Small business owners and solo practitioners often forget the importance of a relationship with a good business accountant. If you own a small business or work from a home office you may be missing important information that could save you money.
To get the latest on tax tips for the home based business Inc.com turned to Mitch Michulka, a Certified Public Accountant and owner of Padgett Business Services in Lisle, IL. Padgett has been in business for over 45 years and has over 300 offices across the country supporting thousands of small businesses with Accounting, Tax and Payroll services.
Q. Mitch, what defines a home office? Are there “rules” about the space that’s used in order to claim the home office deductions?
A. To qualify for deductions as a home office, the area in the home used for business must be used regularly and exclusively:
1. as the principal place of business (including administrative use)
2. as a place to meet clients in normal course of business or
3. “in connection with” the business if the space is a separate structure from the residence (e.g., a barn or detached garage)Q. Does my business have to be a full time operation for me to claim home office expenses?
A. To qualify, the home office must meet the “regular use” test. Regular use means the taxpayer must use the portion of the home in the business activity on a continuing basis.
Q. Does the business have to be incorporated to take advantage of home office deductions?
A. No, the home office deduction is available to sole proprietors.
Continue Reading: “Money Saving Tax Tips for Home Based Bizs”
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