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Know your limits - Play within them!

Know your limits – play within them!

woman with very curly hair Anyone who knows me knows my hair curls worse than a sheep in the high-heat of July; as luck would have it, my hair stopped curling in the months following the birth of my child. In a desperate attempt to revive my curls and save money, I attempted to give myself a perm. Big mistake! Though I may not have liked my hair, at least it looked good… until I ruined it. It took a year, 10 haircuts and several gallons of product to get my hair to look good again. Needless to say I could have spared myself a lot of grief – and money – had I gone to a professional from the get-go.

 

In business, as in life, we should “know our limits and play within them” as we are often reminded by the folks at OLG. Whether your books are in a mess, or your current system does not work for you, trust the pros! Invest in the help of a trained professional and save yourself countless hours of grief and the subsequent money-pit of having a professional fix what you have broken. And… if it ain’t broke, don’t fix it!

 

~ The Shoebox-Be-Gone Team

SOLUTIONS: BUSINESS USE OF HOME


The Dog Is Not An Advanced Intruder Warning System And Other Facts

What constitutes a real business-use-of-home expense? What is appropriate, what is not? This is one area that – for many – is quite gray and scary. First, what percentage of the expense do you use? Once you’ve determined that amount you must then ask yourself: “Would this be reasonable expense for a business office”.

 

Calculating The Percentage Of Your Home Used For Business
Determine the square footage of the area you use for business, and the total square footage of your home. If you use any area of your home for storage of inventory, remember to account for that as well. Next you’ll have to calculate how much time you spend in that space for business, and how much for pleasure.

 

So if you have a 100 square foot office (used exclusively for business) in a 400 square foot home your allowable business expense percentage is 25%. You may account for 25% of your mortgage / rent payments, insurance, utilities, home phone (unless you have a dedicated business line), internet, property taxes etc. “But what about those renovations, the snow removal, the new pool…. My dog?”

 

Flooring, and Roofing, and Painting ! Oh, my!
Would this be a reasonable business expense? Would an office have a bathroom, a kitchen, a driveway, a roof, a floor? Of course it would! Would it have an ‘employee cool-down station’ (pool)? I think not!

 

The general rule-of-thumb here is that maintenance and renovations of a common area that could be found in an office building can be deducted at the same percentage you calculated above. This would include a main bathroom, the kitchen, a new roof, foundation repairs, snow removal etc. A business office would likely not have an en-suite bathroom or a game room, so please don’t try to account for these; the tax man might get angry. Remember, you MAY NOT claim the value of your work – only the actual cost of materials purchased and real labour expenses; associated interest expenses are deductable as well. And as annoyingly loud as Sparky can be, you wont be able to claim his food and the vet bills as ‘Advanced Intruder Warning System Maintenance’!

 

Bottom line, there is an expectation that your expenses would be reasonable in an office building… although an ’employee cool-down station’ would be nice.  :)

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  1. Everyone & their dog is blogging. Are you? - […] was for business; same for your car. What constitutes a business-use-of-home expense? Check out this post where this is covered…

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