| You ask, "Okay, I'm starting a small | | | | with follow-ups. |
| homebased business, not a huge million dollar | | | | |
| International Conglomerate! But should I | | | | These contacts, with whom you are sharing the |
| incorporate or keep it a proprietorship?" | | | | details of your business service or product, |
| Actually, there are arguments in favor of | | | | are the contacts that will validate your |
| either decision. This argument will be in | | | | write off. You should have at least two a day |
| favor of the proprietorship. | | | | while on vacation. Who? The barber, your |
| | | | golfing partners, beautician, people you meet |
| The first thing is that you need to know | | | | in the store or casually just about anywhere? |
| there is a totally different set of laws, | | | | All you have to do is talk to people, share |
| regulations and tax law that governs | | | | your information and you have succeeded. You |
| proprietorships and corporations. And for the | | | | will be surprised, also, by how many will |
| small business entrepreneur the tax | | | | want to join you? But you must keep records |
| advantages offered during the first 5 years | | | | of these contacts. |
| are enormous. After 5 years you are expected | | | | |
| to begin showing a profit but this is not | | | | The same goes for your gasoline, insurance, |
| necessarily "written in stone". Let's take a | | | | depreciation and repairs and maintenance |
| closer look at some of the advantages of a | | | | write-offs. You must keep accurate records of |
| proprietorship. | | | | mileage. Your start mileage, destination(s), |
| | | | people contacted or business conducted, and |
| If I were to show you how a one-time $439 USD | | | | finish mileage. Then, at the end of the year, |
| investment could gain you from $1000 to $2500 | | | | you need to compute what percentage of your |
| in tax refunds and write offs per year would | | | | automobile use (based upon business and total |
| you be interested in learning more? Okay, | | | | mileage) was business. That is the percentage |
| here goes. | | | | of total automobile expenses you are able to |
| | | | write off. |
| If you are a blue or white collar worker, a | | | | |
| doctor, lawyer or other professional, can you | | | | For the telephone you have a different |
| write off on your taxes the gas and other | | | | situation altogether. You must get a business |
| travel and parking expenses you accumulate | | | | line. This can be accomplished one of two |
| driving to and from work? Your lunch | | | | ways. Either by a cell phone or by a second |
| expenses? Your home office? Travel and | | | | phone line installed. There are several |
| vacations? Any part of your household | | | | arguments for both but the most telling one |
| utilities expenses? | | | | is the convenience of the cell phone. With a |
| | | | separate "business phone" you are able to |
| The answer is NO - you cannot write these | | | | write off the entire expense. |
| expenses off your income tax. | | | | |
| | | | But with the cell phone you must keep track |
| If you start a business, a proprietorship, | | | | of all personal calls. The advantage of the |
| working out of your home, call it "your name | | | | cell phone is that you have it with you and |
| consulting" or whatever seems to fit best, | | | | can advise your clients that you are on the |
| you are now able to write off all of the | | | | way, running late because, etc. And keep in |
| following: | | | | touch with your home base while you are out |
| | | | and pick up any messages which may have been |
| Automobile mileage | | | | left at your home number. |
| | | | |
| Gasoline | | | | This applies, also, to your home. You are |
| | | | allowed to write off all home expenses in the |
| Other car maintenance | | | | amount that your business office at home is a |
| | | | percentage of your total home space. So if |
| % of automobile depreciation* | | | | your home is 2000 sq. ft., and your office is |
| | | | 200 sq. ft., you may write off 10 percent of |
| Home office (as a % of your home) | | | | your total household expenses. This includes |
| | | | rent or mortgage payment and all utilities. |
| % of home utilities expenses | | | | |
| | | | If you keep your meticulous records, take |
| & of your home telephone bill | | | | your "working vacation" every year and "do |
| | | | your business" all the time, you stand to |
| Entertainment expenses | | | | save from $1000 to $2500 on your income taxes |
| | | | every year, for at least the first 5 years. |
| Vacation expenses | | | | |
| | | | If you can start your business for under |
| Meals | | | | $1000, and keep your business going for under |
| | | | $1000 a year, you are in a plus situation |
| *100% of a Leased Car | | | | where your business is actually making you a |
| | | | profit --- even though it is technically a |
| And more, these are just the bigger ones. | | | | loss --- every year for at least the first |
| | | | five years. |
| There are, of course, conditions. You cannot | | | | |
| go on vacation and simply "write off" all of | | | | Copyright 2004 by Windy Dawn Marketing and |
| your vacation expenses. You must "share the | | | | Windy Windblad. This article may be freely |
| information" about your product or service | | | | copied and used on other web sites only if it |
| with others while you are on vacation --- | | | | is copied complete with all links and text |
| more than just "passing out business cards | | | | intact and unchanged except for minor |
| --- and you must also keep records of every | | | | improvements such as misspellings and typos. |
| contact you make. This will also help you | | | | |