Why Own a Small Business Part 2 of 4
This is a four part series on Why Own A Small Business.
In part 1, I shared with you the many areas in which you can apply tax deductions in your small business as well as give you an example of the savings on your annual income. It’s pretty powerful and compelling to consider a home based business. If you didn’t read that, be sure and do that here.
Once you understand how to apply the tremendous latitude that you’re allowed as a small business owner in taking full advantage of the IRS’s many business tax deductions you will be amazed.
And you can do this with no employees, building, or monthly costs to run your business.
The only requirement in order to make your life tax deductible is that you own your own business.
Your ability to own your own business—one that generates tax savings for you (personally)—is not limited by such factors as
(1) the size of your business
(2) the time you spend in your business
(3) the business’s location
(4) its profitability.
In fact, you’re allowed a great deal of latitude in setting up and operating your business.
Consider the following:
1. The size of your business.
Your business could be large or small, with thousands of dollars in sales revenue, with or without employees; or it could be one that generates small dollar sales online all by yourself or it could be somewhere in between.
2. The time you spend in your business.
Whether you work full-time or part-time in your business, all the tax deductions and tax savings are available to you.
3. The business’s location.
Your business could have a significant physical plant or a large retail storefront; or you could run the business out of your home; or it could be run both outside and inside your home.
4. Its profitability.
If your business is profitable (for any given tax year), the tax deductions that are created by making your life tax deductible will create tax savings to your business. Even if the business is not profitable (either in the beginning or for any given tax year), this loss may be passed along to your personal individual 1040 tax return (depending on your form of business organization) and used to offset your other income (such as W-2 wages) for the year.
Your business could show a loss but you really increased your cash flow for that year.
Most people are not in a position to fork out thousands of dollars for a start up. The best solution for putting yourself in a position to take advantages of tax benefits allowed for small business owners is to have a home based business.
There are many great home based business options for you to consider as some of the best products on the market are offered through this marketing style. Consider the products, commissions paid and long term leverage with residual income along with the stability and reputation of the company.
I have a home based business in my portfolio and if you’d like to know more about that, just reach out and we’ll chat.
All The Best,
Disclaimer: Always verify with your tax adviser and the current federal tax law before making any tax decisions.