As a self-employed individual or other individual who is working from home, your home can work well for an office setting. There are many businesses that don’t need a new building and all the costs that this can incur. Instead, you can work from your home and be comfortable while getting work done any time that you would like. But when it comes to your home office, you do need to keep good records if you would like to save some money at tax time and get all the benefits out of this home office as you would from any other office you chose.
 
If you work out of a home office, it is important that you get someone on your side who is able to help deduct the right expenses during tax season. This can help you to save even more money on things that you need, such as phone or internet service, while still running your business. 
 
Determining a Home  Office
 
In order to consider your home as partly an office to get your work done, there are some requirements that are needed. You will need to spend the majority of your time working from home, such as only working out of the office and not be reimbursed by another company for the expenses that you incur from working out of your home.
 
Often, once you have determined a home office, you have to figure out the percentage of the home that you use as the office and which percentage is used for sleeping and other daily activities. The IRS is not going to allow you to deduct all of the home as an office since you are usually just using a small little bit. If you are uncertain about how much you need to list as a home office or any other questions about your home office deductions, make sure to contact the professionals at Rincon Controller and Tax Services to get the help that you need.
 
Expenses You Can  Deduct
 
There are many different expenses that you will be able to deduct when it comes to your home office. Some of these include:

• Amount you pay others—even when you work from home, you may hire others to help you get the job done. If you happen to have other employees, you can deduct some of the expenses on what you pay to the others on your tax return. Make sure to fill out the proper 1099 forms if this is true for you.
• Internet costs—you can deduct some of your internet costs if you work primarily online. You will have to figure out the percentage of the time you use the internet for work and personal use and then use this as your deduction amount.
• Costs of equipment—it takes a lot of equipment in order to keep a business up and running. You could get some of the money back that you spend on this with the right help.
• Phone costs—if you use your phone for your job, you could deduct some of the expenses. You will have to figure out how much of the time you use the phone for business and the professionals at Rincon Controller and Tax Services can help you figure out the right amount.
• Interest paid on mortgage—you will not be able to deduct the whole amount of this since you are going to also use the home for personal use, but you could save a bit of money on your mortgage if you use it as a home office.

Many businesses that work out of the home have so many things to take care of that they worry about getting all the work done, much less finding the right deductions.  This is why it is so important to go over these things with a qualified tax professional.
 
Keeping Good Records
 
It is important that you take care to keep good records along the way. You are not able to deduct expenses off your tax return if you don’t have any proof of the expense on you. Without the right receipts or the best record keeping possible, your credit and deduction allowance is going to be pretty limited. It is up to you to go through and keep records. Or, if you need some help getting this done, make sure to contact the professionals at Rincon Controller and Tax Services. We can help you with all of your bookkeeping and record keeping endeavors so you are able to get the most out of your experience. Contact us to get started.

Dealing with your small business has its own unique set of challenges. You have to figure out how to pay for all the same things that other businesses do, but you have less money coming in and less resources. Rather than letting this get you down, make sure to contact Elizabeth James from Rincon Controller and Tax Services in Carpinteria, CA to help you out. 

When you are own your own business, you have some great options for taking care of your retirement saving, that can actually help you to save you money on income taxes as well.  This becomes even more important when you realize that depending on your business taxable income, you may not be paying enough into Social Security and Medicare to receive enough later to live on.   Most don't even know that they are paying into it if they are self-employed.  This is where the Self-Employmenbt (SE) Tax comes into play.

Briefly, as a reminder, when a sole proprietor files their business’ tax return on their Sch C, they pay two different taxes.  First is their Self-Employment Tax (SE Tax).  This is based on the net taxable income from the Sch C.  Since it is currently at 15% of the net from the Sch C, this may seem high and may seem like an extra tax.  It helps to keep in mind that the SE tax is actually the entire Social Security (FICA) and Medicare tax.  (Remember, as an employee, you paid half of it via your withholding tax and the employer had to pay the other half). 

The second tax is the income tax that is on your 1040. 
 
So how does retirement saving planning and your tax have in common? 

You have more options than a regular IRA.  There are other options, such as Simple IRA, SEP IRA, Solo 401k’s which allow you to save more than a regular IRA would, based on your Sch C net income. 

Additionally, if you have a high deductible health insurance plan that allows for a health savings account (HSA), you can really take advantage of some ways to minimize your adjusted gross income (AGI) on your income tax return.  Even better, with an HSA, you can increase your savings for qualified medical expenses that you incur after retirement because these funds are not a use it or lose it like an FSA. 

These are all things to add to the multitude that you are already thinking about.  So, it is important to discuss with both your tax preparer and a financial planner, preferably together, to keep the bigger picture and end result in perspective.

​Mid-March – and most people working in their businesses every day will find that it has just snuck up on them.  Often times, the first thought goes to income taxes coming due.  But there is more to do and work toward.  
Now looking at the end of the first quarter, and having pushed past the compliance reporting requirements (1099’s, W-2’s, etc.) many are think that it’s a time to take a little breather.  However, if you have your eye on the ball and are really working on building and expanding your business, you are also trying to push to meet or exceed your first quarter goals. 
A few things that are good to take a look at before the end of this month,

• Finish pulling your tax documents together and get them to your tax preparer, if you haven’t yet;
• March 15th – Corporate income tax deadline;
• If you have a regular IRA, you may want to consider making a contribution for the prior year, but remember to check with your tax preparer as to the maximum.   If you don’t yet have an IRA, this is something to consider opening before the income tax filing deadline in April. 
• If you have a Health Savings Account, you should check your maximum contribution limit against the amount that you have contributed for the tax year, and try to meet that maximum.  If you have the right type of health insurance plan, and haven’t yet opened up your HSA, then now is a good time to do it- before the deadline to make the contribution apply to last year’s tax return.
• If you had delayed making changes to your payroll processor, now is a good time to jump on it, with the goal of making the switch either before the end of the quarter (so that the reporting is consistent by processing company) or to make the switch effective the first quarter of April (so that you have a clean quarter changeover.)

• If you had made a change to your accounting system, or started one from scratch, you will want to make sure that this has been wrapped up and completed by the end of the quarter. 

If you have goals for the year, formal or informal, now is a good time to measure your progress.  Rather than wait until after the quarter ends, figure it out before it ends so that you can make any last minute changes or push to attain those goals. 
As part of your planning and measurement process, don’t forget to think about your next quarter goals and how you are going to get there. 
Go out and finish off the first quarter strong!