Close 2008 with Purchases to Save Money
Tuesday, December 30th, 2008
It may seem like a farce, but some purchases can save you money further down the line. Small business owners and others who will file a Schedule C during tax season can take advantage of the last hours of the year by purchasing items for the office. This time of year also makes for a good time to consider big ticket purchases for your business or home office, to create a write-off on 2008 tax returns.
Small business owners can write off:
- Equipment used for promotion and services. The write-off comes as a depreciation of value each year. The full amount of a equipment doesn’t come all at once.
- Any realized losses by the business throughout the past year.
- Those who use a home office can write off the cost of using part of the home as the office, this include electrical, water, and space usage costs. Space usage includes a portion of the mortgage and property taxes.
- Business meetings and subsequent meals can be deducted in part.
If you’re running a small business or part time business out of the home, then you should be keeping meticulous records of your expenditures. The money you spend on goods and services throughout the year on your small business can be deducted from your business’s profit margins. This would effectively reduce tax liability and save you money.
While it makes sense to save money and not to buy frivolously, many small businesses owners use this time of year to purchase equipment and other items to offset their realized profit on their 2008 returns. Will you take advantage?
The IRS wants everyone to consider whether they’re in business or just performing a hobby. The difference exists when you do the work for profit. If you’ve been doing side work throughout the year and made a profit then it may pay for you to file a Schedule C and deduct expenses related to the activity. If, however, the activity was simply for pleasure, then you may not have reasonable cause to consider losses related to the activity as a business would. Take a look at the IRS.gov site for more information on how to determine if you run a business or simply have a hobby.
The economy has turned us into private analysts bent on securing our own futures. We may switch stock buys, move to more safer investment solutions, and call out our friends and family who speak on the side of resurgence in the US economy. The troubled financial times bring out a renewed interest in many of our debts and spending habits. A recent San Francisco Chronicle article reported on the state of the US economy.