Tax Tips to Save Money on Taxes - Get the Corporate Kick and Save Loads of Money
Why a Corporation Helps Save You Taxes
The Tax Rates (Notice anything unusual?):
The following tables provide a list of the tax rates for individuals and corporations:
If you examine them closely, you will see at least one glaring contrast. The individual making $49,000 per year is in the 28% percent bracket, while a corporation that earns $49,000 is only in the 15% bracket. That¡¦s a potential 13% difference in your tax rate if you organize your finances to take advantage of this one little item.
But, that¡¦s just part of the story. An individual who makes $49,000 in salary pays taxes on almost the entire $49,000. However, a business can first deduct its operating expenses, and only pay taxes on what¡¦s left. As Robert Kiyosaki says ?± the corporation acts as a filter that is used to reduce the corporation¡¦s taxable income by utilizing the tax deductions afforded by the tax code.
Basic corporate deductions include telephone expenses, equipment (faxes, computers, photocopy machines, telephones), automobile gas, repairs and insurance, travel, entertainment, seminars, etc. Do you have any of these types of expenses? Sure you do!
The difference is that businesses subtract these first, then pay taxes on the balance. You, as an individual taxpayer, pay taxes on the greater amount, then pay for these expenses (you call them living expenses) out of what¡¦s left. Did you ever wonder why there¡¦s not much left for living at the end of the month? Now you can see why. The question is "Are you going to do something about it?"
Keep in mind that there are two steps here; first you must start to shift your efforts from earning a salary to earning more money through your business. There are many ways that you can do this.
For instance, you can start with your own business concept. Maybe you¡¦ve already got an idea that you want to pursue. It could be a product or a service or something along the lines of art and crafts. It doesn¡¦t have to be sophisticated or high tech; it just has to have a profit motive.
Secondly, you may have something that you already enjoy doing as a hobby. You can probably convert that activity into a viable business enterprise. Just remember that there are rules that you must follow to ensure that your new-found business is not treated as a hobby by the I.R.S, and the deductions voided.
Thirdly, you can get into a network marketing business. There are many available, some of which don¡¦t require a lot of money to get going. The older types of network marketing schemes available in the past made little money for anyone except the original promoters.
Today, Wave 3 network marketing companies offer legitimate profit potential and significant residual income streams. I will be happy to make a recommendation if you like. Lastly, you may be able to sell the services of your new company to your employer. Suppose for example that there is some aspect of your job that you think can be done less expensively or more efficiently on an out-sourced basis. Tax Strategies It could be anything really, clerical services, database management, sales or marketing. Instead of working overtime and on weekends to make more fully taxable income, your company could generate revenue by providing the ¡§outsourced¡¨ service to your employer, and, in doing so, you could take advantage of the tax benefits.
And the nice thing is that any of the above can be done on a part-time basis. You can maintain your current job (and income) while you grow your new business.
The next step is to learn to maximize your deductible expenses. The items listed above are only a few of the many deductions that are available. We will be going into more advanced topics later in this booklet.
One of the best ways to start this process is to review your current expenses and see if there is a way to convert these expenses to business expenses. Start with your checkbook; list all of the expenses that you pay each month on a piece of paper. Next, go through your credit card bills for the last year and list them. Next, go through your cash receipts and see where your cash was spent.
Now, having done that, you want to see which of these expenses can be converted into business expenses. For instance, I¡¦m sure that you spent money on your automobile lease or note payments, gas, insurance, repairs, etc. In many cases, a portion of these can be converted to business expenses, if properly documented. Then, take a look at your phone bill. Some of this can be converted. The same is true of travel, meals and entertainment. And work your way down the list. The key is not to add additional expenses just because they are deductible, but rather to convert those things that you are already spending money on into legitimate business expenses.
Keep in mind, that the I.R.S. has specific rules concerning each kind of deductible expense. These rules must be followed. It is imperative, therefore, that you work closely with your accountant to insure that you are in compliance with these rules. THERE ARE STIFF PENALTIES IF YOU FAIL TO DO SO.
Why a Corporation Helps you Save Taxes *
Lets look at the tax advantages of the corporation. The difference between how much or how little you pay in taxes is when you pay your taxes as an individual or as a corporation and what your tax rate is.
Your Tax Base and Tax Rate Make a Big Difference to Your Savings! Tax Help
Drew has combined what he learned during formal education, informal education and twenty five years of business experience in the development of programs designed to teach people how to build and preserve lasting wealth. He is an author, teacher and international speaker in the areas of asset protection, and tax saving and wealth building strategies.
Tax Help Secret: Avoiding the Entreprenuers Curse
Your days as an entrepreneur and businessperson are consumed with one primary activity; making money. Whether you think in terms of growing your business, getting the word out there, or some fancy new marketing technique, your days and weeks and months in business are focused on that one group of activities. In fact, some of you are marketing machines.
What the Tax Software Companies Dont Want You to Know
Haven't done your taxes yet? No problem. Now there is a new way you can use top tax software programs, like TurboTax and H&R Block, to get your taxes done quickly and easily. And the best part is it won't cost you a thing.
Tax Trap #2 -- Double Taxation: Isnt Once Enough?
Have you been thinking about incorporating your small business or self-employment activity? The advantages are many!
Income Tax Returns Your Accountant Should Not File
You've been feeling uneasy (perhaps even guilty) because you've failed to report your under the table business income. Perhaps you've never filed a tax return, even though you know you owe money. Finally, you contact an accountant to resolve the situation.
Anticipating Your IRS Refund Can Cost You Plenty
While accountants are reaching for aspirin, millions of Americans are reaching for some fast cash this tax season. Unfortunately, those who reach for fast cash in the form of a "refund anticipation loan" are getting hit with interest rates and fees that are out of this world.
Furnishing Evidence in E-Tax Compliance
Self-assessment relies on taxpayers voluntarily meeting their tax obligations. This concept is recognised in all tax statutes, which sets out taxpayers' primary obligations, and clearly spells out that taxpayers are required to determine the amount of tax payable correctly and to pay it on time.
The Internet Tax Man Cometh
Q: I was contacted by the city tax collector to say that my business is scheduled to be audited to see if I owe sales tax on items purchased on the Internet. Can they really make me pay sales tax on internet purchase? I thought you could buy things online tax free? -- Charlie B.
Tax Records - What You Should Keep And For How Long
Many taxpayers are confused about how long they should keep tax records. The term "tax records" refers to your tax returns and the documents that support the information in the returns. These documents can include receipts, bank statements, 1099s, etc. If you are one of the unlucky few to be audited, these records will be vital to fending off the IRS.
Tax Trap #4 -- The Quagmire of Depreciation
If you are a Small Business Owner or Self-Employed Person, there's one especially lucrative tax break that not only puts money in your pocket, it also makes the filing of your business tax return much simpler.
Tax Tips for Home-Based Business Owners
As tax time approaches, many home-based business owners begin completing their forms or paying their accountants with trepidation. This nervousness comes from two sources: a fear of being audited and a fear of having to pay a lot. For the most part, both of these fears are unfounded.
The Tax Man Cometh... To Search
You're at your office, or home, and the doorbell rings ? it's the Canada Revenue Agency ("CRA").
History Of The Federal Income Tax
The powers of Congress, and the limitations set upon those powers, are set forth in Article I of the United States Constitution. Section 8 specifies both the power to collect, "Taxes, Duties, Imposts and Excises," and the requirement that, "Duties, Imposts and Excises shall be uniform throughout the United States."
What is a Federal Tax Lien?
A Federal Tax Lien (FTL) is a legal instrument that secures the claim of the United States in the right, title, and interest of a debtor taxpayer's assets. It is a public document and is recorded at the County Clerk's office or the Secretary of State, depending on local law. This is done to serve notice on all creditors or other interested parties of the government's claim.
Paying Workers ? What Can You Write-Off?
As your business grows, you are going to need help. This help comes in the form of employees and independent contractors. What you can write-off is dependent upon how your helper is classified ? as an employee or independent contractor.
What Is Tax Law?
The federal tax code is complex. This complexity generally arises from two factors: the use of the tax code for purposes other than raising revenue, and the feedback process of amending the code.
Keeping Your Own Money ? NOT Handing It Over To The Taxman
Most people trying to make a crust online (or offline for that matter) are so focused on doing just that, they ignore taking simple steps to ensure that they hang on to just as much of it as they can. Instead, they hand over large lumps of their hard-earned money in tax, usually in one of two mistaken beliefs. Either:
SFR Substitute for Returns: IRS Action on Non-Filers
In the latest Star Wars episode, the evil empire executes a brutal revenge on the Jedi. While the IRS is not an evil empire (and due to the Revenue Reform Act of 1998 not very brutal anymore); it too is executing revenge on those who do not comply with filing their tax returns.
Tax Time Tune Up
Excerpted from the new book, "How to Do Space Age Work with a Stone Age Brain" TM
Small Business Tax Deduction - Write-Off Bad Debts
Practically every small business has receivables that it cannot obtain from clients. If your small business doesn't have any such receivables, consider yourself lucky. For those small businesses that suffer from uncollected receivables, solace can be taken from the fact you can claim a tax deduction.
|home | site map|