© 2002 Elena Fawkner

For those of us in U.S., tax time is here again. For those of you elsewhere, tax time is always around corner. Oh joy, I hear you say. Well, if you're contemplating an online home-based business, it may be just that. Really. Here's how.

Are you ready to start making money with, say, affiliate programs or by creating your own information product, but haven't really got off ground yet because you're stuck in stage of thinking you have to learn everything there is to learn about internet marketing before you can start? (Which you don't, but that's a whole other article.) How much money have you spent on e-books and other information products in your quest for holy grail? How much money are you spending on your ISP every month? How much money have you spent on what appeared to be promising online business programs only to see them bite dust? And what about ALL that software you've bought but never used?

Well, even if you haven't made a dime yet, if you have a "genuine profit motive", start thinking outside paradigm of *would-be* online business owner and start thinking from perspective of one who is *already* in business.

What does that have to do with tax? Everything.

If you have a *genuine* profit motive for what you're doing, then you're in business. If you're in business, you can deduct business-related expenses against business and (if you're a sole proprietor), personal, income. Including ISP fees, including information products, including "secret marketing site" membership fees. All of it.

See where I'm going with this?

Even fees for what turn out to be bogus programs can be deducted if you incurred them in pursuit of business profit. And while we're on subject of being hoodwinked, let's just get that one out of way right here. We're ALL suckered into falling for at *least* one - it's called school of hard knocks - so don't dud yourself out of a righteous deduction just because you're feeling ever so slightly foolish for having been suckered, against your usually MUCH better judgment, into believing that what sounded too good to be true wasn't. Even though it was. Repeat after me - a deduction is a deduction is a deduction. All that's required is that you incurred expense with motivation to make a profit.

Now, a word of caution here. You can't deduct expenses incurred in pursuit of illegal activities so I wouldn't try and claim an investment in a pyramid or ponzi scheme on your tax return. But if all you did was fall for a sales pitch for a program that, if successful, would not have been illegal, and it was a business-related expense, go for it. So long as you had a genuine profit motive when you handed over dough.

It gets even better. (By way, this is all U.S. stuff we're talking here. Check your local tax laws. Many countries will have something similar to what I'm about to talk about.)

Here's where it gets interesting. If you work your business out of your home, in a room or a part of a room that you use *exclusively* and *regularly* for your business AND that area is also your principal place of business, you may qualify for home office deduction. Even if you also work at a job outside home.

And when I say "exclusively" I MEAN exclusively - no children using your computer for their homework or to play computer games, no personal papers in your work desk, no late-night chatrooms (or less savory online pursuits if you get my drift), no online affairs, no television in room.

You may not be able to apply home-office deduction against *this* year's income (as we'll see in a minute) but you will be able to apply it against profits generated in future years.

Now take this same principle and discover huge payoff in "spare change" time you've been wasting all these years.

How often do you sit in front of your computer and wait?

Everyone waits for computer to reboot, restart, unlock, "scandisk", "defrag", finish printing, download a file from Internet or generally accomplish tasks that have you sitting twiddling your thumbs for at least 60 to 90 seconds or more.

The shocking truth is that those one, two and three minute nuggets of time contain seeds for accomplishing all tasks you never seem to have enough minutes in day to finish.

Computers represent a double-edged sword. On one hand, they are supposed to save us time by efficiently helping us with big tasks such as balancing our checkbooks, running our businesses, and doing our taxes.

In reality, it seems time computers save you gets sucked right back up in time-consuming tasks such as installing software, scanning for viruses and waiting for computer to restart!

Think about spare change in piggy bank example. Now use that same principle to your advantage by developing an awareness of how you spend your "pocket change" time in front of computer every day.