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You must keep accurate financial records of all your business expenses and receipts for taxation purposes. With these records, you can legally deduct all of the relevant home-business expenses on your income tax. In most areas, you can deduct any business-use-of home expenses, those expenses associated with maintaining a work space in your home. These can include a portion of many of your home expenses including heat, electricity, and insurance. You can calculate how much you can deduct by figuring out what proportion of your home you use for your business, and then using that number to deduct the expenses. For example, if you use 200 square feet of a 1,000-square foot home for business, this constitutes 20 percent of the total space. You can therefore deduct 20 percent of all your home-related expenses. Tools, supplies, and other materials you use to conduct your business can also be deducted as business expenses. Receipts for your business purchases add up and make a significant difference. So make sure you keep all your receipts and remember that they are required to back up your tax claim.