Running a business from home offers excellent money saving opportunities in the form of tax deductions. Smart Home Biz Chicks will get organised and informed and save themselves thousands of dollars.

Much of the information below is available from the Australian Tax Office (www.ato.gov.au) and the Internal Revenue Service (www.irs.gov) and we strongly recommend you contact them for more detail.

A deductible business expenses must be "ordinary" and "necessary". This means it must be typical of the kinds of expenses you would make for your business. For example, if you run a flower arranging business, the purchase of flowers would be a business expense, however this would not be the case if you run a home-based web design business and have no need to entertain clients at home.

A home-based business can be eligible for some or all of the following deductions:

- Utilities including electricity, gas and water. To determine how much to claim, compare your bill from the previous year to the current time and see how much the bill has increased. Work out the percentage increase and apply this to future bills as the amount you can lawfully claim as a business related expense.

- Telephone: You can claim the entire cost of installing a separate phone line for business use, along with the calls you make. If you don't install a separate line, calculate the percentage of business use by companying a previous bill.

- Rent. You can claim a portion of your rent if you rent the home you live in and you have a dedicated room as your home office. Determine the total size (area) of the house, work out the area of your office and then calculate the percentage of space that your office occupies. Apply this percentage to the total amount of rent you pay each month to work out the expense to be claimed.

- Purchase of equipment such as computer, desk, chair, printer, digital camera etc. You can claim 100% of the cost, or a portion depending on the percentage of business or personal use.

- Depreciation of equipment.

- Marketing expenses such as brochure production and distribution.

- Payments to contractors and suppliers.

- Purchase of office supplies such as stationary, printer cartridges, CDs, USBs etc.

- Repairs and maintenance for office equipment.

- Motor car expenses. Calculate the percentage of business use (in Australia you need to keep a log book for a 12 week period and then keep the log book for five years) then claim this percentage for fuel, car services, motoring organisation memberships, car insurance, and repairs.

- Interest and bank fees on any business loans. These are all tax deductible.

- Charitable donations.

- The cost of employing an accountant to undertake your tax return (and don't forget to claim the kilometres for the journey there and back).

The key to receiving every deduction you're entitled to is to keep proper business records. This means keeping all receipts and records of purchase that prove business expenses. This is the case whether you handle your own tax affairs, or bring in a book keeper or accountant to assist.

- Keep a separate filing cabinet or folder for receipts. Divide receipts according to topics including payments and receipts, then break these two topics into separate categories such as electricity, telephone, rent etc.

- Record expenses and payments each month, or at least quarterly. If you leave it until the end of the financial year the process will be overwhelming and you'll procrastinate.

- Schedule a time in your diary each month to do accounting and book keeping tasks.

- If you use the services of an accountant ask for a list of things you can claim so you know what records to track.

- At the end of the financial year, put all paperwork and files relating to that year in a separate location and start afresh for the new financial year. If you're audited down the track you'll have all information in one easy to find location.

- It may pay to keep personal and business financial accounts separate. Set up a separate business bank account, with a separate cheque and credit card.

- Depending on your situation, it's a good idea to set aside money for taxes as income arrives. You can either set up a separate saving account and deposit a portion of incoming money into it, or keep a budget so you can see how much you'll need to pay at the end of the financial year. It's very important to stay on top of this aspect of your business. You don't want to be scrambling to find thousands of dollars at the end of the financial year.

Selecting a suitable accountant and book keeper could be one of the biggest decisions you make as a business owner. Take some time to research accountants in your area and look for someone who specialises in small business. Be clear about their fees and charges, especially if you're asking for advice over the phone or email.

It's important to know your tax facts. Federal tax departments often run free seminars and workshops on all tax related issues. In the US visit www.irs.gov or in Australia visit www.ato.gov.au.

It's important to understand that taxes, accounting and financial management are a big part of owning and operating a home-based business. Ignoring this aspect and hoping it will work itself out is a major factor in the failure of many small businesses. But with the right preparation, some planning and good advice, tax time can be stress-free.

Online entrepreneur Sue Papadoulis publishes the popular e-newsletter Smart Biz Chicks. If you're ready to jump-start your home business to make more money and have more fun and free time, get your FREE tips now at www.homebizchicks.com