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Home-Based Business Tax Preparation Checklist: How to Maximize Your Tax Write-Offs and Avoid Penalties & Save Thousands

business use of home filing tax returns record keeping tax season tax write offs Mar 11, 2023
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As someone with a home-based business, tax season can be overwhelming. It involves preparing financial records, gathering receipts, and figuring out business expenses from the previous year.

But don't worry - I've created a Tax Preparation Checklist specifically for home-based businesses to help you get organized and gather the right information.

Whether you are filing your taxes for the first time as a home-based business or you are a seasoned home business owner looking to maximize your tax write-offs, this checklist is the resources for you.

Have you ever wondered exactly what information is required to file taxes as a home-based business? What information your tax preparer needs to do your taxes? Below you will find the most comprehensive home-based business tax preparation checklist, designed to help you gather all the necessary information and materials for filing your business tax return. By following our checklist, you can ensure that you have all the required documents in advance.

Using our home-based business tax preparation checklist can also help you file a more accurate tax return, identify additional tax write-offs, and avoid penalties.

Don't miss out on potential savings – download the PDF checklist and print it off!

Personal Records - General

  • You’ll need the full legal names, SSNs, addresses, percent ownership, ownership acquisition date and distribution details for you, your spouse, any dependents and any other business owners.

Business Records - General 

  • Copy of your previous year tax return
  • Business name (if registered)
  • Sales tax number with government (if applicable)
  • Business address
  • Business main product or service
  • Copies of any desk audits or previous IRS/CRA correspondence related past tax returns

Current Financial Statements and Bookkeeping Records 

  • This includes year-to-date profit and loss statements, balance sheets, etc.
  • Your total gross business income (sales revenue, rental income, etc)
  • Taxes paid in advance (income tax, federal or state taxes) 

Business Records - Detailed

  • Deposit slip records
  • Bank statements
  • Credit card statements
  • Income records (invoices, commissions, royalties)
  • Sales invoices
  • Receipts for purchases (expenses, inventory, course, etc)
  • Bank deposit slips
  • Fee statements
  • Contracts
  • Loan Agreements and year-end balances statements
  • Detailed year-end inventory listing
  • Receipts on capital purchases or sales in 2021 

If You Have Employees and/or Subcontractors 

  • Payroll, source deductions and taxable benefits for employees
  • Contract agreements (payment schedule, work scope) 

Tax Slips, Correspondence and Receipts  

  • Previous years tax returns and notice of assessments
  • Instalment payments made for income tax, sales tax and payroll remittance
  • Other income sources (including W2 or T4)
  • Other self-employed income sources (including 1099-NEC or T4A)
  • Tuition and enrollment certifications (if applicable) 

Investment Information

  • Tax slips for any pension plan contributions
  • RRSP, IRA contributions
  • Health insurance payments
  • Stock purchases and sales invoices 

Personal Receipts

  • Receipts for medical and dental expenses
  • Receipts for charitable donations
  • Receipts for political contributions
  • Tuition or educational expenses
  • Interest paid on student loans
  • Childcare expenses
  • Moving expenses (see also business expenses) 

Business Deductions

  • Advertising (advertising, website, etc.)
  • Bad debts
  • Business taxes, licenses, and memberships
  • Business insurance premiums
  • Charitable donations
  • Delivery, freight and express costs
  • Depreciation expenses (Capital Cost Allowance)
  • Digital News Subscriptions
  • Interest and bank charges
  • Legal and accounting fees
  • Meals and entertainment
  • Motor vehicle expenses
  • Moving Expenses
  • License and registration fees
  • Fuel and oil costs
  • Home Insurance (supplementary for business liability)
  • Vehicle Insurance (supplementary for business liability)
  • Interest on money borrowed to buy your vehicle
  • Maintenance and repairs
  • Leasing costs
  • Parking fees (business only)
  • Office expenses, stationery, and supplies
  • Payment Processing Fees
  • Property leasing costs and taxes
  • Repairs and maintenance
  • Salaries, wages, and benefits incurred by you as an employer
  • Gross salary amount paid to employees
  • Employer paid CPP and EI contributions
  • Employer paid premiums for sickness or disability insurance
  • Telephone and utilities (cell, internet, etc.)
  • Travel expenses (hotels, airfare, transportation, etc.)
  • Utilities

Business Use of Home Expenses 

  • Square footage of home
  • Square footage of the office space
  • Cleaning materials
  • Electricity
  • Heating
  • Homeowners/renters insurance
  • Maintenance and repairs
  • Mortgage interest
  • Property taxes 

Cost of Goods Sold 

  • End of year inventory dollar amount
  • Beginning inventory dollar amount
  • Inventory purchases
  • Items removed from inventory for personal purposes
  • Materials and supplies used in-process for finished inventory

Vehicle Deductions 

If you use your car for business, keep a logbook of your mileage for business use. You cannot deduct the following business-related expenses without a logbook and itemized receipts: 

  • The miles (U.S.) or kilometers (Canada) you drove in the tax year to ear business income
  • Total you drove including personal and business
  • Fuel and oil costs
  • Lease payments
  • License and registration
  • Interest paid on payments, if you are financing your vehicle
  • Vehicle insurance (supplementary for business liability)
  • Parking fees and toll charges
  • Repairs and maintenance
  • Lease/Purchase Contract for vehicle 

Asset Depreciation 

Keep records of the cost and acquisition date of key business assets that are claimed for depreciation (typically over $500) along with the sales price and disposition date of assets sold within the calendar year. 

  • Vehicle
  • Computer
  • Equipment
  • Other

Tax preparation doesn’t have to be stressful. Having this home-based business tax preparation checklist can help you gather all the information you need to file your business tax return accurately and easily. download the PDF checklist and print it off!

If you want to take the last-minute tax season panic away, the 'Home Business Tax Secrets Course & Productivity System' is the solution for you. This system can help you stay organized year-round.
In addition to a proven battle-tested recordkeeping system, this program includes video courses that explain how to get organized, stay organized, bulletproof your home-based business and save thousands annually.

Accurate record-keeping is crucial for home-based business owners to avoid the stress of an audit and the potential for additional taxes, penalties, and interest. Having organized and detailed records can also help you claim deductions you may have overlooked and save you thousands of dollars on your taxes each year.
Don't wait until it's too late, enroll now and take control of your business taxes today with the system!

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