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Why Contractors should set up a home office
Article Author: Brendan Beeken Posted on: May 17, 2016 (Full Author Bio in the box on the right side)
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Many contractors work from home between projects and will have a specific work space set up for this occasion. However, if you regularly work from home and don’t have a dedicated home office, this may inspire you to set one up.
When you have a clearly defined home office, you are allowed to deduct expenses from the business use of your home, and any items purchased for business purposes, such as stationary and supplies.
This can significantly reduce your tax bill, and allow you to retain more of your hard-earned income.
You’ll need to find a reasonable method for dividing costs between what is business and personal use, and you are then able to claim towards heating, electricity, mortgage and internet use.
Although this may sound tricky, one the simplest and most widely accepted methods is to divide your costs between how many rooms there are in your house. For example, if you have five rooms in your house (including your office), you may be able to claim expenses on 1/5 of your electricity bill and heating bill. Imagine what you could do with all that extra money you’ve saved?
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