When you're running a business from home, handing taxes can be intimidating at first. But you don't have to stress about them. The home office deduction and filing your business taxes can seem rather confusing out of the gate, but following these guidelines can help save you money and stay on the good side of the IRS.

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What’s Your Business Structure?

First, you need to decide on a business structure for your home-based business. If you haven’t formally filed to become an LLC or a Corporation, then you’ll be considered to be either a Sole Proprietorship or a Partnership. Sole Proprietorships can file their taxes under the individual business owner's taxes while Partnerships must file taxes for the business as well. The distinction between a Sole Proprietorship and Partnership is the number of people who are involved. If you are the only person, it’s a Sole Proprietorship. If your business has two or more owners, it’s a Partnership.

If you’re an LLC or a Corporation, you’ll be taxed separately from the business. Learn how a C-Corp is taxed or how an LLC is taxed.

Bear in mind that you will also have to pay estimated quarterly taxes, regardless of your business structure.

Can You Claim the Home Business Tax Deduction?

Regardless of your business form or structure, you can claim the home business tax deduction if you maintain a home office. You just need to make sure that you use the space exclusively for business purposes. The IRS is strict on the enforcement of this rule. To qualify for the home business tax deduction for your office space, any improvements, and maintenance shares related to it, you can only use it for business. Having a separate room or building entirely can make this easier, but it is not absolutely necessary.

Get started Start Your Incorporation Answer a few questions. We'll take care of the rest.

Get started Start Your Incorporation Answer a few questions. We'll take care of the rest.