When you run a business, it can feel like you spend far too much of your time worrying about tax. Here's a quick guide to the what you need to know about tax.

What Do You Qualify For?

There are all sorts of tax breaks for home and small businesses, to try and make it easier for them to survive. To qualify for them, though, you will need to be using your home as the primary place where you do business. If most of what you do takes place in some space elsewhere that you rent, then you won't qualify for home business tax rules. You also are unlikely to qualify if you haven't set aside a specific part of your home as the 'business area'. Be prepared for the fact that you might be audited, to make sure that you are running a legitimate business from your home.

Records You Need to Keep.

You need to keep records of everything -- literally everything -- you spend on your home business. You should especially keep records of things when their use might be shared between personal and business, such any business-related travel expenses you run up on your car. If you have stock, you need to go through and inventory it at least once a month.

What You Can Deduct from Your Home Expenses.

Because your home office is in your home, you can claim any tax back that you pay on that part of the home. You can also claim back tax on part of your utility bills. For example, if your home is 2,000 square feet and you use 100 square feet for your home office, you can claim back 5% of your utilities. If you rent, then you can claim back this percentage of the rent, and if you have bought the house then you can claim it as a discount off your mortgage interest. Any equipment you have that depreciates (becomes worth less) because you use it in your business may also be eligible for a tax deduction.
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