Do you know that starting a home-based business was one of the single greatest tax reduction strategies available -- but you had to make a profit before these deductions could apply.
If your accountant or CPA has told you the same thing, start looking for another tax professional immediately because it is simply not true ! What matters is that you run your business like a business, not like a hobby.
If your loss exceeds your income, you can use the loss against any form of income you have : interest, dividends, wages, and pensions ... anything you can think of.
If you are married, you can use that loss against your spouse’s earnings. In addition, you can carry back the loss for two years and carry forward all business losses that exceed your income for 20 years !
The important thing is to not quit. I can’t say that enough. Let the tax benefits work for you while you learn your new home-based business venture. If you quit your home-based business, then you are giving the IRS a definite date when your tax savings cease. And there’s no reason to ever give them up -- ever !
The bottom line is this :
Congress wants the IRS to subsidize you in pursuit of your home-based business, and anyone can deduct legitimate business expenses regardless of their income or profit. The fact is, the majority of businesses lose money in their first year or two. Congress figures that those businesses would never start, and many jobs would be lost, if they couldn’t deduct their expenses or losses.
Make sense ?
The problem is, many CPAs, tax planners, and tax preparation firms are simply confused about what is or isn’t tax deductible. And who can blame them ? Not even an IRS agent has all 40,000 pages of tax code memorized, not to mention the thousands more pages added almost every year. Whether they’re government employees or tax professionals, most people involved in taxes only familiarize themselves with the laws they see or use the most. Most professionals are unfamiliar with many of the tax laws passed benefiting home-based businesses because they simply cannot make any money in that particular area.
Most home-based businesses don’t use a CPA like larger businesses and corporations do, so most CPAs are not fully aware of the huge advantages that home-based businesses have for the average person.
You say you have an accountant already or a tax preparation professional whom you like and trust ? Congratulations !
But they can only do so much with what you bring them. If you haven’t set up a home-based business and don’t have a good tax diary system for recording expenses, no accountant can save you the money you should be saving. Without the right documentation, you’ll end up in the tax deduction cemetery, where IRS will pick your bones clean.
A good tax diary more than pays for itself in saved accounting fees and time away from money-making activities during an IRS audit that could have been completely avoided. With a little work in a few places, properly documenting your records can be one of the easiest things to do. And guess what ? It’s one of the easiest things not to do.
Now there are two very logical reasons why your accountant may not mention any of this to you :
• He doesn’t have the time to show or teach you what legal deductions to take, or
• He’s afraid of losing his license if you don’t follow his record-keeping instructions.
Who do you think the IRS blames whenever they find mistakes in an audit ? Your tax pro, of course ! Remember, most accountants are by nature very conservative people. There’s even a doctrine in the accountants’ creed called the Conservatism Doctrine. These folks are trained to be cautious.
It’s a shame. Accountants are not telling their clients about the power of having a home-based business, yet the fact still remains that it represents the single greatest tax reduction strategy in America today. Period !
To Your Success
Wingcent Ning
Success-Biz Marketing
wingcent@gmail.com
http://mysignaturebusiness.blogspot.com
Singapore
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