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Do you do your own taxes, or do you use a tax accountant?
I ask because there’s different thinking about what you can deduct in your home and how. Each tax accountant may have their own take.
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I havent had any discussions with Mark after our conversation several years ago. So I cant endorse him or share any experience working with him. But he does seem like a good dude and focuses on doing taxes for resellers: https://notyourdadscpa.com/about/
He seems to do public Q&A’s on instagram and Facebook so might be good to send him these kinds of questions.
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In my mind, there are two ways of taking deductions for your home. One is a home office and the other is storage.
The home office deduction is more complicated and requires that the area be used for business purposes only. You can deduction a portion of your mortgage this way in addition to utilities and other bills. There might be implications for when you sell your home. Because I use my office space for both business and personal use, I cannot deduct mortgage.
The storage is maintaining your inventory in a climate controlled area. You can deduct a portion of your utilities based on the size of the area used for storage. You cannot deduct mortgage.
There have been previous discussions on tax deductions on this forum. You can use the Search tool on the righthand side. Jay also interviewed Mark Tew “Not Your Dad’s CPA” in the past to talk about taxes specifically for resellers.
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Yep like Sharyn mentions. Our CPA uses a spread sheet I prepared just for this purpose many years ago.
The principle works off square footage.
The sheet has the total sqaure footage of our house, living, basement and garage.
Then 12 columns across for each month with several rows down. I place each months utility bills across for ea. month, Gas, elec., then mortgage, cell phones, internet, etc.Then at the end of each row, I have a cell that contains the sqaure footage of the garage, basement, attic, under bed storage and full bonus room over the garage. Then I also have a spot for what percentage of the line item or area is used for the business.
Then I have formulas built to auto calculate based on the square footage of the area being used, the percentage of the total square feet and those percentages auto calculate the dollar amount, based on my monthly bill inputs and I get a total amount of the allocated space used for the business.
Our CPA loves it and I talked with Mark Tew a few years back and he seemed to buy into it. Also helps to be either an LLC or corporate type business structure. Also small equipment like printers, computers, label printers can all go into small equipment and expensed and large equipment can be depreciated. We have bought some art equipment for the studio that ran over a thousand.
If you don’t have a CPA get in touch with Mark. I would have had him do our taxes, we have to do a corporate return before March 15th and then personal by April 15th and Mark can do both for you. Also I checked his prices and they were in line with local smaller firms here in Atlanta and even a little less on some forms. Also he understands online selling because many of his clients sell online. Some local guys we used years ago, just din’t understand the concept of reselling older vintage, used items which were not bought brand new. Figuring out inventory costs and COGS is interesting with sellers like us. Especially when you sell your own old stuff that is 30 years old and no paper trail.
mike at MDC Concepts, Inc.
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