Home Based Business: Your Ultimate Tax Shelter
Starting and operating your own home based business is the ultimate tax shelter.
How To Home Based Business – Although this article has been written from a general income tax perspective. Overall the principles should be practical in all tax jurisdictions whatever your country.
Non-Deductible Personal Living Expenses
All of us have expenses that we incur in everyday living.
Either you rent an apartment or house or you own your residence. Utilities, insurance, rent, mortgage interest, property taxes, and maintenance and repairs are typical costs of operating your home.
Likely, you have a vehicle which also consumes large amounts of cash.
Add to this, dining out, entertainment, gifts, alcoholic beverages, office supplies, telephone and many other expenditures, and you have a significant cash outflow.
In most cases, as an employee, retired person, investor, student, or homemaker, few of these expenses are tax-deductible to you.
This means that you must earn a considerable income, pay your income taxes first, and then use what is left to pay all your expenses.
Some employees may be able to write-off some of their employment related expenses, if such are required by their contract of employment. However, even in this situation, the tax deductions are very limited.
Your Own Home Based Business Tax Deductions
Now consider the situation where you decide to start your own home based business.
Suddenly, many of your everyday expenses are now being used for business purposes and are now tax-deductible.
If you use one quarter of your home exclusively for business use, you will be able to deduct (or write-off) one quarter of all related occupancy costs. These expenses may include maintenance and repairs (that are not capital in nature), rent, mortgage interest, house or apartment insurance, power, heat, water, and property taxes.
As well, your vehicle expenses used for business purposes are another tax write-off. Say you use your car ninety percent for business purposes. You can deduct ninety percent of your vehicle insurance.
Then there’s gas and oil, maintenance and repairs. Car washes, license and registration, auto club, loan interest (within certain limits), and other costs can also be deducted from your income.
You may also write-off one hundred percent of your business related parking. Capital Cost Allowance (C.C.A.) on your vehicle is also allowed for income tax purposes; depreciation is the accounting term for this tax deduction.
You could also be allowed as a deduction, fifty percent of your business related entertainment expenses.
Also tax-deductible are business related telephone expenses, Internet access, office supplies, travel, books, memberships, and a host of other expenditures.
Your Home Based Business – Income Splitting
With your own business, you can pay reasonable wages to your spouse and children. In this way, you can legally divert income taxed at your higher rate to your family members that are in a lower tax bracket.
This tax saving technique is called income splitting. It is another good reason why your own home based business is the ultimate tax shelter.
Will A Part-Time Home Based Business Work
Even if you have a full-time job, running a part-time business can be advantageous.
If you earned eight thousand dollars during the year from your part-time business and were able to deduct eight thousand dollars in car expenses, home office expenses, entertainment costs, office supplies, and other business related expenditures, you would have a net business income of nil. You would pay no tax on this additional income.
Do not miss this important point! Although these tax deductions are actual, legitimate business expenses, these are expenditures you would probably have made anyway, whether you had a business or not.
Thus, by rearranging your affairs to start and operate a home based business, you have been able to convert non-deductible personal expenditures into legally deductible business expenses. You have successfully sheltered your income from tax and have split your income with family members in lower tax brackets.
Yes, indeed, your home based business has become your ultimate tax shelter and can lead to your ticket to financial freedom…
Home Based Business: Your Ticket To Ultimate Freedom
Due to the hardships brought on by our country’s current economic situation, many people are looking to a Home-Based Business as a means of income. Job loss due to downsizing or other reasons, is motivating people to find alternate ways of supporting themselves and their families.
If you have decided you would like to start a home-based business, there are several issues that need to be thought-out and realized in terms of legality. You must consider the legal issues as well as your local zoning regulations, in addition to any restrictions on the use of your property for business purposes.
Municipal policies determine what types of businesses can be run from your home. These regulations vary by city, so you will want to do some research in this area.
You can look up the regulations for your town by visiting the local zoning board or law library. You might also need to talk to an accountant or read information from the IRS on the issues of tax deductions regarding home businesses.
Another consideration is that many home-based businesses in America require state licenses for things like child care, auto repair and private investigation. After you have researched your city or States regulations on home businesses, be sure to contact your local government office. Ask about what agency, if any, regulates your planned business and what you need to do to obtain a license.
Avoid a costly mistake and look into obtaining business insurance. Your home-owners policy may not provide enough coverage especially for things like equipment damage and even client injury if you will be conducting meetings in your home.
Once you’ve got all of those issues satisfied, you should be thinking about the internal workings of your business. Staying organized requires a good deal of effort for some people, but it benefits you greatly in the long run.
For example if you will be receiving and sending large amounts of mail and/or packages, it might be better to set up an external mail service. Then designate an area of your home to be used for sorting and also preparing out-going mail. You don’t want to cover up your work-space with papers and boxes which may become misplaced and disorganized.
A separate email account used solely for your business is another way to ensure consistent communication with your customers. Customer service is what will make or break your business. Its wise to stay on top of things within your devised system to ensure satisfaction and ultimately bring in repeat business. Read on and find out how you can achieve home business success…
Home Business – Work From Home
Building a successful home business IS possible, if the recipe for success contains the right ingredients!
It takes a few key ingredients to be successful with your home based business, these ingredients will make your income rise…
- You must have a solid company, a lucrative pay plan with no hurdles to jump each month so that you are not restricted in compensation in any way.
- A product that is consumable, that will be used each and every month so that you have repeat business, a long term customer base will produce a long term residual income.
- A mentor or coach, who can support you both Online and Offline to grow your business quickly and efficiently.
- A team of like minded individuals to support you during your first few months of learning how to build your business. Friendly support and encouragement from others who are also building a business will help you as you initially grow your business until you become a mentor yourself.
- Marketing tools, such as a free online marketing system to market to your potential customers, working for you 24 hours 7 days a week. Online training resource center, with information about your business that will help you grow.
- Training Calls, either teleconferencing or online conferencing where you can connect for support or bring new prospects to grow your business.
All these key ingredients are required to build a successful home business, however, the MOST important ingredient is YOU!
Set your hours, set your goals, stick to them and if you add all the above ingredients, including you, together… watch your income rise!
What Is The Best Home Based Business
To get you up and running with a great start. Let me say that you could do a lot worse than become a member of the great community of people that I myself joined four years ago.
You will receive two websites. They are hosted for you on the internet. Your websites are maintained. You get to choose your own Domain Names for these sites. There are great tools you can use. Over 500 videos you can watch whenever you get stuck. Online classrooms you can drop into and there’s even an online Bootcamp that will show you how to make money as an online affiliate marketer.
Remember what I said in ingredient number four above – With all those members you will have a group of like minded individuals who will support you during your first few months of learning how to build your business. Friendly support and encouragement from those people who are also building a business will help you as you grow your business.
There’s also a Live Chat function where you can be in direct and instant contact with members all over the world. You will never be on your own and stuck for an answer that’s for sure.
You know what’s also great about this program? You can join for free and there is no credit card required like you see with a lot of these so called free starter sites. If after seven days you feel its not for you then you just leave and no harm done. If you decide to stay then its only $19 for the first month. Or you can stay for as long as you want to as a free member.
Where else will you get a deal like this on the internet? Let me tell you. You will have to look long and hard to come even close to what’s on offer.
Why not have a look at these web pages and see for yourself what this offer is all about. You decide if its worth giving the program a go or not. But do it today because tomorrow you will still be where you are today instead of making a start on being your own boss with your own home business.
Thank you for reading my article and if you feel like leaving a comment below I will reply.
To your success and secure financial future and hope to see you on the inside.
Have a good one folks.