- DO
NOT MISS OUT ON YOUR FAMILY LIFE!
- START
A BUSINESS FROM HOME!
- HERE
ARE CERTAIN TIPS!
The
reason for starting the business or profession from home may
be for reasons like sky touching real estate prices or traveling
problems or office space crunches or to have a better family
/ social life etc.
YOU
should obtain necessary permission from the housing society
or obtain required permits from Municipal Corporation as applicable
before starting your new venture. The infrastructure and the
facilities required depend on the needs of the specific business.
The
investment required is not very high since you are already
saving a huge amount on your rent and conveyance/petrol bills.
Your other investments include a telephone, a computer, a
printer or any other instrument/ equipment necessary (again
specific to the business needs).
DO
YOU KNOW: -
- HOW
TO ORGANIZE YOUR PAPERWORK FOR TAXES
- WORK
THAT CAN BE STARTED FROM HOME
- Expenses
incurred at home for operating business can be claimed as
business expenses.
- Electricity
Bills can be claimed on proportionate basis as business
expenditure.
- Newspaper
and periodical bills can be claimed in full as business
expenditure.
- Salaries
for domestic help can be claimed as incurred for office
and can be claimed in full as business expenditure.
-
Grocery
Bills can be claimed as entertainment expenses incurred
if the Assesse has to entertain clients. If the Assesse
provides the staff with refreshments then part of grocery
bill can be claimed as entertainment expenses.
- The
telephone deposit paid on Own Your Telephone (OYT) can be
written off as expenses either in the year of installation
or year of payment.
- Payment
for expenditure in excess of Rs.20, 000/- should be avoided
in cash.
- Some
expenses are allowed only if they are paid before the returns
are filed like taxes, duties, provident fund deductions
etc.
- Business
or Professional Loss can be carried forward for 8 years.
-
If
the Business or profession incurs loss the income tax
return should be filed before the due date of filing the
return. If the return is not filed before due date then
you cannot carry forward the loss and claim it in the
subsequent years.
HOW
TO ORGANIZE YOUR PAPERWORK FOR TAXES?
How
do I prove to the Income Tax Department that the expenses
incurred are for the Office?
Please ensure that you follow certain procedures to claim
the expenditure and prove that they have been incurred
for the Purpose of Business:
i. Demarcate a specific part of your home (e.g.: a Room
or a Balcony/ Verandah) for Office purposes. This can
help for claims of certain expenditure in proportion to
the area of the House. E.g.: Rent or Electricity charges.
ii. Maintain vouchers/bills pertaining to your Business
(e.g.: grocery bill or
Telephone bill, Electricity Bill, Petrol Bills, Conveyance
Vouchers etc.)
iii. Maintain proper books of accounts like Cash Book,
Ledger and all Bank Statements (including personal accounts
of all the people in the House). You never know when you
can put these to proper use. Maybe you can use a Personal
Accounting System for maintenance of Books of Accounts.
What
about the expenses incurred to start the office from home?
The expenses, which are incurred, can be claimed or
it can be capitalized and written off every year on proportionate
basis.
Do
I have to maintain books of accounts if I start the business
or profession from home?
Yes, you have to maintain books of accounts.
Do
I have to get my books of accounts audited even though
I am operating from home?
As per the Income Tax Act, if your turnover/receipts/sales/professional
fees from business/profession exceeds a certain amount,
there is a TAX AUDIT to be done by a Chartered Accountant:
1. If you have a business where the total sales, turnover
or gross receipt in business for the financial year exceeds
Rs. 40 lakhs.
2. If you have a profession, the gross receipts in profession
for the financial year exceed Rs. 10 lakhs.
How
should I account for my Income/ Expenses?
The books of accounts can be maintained on cash basis
or mercantile basis. Cash Basis is where you maintain
your books on actual receipt and expenditure made.
Mercantile Basis is where you book for all Income billed
but actually not received or Expenses pertaining to the
financial year for which bills have been received or the
liability is known even if the payment is made in the
subsequent year.
Can
I still claim deductions even though I am operating from
home?
Yes, you can claim deductions.
Can
I start a partnership firm operated from home?
Yes, you can start a partnership firm too. It is
advisable to enter into a proper written Partnership Agreement.
Can
I start a Limited Company also from home?
Yes, you can.
What
are the expenses I can be claim as deduction from business
or profession?
The following expenses can be claimed as deductions:
· Expenses which are not personal in nature,
· Expenses which are incurred in the previous or
accounting year,
· Expenses which are incurred in respect of business
carried on by you,
· And Expenses which is for illegal purpose (penalty
or bribes) or those prohibited by any law.
If
I am working from home what about rent & society charges?
The rent or maintenance charges can be claimed on proportionate
basis depending on the area demarcated for Office purpose.
How
do I claim telephone charges when it is used for business
and personal calls?
It may not be possible to keep a tab on all local phone
calls. What can be done is to determine a certain percentage
of the amount of the bill for business purpose. The allocation
for STD/ISD/Internet (depending on time) can be done on
actual basis by maintaining proper records/register.
What
if I own more than two telephones?
If you own more than two telephones, one could be for
business purpose and the other one could be for personal
use.
What
about Car expenses?
Some percentage of petrol expenses and maintenance
charges could be claimed for business purpose and the balance
for personal use. It is better to note on the Petrol bill
of the place for which the car has been used and correlate
to the Customer/ Client/ Official purpose.
Are
there any expenses, which I can claim in full?
Yes, there are some expenses, which can be claimed
in full like Salaries, Repairs to Office Furniture/ Equipment/
Computer, Conveyance for business purpose, Interest on Business
Loans, Depreciation, Insurance, Registration charges for
Internet connection Membership Fees paid to professional
bodies, Subscription related to business/professional magazines
etc.
If
I travel, for business purpose, can I claim it in full?
Yes.
If
I take loan to buy any asset, can I claim the interest as
a business expense?
If the assets are used for business purpose or is related
to the business/profession, then interest paid on such loan
is fully allowable expense.
If
I take a Housing loan for residential purpose and want to
utilize a part of my residence to operate my business, what
is the treatment of interest?
Interest can be claimed in proportionate for that part
(based upon the area) which is used for business.
Can
I claim Depreciation on all assets?
You can get depreciation for assets, which are used
for business. It is always better to buy assets before the
month of September in each financial year so that one can
claim full year's depreciation.
WORK
THAT CAN BE STARTED FROM HOME
THE
GOLDEN RULE IS TO START THE BUSINESS/PROFESSION WITH THE
MINIMUM INVESTMENT
|
TYPE
OF WORK
|
INSTRUMENTS
REQUIRED
|
COST
OF ORIGINAL INVESTMENT
|
| DATA
ENTRY |
One
needs a computer & a printer |
The
cost of investment will be around Rs.25,000/- (Computers
can be availed on hire basis also .The Hire charges
are Rs.1500-2000 per month). |
| CATERING |
One
needs regular things, which are used at home for cooking
and serving. E.g: Cutlery, Napkins etc. |
The
investment is very-very less- Approximately Rs.10,000/-
|
| BOUTIQUE
/ STITCHING, FASHION DESIGN |
One
needs a Sewing/Embroidery machine, books, Wardrobes,
hanger etc. |
The
cost of investment will be around Rs.2, 500 -Rs.10,
000. |
| BEAUTY
PARLOUR/ TREATMENT CLINICS |
One
needs cosmetics, chairs, tables, mirrors, Air conditioners
etc. |
The
cost of investment is around Rs.10, 000- Rs.50, and
000. |
| ARTIFICIAL
JEWELLERY DESIGN |
One
needs white metal, wire, plastic buttons & tit bits.
|
One
can start with Rs.200-Rs.500. |
| MEHANDI
/ MUSIC / DANCE/ YOGA / COOKING CLASSES |
Basic
facilities. |
The
investment is very-very nominal -almost nil. |
| TUITION
CLASSES |
Nothing
is needed |
No
investment is required. |
| GRAPHIC
DESIGN / WEB DESIGNING |
Computer,
printer, Software etc. |
Investment
is around Rs.30, 000-50,000. (Computers can be availed
on hire basis also .The Hire charges are Rs.1500-2000
per month). |
| DRAWING
/PAINTING, DESIGNING CLASSES |
Basic
Material like paints,board,brushes etc. |
Nominal
Investment required- approximately Rs.15,000/- |
| PROOF
READING |
Command
Over grammatical language. |
No
investment required |
| SCRIPT
WRITING |
Creativity
required |
No
investment required |
| INTERIOR
DECORATION |
Creativity
required |
No
investment required |
| CONTENT
DEVELOPMENT & MANAGEMENT |
Computer
,books & periodicals and an Internet connection |
Investment
is around Rs.30, 000-50,000. (Computers can be availed
on hire basis also .The Hire charges are Rs.1, 500-2,000
per month) |
| NURSERY
/ CRECHE |
Nothing
is needed |
No
investment. |
| TELEMARKETING
|
Telephone
connection |
No
investment. |
| EDITING
OF MANUSCRIPT. |
Command
over language is needed |
No
investment. |
|
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