On a percentage basis, Maricopa is home to more home-based businesses than most other cities and towns in the area. There are lots of reasons for that but primarily it’s because there are just too few brick and mortar offices and store fronts to accommodate the hundreds and likely thousands of home-based businesses operating in the city.
It’s almost tax time again so while we are certainly talking about taxes at all our Power Networking Team events, I felt that it would make sense to call out a few important points that our hard-working home-based small business owners should know about.
According to the IRS, owners who run their businesses out of their homes and want to do some repairs, painting or redecorating may be able to get a deduction for the work. If the home office or workspace itself is getting a makeover, those costs may be completely deductible.
To claim the deduction, an owner can use a formula set by the IRS. The owner determines the percentage of a residence that is exclusively and regularly used for business. That percentage is applied to actual expenses on the home including repairs and renovation and costs such as mortgage or rent, taxes, insurance and maintenance.
There’s an alternate way to claim the deduction — the owner computes the number of square feet dedicated to the business, up to 300 square feet, and multiplies that number by $5 to arrive at the deductible amount. However, repairs or renovations cannot be included in this calculation.
Owners should remember that the home office deduction can only be taken if the office or work area is exclusively used for the business — setting up a desk in a corner of the family room doesn’t qualify. And it must be your principal place of business. Any business owner who may have questions about taxes should consult a qualified tax advisor.
Power Networking Team is a powerful small business networking group run by powerful small business owners. With active networking opportunities in three states and more than 100 upcoming networking events on the calendar, you should check it out. It’s a perfect networking group for you to join if you are a startup or home-based business. For more information about Power Networking Team, visit the website at www.powernetworkingteam.com.