Did you know owning a home based business has considerable tax benefits? The idea that only the rich have access to tax benefits is a myth!

The first step is to own a home based business and run it with the intention to make a profit. The important word there is “intention”. You don’t really have to make a profit to take advantage of these benefits. Now, you can begin a home based business for little cost and can run it part-time from your home while having a full-time job.

In time, and with some effort on your part, you will be able to leave your day job and work from your home full-time and take advantage of all of the benefits a home based business has. The best part is you can take advantage of the home based business tax benefits as soon as you start your new business!

Owning a home based business allows you to deduct some personal expenses you wouldn’t usually be able to deduct. These things include but are not limited to: dining out, a new computer for the office, dental and medical expenses, and some vacation related expenses. The money you can deduct for operating a home based business is not insignificant and can amount to well over ten thousand dollars.

Here are the top five deductible expenses for Home Based Businesses:

1. Vehicle Deduction

This IS the most complicated home based business tax benefit you get. It is also where most people get into trouble with the IRS because they didn’t correctly document their vehicle related deductions. If you are going to use vehicle deductions, I can not stress enough that you MUST document everything properly. Keeping a diary or travel log to track mileage, maintenance costs, etc. will save you time and many headaches.

How does the vehicle deduction work? Basically, you determine how much of the time you use your vehicle for your home based business as a percentage. You are then permitted to take that percentage of time and apply to the cost of operating your vehicle. For instance, if you use your vehicle 60 percent of the time for your home based business, you are permitted to deduct 60 percent of the costs of operating the vehicle.

2. Meals and Entertainment Deduction

First things first, in order to take advantage of this tax benefit, you must have proper documentation. This primarily means you need to save your receipts and record who you spoke to about your home business. Normally, you will be able to deduct up to 50 percent of the cost, but make sure you check beforehand.

As long as it is related to your home based business and document the costs properly, you can also deduct up to 100 percent of the expenses of entertaining people in your home. You may come to realize the tax benefits are much greater if you entertain in your home instead of taking someone to your favorite restaurant.

3. Home Office Deduction

This one of the more intricate home based business tax benefits, but it has the potential to save you thousands of dollars every year you own your business.

To claim the home office deduction:

1. You must render significant administrative or management activities for your business out of your home. For example, you do your paperwork, make calls, do your training, and perform other business functions out of a set area in your home.
2. You have no other office where you conduct significant management or administrative activities for your business.
3. You must use a specific part of your home exclusively for business. It doesn’t need to be an entire room though. A particular section will do.
4. You must use this designated section regularly for at least 45 minutes a day, four or more days a week. The work hours must not be occasional or sudden.

What can you deduct? You are permitted to deduct part of your home, utilities, and part of the interest and taxes you pay that are related to owning your home. You can also deduct office supplies like new computers, printers, phones and furniture used for your home business.

4. Travel Deduction

Did you know the Internal Revenue Code (Section 162) allows you to deduct “traveling expenses…while away from home in pursuit of a trade or business…”? As the owner of a home based business, you can visit family and friends all over the world and deduct some of the expenses associated with the trip. You just have to make sure at least half of the days of your trip are “business days”. Essentially, as long as you plan ahead and document properly, you can deduct a lot of the costs associated with traveling and vacationing… Every year. How is that for a home based business tax benefit?

5. Medical Expenses Deduction

In order to take advantage of this home based business tax benefit and, you will need to employ your spouse and cover them with a comprehensive family medical plan. This allows you to deduct all of the costs associated with the your family’s medical expenses. But, there two important requirements in order to take advantage of this deduction.

The first is you must have proof your spouse has done actual work for your home based business. The second is you must establish a legal document called a “Self Insured Medical Reimbursement Plan.” Do a search on that phrase in Google to see what that entails. It’s pretty straight forward.

Auctions are those events where properties or goods are sold to the highest bidder. Auctions are mostly public events, where bidders make a series of bids and purchase a particular item for a high price. During auctions, bidders decide the price of an item rather than the seller. It depends on bidders to decide the amount they would want to pay for a specific item. During an auction, a bid is a proof of a legal binding. Bidders agree to pay the amount that they have bid. In a high profile auction, bidders may have to pay a deposit in escrow accounts or give a proof that they can pay for those items.

Types of Auctions:

Different types of auctions take place around the world. Below mentioned are some types of auctions:

1. English auction:
This is a basic type of auction. In this type, people can see the item and then start bidding. Bidders slowly raise the value of their bid until everyone gives up. The highest bidder is the winner. An auctioneer manages an auction, keeps records of the on going bid and decides the winner. Sometimes, the seller will quote a minimum amount for an item to the auctioneer, below which the auctioneer cannot sell that item.

2. Dutch auction:
In this type, the auctioneer sets a particular price and then gradually lowers the price. People in public will start bidding and later decide which prices are suitable for the item. A seller may use this type of auction to sell large quantities of same products to the public. For instance, a seller may want to sell a large amount of hay and will thus, decide to sell this hay to people for the same amount, once a reasonable price is decided.

3. Silent auction:
In this type, the bidders in public will present their bids in a sealed format. These sealed bids open at the same time and bidder with the highest bid wins. There could be a modification in this type of auction. The bidders are allotted a specific period to bid. They can roam in a room displaying the items, and write their bids on an associated sheet of paper. The bidders are allowed to see bids of other bidders and can choose a higher price for an item. At the end of the allotted time, bidder with the highest bid is the winner.

Examples of Auctions:

Auctions can be of two types either public or private. Sellers may trade any kind of items in both types of auctions. Some areas where auctions take place are:

1. Antique auction: An antique auction consists of a trade opportunity as well as provides entertainment.

2. Collectable auction: In a collectable auction, the seller may put up collectables like coins, vintage cars, luxury, stamps, real estate, and luxury for sale.

3. Wine auction: In wine auction, bidders can bid for rare wine, which may not be available in retail wine shops.

4. Horse auction: Bidders can bid for young horses of the best breed.

5. Livestock auction: In livestock auction, bidders can buy pigs, sheep, cattle, and other livestock.

The other examples of auctions may not be public. These auctions are for bidders from corporate levels. Some examples of private auctions are:

1. Timber auction
2. Spectrum auction
3. Electricity auction
4. Debit auction
5. Environmental auction
6. Auto auction
7. Electronic market auction
8. Sales of business auction

Bidders in an auction need to examine the items displayed and decide an appropriate price for an item. Thus, auctions help buyers in getting the best deals and in gaining better profits for sellers.

I want you to think about the term “Fundraising Auction”.

A “Fundraising Auction” is an event where items of value are gathered, and then sold in a competitive bidding situation, either in a Silent Auction format, or in a Live Auction format by a Live Auctioneer. And since typically the best items are saved for the Live Auction, arguably it is the Live Auction that should generate a significant portion of the proceeds in any Fundraising Auction.

So why do so many non-profit groups consider the Fundraising Auctioneer to be the least valuable component in a Fundraising Auction?

The Hosting Facility gets paid.
The Printer gets paid.
The Caterer gets paid.
The Liquor Store gets paid.
The DJ gets paid.
The Florist gets paid.
But the Auctioneer … the individual who is expected to raise the lion’s share of the event’s proceeds… is expected to work for Free. And is usually under-appreciated for the professional services he/she provides.

I’m not trying to underscore the value of the invitations & programs, food, booze, music, and decorations. All are important in their own way. But each of these are “Expenses”. It is the Auctioneer who is going to bring “Revenue”… and thus, the “Profits”… into any event. Which is the ultimate objective of any Fundraising Auction.

Here is a real-life example of how under-appreciated the Auctioneer can be. In two comparable events we worked last year, during the dinner portion of the event one non-profit group sat the Auctioneer (me) at a table with the DJ, the Interns, the Volunteer Staff, and other event “Help”. The 2nd non-profit group sat the Auctioneer (me) directly next to the CEO of their organization, where we chatted about how important the pending revenue would be to their organization. Which group do you think valued the services of the Fundraising Auctioneer more?

Don’t ever under-estimate the value that a professional Fundraising Auctioneer can bring to your event. The Auctioneer adds value as a pre-event consultant. And the Auctioneer can change an event from a moderate to a huge success.

A Case Study Once I was scheduled to call an Auction for a major local non-profit group. They represented a very good cause and they had a strong and dedicated following. Their event was sold out, quality Live & Silent Auction items had been solicited, and the Special Pledge Appeal had been choreographed and was ready to go. The facility was first class, the appropriate caterer was booked, and the food was ready to cook.

But quite unexpectedly, some unseasonably inclement weather forced the event’s cancellation. Despite all of the committee’s hard work, cancelling the event was the proper decision considering the circumstances.

So the Event Committee scrambled to re-schedule the event for the following weekend.

They confirmed with the Hosting Facility.
They confirmed with the Caterer.
They confirmed with the Liquor Store.
They confirmed with the DJ.
They confirmed with the Florist.
Since they already had the Mailing List of those scheduled to attend, no new invitations had to be printed as all were contacted by email or telephone. So with everything in place, the group went ahead and re-scheduled the event for the following weekend.

But guess who they failed to confirm? You got it… the Professional Auctioneer. They thought so little of the Auctioneer’s contribution that they “assumed” that the Auctioneer would be available and at their beck and call.

But the Auctioneer already had another Fundraising Auction booked for that date with another non-profit group. It was only hour away from the re-scheduled event, and things could have been easily worked out. All Group #1 had to do was start their event one hour earlier, or one hour later, than the Group #2, and the Auctioneer could have helped both groups on the same day.

But because Group #1 failed to anticipate a possible Auctioneer conflict, because they failed to confirm with the Auctioneer before re-scheduling their event, their preferred Auctioneer had to bow out and they had to scramble to locate substitute “Volunteer” Auctioneer only days before their event.

And it cost them.

Learning Points

The Live Auction is usually where the profits are made at any Fundraising Auction.
A Professional Fundraising Auctioneer can be vital to the success of any Fundraising Auction.
The better Fundraising Auctioneers usually get booked quickly.
You need to recognize the important contributions that a good Auctioneer can make to your event.
Michael Ivankovich is a Bucks County Fundraising Auctioneer based in Doylestown PA, and serves the Great Philadelphia PA area. He has been a professionally licensed and bonded Auctioneer in Pennsylvania for nearly 20 years, has been named Pennsylvania’s Auctioneer of the Year, and has considerable experience in conducting Fundraising Auctions. Michael loves helping groups raise needed funds for good causes and one of his specialties is the “Special Pledge Appeal” or “Fund-A-Cause Appeal” which usually enables clients to double their revenue in a single evening.