Basic Costs that Can Be Included as Tax Write-Offs

• General tax write-offs for most businesses, whether home-based or located in an office or retail building, include the costs of office supplies and equipment, payroll, rent or building expenses, property taxes, insurance, advertising and vehicle expenses.
  
  

Expenses Unique to Home Businesses

• For home-based businesses, you need a dedicated area or room where all business is conducted and separated from personal use in order to be able to take certain tax write-offs for the business use of your home. Measure the total floor space in your home and divide it by the floor space of the area in your home used exclusively for business. Multiply this number by 100 to convert to percent. For example, if a home has a total of 2,000 square feet, and one room that measures 200 square feet is used exclusively for business, then 10 percent of the home's electricity, heat, insurance and property taxes can be claimed as tax write-offs.
  
  

Telephone Write-Offs

• Keep a log of telephone calls that are made for personal or business use, as you can only write off the portion of the phone bill that pertains to business. The best scenario is to have a dedicated phone line just for the business. This makes it a lot easier to track business use.
  
  

Managing Business and Personal Computer Use

• If your computer is used both for personal use and to conduct business (such as maintaining a website, checking business email, performing bookkeeping functions, writing correspondence and so on), then only a percentage of the computer's purchase price and repairs can be claimed as tax write-offs. To make record-keeping easier, it is best to have two computers if possible, one exclusively to use for business and the other for personal use. Consider using a desktop system for the business and a laptop for personal use.
  
  

Keep Business and Personal Expenses Separate

• It can sometimes be difficult to keep business and personal expenses separated, especially for businesses that work out of a home. But in order to take a legitimate income tax write-off, all business expenses must be kept separate from personal expenses. For example, if a car is used for both personal and business purposes, the mileage for each must be recorded, so at tax time only the mileage used for business (or the percent of vehicle expenses used for business) can be written off of taxes.