People start home based internet or direct sales businesses for many reasons. However, many of these same people still do not understand or realize all of the tax advantages that they qualify for.

Lets have a simple look at deductions and expenses you may be able to use to your advantage come tax time.

Business Deductions:

You are in an internet or direct sales business so therefore you are eligible for business deductions. These expenses have to be necessary and reasonable for the operation of your internet or direct sales business.

It is extremely important that you keep accurate records and books for your accountant and tax purposes. Your records need to include the types sources of income, expenses, losses, gains and cost. You need to include items like bank statements, cancelled cheques, receipts, invoices, credit card statements etc.

Please do not keep all your stuff in shoe boxes or bags, carefully organize them in a filing system. Your accountant will adore you as it will make life so much easier for them, believe it or not your life will also be much easier if you ever have to look up a particular receipt etc..

For further clarification you need to check with a professional accountant. Also remember that tax deductions vary according to the tax laws of the country in which you live.

Tax Deductions for Home Based Businesses:

No one likes tax time, but since you own your own home based internet or direct sales business you could actually save thousands of dollars a year in taxes, as it allows you to turn some personal expenses into legitimate, allowable expenses. The more tax deductions your business can legitimately take, the lower its taxable profit will be.

Lets look at some of the tax advantages to keep in mind.

Auto Expenses:

Keep track of and deduct all of your actual business related expenses. Do you lease your vehicle? Log the mileage you drive and keep your gas receipts. Don’t forget you auto insurance, license plate fees, and vehicle registration. Keep all of your maintenance receipts also.

Education/Training Expenses:

As an owner of a home based internet or direct sales business you continually need to educate yourself. You are allowed to claim for the cost of training materials, training meetings, programs, manuals, conferences, books, on line training subscriptions and internet courses etc.. Also you can claim for professional fees that you pay out to your lawyers, your accountants and tax consultants and other professionals that you consult with for your business.

Business Entertaining:

You are able to deduct a percentage of the cost of entertaining existing or prospective customers and associates. The entertainment must be either “directly related ” to your business or “associated” with business. Entertaining must be done immediately before or after your discussion. It is important that you keep a record of the people involved in your entertaining ( in a diary or write their names on the back of the receipt, both are good habits to get into). Entertaining can be elaborate or it can be as simple as a dinner or meeting for a cup of coffee.

Travel:

When you are traveling for business there are many expenses you can deduct. They include the cost of air fare, cost of operating your vehicle, car rentals, taxis, accommodations, meals, shipping business materials to and from destination, dry cleaning, laundry service, telephone calls, faxes, tips, and more. It is perfectly alright to combine business with pleasure as long as business is the main reason for the trip. However, remember that if you take your family with you, you can not deduct their expenses for the trip.

Interest:

You are allowed to deduct interest and carrying charges on your credit cards used for business and on business loans.

Computer Software:

You really need to discuss any computer software purchases with your tax consultant or accountant on how this applies to your home based internet or direct sales business. For example Star Wars games are not a deductible item while accounting software may be require for your business.

Advertising:

Advertising is a must have for any business to make money. All expenses involved with advertising and promoting your business is deductible. Classified Ads, business cards, newspaper ads, ezine ads, flyers, brochures and other forms of advertising.

Charitable Contributions:

Charitable contributions are deductible, however the rules will differ in accordance with the taxation laws of the country in which you live and as to how your business is registered. Your tax consultant or accountant can clarify the points on charitable contributions.

Household Expenses:

This deduction is one of the most valuable ones. A percentage of your home must used “exclusively and regularly” for business in order to qualify for this deduction.

Under household expenses many people overlook some of the following expenses:

Business related long distance services
Monthly internet fees
Costs related to improving your office space
A percentage of all household expenses (property taxes, mortgage interest, homeowners insurance, utilities, property maintenance, alarm systems and more)
Office Furniture and equipment (new desks, chairs, lamps file cabinets and more–your accountant or tax consultant can tell you what you can claim)

This certainly is not a complete list of deductions, for a completed list you will need to talk to your tax consultant or your accountant as they are the experts. They will review all of the legitimate deductions and business expenses that you are allowed according to the taxation laws of your country.
Here is a brief check list that can help you get started with your home based internet or direct sales business records:

Automobile Expenses
Bad Debts
Bank Charges
Business Taxes and Licenses
Collection Agency Fees
Conference and Convention Fees
Expert Advice (consultant, layer fees)
Interest expenses (on money borrowed for business)
Internet Service Provider (business usage)
Membership Fees (for business related organizations)
Meals and Entertainment expenses
Office rental expenses
Office supplies
Postage and Courier services
Private Health Care plans
Promotional Expenses
Property taxes
Inventory (as in direct sales)
Repair and maintenance (home and vehicle)
Salaries for employees (including family members)
Telephone/telecommunications expenses
Travel expenses
Utilities

As you can see there are plenty of tax advantages given to home based internet or direct sales businesses. Tax advantages are just one of the reasons to start your own home based internet or direct sales business. However it is a very special reason, just ask and internet entrepreneur.

I have given you a simple look at tax advantages here. I am not an accountant or a tax consultant so if you want more information and advice contact a tax consultant or an accountant. If you do not have an accountant then get one because they will save you money, time headaches and indigestion and a visit from you friendly tax man.

A home based internet business can create freedom in your life if you commit yourself to it. With the state of today’s economic uncertainty, and peoples desire to escape the stress of mainstream employment, home based internet businesses are flourishing.

That’s the good news, the bad news is that 95% of home based businesses fail within the first years. You do not have to be in that 95% group though, all you need to do is to commit yourself to really working you internet business and you will succeed.

Most people think that working from home on their internet business will be a rather simple task requiring little effort. It is possible, however just like anything in life that is worth pursuing, your success will depend on how much of your personal effort you are willing to expend on it. This is where commitment enters into the equation.

You need to commit to getting training in the methods that will make your internet business successful. Next you need to commit to implementing what you have learned non-stop. You can not just open an internet business then sit at home doing nothing but watching television and say you are an entrepreneur and watch the money start flowing into your back account. Business does not work that way.

As an owner of a home based internet business you need to look at your internet business like any other business. You need to deal with business issues such as accounting, insurance, advertising, taxation, your health care and many other business related issues.

One of the major issues that is key to the success of your internet business is YOU. You must be a self starter, it is your business and it won’t make money if you don’t get up and moving. You need to set up a schedule for your work time and commit yourself to it.

Your commitment to yourself is critical to your success in your internet business. If you are not highly committed you will end up in the 95% that do fail.

You want to be in the 5% of successful home based internet entrepreneurs, so go ahead and commit yourself to doing something constructive every day for your business. Commit to educating your self on your internet business and then implementing what you learn so that you can have the freedom you want in your life.

After the crisis that has occurred in the financial markets over the past few weeks why would anyone want to start a home based internet business? We just saw well established, long running, profitable businesses go into bankruptcy or merge with others to keep afloat.

So what happens when corporations go bankrupt or merge? People, like you and me, lose their jobs. Most of the people will see this job loss as a crisis, however there will be a small number of people seeing it as an opportunity.

No, I am not crazy. I was taught at a young age that if you encounter a problem there is a solution for it, and if there is a crisis there is always an opportunity. It is just a matter of perspective.

Now that your entire life has been turned upside down you have the perfect opportunity to take a very real and serious look at just what it is you really want in your life. That means your personal life, work life, financial well being, and health and welfare of yourself and your family.

This opportunity means that you have the chance to restructure your whole life. Perhaps you see yourself spending more time with your family having fun. Or you may want to travel, get a new house, or just do whatever it you want to do when you want to do it. But, how can you do all those things without a job?

Why not look at working from home? Did you know that we are at the perfect time in economic growth to start a home based business? Did you know that home based businesses are one of the fastest growing portions of the economy? Did you know that the potential for using the internet for home based business is just in its infancy?

So know that you know the facts lets look at how you will benefit when you start up your own home based internet business.

Firstly, you will save time and money working at home. No more getting up real early, spending two or more hours a day commuting, wasting gas while driving, not to mention that you will be causing less damage to the environment. Just imagine arriving at your desk, just off of your kitchen, coffee in hand, relaxed and refreshed after a nice breakfast instead of arriving at an office, muttering and snarling like a mad man, a half an hour late, after being struck in traffic and mayhem.

Secondly, you get to set your own working schedule. Plus you decide which projects you want to work on, after all you are the boss.

Thirdly, you decide how much money you want to make and how you want to make it. These are only a few of the reasons a home based internet business benefits you.

One of the most important things you need to look at when working your internet business is affiliating with a reputable company. One that offers a multimedia training system, exclusive products, great backend support, excellent commission structure and affordable start up fees.

With the proper program in place all you should need to do is advertise, market and bring in buyers to purchase the products or services you provide. You will have to devote some time and effort to your business, but it is well worth it.

So why not start your internet business today? This is your opportunity to live the life you have always dreamed of.