"Build your own business and give yourself choices"

Tax Returns

for Home Based Business

Tax Returns are as important for your home based business as they are for any other business, or if you are working in a job as an employee.

It is important to remember that a Home Based Business is as legitimate as any other business, and that you need to ensure you are legally tax compliant.

This will also brings some benefits that you are able to use to your advantage.

Those benefits will vary depending on a number of factors.
The biggest considerations are usually:

  • Your location - which state, which country - tax laws vary from place to place so make sure you get the right advice for your location.

  • Your business structure and ownership - there are often different tax laws for different entities. For example, if you are operating as an individual your tax obligations will be different to if you operate a Registered Company.

    IMPORTANT NOTE: these are not the only factors taken into consideration when working our your tax requirements so it is always a good idea to get the correct advice.

    Tax Advice

    Getting the right tax advice right from the start could save you a lot of work as well as a lot of heart ache.

    The Government Tax Department of any country has significant powers to investigate potential tax breaches to ensure we all pay the correct amount of tax.

    In my opinion it is just not worth getting it wrong. You will tie up a lot of time and resources that would be better spent building your business and increasing your income.

    So finding the right tax information is essential.

    There are a number of options for getting advice.

    1. You can go directly to your Government Tax Department - whichever one is relevant to your location.

    2. You can seek out a Tax Consultant - again one relevant to your location, but it is also beneficial to find one that has some experience dealing with your type of business enterprise.

    3. You can use an Accountant - and again it is beneficial to find one with experience with your type of business. The type of Accountant you use is also a factor. For example, in New Zealand they may or may not be a Chartered Accountant - and this is based on their qualifications as well as membership of a professional accounting organization.

    Completing Tax Returns

    Who completes your tax forms will depend on a few things.

  • How complex is your business? Are you able to work out all the tax deductions you are entitled to, or should you enlist some help.

  • How much money do you have available to pay someone else to complete the return? Paying to have your tax returns done by someone else may seem a lot of money when first starting out in business, but the cost is usually tax deductible. Plus, is your business Tax Accounting, or should you be focusing your time on your actual business?

  • How complex are your other financial affairs, e.g. do you have investments, property, trusts etc to consider? How do all your financial affairs tie in together, and what are the tax implications of that?

  • How confident are you in your financial literacy? Are you confident that your Tax Returns will be correct?

  • What would be the cost if you got it wrong? You may end up under or over paying tax - both scenarios present their own set of problems.

    Home Business Tax

    While your Home Business is a legitimate business activity, it is still not exactly the same as many other businesses.

    In New Zealand there are tax advantages to using your home as your business space. This is also probably true of many other countries and their tax systems.

    You may be able to claim a % of your home expenses such as rent/mortgage, power, insurance, rates etc.

    This will obviously vary depending on where you are, but don't forget to check it out!
    Who wants to pay more tax than they need to?

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