The Law and Your Business

Home-based Businesses

What are the IRS rules on home offices?

Here are some of the IRS hurdles you might have to jump through.

Exclusive and Regular Use Test. This test requires that the portion of your home used for the business be used solely for the business, as well as regularly. Now, this doesn't have to be a whole room. It can be just a portion, as long as the space is clearly demarcated. If you tried to deduct the whole room, however, you'd have to show that it was strictly an office—not a second TV room for the family.

The Principal Place of Business Test. Under this test, it's enough to show that your home office is the main place you do your administrative work—the fact that you're out selling 90% of the time won't matter if you do your paperwork there.

>>Do I have to be concerned about zoning?
>>What if there’s a problem with the zoning authorities?
>>Can I deduct my home office?
>>What are the IRS rules on home offices?
>>What, exactly, can I deduct?
>>What insurance will I need for my home business?
>>What if I want to open a day-care center?


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