Taxation & Estate Planning

Why Starting Your Own Business Can Save You Taxes

By Darrin Mish

People start their own business to make money and have the freedom to be their own boss. But there is another spin-off in starting your own business, which is saving on your taxes. Many do not realize that when you work as a wage earner in a 9 to 5 job, you are taxed up to 35% on your gross earnings less the standard deductions. This means that you are taxed even before you get to spend any of your hard-earned money. But if you have your own business, your taxes are calculated on what is left after you have spent on your business. With some careful but legitimate planning, you can save quite a bit on taxes each year.

But you have to prove to the IRS that your business is actually a business and not merely a hobby. You do not have to actually earn any profits in your business to make business deductions, you only have to carry out the normal operations of a business like advertising, printing business cards, creating a website, keeping a set of accounts etc.

According to IRS rules, you can deduct any expenses that are ordinary and necessary to your business as expenses. In addition to the usual payments like rental of premises, amenities, wages of workers, stationeries, office equipment etc, if you make your business trips as working holidays, you can deduct these travel and entertainment expenses as business expenses and save a lot in the process. Likewise, you can deduct a certain percentage of your meal expenses as entertainment expenses also as long as you discuss work over the meal. If you run your business from home, you can deduct a proportion of your rental expenditure; if you own your home and run your business from there, you can deduct depreciation to a portion of your home as business expenses.

Generally, if you have made some profit for 3 out of 5 consecutive years, your business is considered a business as far as the government is concerned. But whether you are making a profit or a loss, you have to be sure to file all your necessary business tax returns every year.

Obviously, there are many rules and laws that govern businesses and the deductions you can make for expenses. Do consult a qualified tax attorney who can help you maximize your savings through business deductions. You can find one of the best in the country when you visit http://getirshelp.com.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.

Why Starting Your Own Business Can Save You Taxes is a post from: IRS Tax Problem Solver Blog - IRS Help

Full post as published by IRS Problem Solver Blog on December 28, 2009 (boomark / email).