I am self-employed, I have an LLC, and I am the only employee. I service clients via my call center in my office at home. Are all of my setup expenses and rent/utilities tax deductible, as well as my dedicated phone line and online platform I am required to use?
Since you mentioned rent, I will make the assumption that you are referring to an apartment. Since the call center business is conducted in your apartment, expenses related to the portion of the apartment that is exclusively used for business are deductible as business expenses.
Note the requirement for “exclusive use.” There is no requirement that the business portion of a room be physically separated from the rest of the room by a wall, partition, or other demarcation, but any personal use of the space, no matter how small, means the exclusive use test is failed. File Form 8829 to record the percentage of business use and the portion of resident expenses that will flow through on your Schedule C. Direct expenses that benefit only the business-use portion of the residence, such as the dedicated phone line and online platform, are 100 percent deductible and are not required to be allocated.
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Answered by: Loretta M. Tubiello-Harr, CPA, is a principal with Tubiello-Harr & Associates LLC in Coopersburg, Pa.