Home Based Business Tax Deduction Guide
This Home Based Business Tax Deduction Guide is designed to help you to do three things...
First, it will help you get your home business into profit instantly, even before you've sold your first product.
Secondly, it will help you save up to $5,000 on your taxes this year (this varies depending on your country's tax code) by helping you to take all the legitimate home business tax deductions you are eligible.
Third, it will help you retain your brand new distributors for life. If you start your new team members off on the right foot, educating them about how to use their home based business tax deductions to save them thousands of dollars each year, they will never want to leave your business!
One fact that few people know is that a home based business is often MORE profitable for a family than getting a second job... even before you start earning income from your business.
Let's use this example first shared by Jane Bryan Quinn, a personal finance and investment author who published this information in Woman's Day magazine.
She used the example of a woman with children, let's call her Mary, who has a part time job that pays her $15,000 a year. We're using approximate numbers here as this study was published in 1994 ... but the SAME principles apply today.
Now let's subtract the yearly cost of taxes ($4,500) and social security tax ($1,148) car expenses (gas and upkeep $696 minimum) child care ($4,250), lunches ($1,250), business clothes and dry cleaning ($1,000) and convenience foods ($1,000).
Once you substract these expenses, your total net profit is quite meager... about $1,156. Ouch!
Now, lets say that Mary opens a home based business. Watch what happens now with the power of the home based business tax deduction...
Mary's total business income is $15,000. Let's say her yearly car expenses are the same ($696) but now that expense is a home based business tax deduction. Her business lunches are the same ($1,250) but these also are now a home based business tax deduction, deductible at 50%.
The cost of her business clothing, dry cleaning is the same ($1,000) but is now a home based business tax deduction. She works at home so she no longer has a child care expense, and she also no longer needs to buy convenience food as she is home to cook each day.
The additional money she has kept in the household is now a whopping $11,429 ... more than TEN times the amount she would have kep in the household through her job!!
In addition, there are more home based business tax deductions that she can take. Some examples...
• The Home Office tax deduction ($2,000)
• The Family Medical Reimburesement Plan home based business tax deduction ($10,000)
• The allowance for one child who helps Mary in her home business, whose wages are a home based business tax deduction ($4,400)
• Loss on paper from her first year in business, which is not an actual loss of money ($4,346)
• Home based business tax deduction from other income ($1,200)
Mary's net income is $12,629 compared to $1,145 ... which choice would you make?
That is the power of the home based business tax deduction. The key is, you and your new distributors need to keep GOOD RECORDS of all expenses right away. And then use a good, solid software that makes your life even easier.
Home Based Business Tax Deduction Steps
As soon as you sign on the dotted line and open your home based business, you are eligible to change your exemptions which immediately brings you more take home pay.
These exemptions and home based business tax deductions are available to you immediately and should be put to work for you RIGHT AWAY, to help you get your new business into profit and to help your new distributors to do the same.
One of the first things you should do is set up a tax file for your new business. Some people use pendaflex folders and simply file their receipts, and at the end of the year bring it to the accountant.
This is an OK approach. However, for it to work you need a REALLY good accountant who is knowledgeable about the changing tax laws and on home based business tax deductions.
I personally find it easier, and more affordable, to use a home based business tax deduction software tool instead. Studies proove it's so much quicker, very easy to set up, and very cost effective.
Most importantly, it's easily duplicated for team members to use, and save us all a lot of time and energy! If you have a big group you can even give this away to your downline for free... and help them to take every home based business tax deduction they are eligible for. The reason this works so well is that it is simple, and the program is customized for Network Marketers.
Instead of having to learn all the home based business tax deductions you are eligible for, these are set up for you in the software. All you have to do is fill in the numbers and press "save". How easy is that!
Because it saves a lot of time, you and your new distributors can focus on learning how to build their business. Most network marketers start their business part time, and so they don't have hours to spend learning complex tax codes and things like this.
There is also a nice version of this software available for non-network marketers who have an internet based business which is customized for those who have membership sites or an affiliate marketing or other internet marketing business.
For more home business tax information, please see the article by Sanford C. Botkin on Why Everyone Needs A Home Business.
To your success,
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