Work from Home? A Home Office Deduction is for you.

If you work from home, or use part of your home for your business, you can decrease your tax burden by claiming home office deductions. To be able to deduct home office costs, the IRS requires that the use of part of your home is done regularly and exclusively for business purposes in order to claim the home office deduction.

Need to know more about this method of offsetting taxes? Practical Taxes, your choice for affordable tax preparation in Billings, has the answers.

What is a Home Office?

If you are self-employed or a business owner, one of the following should be true about the “business side” of your home:

– It is your principal or main place of business

– It is a place where you deal with customers, clients, or patients on a regular basis, as part of your normal business routine

– It is a separate structure that is not attached to your house (ex. garage, studio) but used solely for your business, and never for personal activities

– It is used to provide day care services for children, the elderly, or handicapped individuals, and meets corresponding local and state licensing requirements.

– It is used as a storage area for inventory or products that you sell in relation to your business, and your home is your only place of business.

If you are an employee, home office deductions can be claimed if you meet the home office requirements as a business owner (mentioned above) and:

– You work from home not for your own convenience, but for your employer’s convenience (ex. your employer does not have his/her own headquarters so you have no choice but to provide your own work space)

– You do not rent the office part of your home to your employer and use it to accomplish your tasks as an employee (in other words, you do not get to receive rent income for doing office work in your own home)

What Expenses are Considered Home Office Expenses?

Direct expenses – These are the costs incurred to maintain your business space such as painting the walls, or treating the windows for privacy and security reasons. Direct expenses are fully deductible.

Indirect expenses – Indirect expenses are the costs incurred for maintaining your entire home such as rent, mortgage payments, real estate taxes, utility bills, general repairs, cleaning services, trash collection fees, security services, homeowner’s association fees, and depreciation. Only a percentage of indirect expenses is deductible based on its proportion to your entire home. Take note that only those costs which benefit your entire home and affect your business space in some way will count as an indirect expense. For example, if you are paying for a cable bill, and you do not have a TV with cable in your business space because it is irrelevant to your business and the cable is strictly for personal enjoyment, then you can’t include your cable bill as an indirect expense. In other words, money you spend specifically for personal benefit (ex. installing a jacuzzi in your bathroom) can never count as a home office deduction. The IRS is also very specific about excluding lawn service payment from being counted as an indirect expense.

How to Claim Home Office Deductions

Regular method. With the regular method, home office deductions will depend on the percentage of your home that is used for your business. To illustrate, if your business space takes up 25% of your house, you can deduct 25% of your expenses. This method is a bit more complicated and time-consuming because of all the records and documents you would need to support your claim.

Simplified option. With the simplified option, home office deduction will be computed by multiplying your office area (in terms of square feet) by $5.00. The maximum allowable area is 300 square feet for a maximum home office deduction of up to $1,500.00. Simple enough as it is, the trade-off for selecting this method over the regular method is the maximum cap it has. If you know for a fact that your deductions are way above $1,500.00, this method will not be beneficial for you.

Practical Taxes can Help

Here at Practical Taxes in Billings, we know that working from home is a great benefit. We also know that working from home can present some unique challenges. But most importantly, we know that you get a good tax deduction when you use your home for business purposes.

If you are unsure of how to do your taxes this year since you have started working from home, don’t panic! We can prepare your taxes so that you receive the biggest refund possible using the home office deduction.

Give us a call at 406-894-2050 to get started.

Is it Important to Keep a Budget?

Anyone who has money to spend should, at some point, learn how to set a budget. At the very least, a budget will give you some kind of direction — a plan to follow so that you’ll have enough money to pay for the things you need, and hopefully, for the things you want. Everyone has goals, right? And in terms of financial goals, it is practically impossible to achieve what you are aiming for if you do not have a budget.

If you still need a bit of convincing to start one, Practical Taxes, your affordable accountant in Billings, lays out 4 of the most important reasons.

Control Spending and Avoid Debt

Before the age of credit cards, it was much easier to live within one’s means. It’s quite simple, you have to make sure that you spend just enough so you can pay for everything you need, or else you might end up having nothing to eat, having your utilities disconnected, or having to be thrown out from your apartment because you can’t pay for rent. Now that there’s plastic money, however, responsible spending has become more of a challenge, rather than what used to be a norm. It’s just become so easy to have your credit card swiped, and promise to pay for it later. There’s hope, though. Even if you have access to both cash and credit card, with a set budget, it will still be possible to manage your finances and make sure that you know just how much you can spend each month — with savings to spare, and without having to go into debt.

Set Short-Term Goals; Achieve Long-Term Goals

Keeping a budget will give you a clearer picture of where you are, and where you are going. If you have short term goals, it’s only logical that you should have long term goals too. How else could you give something up if you aren’t looking forward to something better in the future? So you might feel bad that you can’t have that new laptop or that divine-looking dress you know would look absolutely gorgeous on you. But if you remind yourself that it’s a small sacrifice you’re making so that you can buy that new car you’ve been saving up for, then it will be probably be that much easier to keep your money in your pocket and walk out of that store.

Be Prepared for Emergencies, and Retirement

If you don’t keep a budget, it will be that much harder to practice what financial experts have been recommending, is to pay yourself first, before paying others. Essentially, you should make savings part of your budget, and not an afterthought. This way, you’ll have what you need to deal with the unexpected (emergencies), as well as the expected (retirement).

Develop Discipline

One of the primary purposes of having a budget is for you to keep track of how much you are spending, and what you are spending for. If you don’t set a budget, there won’t be anything stopping you from eating out for every meal, buying all those clothes and shoes that catch your eye, going out for a drink every night, and just spend, spend, spend. But, if you are aware and mindful of where your money should go and where you want it to go, you will learn when to say “yes”, when to delay and say “some other time”, when to say “it’s time for a change”, and when to say with conviction — “definitely not!”

Practical Taxes Helps you Keep a Budget

A budget is not something you get right the first time. Changes are always happening and you need to be able to adjust accordingly. Remember that a budget is something to guide you after all, not restrict you from actually having a life. So while you’re working your butt to pay for all those bills, don’t forget to keep your eye on the prize and assure yourself that though the journey might be hard, reaching your destination will make it worth your while.

Let Practical Taxes prepare your taxes this year. We can help save you money, and get a larger refund than you thought possible. This means that you can bolster your emergency fund and not have to worry about breaking your budget if something unexpected happens.  Call 406-894-2050 today to schedule an appointment.

When it comes time to do your taxes, we know that you have choices. Here at Practical Taxes we have three goals in mind:

You save money using Practical Taxes

You save time using Practical Taxes

You get more using Practical Taxes

As we seek to provide you with the best service possible, we also seek to shoot to the top of the list of Billings accountants. Through excellent customer service, top notch tax preparation, and fast responses, we believe that we can be number one in the Billings community.

List of Billings Accountants

If you were to try to put all of the accountants in Billings into a list, you would see some distinct categories come up.

The Seasonal Firms – These are mostly the big nationwide companies. They open their doors in early January, and by the end of April they are nowhere to be found. They offer fast tax preparation, and they are usually pretty competitively priced. The problems arise when you can’t get a hold of anyone outside of the regular tax season.

The CPA’s – Many accountants continue their education and earn their Certified Public Accountant (CPA) certification. This opens them up to a larger variety of services beyond tax preparation. If that is what you need, we recommend checking out Kevin King & Company. CPA’s are great at their jobs, but if all you need is tax preparation, then a CPA is probably more expensive than what you need.

The Accountants – The bulk of the list of Billings accountants is made up of those who are accountants. The majority of their seasonal work is to help with tax preparation, but they also can perform other services like bookkeeping, payroll services, and the like. Here at Practical Taxes, we know accounting.

Here at Practical Taxes, we offer a more personalize service than the seasonal firms (generally at a lower price), a more affordable tax preparation service than a CPA can offer, and we believe our customer service is the best in the industry. Here is how we top the list of Billings accountants.

Our Customer Service Goals

The bottom line is that we aren’t happy unless you are happy. And for most people, that sounds like a bunch of buzzwords. Here’s what it means for you.

You are looking for the most affordable way to do your taxes. You have probably read our blog post on how an accountant saves you time, money, and can often get you a larger refund. Now you are here and you wonder why you should choose Practical Taxes for your needs.

You are looking for customized service. If you go to a seasonal accounting office, you get run through a template. While templates are great for the business owner, they speed things up dramatically, they irritate the customer. You don’t want to be a number; you want attention to your details.

You are looking to save time. You know that you could spend less out of pocket if you do your own taxes. But you also know that you will waste a ton of your time. Practical Taxes won’t waste your time when you come in to have your taxes prepared.

You want a big refund. While we can’t artificially inflate numbers, we can find the best deductions that fit your situation. There are no guarantees that we can find things that other accountants won’t find, but we do know the tax laws and we do know how to make sure you are maximizing your credits and deductions.

You want someone you can trust. We can throw numbers and figures at you all day long. When it comes down to it, you want to find a Billings accountant that you can trust with your personal information. We consider our client’s taxes as important as our own. We will keep your private life private.

When all is said and done, we meet the criteria for topping the list of Billings accountants.

• → You can trust us with your personal information
• → You can afford our tax preparation services
• → You will get the biggest refund possible
• → You will save time and money

Let Practical Taxes Help with your Finances

Practical Taxes understands finances. We can help you with your tax preparation needs, and provide advice along the way.

If you are a business owner, we offer even more services to help lighten your load. Our payroll services can save you multiple hours every month, and our bookkeeping services can keep you worry free knowing that your taxes are in good hands.

When it comes time for you to do your 2015 taxes, don’t waste your time doing them yourself; don’t waste your money on a high priced accountant; and don’t let worry take over by using a seasonal accountant. Come to Practical Taxes, the firm that’s at the top of the list of Billings accountants.

Word of mouth refers to the spread of messages from one person to another. It can be done through face-to-face interactions, through mobile phones, through the Internet and other media channels like TV and radio. Particularly when it is done voluntarily without any kind of payment involved, word of mouth advertising is very powerful because you are putting your reputation on the line by making a recommendation.

To generate word of mouth advertising and maximize its benefits, follow these 6 tips from your Billings, Montana accountant:

Respond Immediately to Word of Mouth Advertising

Whether it’s positive feedback or negative feedback, it is important to respond promptly. If it’s a simple thank you for a great product or great service provided, a simple welcome or acknowledgement will be sufficient. And when it’s anything negative, responding with urgency is even more crucial because it gives a customer the feeling of being valued. Sometimes, what started out as a disastrous encounter can be transformed to an amazingly memorable one, if you just take the time and exert sincere effort to set things right and turn a disappointed customer to a happy patron (who is likely to refer you to more people).

Have Social Media Presence

Let’s face it. The influence of social media has been going strong for some time (Facebook has been around for over a decade), and it doesn’t take a genius to see that knowing how to capitalize on this will be a big promotional help for any type of business. People talk on social media all the time so make sure you have accounts on the most popular channels like Facebook, Twitter, and LinkedIn. Know what your customers are talking about and make it an effort to interact with them. Connect with them on a more personal level and talking about you with their friends, family, and other associates will come naturally. Word of mouth advertising spreads quickly on social media; especially through customer service watchdog groups.

Be Honest

Marketing has a tendency of exaggerating the positive and undermining the negative. While this is generally a given, it is still important to set limitations so customer expectations can be managed more effectively. When a question about your service or product is asked, answer truthfully. If you lie and it results in some kind of injury, illness or damage, the situation will be that much harder to address and might even result in major losses. Keep in mind that even if you might not have been able to sell your product at that instant because it really isn’t what the customer needs, he/she will remember your honesty and possibly tell other potential customers about your business.

Share Positive Feedback

You’ve been working hard to provide a great product and exceptional service. When customers take the time to write about how pleased they are about your business and express appreciation for your efforts, isn’t it only fitting that you take pride in what you accomplished? Don’t be coy about it. When you receive positive reviews, proudly display them on your website and your social media pages. Especially now that most consumers tend to rely on reviews before deciding on making a purchase or availing of services, testimonials from satisfied customers boost interest in your products and encourage others to give your business a try. Of course, never ever forget to thank your customers for such inspiring feedback.

Provide Incentives

When waiting for customers to talk about your product is taking a bit too long, it’s time you give them a little push. This can be done by providing incentives. For example, you can give coupons or discounts to customers who leave reviews, or those who refer their friends. The best word of mouth advertising is done because people love your service or product, but sometimes they need a gentle reminder (in the form of a gift card).

Aim for Personalized Service

It is not uncommon for customers to remember the service provided even more than the actual product purchased. When a customer makes a special request, rather than look at it as an inconvenience, it should be regarded as an opportunity to exceed, and not just satisfy expectations. He/she will surely be pleased that you went out of your way to provide what he/she was asking for, and telling other people about the great experience will be a strong likelihood. Plus, you will have gained a loyal customer for sure.

Practical Taxes is here to Help

When you have your word of mouth advertising down just right, your business is going to explode with growth. All that growth will mean that you don’t have time for things like preparing your own taxes, and doing your own payroll. You focus on your business, and let us focus on the mundane accounting details.

Practical Taxes provides tax preparation and accounting services to the Billings, Montana area.