What's the best way for you to save money on your income taxes?
What can you do now, to save money next year and the year after?
How should you manage your expenditures for optimum benefit? How
can you improve your bottom line by reducing your income tax
liability?
These are questions I'm asked every year at this time. It seems
that you're paying an ever-increasing percentage of your
earnings to one type of tax or another. And for good reason!
Uncle Sam wants as much of your money as he can get, and his
greedy cousin, your state tax agency wants their cut, too!
The Number One Tax Advantage for the ordinary American is
available on Schedule C - Profit or Loss from Business. You can
benefit even if you live in a rented trailer behind your Aunt
Harriet's house. Even if you don't itemize deductions!
That's right! The best thing you can do to keep more of your
hard-earned money is to start your own Home-Based Business! As a
Home-Based Entrepreneur, you're entitled to many deductions the
ordinary citizen is not. Today, it's easier than ever to start
and build a business with little or no cash at risk. You can
literally start your home-based business today without the huge
cash investment that was required just a few short years ago!
Let's consider a typical scenario. Suppose you're now working
for an hourly wage. You're probably not thrilled with your job,
and you probably don't make as much as you think you should. You
probably have to put-up with more negative energy than your pay
is worth, but you have bills to pay! You may be renting an
apartment, mobile home, or house. You can't get ahead, but you
aren't getting financial assistance, either. Income taxes have
the worst negative impact on people like you!
If you had enough cash saved, you could go out and buy a house.
That would entitle you, most likely, to itemize deductions
because of your mortgage interest and related expenses. However,
what if you're not in a position to do this? You can still start
your own Home-Based Business and minimize your income tax
liability!
This is how it works. You join forces with an organization that
assists you in starting your business. You don't have to put-up
any money, but you get the same benefits you would as a
franchisee - comprehensive professional training, on-going
business coaching, legal and organizational assistance, name
recognition and good will. You're in business for yourself, but
not by yourself!
You invest an hour or two per day of your time and energy, in
exchange for the invaluable training and experience you'll get
from your coach, or mentor. You learn the business from someone
who has already achieved success in it. You simply do as they
have done, and you too will achieve financial and personal
success. This is absolutely the best way to go into business for
yourself!
So, how does this save you money? Well, it is expected that a
new business will have more expenses than revenues in the
beginning. After all, the farmer has to buy seed and fertilizer
and machinery before he can sell the crop, right? As a new
entrepreneur, you'll have some expenses. You probably will have
some advertising and promotion expenditures, as well as supplies
and utility expenses. Suppose you use a room in your home as an
office. You meet with clients/customers there. You use your
phone to conduct business, as well.
These are business expenses. These expenses are applied against
any revenue you may receive in the course of your business
(commissions, profits on sales, etc.). If your expenses are more
than your revenues, the resulting loss may be applied against
your total income. This includes the money you earn at your
regular job.
Do you see the beauty of your own home-based business? You are
entitled to the same deductions as IBM, MCI, Standard Oil, Home
Depot, McDonalds, or any other big business. Revenues minus
Expenses equals Net Income or . It's that simple.
Our government knows that the backbone of our economy is the
small business person - the entrepreneur. We account for the
vast majority of economic activity, innovation, and progress.
Remember, Bill Gates started Microsoft in his garage, and many
others have begun likewise! The government wants an
ever-increasing number of would-be entrepreneurs to "make it"
and thus generate more economic activity and tax revenues. To
that end, tax advantages are extended to Home-Based
Entrepreneurs, like yourself.
Suppose your business is providing legal expense plans for
business owners. Your primary responsibility is to make business
owners aware of your offering(s). You'll have to distribute
information - brochures, pricing, and forms - to your prospects.
You'll have to be available for telephone consultations. You may
need to discuss business matters over a cup of coffee or a meal.
The money you spend marketing your business is important to your
income tax situation.
You meet with a potential client at a local restaurant. Over a
cup of coffee and a sweet roll, you discuss how your product
will benefit his/her business. You give your prospect your
literature and an agreement to review. Two days later, you
follow-up with a long distance phone call. Your prospect agrees
to sign on the dotted line, and you get the order! You've earned
your commission!
Will you pay income tax on the entire commission? Not if you're
smart! You spent money in the pursuit of that commission. Those
expenditures - for printed materials, telephone use, and the
business meal - not to mention transportation expenses - are to
be deducted from any revenues you received.
It's vitally important for you to keep detailed, accurate
records of your revenues and expenses. Keep a vehicle use log.
For every trip, record the beginning and ending odometer
(mileage) readings on your car, and the reason for the trip
(eg., recruiting, sales call, etc.). Record every penny you
spend, and for what reason. Keep track of all money received,
and why you received it. Good records are vital if you're ever
audited by the IRS or your local tax authority.
Your objective at his point is to get your business started -
NOW! You know that working at a J.O.B. (Just Over Broke) is a
ticket to mediocrity. In order to earn what you're really worth,
you have to write your own checks! Start by working an hour or
two a day, at home. Keep your regular job. Follow in the
footsteps of someone who has already achieved the kind of
success you desire. Be patient, work diligently, and NEVER QUIT!
Winners always keep trying. Winners never quit. If you resolve
to keep trying until you achieve financial success, it's just a
matter of when!
About the author:
David Wilkerson, creator of the famous SECRETS TO MAILBOX MONEY!
system started his first home-based business over 23 years ago.
The super StartSmart online community
(http://www.2StartSmart.com) was established to provide FREE
resources and assistance, as well as low-cost services and
products to help the entrepreneur. Order your FREE copy of
Overlooked Business Deductions by eMail: obd@2StartSmart.com
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