MLM Home Business Tax Benefits...

Copyright © Paul Birdsall, Your Online Success Partner

The tax benefits for an MLM home business are the same for any home business---and they can mean a big difference to your bottom line.

According to the IRS, if you use your home to conduct your business, chances are there are numerous tax breaks you can take advantage of. In order to take advantage of these tax benefits at least part of your home must be used regularly and exclusively in the following ways:

1. It must be the principal place of business for your work.
2. It must be the place where you meet and deal with clients or customers in the normal course of business.
3. If you use a separate structure that is not attached to your home.

It’s important that the place you conduct business is not used for any other purpose than your MLM work. In other words, if you use your den to work in while the kids are in school but use that same room to watch TV in when you are not working, you cannot deduct the expenses used for your business, according to the IRS. That’s why it is important that you set up an area for your business that is used exclusively for that purpose.

If you do, then the tax benefits are substantial. Say, for instance, that your home office represents 10 percent of the total square footage of your home. You can then deduct 10 percent of your utilities, including heat and electric.

Other deductions, according to the IRS, include office equipment, internet service, copying expenses, telephone, and mailing expenses. In addition to that, you can deduct mortgage interest, rent casualty losses, insurance, depreciation, maintenance and repairs as long as it pertains to the office. Taking advantage of these tax breaks can save the business owner thousands in taxes.

Keep in mind, however, that you can’t deduct such expenses as lawn care or money spent on maintaining other parts of the house. No, that kitchen renovation would not be considered a business expense.

Be aware that home-based business tax deductions has become an area where abuse is actively being investigated by the IRS. In fact, the IRS issued a warning to avoid tax scams that claim you can deduct personal expenses simply by claiming you have a home-based business.

Here are some bogus tax deductions that can lead toward a business owner’s nightmare: the dreaded audit.

1. Deducting all or more of the cost of operation of a personal residence.
2. Deducting excessive car and truck expenses when the vehicle is used for personal and business expenses.
3. Deducting personal furniture, home entertainment equipment, children’s toys, etc., is not allowed.

There are plenty of legitimate and worthwhile deductions without having to try to deduct something that might spark an audit. Keep in mind that home businesses are more likely to get a closer look from the IRS, so it’s important that you do nothing to stretch the truth and claim that new high definition TV as a business expense just because you like to take a break and catch a show between sending e-mails.

I use a personal Business Tax Advantage coach and tutor to maximize my home business deductions and so should you.

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Paul Birdsall is an international professional speaker, network marketing funded proposal expert and very proud stay at home dad. For more information on Paul's courses or to sign up for Paul’s free video newsletter, to visit his web site. http://www.WhoIsPaulBirdsall.com