Here’s Why Uncle Sam Wants You To Start A Business!

(Reprinted from article written by Sharon Lechter, CPA)

A lot has been said about the many tax advantages of starting your own business. Let’s start with the tax incentives. It’s no secret to anyone that the tax laws are written to promote business ownership. So what do what the rich do. Start your own business and take advantage of the favorable tax advantages that come with owning a business.

Build First, Pay Taxes Last

The difference between the employees and the business owner is that the employee pays taxes FIRST on what they earn and then get to live on whatever is left over. The business owner spends their earnings to build their business FIRST and then pays taxes on what is left. The business owner will always pay less tax than the employee simply because they can reduce the income amount they have to pay tax on. This enable the business owner to grow their business faster and for the business to generate investment dollars quicker.

That is also why there is such an advantage in starting a direct selling business versus a traditional business from scratch. You can immediately begin earning, instead of spending, the time and money to set up the back office administration, product development, advertising, and other functions that are often necessary when you begin a new business.

Tax Advantages of a Home-Based Business

To take advantage of these deductions, the tax code states that these expenses need to be only “ordinary and necessary” and that your business needs to be one in which you are endeavoring to make a profit. Here are some of the other business deductions you may be able to take advantage of:

·         Home office expenses (repair, maintenance, property taxes)

·         Business equipment (computers, cell phones)

·         Office supplies

·         Internet and telephone services

·         Software and subscriptions

·         Mileage and other auto expenses

·         Travel, meals, and entertainment

Proper Documentation a Must

Don’t be afraid to take advantage of these deductions. As long as your expenses follow the tax code guidelines and you retain proper documentation to back-up the expenses, you will be protected in the rare case of an audit.

G. L. Giddings, Director

GLG and Associates, LLP

The POWER Group Organization Team

http://ibourl.com/17hk 

Office: (502) 209-TEAM {8326}

10 Tax Deductions for Home Based Businesses

Posted by Ivan Widjaya

One of the greatest advantages to working for yourself through a home-based business is the many tax deductions that can be claimed against your federal tax obligations. Valuable information concerning the rules that apply to each of the following categories can be found on the IRS website. At the outset of the business, have a system for saving receipts and maintaining good documentation concerning every deduction. Some small businesses are audited every year, and the business owners with good records emerge from the audit easily while others end up paying additional taxes because expenses could not be proven. Many of the following categories will apply to most home-based businesses.

1. Home Office Space – When the home office is a separate space that is used exclusively for the business operation, that percentage of the total square footage of the home can be deducted as office space. Specific calculations apply and can be found on the IRS website. For certain types of businesses, the licenses to operate in the home must be acquired prior to claiming the home as a place of business. Check local and state regulations prior to the first day of operation to avoid disqualified deductions.

2. Services and Utilities – A phone line that is installed in the business office and used exclusively for business calls is deductible. Installation charges and monthly service charges can be claimed as deductions. All long distance charges can also be deducted. Cell phone accounts can be deducted as a percentage of the actual business usage. If the cell phone is used exclusively for business, the entire expense, including the cost of the phone, can be deducted. Utility expense to heat the office and the electricity to light the office can be deducted according to the percentage of the home’s square footage used for business.

To read the entire article, click here: http://www.noobpreneur.com/2011/02/05/10-tax-deductions-for-home-based-businesses/

A dozen deductions for your small business

By Dana Dratch • Bankrate.com

Small-business tax rule No. 1: Don't mess with the IRS.

But that doesn't mean you should cheat yourself. Take every legal deduction you can. Here are a dozen that even savvy small-business owners and entrepreneurs sometimes forget:

The deductible dozen:

1. Home office
2. Office supplies
3. Furniture
4. Other equipment
5. Software and subscriptions
6. Mileage
7. Travel, meals, entertainment and gifts
8. Insurance premiums
9. Retirement contribution
10. Social Security
11. Telephone charges
12. Child labor

1. Home office

Concerned that claiming a home-office deduction is tantamount to sending an engraved invitation to an Internal Revenue Service auditor? Don't be, says Jan Zobel, author of "Minding Her Own Business: The Self-Employed Woman's Guide to Taxes and Record-keeping."

I don't agree that chances of getting audited are greater with a home-office deduction," says Zobel, a San Francisco Bay-area tax expert, who specializes in serving the self-employed. The key is that you use the term "home office" the same way the IRS does. The tax agency says it must be a space devoted to your business and absolutely nothing else. Deducting the den that houses the family computer and serves as a guest bedroom won't fly with Uncle Sam.

"If you only have one computer and you have a child over four, the IRS is going to be pretty certain that the child is using the computer," says Zobel. "And the burden of proof is on you."

The deduction, however, isn't limited to a full room. Your home office can be part of a room. Just how much of the space is deductible? Measure your work area and divide by the square footage of your home. That percentage is the fraction of your home-related business expenses -- rent, mortgage, insurance, electricity, etc.-- that you can claim.

To read the entire article, click here: A dozen deductions for your small business -  http://www.bankrate.com/finance/money-guides/a-dozen-deductions-for-your-small-business-1.aspx#ixzz1eqYJrvxF

Tax-Advantages Of Owning A Home-Based Business

By G. L. Giddings, Chairman and CEO, GLG and Associates, LLP®

(The POWER Group Organization Team®)

I have been involved in the home-based business industry since 1979 and today make a GREAT living from home. Even though I work from the comfort of a laptop and not-so-sophisticated phone systems (2 mobile and 1 business land-line phone), I do go out on appointments with business owners, meet with potential clients, and attend many networking events. I operate a home-based business, not a home-bound business. I regularly have to itemize ALL of my business expenses, which can add up very quickly with utilities, supplies, marketing tools, travel expenses, among other things that can pop-up out of the blue and throw one for a loop!

If you ever wanted to work for yourself, starting a home business can be very challenging, but I wouldn't change it for anything in the world! I have total control of my time, no glass ceiling to worry about, no one telling me what to do, and the BEST part, I can make as much MONEY as I want, whenever I want, wherever I want! But here's the catch. If you don't take your business seriously, you'll be BROKE in no time!

Since the holiday season is here and tax time is right around the corner, I wanted to share a couple of tips any home-based business owner can do to take advantage of the many deductions available to them so you can keep the MAJORITY of that tax money in YOUR POCKET instead of giving it all to the IRS!:

 

·-- Employ your children in your home based business and pay them up to $4,400 a year per child tax free to them and tax free to you. After paying them, you can then have that child pay his/her own expenses (with the parent’s supervision) such as clothing, allowances, college funds, entertainment, school supplies, etc. There has been a court case ruling authorizing a child as young as 6 years old can work in the home-based business to qualify, but if the child can answer the phone and take messages, they are old enough to justify paying them up to $4,400 a year.

·--Deduct mileage @ $.325 per mile when driving anywhere to conduct business. In addition, mileage back and forth from your home based business to your place of employment could be deductible as a Schedule A deduction (mileage between two places of employment). Providing you conduct some kind of business before you leave your home based-business and when you get back to your home based-business. By doing this, you can now convert a lot of your non-deductible mileage into deductible mileage.

·--All telecommunications expenses (except for basic residential service) such as long distance, call waiting, call forwarding, 3-way calling, internet, pagers, cellular phones etc. can be deducted 100% if they are business-related.

·--Travel expenses could be deductible for the entire family by properly structuring & planning your travel itinerary around business activities.

·--Employ your spouse and supply them with a 100% Medical Reimbursement Plan as an employee benefit. This makes 100% of all your medical, dental & optical expenses such as premiums or partial-premiums, deductibles, co-pays, prescriptions, teeth maintenance and repair, braces, contacts, eyeglasses, cosmetic surgery, etc. (for your spouse that is employed and the entire family which includes you, the business owner).

·--Deduct the business use % of all expenses associated with your house and/or apartment such as mortgage or rent, utilities, improvements and/or repairs, insurance, real estate taxes, security systems, lawn care, etc. (This deduction is one of the smaller deductions and can only be deducted to the level of gross receipts for your business. The amount remaining would roll to the following year.)

·--Deduct 50% of all entertainment & meals when in the activity of conducting or discussing business.

These are just a few of the many tax deductions available to you in a Sole Proprietor home-based business. Of course, you need to visit a tax professional in your state to get the details on each of these deductions.

To read more information about this topic, watch this short YouTube video: http://www.youtube.com/watch?v=7wRgCPDbG-w&feature=colike

 

Small Businesses Emerge as Big Campaign Issue for Democrats and Republicans

By Lori Montgomery and Michael D. Shear



Washington Post Staff Writers
 
 
 As President Obama and his adversaries look for winning themes in the run-up to the November congressional election, both sides are noisily clamoring to prove their support for a critical constituency: America's small-business owners.

At the White House, the president's advisers are urging Democrats to portray Republicans as supporters of big corporations unfriendly to the interests of the small, family-owned enterprise. On Wednesday, as he visited a sub shop in Edison, N.J., Obama chided the GOP for blocking his proposal to expand tax breaks for small businesses and make it easier for them to borrow money.

"Helping small businesses, cutting taxes, making credit available. This is as American as apple pie," Obama said. "Small businesses are the backbone of our economy. They are central to our identity as a nation. They are going to lead this recovery."

To read the entire article, click here - http://www.washingtonpost.com/wp-dyn/content/article/2010/07/28/AR2010072806034.html