cliff.

Michael, if you're reading this, seek out a financial counselor instead of the "yes" people you have around you. In the long run they aren't helping you at all. But most of all, forget the spending sprees, you've run out of quarters to go on the rides at Never Never Land.

 About the Author

Jaci Rae is a #1 Best Selling author of The Indie Guide to Music, Marketing and Money and Winning Points with the Woman in Your Life One Touchdown at a Time. jacirae.com

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