Home Business Success? Pt. 2
Home Business Success? Pt. II
The Joys of Tax Reduction
In part one we talked about the necessity of staying informed to be successful and treating your home business like the real business it is. There isn’t much room any more to be passive about it. Having a home business is crucial to the survival of many thousands. So today, we are going to the next level.
First, although it may seem a little obvious, is, having a good solid foundation to do business with. Most people understand the basics of having a home office where one can work and create a business-like atmosphere and if you are going to claim the home office deduction it needs to be “exclusive use” meaning it must be all business. IRS auditors can be very tricky in their questioning and could even check out your computer for games. But think about this; once you have a good solid business foundation in place and are running it like a real business, the value lies in having the self-confidence and knowing you are doing it right and staying below the IRS radar, being able now to take full advantage of major tax deductions available, and using the business foundation for other businesses if you decide to make a change and all this adds up to never wanting to be without the structure again now you are learning to live the corporate life style.
Secondly, and this is my favorite part, learning to take the deductions you deserve. I have personally heard ex-irs agents say they have never seen anybody take all the deductions they are entitled to and “Americas #1 tax reduction strategy, starts with a home-based business.” These are both true, but, how does it all begin?
Usually the new entrepreneur starts with a sole proprietorship. That’s a fancy way of saying you really haven’t done anything yet. The liability and taxes all flow down to you, but one thing you can do is off-set your taxes and your spouses, if you are married, from your regular jobs. A nice way to start.
Once you start making a little money it’s a good idea to be thinking seriously about structuring your business with entities like LLC’s, Limited Partnerships and Corporations. Most people start with a simple LLC. The tax liability still flows to you but it gives you some liability protection and more tax deductions become available.
When you get serious about your business is when the fun begins. There are strategies for the more savvy business person that could take you up over 200 plus deductions and even teach you how to get money out of your business that is not taxed. What would you do with $10,000 non-taxed dollars? Think about it.
Yes, it is true. You can incorporate your home business and with some guidance you can literally take more deductions than major corporations because of it.
There is not enough space in these articles for lengthy explanations, but to wet your appetite and to close with, if you have a business like an MLM or internet business that does business in multiple states, you can set your business up in any state you desire if you are open to a little more work but wonderful advantages for asset protection and further tax reduction if you select a state that doesn’t have state taxes.
See you in part III where we will go into a little more depth.
Jerry McMullin is the founder of Home Business and Tax Solutions where he takes the mystery, difficulty and fear out of establishing a home business using video instruction from a top former IRS trial attorney and other professionals. His goal is to simplify the tax code pertaining to home-based businesses and simplify setting up the home business so the entrepreneur can confidently focus on building the business of their choice while easily saving thousands in taxes. Just follow the experts. http://www.homebusinessandtaxsolutions.com is designed for the serious entrepreneur.