The Home Office Deduction

It is estimated that 58% of the American workforce now works from home at least some of the time. And if you own a business and your home is your primary place of business, then you can potentially qualify for the Home Office deduction.

However, as a reminder, to qualify for this deduction, you will need to use an area of your home exclusively and regularly for business. Many people are aware of the Home Office deduction, but a lot of people do not understand exactly how powerful this deduction really is.

Part of the reason why this is the case is because the IRS gives you two ways to take the Home Office deduction, the simplified method and the actual expense method, which is also known as the regular method.

With the simplified method, you can deduct $5 for every square foot for a total of up to 300 square feet. This would result in a maximum amount of deduction worth up to $1,500, which is why it is called the simplified method. Now the regular method is more detailed. With the regular method, you can calculate the percentage of your home that you use for business and apply that percentage to your actual home expenses.

For example, if your Home Office is 200 square feet and your home is 2,000 square feet, your office would be 10% of your home. You can deduct 10% from your eligible home expenses.

The Home Office Deduction can be found in §280A of the US Tax Code. This section literally states: “Except as otherwise provided in this section, in the case of a taxpayer who is an individual or an S corporation, no deduction otherwise allowable under this chapter shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence.”

Basically saying - here’s the general road map for deductions in a residence being used as a business.

The very first thing to do for your LLC to do list is choosing a name. This isn't just about branding, it's also about legality and clarity. The name you pick should clearly reflect your business and help potential customers understand what you offer. A name that's too generic or too abstract might cause confusion and might dilute your business presence. You also need to include an LLC designator at the end of your business name. Most states require something like ‘LLC’ or ‘L.L.C’ or ‘limited liability company’ to be included. This indicates the legal structure of your business to the public.

For instance, if your company sells handcrafted furniture, something like ‘Jones Custom Furniture LLC’ would be a great option because it lets customers know what your business does and it has an LLC designator. 

Don't forget your desired name must be unique in your state. If another company already is using that name, you'll need to pick a different one. Most states have an online business name database that you can search to see if your name has been taken. It also is a good idea to check the web domain name and availability at the exact same time you're searching. If the business name is available, sometimes the business name will be available, but the website domain name will already have been taken. This would be a major bummer. Your website URL should ideally match your business name to maintain consistency across your branding so it’s important to make sure relative URL’s are available for your LLC name.

Also, consider checking social media handles. You want to ensure that they're available and consistent across platforms like Instagram, LinkedIn, Facebook. A unified brand presence will make your business appear more professional and trustworthy.

This is a signal that there are more sellers than active buyers in the once booming market. When there are more sellers than buyers in a market, prices tend to come down.

🏦 Story via R/Fit_Maarionberry_2867

About a year ago, the founders of AgainstData.com were invited to pitch on Romania’s version of Shark Tank/Dragon’s Den. At first they hesitated—mainly because the show’s contract allowed producers to edit the footage however they wanted—but eventually agreed, reasoning that TV exposure was too good to pass up.

They prepared obsessively for months, rehearsing the pitch until it was second nature. On filming day, nerves ran high, but they delivered their pitch confidently. Tension quickly rose, though—their product helps people block unwanted emails and delete personal data, while the investor “Dragons” all ran companies that relied on collecting and sending such emails. The back-and-forth got heated, even leading one juror to call them “digital mobsters.”

Despite this, two Dragons offered $350,000 for 20% equity, but the founders turned it down, feeling the valuation undervalued their business.

When the episode aired, they didn’t even watch, but the exposure paid off: their servers crashed under the traffic surge, and they gained 5,000 new users.

Takeaway: Ads and organic growth work, but if you ever get the chance for TV exposure, take it—no matter the scary contract.

Till next time,

^{The content provided in this newsletter is for informational purposes only and is not intended to be, and should not be construed as, professional tax, legal, or financial advice. While we strive to ensure accuracy, tax laws are complex and subject to change. Always consult with a qualified tax professional or financial advisor regarding your specific situation before making any decisions based on the information provided herein.}