Taxes and home based business
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Transcript of Taxes and home based business
Taxes and Home Based Business
April 6, 2013Rosie Bank & Mark Waldman
Three Money/Freedom Strategies Two Tax Systems Home Business Tax Deductions
Topics
This is not tax advice
We are not tax professionals
Information is based on our experience for 14 years as home business owners
Consult your own tax accountant / professional◦ Get a tax pro who is familiar with home business and has
some creativity
Disclaimer
Three Freedom Principles
Minimize Tax Liability
Overcome Personal Time Barrier
Create Continuous Cash Flow
Bonus: The Health To Enjoy It
Employee (W-2)
Business (1099, Including Home-Based)
Two Tax Systems
Deductions to Income◦ Mortgage Interest◦ Taxes
Real Estate Tax State Income Tax
◦ Contributions – IRA & Charity
Employee Deductible Expenses
Business Deductible Expenses – Expenses You Already Incur
Cell Phone Internet Computer/equipment** Office supplies (paper,
ink) Travel / Travel meals
(business travel) Professional wardrobe
upgrade Dry Cleaning Car/Truck expenses
(mileage)* Health Insurance
Home Office (indirect)*◦ Rent◦ Mortgage◦ Real Estate Taxes◦ Utilities
Gas & Electric Water Garbage Collection Alarm System Landline
◦ Homeowners Insurance◦ Housecleaning (if clients
are met)◦ Repairs/Maintenance
(some)
Percentage used for business**Expensed or Depreciated
*@Percentage of home area used exclusively for business
Business Deductible Expenses – Investing In Your Business
Promotional Materials Training
◦ Events (including travel) Convention Cruise Regional Conferences Personal Development
◦ Books, CDs, Magazines Business Meals &
Entertainment Advertising
Product Samples (including gifts!)
Postage Autoship Products
(required by company) Software Office expenses
(online services) Start Up Costs Pay Your Family / Kids
Minimize Tax Liability
Answer:HOME BASED
BUSINESS
“Every North American who works a full-time job and does not have a side business is probably overpaying taxes to the tune of $3000 to $9000 a year!”
-Sandy Botkin, former IRS tax attorney, CPA, founder of TRI
W-2 1099
$1,000 $1,000
$250 $900
$750 $100
$900 $25
-$150 $75
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Traditional employment
Self employment
Taxable income after business deduction
Earnings Earnings
Taxes paid Business expense (computer)
After tax dollars
Personal expense (computer)
Taxes paid on taxable income
Remaining capital
Remaining capital
Business versus personal expense worksheet.It’s not only what you make. It’s what you keep that determines
your wealth.
Business Deductions - Existing ExpensesCell Phone ($100/mo @ 75%) $900.00Internet ($60/mo @ 80%) $576.00Offi ce Supplies ($20/mo) $240.00Business auto miles (2000mi @ $0.555/mile) $1,110.00Meals out - clients, prospects & partners ($100/mo@50%) $600.00Equipment (bluetooth, computer, cell phone…) $1,000.00Personal development (Books, club/toastmasters, online, CDs) $150.00
Subtotal $4,576.00Home Offi ce
Rent (Discuss Mortgage Interest & RE Taxes) $21,600.00Gas & Electric $1,800.00Renters Insurance $200.00
Total $23,600.0065 sq ft / 1500 sq ft 4.33%
Subtotal Home Offi ce Deduction $1,022.67Total Existing Business Deductions $5,598.67
Business Deductions - Business ExpensesPromotional Materials $150.00Training - convention, online $200.00Business Travel (air, hotel, 50%meals) - Convention $1,000.00Networking / Events $120.00Sampling $120.00Autoship $1,500.00
Total $3,090.00
Total Business Expenses $8,688.67Tax Savings @ 25% (Fed + State) $2,172.17
Business Expense Deductions Example
Home-Based Business?
It’s a NO-BRAINER!