I am sure that you probably know by now how taxes work and how frustrating they can be, but I thought I’d still put this together and throw it out there to you to jog your memory, just in case you were in need if a refresher, because hey…everyone , or at least almost everyone likes money.
Now, I’ll bet that you have heard of how people can actually save money with taxes when they have a business, but do you know how they actually save the money? Well if not, then read on because I am sure you have been at one time or another, that person who has said to themselves… “Dang, my friend, sister, cousin, or whatever, is so lucky.. he/she get’s to write everything off! If only I could do that…yada, yada, yada” So I thought I’d share with you how easy it is to save/make (depending upon how you look at it) $3,000 – $9,000 / year in taxes if you so choose to.
Keep in mind as you look at the breakdown that you can simply enter in your own figures to get an estimate of what you woud be able to write off if you had a home based business. Don’t forget that most of the expenses you already have will fall into a type of business expense category once you have your business up and running (Disclaimer: all figures are relevant to my expenses and will differ based on the type of business you set up). Let’s begin!
Tax Deductions (untaxed income) for a Home Based Business
Cell Phone: Monthly Charge: $ 100 x 12 months
= $ 1,200
Internet Service and Home Phone (Land Line… New Messages) Monthly Charge: $ 67 x 12 months
= $ 804
Signup $299.00 + Monthly Website fee $ 14.95 x 12 = 179.4
= $ 478.40
Education / Training (annually)
SuperSaturdays, Conventions, Audiobooks
Office/Business Supplies (annually)
= $ 200
= $ 60
= $ 20
= $ 60
Internet Technology i.e. sites, myfax, etc.
= $ 122
Gas Mileage (annually)
Total Mileage on Vehicles(s) this year: 15,000
Total Miles driven for other employment: 5000
Miles remaining: 10,000 so
15,000 – 5,000 = 10,000 x $.55
= $ 5,500
Meals / Entertainment
(meetings with team, partners, prospects, leaders, or recruits)
50% of Monthly meals out or in home: ($240 x .5 = $120) so
$ 120 x 12 months
= $ 1,440
Vacation (Intellectual Property) $ 1,200 x 2 (# of vacations)
Total Tax Deduction = $ 13,284.4
Estimate your tax bracket (20 – 25% is good for this example)
= $ 13,284.4
$ 3,321.10 = TOTAL TAX SAVINGS …..Yippee!
I don’t know about you, but having an extra $3,321 per year is a lot of money. I am big on assests, so of course I will put the money back in the market and have it work hard for me. I like to play with the numbers so I will show you what I will get when I invest this $3,321 give away into an average performing stock for oh…let’s say 20 yrs.
So that’s $3,321, with an annual addition of $3,321 for 20 yrs at 6% and I get, drum roll please…………………………. $140,145.74!
(Try For Yourself)
I know what you are thinking… Holy smokes that’s alot of money, and you’re right, it is. So the question is, what would you do with a $3,000 giveaway? Go on vacation, pay off some debt, invest it, gamble with it?…what? I am curious.
Okay, so you don’t have a home-based business I understand that, but if you are curious, and would like to know what is out there, I would highly recommend visiting npros.com or entrepreneur.com. These two sources have an extremely extensive list of fast start home-based businesses which you can choose from that will be most fitting to your personality.
So, are you going to take advantage of the $3,000 giveaway, or are you not going to do anything and give away the $3,000?
[This is an estimate only. Check with your CPA as tax laws periodically change. Many other deductions are probable such as a percentage of all household costs for Home Office, i.e gas, electricity, water, HOA fees, landscaping, sewer repairs, etc… The percentage is based on the square footage in the home used for the home based business. Capital Expenses, i. e laptop computers, printers, flat screen TV’s used for presentations may also be depreciated/deductible. June 2009. For more Info on Tax Law for the Home Based Business, call for recorded info at 702-405-4438. or visit the Tax Reduction Institute]