Comments on: Business 101: Home Office Expenses

By: Nick

Nick — Fri, 02 May 2008 02:45:27 +0000

Thanks i understand now what it means.

But you wouldn’t be able to write off something that really doesn’t have to do with your business?

By: Rhetorical

Rhetorical — Wed, 30 Apr 2008 03:28:06 +0000

Precisely. The amount you save is dependent on your marginal tax rate. “Writing off” $1000 in expenses when you earn $100,000 in profit is different than writing off $1000 in expenses when you earn $2000 in profit.

By: blogadmin

blogadmin — Wed, 30 Apr 2008 03:22:40 +0000

Lets use a case to explain the answer.

If your business had $5000 in revenue. Your cost of goods (COG’s) is $2000 this leaves you with $3000.

So now if you bought $1000 in tools for the business instead of having $3000 in profit you now would have $2000. You would end up having to pay taxes on the $2000 profit instead of the $3000. The more things you can write off the less you have to pay in taxes.

Just remember the less taxes you pay the odds of being audited go up. So be sure they are all legitimate and save your receipts for 7 years.

By: Nick

Nick — Wed, 30 Apr 2008 03:15:23 +0000

Sorry if this is a stupid question , but what does it really mean when you write off something for your business.

What kind of money do you get back lets say if you write off 1000$ in tools? How is that all calculated?