1 of 10

Write now Article Tools

Page 2 of 2

get to subtract a portion of the costs from your profits over a number of years. However, the Section 179 deduction allows you to subtract the full cost of certain equipment, up to $100,000, in the first year of ownership.

2. Small-business retirement plans. If you, or you and a spouse, are the sole owners of your business, there are some great IRS approved retirement plans that allow you to defer taxation on your income. It would not be hard, using things like "Simple IRA's" or SEP-IRA's, to shelter $10,000 - $20,000 from taxation in any given year.

3. The Home Office Deduction. You can actually take a deduction against your home business income for space within your home "dedicated" to the business. "Dedicated" is the key word, which means that it has basically got to be exclusively used for the business.

4. Self-Employment Tax Deduction. The IRS gives you some reprieve from the 15.3% self-employment tax mentioned above. As your own employer, you get to deduct 1/2 of the employer's 7.65% share, as an "above the line" deduction on your return. This makes your net rate for self-employment somewhere closer to 13%.

In the end, taxes may be one of the most confusing, frustrating parts of operating a home business. It is strongly recommended that you pay for professional help in this area, so you can avoid major mistakes and free yourself up to run your business.

Learn more about this author, Ken Clark.
Click here to send this author comments or questions.

• << previous page
• 1
• 2

Add your voice

Know something about Home business and taxes?
We want to hear your view. Write now!