Everyone has some kind of home office, if you happen to run a business from that home office, it's deductible. But… There are a few important things you need to do to make certain your deduction is provable.

Clear a specific room or space for your office. Give it a square footage, something you can actually determine with measurements. Take everything out of your space that is not directly related to your business. Measure your space, and if it doesn't already have four walls, set up specific perimeters with room dividers or temporary walls.

Create a name for your business. Get a tax license, and register your business name, along with your ID. Announce your business to the local papers, send out press releases, and be identifiable as a business.

Purchase office equipment and furniture for your office. Keep the receipts; this equipment and furniture is deductible. (Including any room dividers or temporary walls you set up to disguise your office.) This furniture probably includes your desk, a computer desk, shelves, file cabinets, printer cabinets, storage containers, computer, adding machine, fax machine, filing supplies, etc., lamps, chairs, and a telephone with voice mail capabilities.

Install a separate phone line for your office. Call it a kid's line or second phone, dedicated computer or fax line, but get a separate phone line for your business. Put a professional response on your voicemail - save the "Hey Granny, I've gone fishing - leave a message at the beep.” For your private line. Use your professional voice and manners on your business voice mail. Your customers will appreciate you for it.

Set up a schedule. Give yourself hours/work days and some time off. Plan your work around your business schedule. Even if you include some evening and weekend hours, you will benefit from scheduling some time off.

If you work late in the evening, take some time off in the morning to run, laugh, get together with friends, read a book or enjoy life. It will help you focus on what you want during work hours.

Build a business budget and a plan for making money from your business. Without a business plan your business isn't really a business. The description that distinguishes a business from a hobby is "intent to make a profit”. If you do not have a plan to earn a profit, IRS considers your business a hobby and so should you, limiting your deductions. Write a plan for making a profit for your business.

Develop a process of doing business that includes such simple things as returning phone calls, a newsletter, client lists, advertising, business cards, letterhead, and a marketing plan.

Products or services. Create or obtain products or services to sell and maintain a pricelist for your wares.

Home offices indicate you have a home-based business. The list above will help you prove your business is viable in case of an audit. These will also improve your ability to make a profit as a workable business.

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