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Taxes and home based business

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Taxes and home based business

  1. 1. April 6, 2013Rosie Bank & Mark Waldman
  2. 2.  Three Money/Freedom Strategies Two Tax Systems Home Business Tax Deductions
  3. 3.  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
  4. 4.  Minimize Tax Liability Overcome Personal Time Barrier Create Continuous Cash Flow Bonus: The Health To Enjoy It
  5. 5.  Employee (W-2) Business (1099, Including Home-Based)
  6. 6.  Deductions to Income ◦ Mortgage Interest ◦ Taxes  Real Estate Tax  State Income Tax ◦ Contributions – IRA & Charity
  7. 7.  Cell Phone  Home Office (indirect)* Internet ◦ Rent Computer/equipment** ◦ Mortgage ◦ Real Estate Taxes Office supplies (paper, ◦ Utilities ink)  Gas & Electric Travel / Travel meals  Water (business travel)  Garbage Collection Professional wardrobe  Alarm System upgrade  Landline Dry Cleaning ◦ Homeowners Insurance ◦ Housecleaning (if clients Car/Truck expenses are met) (mileage)* ◦ Repairs/Maintenance Health Insurance (some)Percentage used for business *@Percentage of home area**Expensed or Depreciated used exclusively for business
  8. 8.  Promotional Materials  Product Samples Training (including gifts!) ◦ Events (including travel)  Postage  Convention  Autoship Products  Cruise (required by company)  Regional Conferences  Software  Personal Development ◦ Books, CDs, Magazines  Office expenses (online services) Business Meals & Entertainment  Start Up Costs Advertising  Pay Your Family / Kids
  9. 9. Answer: HOME BASED BUSINESS“Every North American who works a full-time joband does not have a side business is probablyoverpaying taxes to the tune of $3000 to $9000 ayear!”-Sandy Botkin, former IRS tax attorney, CPA, founder of TRI
  10. 10. Business versus personal expense worksheet.It’s not only what you make. It’s what you keep that determines your wealth. Traditional employment W-2 Self employment 1099 Earnings $1,000 Earnings $1,000 Taxes paid - $250 Business expense (computer) - $900 After tax dollars $750 Taxable income after business deduction $100 Personal expense (computer) - $900 Taxes paid on taxable income - $25 Remaining capital -$150 Remaining capital $75
  11. 11. Business Deductions - Existing Expenses Cell Phone ($100/mo @ 75%) $900.00 Internet ($60/mo @ 80%) $576.00 Office Supplies ($20/mo) $240.00 Business auto miles (2000mi @ $0.555/mile) $1,110.00 Meals out - clients, prospects & partners ($100/mo@50%) $600.00 Equipment (bluetooth, computer, cell phone…) $1,000.00 Personal development (Books, club/toastmasters, online, CDs) $150.00 Subtotal $4,576.00 Home Office Rent (Discuss Mortgage Interest & RE Taxes) $21,600.00 Gas & Electric $1,800.00 Renters Insurance $200.00 Total $23,600.00 65 sq ft / 1500 sq ft 4.33% Subtotal Home Office Deduction $1,022.67 Total Existing Business Deductions $5,598.67Business Deductions - Business Expenses Promotional Materials $150.00 Training - convention, online $200.00 Business Travel (air, hotel, 50%meals) - Convention $1,000.00 Networking / Events $120.00 Sampling $120.00 Autoship $1,500.00 Total $3,090.00 Total Business Expenses $8,688.67 Tax Savings @ 25% (Fed + State) $2,172.17
  12. 12. Home-Based Business? It’s a NO-BRAINER!

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