Tax Helps Aug 15th

Okay, now let’s talk about those 3 qualifications for the home business tax breaks that I mentioned last Saturday.

The first one is:

RUNNING YOUR BUSINESS CONSISTANTLY:

This can be 3 to 4 hours a week. Week after week, why?
Because the Government wants you to be able to ramp up this so called part time job to full time should the need arise.

This is the biggest objective the Government had. To encourage every taxpayer to have a home based business and to run it
actively because it provides the ideal safety net in these times of economic stress and layoffs.

The second requirement:

HAVE PROFIT INTENT:

Here is the easy part. Some of the activities you do for requirement number one are the same activities you will do to prove profit intent.

So, does the time and effort you are putting in your business indicate an intention to make a profit.

Do you depend on the income from the business? Would the income from this business help you to survive should you get laid off or lose your day job? This means you have profit intent. No one does things to lose money and continues to do so.

If you have losses, are they due to circumstances beyond your control or did they occur during the start up phase of your business.

Do you have knowledge needed to run your business successfully?
This does not mean you have to personally be an expert. Are you learning from someone who is? Do you read up on the subject? Take relevant classes. Does your day planner have notations of times spent learning up on the subject in an effort to establish expertise?

And by the way, if your business has made a profit any 3 of the past 5 years, the above factors are not even a consideration.

And finally,

qualification number 3:

KEEP GOOD RECORDS:

Do not let this scare you. It is not a difficult thing. Let me help you organize.

I find the envelope system helps me a great deal. Keep all receipts. When you come home from shopping for supplies, having a business luncheon, getting gas, what ever you did that on that trip from the house to time you come back to the house. Keep all proof of what your activities were.

In your car: Keep pad and pencil to jot down your miles. Again, from the time you leave the house to when you return. Even if you went to the grocery store before returning home, keep the track of the miles.

Your envelopes should be marked for current months use. Place only the receipts for that month in that envelope. Do this for each month. Set aside a day to take that months receipt and further organize them by the activity they represent.

Now you can do this each day if it is easier for you. I am not that particular. I have what I call the end of the month records day. I take an hour or two that day, just for me to further separate and organize that month’s envelope. After making sure each item is in it’s correct category, then that envelope is placed in a shoe box that holds all the other years envelopes and other papers required for my business.

Then when tax time comes, all I need do is take along my shoe box.

It is that simple.


Next week: How some of your personal expenses can become valuable Business Deductions.

Yours Truly,
Lenisa
Dish Gardens by Lenisa
www.Lenisa.Etsy.com
Lenisahbb@yahoo.com