While 90% of the U.S. population is bemoaning the quickly approaching April 15th tax deadline, I am waiting for my gift from the IRS. I big fat refund. How you ask? I take advantage of the one last tax shelter available to the average person. Before I tell you my best tax tips for 2006, I’d like you to be aware of a couple of things.
First, do you realize that what you pay in taxes each year is your number one expense?! In fact, the average employee works the first five months of the year for Uncle Sam for free. How does that make you feel about going to work January through May?
Second, most people think the way to have more income is to get another job. Adding a second “job” to increase your family’s income is in most cases a bad idea. Especially, if it pushes you up into a higher tax bracket! You basically sign up for even more taxes, increased car expenses, childcare costs, food and clothing costs. This doesn’t take into consideration the physical and emotional stress added to families by having both parents working outside the home. You can’t even put a price tag on that expense.
Here is an absolute fact. You will never make true steps toward financial independence until you learn how to get your taxes down to the legal minimum.
So, now I’m back to my top-secret strategy. Drumroll please…Own a home-based business. I am a CPA, and I am here to tell you that if you do not have a home-based business you absolutely need to start one today! I can not overemphasize the importance. The tax system for the “employee” will keep or make you poor. The tax advantages for small business owners are designed to spur economic growth. It can be your ticket to begin creating wealth.
Conservative estimates say that you can save a minimum of $2,000-$10,000 a year by having even a part-time home-based business. Let’s say that having a small business puts $4,000 a year back into your pocket (on tax savings alone) for 30 years and you invest it each year and earn 8%. You will generate over $500,000 just from owning a home-based business. That doesn’t include any income you generate from the business itself. Invest your $4,000 in tax savings for 35 years, earn 10%, and ladies and gentleman you are a millionaire!
The question is how do I take advantage of this wonderful opportunity the IRS has handed us on a golden platter? My first suggestion is to look for a business that incorporates something you are passionate about. My second suggestion is do your homework. Determine how much money you can invest, how much time you can spend and what kind of skills will be necessary.
This may shock you, but Donald Trump and Robert Kiyosaki in their new book, “Why We Want You To Be Rich,” actually recommend network marketing. For the average person the network marketing industry offers benefits that far outweigh the risks. There is usually a very low start-up cost and ongoing overhead expense. You begin to learn how to leverage time and money. This lesson, along with minimizing your tax expense, is arguably the most important to learn if you want to achieve financial independence.
That subject is a whole other article. A good way to explain it, though, is to work smarter not harder.
Finally, a good network marketing company already has all the systems, marketing materials, accounting and training in place. This is invaluable to the first-time business owner who does not want to take on a lot of risk.
Once you are up and running, you now have a whole new world of tax deductions available to you. It is like Christmas every April 15th. With the proper planning and documentation, you can deduct your home office, computer, phone, car, vacations, some meals and entertainment, even your child’s college education cost all completely within the legal parameters of the IRS regulations.
What is required of you is some education, documentation and a home-based business of your choice! So, when you sign this year’s return and mail in that check that feels like squeezing blood from a turnip, compare your return on that to the $500,000 to $1 million you could grow from home-based business tax advantages.
If you would like a FREE 30-minute consultation with Holly about how you can begin to take advantage of these tax benefits, please visit her website and submit a request. She can also be reached at 918-698-6674.