David Picchi  

Certified Public Accountant
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Home Office Set Up

Setting up a home-based business will undoubtedly cost you some money. There may be times when you're not able to locate a receipt. In these circumstances you are advised to underestimate the value of the item in order to keep yourself in good standing with IRS in the event of an audit.

An expense like the cost of a personal computer can usually be a tax deductible item. You should be able to prove that you do use your home office or computer regularly for business so the costs qualify as a tax deduction. The majority of your work should be done from the home office; however some work can happen outside of it.

A good tax advantage that a home business has over a traditional business is that driving expenditures can be deducted. You will be able to deduct driving expenses for business related purposes. Wise business owners will coincide personal errands around driving to business related tasks.

An example of this might be when going to collect the contents of a PO Box the home business owner can deduct those motoring expenses, it does not matter that you completed a few personal chores along the way!

Mileage must be recorded for all motoring so that the IRS can pay the assigned per mile amount.


Londonderry tax preparation accountants advise you that the IRS state the following are allowable tax deductible motoring expenditure items.

 Oil & gas expenditure
 Garage & parking costs
 Auto repair and depreciation costs
 Registration and license costs
 Insurance and leasing payment costs
 Toll costs

For non car owners still needing to travel for the home business, you are able to deduct items like bus and taxicab fares. Travelling by plane or train can also be deducted as can food, dry cleaning, phone calls and hotel bills. Should you need to ship material associated with a business presentation then this too is tax deductible. Business related meals that are eaten out or cooked by you are deductible too.

Some other expenditure that you’ll be able to deduct is in the list below:
 Motor vehicle insurance,
 Medical insurance
 Credit expense costs
 Bad debts
 Disaster Insurance
 Theft Insurance and malpractice
 Medical expenses
 Out of pocket expenses

One area to be aware of is using a home phone, that isn’t deductible as it has a personal use element. A dedicated business phone would be deductible.

Office equipment items that can be deducted if they are for use in your home business are:
 Computer
 Laptop
 Printer
 Copier
 Fax
 Scanner
 Camera
 Calculator
 Sundry office items

Many types of office equipment will fall into the tax deductible category, such as desks, office chairs, filing cabinets, lamps and similar items. As long as these items are used for the home business then they are allowed.

To round of the types of deductible expenditure are stationary type items, for instance tape, paper, pens, folders, files, calendars, planners and other sundry items.

There you have a fairly comprehensive overview of some of the allowable tax deductible expenditure. Your local Londonderry tax preparation accountant will be glad to advise you on further tax deductible items that fall outside of the scope of this article.