There are tons of benefits a home-based business can do for you.
Not only do you get to be your own boss and control the revenue while creating connections with customers and employees, but you also get to learn a lot of skills and lessons along the way! These aren’t the only awesome advantages to it, though.
Did you know that small home-based businesses also have tax reductions? That way, you’ll be able to use the extra funds in the maintenance of your home from running the business.
But how does that work anyway?
Here are some examples of those who are eligible for tax deductions:
- Small business with their home as a main office
- Craftsperson with their home used as a workshop
- Doctor who uses their home as a surgery or consulting room.
You will be able to get tax deductions from the following:
- Your room’s cost of utilities (gas and electricity) as long as it is proportioned between private and business use.
- Phone costs (as long as it is used for strictly business purposes)
- Depreciation of equipment or office furniture
- Occupancy expenses (rent, insurance, mortgage) for the room you use for business.
Take note that before claiming occupancy expenses, you’ll need to make sure you pass the Australian Tax Office’s interest deductibility test. This test will consider factors that prove your home is used as a business, from signs outside your house promoting your services, as well as the area of work to make sure it’s suitable for both working and client visits.
You claim the proportion of occupancy expenses that correspond to how much space you use for work.
So you will need to make sure that you take note of all your expenses, as well as the space you have used for your business in the house.
I hope that this article helped you out on the things you need to know regarding the tax deductions for businesses. On to the next step: Learning how you can own a small business or franchise from home!