Now there are of course, several types of corporation that would work for a home business owner, and if you're planning on making it big one should probably look into an S corp or LLC, but for simplicity's sake, let's start with the typical home business owner just starting out and wanting to just do a business on the side. For them they might want to go with a C corp; so I'll detail the benefits of this type of corporation below. ( And if you're just starting out, you can switch from a C corp to an S down the road, provided you follow the proper procedures. )

One head's up first: everything here is merely a suggestion and I highly recommend you stay within your limits and do not exaggerate any of your tax deductions. The IRS is just looking for people right now to finagle with their taxes and then get a big fine levied upon them . Don't be that person.

Office rent-This is one everyone should know and use but I'm including it because like I mentioned before, a lot of people overlook these benefits. Even if you're using a spare bedroom , you can take your office space and ( the size of the bedroom or a percentage of your house-don't go overboard with this one and claim like " All of my house is an office because I work in every part of it !" or anything, this won't fly with the IRS. There are ways to use tax laws to your advantage and ways to abuse them. Again, I am not suggesting the latter. )Typically you can deduct somewhere around $1.75 per square foot, so if you have an office that is only 120 square feet, you can deduct around $210. But that's every month. Ok, off to a good start.

Computer-

You are allowed to write off around $25,000 annually for equipment and business assets, so a new computer, printer , fax , modem , etc. all fit into this category.

This makes much more sense than paying for stuff with after tax dollars.

Health Insurance-the new corporation pays for medical, dental, and even disability. Smart.

Start-Up Expenses and Marketing- business cards, joining your network marketing company, PRODUCT ( in most cases) , even the cost of incorporating ( probably around 400-500 hundred dollars, but in my opinion certainly worth it in the long run) can be written off. Did you seen the one in capital letters ? Your downline and even a lot of your customers need to know this as well. However if you're unsure about this for your particular company, ask around, someone should know .

Meals-you have to eat right? And sometimes have business lunches. A word of caution with this one: don't overuse it by claiming an inordinate amount of meals eaten were business related. When traveling one can only write off 50 % of meal costs as well.

Telephone- this is only related to a separate business line, not your regular home phone; but you can write that second line off, along with internet too.

Employee-you can get an accountant to do the numbers for you as far as paying yourself or spouse as an employee, but this can make your deductions for salary much lower by plistting it between an employee and the corporation.

Auto -It is important to keep good records with this one, but the corporation can pay an monthly auto allowance according to how many miles each month the car is driven. Right now I believe it is allowable to around 50 cents/mile ( we did our taxes all the way back in January so my figures may be a little hazy, hence the estimates) , so if you drive a 1000 miles a month, that's about 500 dollars you can use to pay for gas, maintenance, and even your car payment.

Travel-the employees of the company can deduct half their meals, plus lodging and transportation. Foreign travel is a bit different, but basically is three quarters of the trip is spent on business, you are good to go.

Subscriptions-these of course have to be related to your type of business- magazines , business clubs, and even college courses can be deductible if they fit the right description, meaning they can further your business .

Retirement plans-This one could be its own post, so perhaps I will save it for another time. But basically refers to setting up and contributing to a tax beneficial 401k or IRA.

Cafeteria plan-the choice of receiving cash or qualified benefits. This refers to daycare, health benefits, and other similar choices, and one is allowed to pick and choose them like a cafeteria . It means a certain amount is first set aside for these reasons however. These funds are not subject to payroll taxes however.

Dependant care- $2500 separate , $ 5000 together for day care for kids under 13.

Bonuses- Yes! You can pay yourself ( the company's top employee ) bonuses from time to time . The limit is somewhere around sixteen hundred though, so don't go buying that plan and writing it off yet as a first month's bonus.

Lower Tax Rate-Only 15% on the first $ 50,000 in profits for a C corp.

So the lower tax rate and many of the other benefits that accompany a C corp are useful for those simply beginning or working their business part time ( or haven't really hit the big time yet ), and that's great. If your business is more mature, you may want to look into an S or LLC. It's wise to consult with someone that knows your situation for any final decision, because ultimately you want your corporation to work for you.