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Tax Tips for Ambit Energy Home Based Businesses For Training Purposes Only! I re
commend you to research and find a tax advisor that you click with. Why would yo
u want to pay more taxes than you are legally required to pay? First, you have t
o understand that there are Two Types of Taxpayers the Employee, and the Busines
s
Owner.
Employees have very few tax deductions available to them. Mortgage interest, sta
ndard deductions for
dependents, gifts to church or charity, and contributions to a retirement plan,
are usually the only
deductions available. For the most part, employees are taxed immediately on what
they earn: their "take
home" pay is after taxes.
Business Owners (and you can be one, too!) earn money, spend what they want or n
eed to run their
business, including their salary, and pay taxes on whatever is left. The tax ded
uctions available for
Business Owners include: mortgage interest, rent, utilities, computers, janitori
al services, office
supplies, furniture used in business, phones, publications, travel expenses, mea
ls & entertainment,
medical insurances, gifts to charities/clients, contributions to employee retire
ment plans, landscaping,
or any other expense that qualifies as "ordinary and necessary" to operate their
business.
Read the following over and over again until you have a clear understanding. Her
e's the hint:
Home and Personal Expenses are NOT tax-deductible, but Business and Business Exp
enses ARE
tax-deductible. Having a Home-Based Business Pays Off!
To qualify for tax-deductions, the Ambit Energy Home Based Business Owner must a
ctively "run" a
business. The Ambit Energy Home Based Business Owner must establish to the IRS's
satisfaction "the
intent to produce profit."
How does the Ambit Energy Home Based Business Owner establish "intent to produce
profit"?
1. The Ambit Energy Home Based Business Owner establishes him/herself as an "exp
ert" by holding regular (documented) meetings and/or training sessions with othe
rs in the business, i.e. MLM, sales, team calls or meetings with up and down lin
e. Document participation in meetings/calls.
2. The Ambit Energy Home Based Business Owner establishes "running the business"
through long
distance call logs, receipts for postage, ordering of business promotional liter
ature and products,
business cards, products, etc.
3. The Ambit Energy Home Based Business Owner establishes "actively running" the
business by holding meetings, making presentations, doing mailings, and having
customers and prospects. 4. The Ambit Energy Home Based Business Owner's history
of income or loss with respect to the
business activity must be "relevant" to "the intent to produce profit." The IRS
would assume that a
business with 3 or 4 years (in a row) loss that is not decreasing would be aband
oned by the Ambit
Energy Home Based Business Owner if the intent were to make a profit. If the bus
iness is NOT
abandoned, then the IRS could assume that the business is for "tax-reduction" an
d not "profit
producing" purposes. If a business does not show a reasonable profit at least so
me of the time, then
change businesses, or get hassled by the IRS over the deductions.
5. The Ambit Energy Home Based Business Owner deducting "personal pleasure or re
creation"
expenses - golf, vacations, theater tickets, dining experiences, etc. must meet
the "reasonable" and
"relevant factors" in the eyes of the IRS!
6. The Ambit Energy Home Based Business Owner needs a Business Plan with vision
and mission
statements, target prospects and customer profiles, competitive environment and
marketing advantages,
as well as sales strategies. The Home Based Business Owner may wish to seek advi
ce of an attorney to
develop this document.
7. The Ambit Energy Home Based Business Owner needs to have a customer and/or pr
ospect list, and "work it." Keep copies of mailers, faxes, emails, phone call no
tes, telemarketing scripts, advertising, etc.
8. This is Important! The Ambit Energy Home Based Business Owner needs to use pr
ofessional tax
preparer who specialize in home business tax law. A good tax person can help you
set up a system that
will work for the both of you.
We have established the "intent" of your business o make a profit. Now for the A
mbit Energy Home Based Business Tax Tips! How many of these deductions do you ta
ke?
1. Mortgage payment/interest - according to the Business Use Percentage (BUP) of
the home
2. Rent - renters can now claim a business rent deduction on Schedule C accordin
g to the BUP.
3. Utilities - gas, electric, water, sewer, trash collection - monthly cost as w
ell as repairs, service and
maintenance - use BUP
4. Cleaning / Janitorial Service
5. You can hire your children to perform this task - use BUP -
6. Computers, Copiers, Fax Machines, Telephones, Palm Pilots
7. TV, VCR, DVD player - used for business presentations - use BUP
8. Office Supplies - paper, pens, ink cartridges for printers & copiers, envelop
es, letterhead
9. Mailing / shipping costs - postage, UPS, Fed Ex, Airborne, etc.
10. Paid advertising, classifieds, radio spots, etc.
11. Mailing list rental fees, Biz-Op lists
12. Direct Mail costs - postage, envelopes, printing
13. Promotional Materials - prospecting tapes, videos, flyers
14. Vehicle Operating Expenses (Vehicle Use Log)- gas, parking, tolls, maintenan
ce/repairs,
purchase/lease monthly payments, interest, taxes, fees, insurance.
15. Wages, commissions, benefits paid
16. Legal/professional fees - legal, tax preparation, tax advice, bookkeeping, p
ayroll service.
17. Business licenses/fees, banking fees, interest on business loans, dues/subsc
riptions, etc.
18. Desks, chairs, sofas, coffee tables, filing cabinets, bookcases, bulletin bo
ards, and other furniture
and furnishings - include coffee maker, water cooler in kitchen.
19. Painting, wallpaper, and other repairs/remodeling
20. Phone bills, cellular phone bills, pagers (Your base home phone charges are
NOT deductible; add-
ons to facilitate business are.)
21. Internet Service Provider.
22. Newspapers, magazines, books, on-line media - (Reader's Digest, Playboy or G
lamour are probably
NOT business-related publications - unless you have a waiting room in your home.
Again, be "reasonable".) 23. Plane fares, hotels, meals, car rentals while trav
eling - pay attention to IRS rules 24. Dinners, ball games, theater tickets, hea
lth clubs, association dues - this is the category that is most audited by the I
RS.
25. Health, life, dental, disability and other insurance - premiums, co pays & d
eductibles.
26. Security alarms, security cameras, floodlights, motion detectors, and guard
dogs
Ambit Energy home business and taxes
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Reads:1,592Uploaded:01/02/2009Category:Business/Law>Taxes & AccountingRated:(2 R
atings)Always consult with your tax person before taking write-offs. This is an
informational article of what can be possible running a home business.
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