What Are The Economic And Tax-Benefits Of A Home Business?

The benefits of starting a home-based business is that with a low start-up investment under $500 and a monthly marketing budget of $200 to $500+ you can realistically start earning an extra part-time income of $500+ per month consistently working 1 to 2 hours per day 5 or 6 days per week with the potential to replace a full-time income in 2 to 4 years or even create six figures.

As a home-based business owner these are some of the things you can look forward to:

No commute to work especially with rising gas price.

No oppressive boss to undermine your growth or defer your salary increases.

Lower chance of lawsuits compared to traditional businesses or franchises.

Operating your business without the headaches of huge storefront rents and overhead expenses.

No payroll or employee benefits requirements.

Many of the labor laws don’t apply to small businesses with no employee.

Take vacation whenever you want without asking anyone’s permission.

Our tax laws allow employees deductions for IRAs, 401(k), interest and property taxes on your home, and charitable contributions.

The same tax laws allow business owners numerous tax deductions such as: business vacations, cars, and food expenses in the course of conducting business.

High-income business owners with stable profits can set up their own pension plan 100% tax-deductible with larger lifetime pension and larger survivor benefits for their loved ones that outmatched government pension plans.

By owning a home-based business, Congress will subsidize your business, if the business produces a tax loss. The tax laws allow you to use your tax loss against other w-2 income, dividends, pension benefits, or interest income. You can also use your business loss against your spouse’s earnings, if you file a joint return.

You can carry back your loss two years and get a refund from the IRS or you can carry forward your loss for 20 years.

The IRS requires that “you must run your business with an earnest expectation to make a profit.”

The IRS will consider your business a hobby if you lose money 3 out of 5 years, and your business deductions are limited to your revenues. You business is considered a for-profit business, if you make money 3 out of 5 years.

You must keep proper documentation of business expenses for 3 years after filing your tax returns. It assumes you are running your business with “sincere attempt to make a profit.”

Your expenses must be ordinary and necessary for your business operation.

You have to consistently run your business like a business not like a hobby and keep a daily business activity diary.

You must spend at least one hour every day talking to people about your business with the expectation to make a profit.

You will need to hire a competent CPA who can help you to take all of the tax deductions and tax credits you are entitled to.

You owe it to yourself to find out about the hundreds of tax deductions, and keep a ledger of all expenses for your CPA to interpret what you are entitled to deduct.

Don’t expect your CPA to tell 300 to 500 clients individually about every tax deduction. You must find those tax deductions yourself, because only you know what goes on in your business, and the more you know the more money you will save on taxes.

Don’t be one of the small business owners who overpay billions of dollars income taxes every year, because they fail to take deductions the government allows.

George Brown, a CPA, once said “You get a raise every time you can legitimately avoid paying a tax on something.”

Julian Block said “The informed client gets the best advice.”

It is said only a ‘fool’ acts as his own lawyer, and only a ‘fruit cake’ prepares his or her own taxes, excpt for accountants and tax attorneys.

Hire a competent CPA pay his or her fee. Why would you want to face the IRS, if you fall in the 5% who are audited annually? That’s a CPA’s job, and don’t forget most IRS auditors are trained accountants. Would you perform your own by-pass surgery? Or will you find the best and most experienced cardiac surgeon?

Don’t be cheap! Hire a competent CPA who can keep you in the comfort zone with all the tax benefits business owners and their families are entitled to by law.

The tax laws are too complicated and are like ever changing quick sand. Studies show five top tax experts will produce five different results preparing returns for the same business. Why do you want to pretend you know what you don’t know?

And don’t goof-up and try to tell the IRS income tax is unconstitutional, because Our Founding Fathers did not mention it in the Constitution. They will put you away for tax evasion, and for many years you will go without those delicious Cross Buns on Good Fridays.