Home-Based Business Tax Specialists Orangeville ON
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Home-Based Business Tax Write-Offs and How They Work
You shouldn’t decide whether to base your business in your home or outside of it, primarily on the tax advantages. But if you’ve made a commitment to start or grow your company from your living quarters -- even if only for the short term -- you’ll be happy to learn that a home-based business will give you tax advantages you wouldn’t enjoy otherwise.
Here’s advice about home-based business tax write-offs, and about other things you should do to maximize your tax situation while running your company from home.
Taking the home-office deduction
This is the big kahuna of decisions when it comes to home-based business write-offs. Even tax-accounting experts don’t agree on whether you should put in for it.
The deduction is for depreciation and operating costs for maintaining an office, workshop or other business site in the home. Figure out the square footage of that space and divide it by the home’s total livable space. You can typically deduct not only the business’s share of depreciation but also a share of your home’s overall utility costs.
Tax expert Eva Rosenberg suggests maximizing this deduction by figuring out what your utility bill would be if you didn’t work at home, rather than just deducting the percentage of utility expenses to match the percentage of physical space occupied by the office. The former deduction will be a lot higher, she says, because you might not be running the furnace at all, for example, if you worked outside your home.
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