3 Top Tax Tips for Your Ecommerce Home Dropship Business
With Thanksgiving behind us, it’s just a hop, skip and jump until Christmas and right after that the end of another year, so you might appreciate some tax tips for your home ecommerce dropship
business. Click Here For a FREE Home Business E-Book!
It has been said so often that most people are aware of it but it bears repeating: There are numerous tax advantages to home business owners. Your dropship business can claim legitimate deductions that will save you big bucks when April 15th rolls around!
Use these top tips to your best advantage when you file your annual income tax this year. Of course, the whole idea is to render unto Uncle Sam what is his and keep as much as you legally can for yourself. So, make sure to take these tips into consideration if you want to try and keep the iron hand of the IRS out of your pocket as much as possible:
I. Count your home office as a tax deduction---You can claim your home office as a bona fide tax deduction if it meets certain criteria. Basically, you must use your home office or workspace solely for business and do so on a regular basis. It doesn’t actually have to be a separate room or partitioned area. If you use one corner of a room in your house for your home office space, you will simply figure the square footage of that area. For example, if your home dropship business office takes up approximately 15% of the square footage of your home, then you can probably claim 15% of all expenses such as rent or mortgage payments, utilities, insurance, etc. as home office expenses.
II. Phone and Internet---If you use one laptop or desktop PC exclusively for your dropship business, you can claim the cost of the machine itself as well as your internet service provider costs as a home business expense. Ditto for a separate phone line or even a cell phone that is used only for business calls. You can deduct the cost of the monthly service along with the expense of purchasing the phone.
III. Self Employment Taxes---When you work for someone else as their employee, they pay half of your Social Security and Medicare taxes and you pay the other half. When you have your own home dropship or other ecommerce business and work for yourself; you pay all of these taxes. That being said, Uncle Sam has made it a little less painful to be self employed by allowing you to deduct half of the total Social Security and Medicare taxes you’ve paid from your income tax. You’d have to pay half even if you weren’t self employed, after all, so that isn’t a bad deal. Plus, you’re getting a break this year in 2011 because you will only have to pay 13.3% rather than the usual 15.3%. Another silver lining in this self employment tax cloud is that you only pay on the amount of your net income, not gross. All in all, you’ll probably end up paying less than 3% more than someone who isn’t self employed with a home business, which is a very small price to pay to be your own boss and work at home!
Use these tips and others to make sure you get to keep as much of your hard earned money as you can from a home dropship business or other online endeavor you conduct from home.
If you liked this article, you may also like this one: Make More Money & Be Your Own Boss with a Home Dropship Business!