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As discussed in the article for business use of your home, I am expanding on this in this article.  You can deduct a percentage of your mortage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance and repairs on your yearly tax return per the IRS topic 501. If you are self employed, you will deduct these expenses on your 1040 tax return.  If you are an S-Corporation, these deductions will be recorded in your Other Deductions section of your 1120-S tax return.  Some examples of deductions for your home business are as follows:

1. Telephone bill

2. Electricity

3. Internet cable bill

4. Fax machine charges

5. Water bill

6. Mortgage payment

7. Power bill

8. Garbage and recycling bill

9. Cell phone bill

Remember that alll of these deductible expenses are not fully deductible (except for cell phone bill if it is business only). They are only deductible by the percentage of the home office of your home.

In addition, if you as an owner can make owners "draws" which means you can take out a specific amount of money for yourself monthly which is recorded through the owners drawing account, as well.  This amount can be determined by your CPA. It is dependent upon how much your company's sales and net income is.  Furthermore,  when you make your estimated tax payments to the IRS, you will record a journal entry in the owners draws "draw" section of your owners drawing account. This will, in essence reduce your owners drawing account by the amount of tax payments you are paying.

For example, when you make a draw to 'pay yourself, you will make a journal entry as follows:

2/1/xx                                                    Debit                   Credit

Owners Drawing: Draw                             $3,000.00

Business Checking                                                               $3000.00

Memo: To record February 1 xx draw

Estimated tax payment:

2/15/xx                                             Debit                         Credit

Owners Drawing: Draw                        $1,200.00

Business Checking                                                                $1,200.00

Memo: To record Feb 1 xx estimated tax pay

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