What are Home Based Business?

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Home Based Business

Life is in every case brimming with astonishments as the weariness soak in to your inner mind it’s disclosing to you that you require a vocation to stay aware of your obligations at home, particularly the money related perspective. All these are shredding you confound what ought to be your following stage. You may be running a home based business if you carry out most of your business work at your home. For example a dressmaker who has clients coming into their home for fittings, or your business doesn’t own or rent any premises other than your home for example, a tiler who does most of their work on the clients’ premises.

Deductions fall into two broad categories – occupancy expenses and running expenses. So occupancy expenses are those expenses you pay to own, rent or use your home. These include: – rent or mortgage interest – council rates – land taxes or – home insurance premiums You may be able to claim a portion of these expenses if you have an area of your home set aside exclusively for business activities, such as an office or workshop. For example, if you use a room in your home to store stock for your business, but also use it to store personal items, then this is not exclusive use, and you can’t claim for occupancy expenses. However, you may still be able to claim for running expenses. Running expenses are those expenses you incur as a result of using facilities in your home to run your business. Some examples include:

  • The cost of using a room – business phone costs,
  • The declining value of plant and equipment,
  • The declining value of furniture and furnishings,
  • The cost to repair furniture and furnishings and
  • Cleaning costs.

Yes, you must keep receipts and records of when and how you use your home for business purposes. We recommend you keep a diary showing your business use that will allow you to work out a pattern of use over a representative four week period within the financial year, taking into account holidays and illness. In claiming deductions, it is important that you separate your expenses relating to business and private use. This is referred to as apportionment. Now there are a couple of ways that you can do this. For example, you could keep a diary showing your business use for a representative four week period each financial year to work out a pattern of use. So for example, in terms of phone costs, if you don’t have an itemized account, you can keep a record for a representative four week period to work out the pattern of business calls, or where you have an area of your home set aside exclusively for business use, you can claim a percentage of occupancy expenses that relates to the floor area you use for your business as a portion of the floor area of your whole home.

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