Well, Happy New Year Everyone!
This is the time of year that many people are thinking
about doing their income tax forms.
But, what I would like to talk to you about today , is
starting fresh and properly organizing yourself to make the most of your
tax deductions for 2012. You need to get focused this month!
The smartest thing that you can do to save on what you
need to pay Uncle Sam each year,Ā is to have a
Home Based Business.
The government allows a tremendous amount of tax
deductions regarding your home businessĀ as long as
you follow their rules. It is possible to save
$5000-$15,000 per year.
Generally, even though you may make a small amount of
money your first year, this is also the time when you
spend the greatest amount to get started. Following,
are a some great strategies that you can begin to
use as a home business owner.
Note:Ā I know in this day and age, you will have a spread sheet,
but also get a small spiral note book , and an envelope for
receipts, that you can have with you at all times.
You willĀ want to open a seperate credit/debit
card & checking account for your business. Any paid
annual fee, interest and other fees becomes a deduction.
Here are 8 Main Expenses that you’ll want to keep
track of on a monthly basis.
#1 HOME OFFICE DEDUCTIONS
You must 1st determine what percentage of your home is
used for business purposes. Tax law allows you to
deduct this percentage of all expenses that are
reasonably incurred in the course of doing
business. These include rent, utilities, insurance,
property taxes, phones, supplies, office equipment,
and repairs made to the office portion of your home.
In addition, you can also deduct the cost of office
furniture, for example your desk and file cabinets,
rugs, office decorations and office cleaning.
#2 Possible Vacations & Travel Expenses
#3 Food& Entertainment (proportional-receipts
important)
#4 Automobile Expenses (especially mileage)
#5 Education & Seminar Expenses Including Books, Reports, etc
#6 Possible Medical & Nutritional Product
Reimbursement
#7 Business Gifts or Correspondence (Greeting Cards)
#8 Payment to your childrenĀ for services they provide
for your Home Business.
For instance, they can help you with your paperwork
and filing, mailings, and office clean-up. Ā ( Case law
says that a seven year old can provide these services .
As your employee, you may be able to pay the child up
to $5000 per year in non-taxed income. )Ā Also, your
child can put up to $2000 per year in an Educational IRA.
Of course, you will need to be reasonable in these
very large expenses if you income is quite low. It is
imperative that you seek the advice of a good tax
accountant when applying these strategies.
A competent person, knowledgeable in home businesses,
can be invaluable in assisting you in their proper
application. Please also note that you must properly
set up your business enterprise, have a profit motive, run
it as a business (not a hobby) and document each of your
business expenses.
You may even want to look into the possibility of
spreading your expenses over 1-3 years if that is possible.
If you, or your spouse has another salaried income, your
business deductions will be counted against that income
with the Schedule-C form.
Even if your saving is notĀ huge amount of money,
without your Home Based Business, you would have just
given it away to the government.
I hope this information has inspired you to get to
work , and take your business more seriously.
If you are still looking for the right business…check out the Income Opportunities Tab on this site.
Here’s A little gift for you… a PDF form to determine your
yearly family budget to help you get started.
http://ILoveCards.net/TaxSaving.pdf
To Your Success in 2012 and beyond,
Linda
PS- Feel free to share your own tips & comments
