With over 40,000 pages of Tax Code, how can you figure out what tax deductions you can and can't take as a home-based entrepreneur? This article sheds some light on the subject.
Tax reduction is not for the timid. So, do you dare read this article?
With over 40,000 pages of "Tax Code," accountants simply can't keep up with it. Like it or not, we need to look out for ourselves.
How?
Knowledge.
Let me offer a little perspective. A survey by the Tax Foundation estimated that Americans would "spend more per capita in 1999 on taxes ($10,298) than on food ($2,693), clothing ($1,404), and shelter ($5,833) combined." Taxes eat up 38.2% (or more) of the average family's income; that's more than for food, clothing and shelter combined. (Source: Tax Reduction News)
If your reaction to this is, "Boy, this is frustrating, but there's nothing I can do about it," then there really is no reason for you to finish reading this article.
However, if you feel there must be a legal way to reduce your taxes, and if you'd like your home-based business to help you, you'll be interested in what's to follow.
Now, I know you want to reduce your taxes, but the thought of spending time reading about income taxes ranks right up there with having a root canal. Better to just hand everything over to an accountant and let him/her handle it all. Right?
No way!
Remember the 40,000 pages of tax code? And, you expect the accountant to be on top of all 40,000 pages? You expect him/her to know every deduction you can possibly take?
Think again.
I'm not saying to not hire an accountant. Dave and I use an accountant, ourselves. What I am saying is that YOU need to take charge of your own taxes. Yes, YOU!
I can't count the number of times I've heard people complain about how their accountant actually cost them money. Or, how about the ever-present complaint of the accountant him/herself? "I wish I had known about such-and-such, I could have saved you a lot of money."
The plain and simple truth is, one of the biggest hurdles you'll face in running your own business is to stay on top of taxes you have to pay now that you're self-employed.
Okay, have I scared you off yet? No? Great, then I've got some very good news for you.
Having a home business is one of the very best ways you can reduce your taxes. It's true! You just need to know how. When planned correctly and with a bit of knowledge under your belt, you will save more on taxes than you did in your regular day job -- substantially more!
Whether you use a tax service, file online or use an accountant to do your taxes, you need to think of them as a help, not the end to the means. Get some knowledge under your belt, then use that knowledge to question everything. Make it easy on your accountant to include every tax deduction YOU and HE/SHE can find.
So, do you need to know all 40,000 pages of tax code?
Oh, please no! That'd be reason enough for me to split the whole self-employment scene.
Actually, you simply need to know where to look to find the best information for the self-employed, home-based entrepreneur. There are plenty of good books and courses available. Here are a few excellent resources that Dave and I like for the price (U.S.-based):
- The Definitive Small Business Owner's Guide to Saving Taxes All Year Long - by Jeff Parrack, CPA
(An 8-hour, all-day seminar re-written for you to read and use as a reference.)
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- It's How Much You Keep That Counts - by Ronald R. Mueller, MBA http://www.homebusinessonline.com/preview/taxsavings.html
Since I don't keep up with self-employment tax laws of other countries, I cannot recommend any non-U.S. books or courses. However, you should be able to find plenty of information by doing a search on Google.com or visiting your local bookstore.
Now, armed with the knowledge you need, liberate yourself from overwhelming taxes. Keep and use that heart-earned money to better your business and your life.
You've earned it!
About the Author
Seasoned entrepreneurs, Dave and Heidi Perry have started and developed half a dozen businesses, both retail and home-based. Their passion is using their experience to help the home-based professional start and develop his or her own business. Known for their entertaining and straight-forward style, Heidi and Dave are editors of HomeBizBytes (readership 25,000). Subscribe at http://www.HomeBusinessOnline.com/nsl.htm?im