Tax Benefit of Owning an Ecommerce Business
Many times people forget or do not give much thought to the tax benefit that is available to online business owners. When you conduct business out of your home you are able to take deductions on your personal tax return that essentially reduce your tax liability. The information contained in this article is meant to make you aware of the tax deductions that are available to online business owners. This is an excellent benefit for every business owner!
Home Office Deduction– Because our businesses are home based we have the opportunity to take a home office deduction for the area in your home where you conduct business (principal place of business). If you meet the requirements then you can calculate a percentage of your rent or mortgage, insurance, utilities, interest, improvements and repairs. The IRS has an excellent guide on how to claim the Home Office Deduction.
Auto Expenses – mileage to ship packages, purchase office supplies and travel to trade shows are a few examples. Fuel costs can also be deducted. Be sure to check with your CPA on the standard mileage deduction.
Travel – all expenses for business trips can be deducted. Note that for meals you get a 50% deduction.
Start-Up Costs – The tax deduction you can take during the start-up year is a major benefit to owning your own business so please talk to your CPA about how to claim it.
Other Deductions: phone and internet expenses, office suppliers, education, health insurance
All of the deductions mentioned above are available to those who operate an online business. By owning your own business you are able to take a tax advantage and reduce the amount of income that is taxed. For a more detailed analysis please talk to your CPA or Accountant.
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Disclaimer: The information contained herein serves as a brief overview of the tax deductions and benefits for online business owners. Before taking any of these deductions please talk to your local CPA.