Tax Tips for Owners of Home-Based Businesses
Posted 13 Oct 15
One of the advantages of running your own company is the flexibility of your working environment. You can choose to operate your business from home while using one of our virtual offices as your company address.
That way you can remain in a comfortable environment and keep your personal address private from any unsolicited mail or visitors, while using a prestigious London address to boost your company’s corporate image.
However, running your business from home has its disadvantages, too. You might encounter various distractions while trying to complete business related tasks or struggle to create a strategy which would keep your work and life in balance. Running a business from home will require much more self-discipline and superb organisation skills if you want it to be successful.
Things can become especially complicated when you’re dealing with your company’s taxes. You might find it confusing which expenses you can deduct from your tax, since often the border between the private and the corporate when running a business from home is blurry.
In this article we will focus on the expenses which can help you make your tax bill smaller.
1. Deduct your home office
Although it is often difficult to decide if your home office can qualify as a legitimate business expense, there are certain aspects which determine it as such. If you own a separate room at your home dedicated solely to business activity, or even a portion of a room, you might be able to deduct some of your housing cost.
In some cases, it will allow you to further deduct some of your utility bills, including council tax. If your business is based online, you can save a lot of money on your broadband bill, but you will need to calculate how much time you spend using the internet for personal versus business purposes.
If you would like to find out if your home office qualifies as a business expense, contact our experts at Tawanda Accountants and we will help you make the most out of the exciting experience which is running your company from the comfort of your home.
2. Travel expenses
Even if you spend the majority of your time working from home, occasionally you might have a conference or a client meeting scheduled. In order to keep it professional, we suggest you meet your clients and potential investors in an appropriate environment, such as a virtual office we offer our clients.
Business-related travel allows you to deduct the cost of plane/bus tickets, parking fares, and car rental amongst others. Furthermore, you might be able to deduct 50% of your meals on business days, including taking your client out to lunch.
If you make those expenses on a daily basis though, you will need to prove that their purpose was solely business-like.
3. Health Insurance
Both health insurance and retirement plans can be tax deductible for both you and your family.
If you would like to find out more about how you can save on health insurance, call Freephone 0800 345 7556 and talk to our team at Tawanda Accountants - we will help you pick the strategy that fits your needs best.