You are going to learn how to AVOID PAYING TAXES LEGALLY THE POWER OF A HOME-BASED BUSINESS. I am going to show you how to turn your everyday living expenses in legitimate tax deductions for your home based business. This is going to result in you having more money!

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Avoid Paying Taxes Legally. The Power of a Home-Based Business.

In this video we will explain how to it may be possible to avoid paying taxes legally. This is the power of a home based business.

We have better tax treatment as business owners when compared to normal employees which allow us to avoid paying taxes. It may be possible to implement this strategies now. We will show you how to legally avoid paying taxes this year.

Let’s us quickly examine the differences between a normal W-2 employee and a home based business owner.

For most normal W-2 earners they make an income. Their standard deduction and individual exemption makes their taxable income roughly $12,000 less. After this, they pay taxes on their income. Any money that is left over, can then be used. W-2 earners are taxed before they receive their usable income.

This situation is vastly different when it comes to a business owner. Business owners have business tax deductions that are applied and lower their taxable income before paying taxes on this income that they earn. Business owners earn income, then spend their earned income on business expenses, and then are taxed on what is left over.

Home business owners have many tax benefits that are available to them. These benefits allow business owners to avoid paying taxes through tax deductions.

You have to make sure that all of these deductions claimed are a regular part of the business activity your engaged in.

So how does this all work.

Lets say as a small business owner you make 50,000 for the year. Let’s say we have

Home office Expenses of $6,000,
Cell phone $500
Car Expenses $2,000
Travel Expenses 5,000
other expenses $3,000

If we add up all of our business expenses in this example it adds up to $16,500. This is what people refer to as a “business write off.”

This means that we would be able to reduce you the amount of income that you need to pay taxes on by $16,500.

As a W-2 employee it is likely that most of these deductions would not be possible.

Hobby vs Business

Can you qualify to take these deductions?

There are certain guidelines that you want to fall into be classified as a business.

You must have
1. You must have Intent to make profit.
2. Run business on a regular consistent bases. I would say at a minimum, you would want to put four hours a week into your business.

If you don’t need meet the standards of operating a business in the law, your ability to claim tax deductions can be restricted and the IRS will classify your operation as a hobby.

What helps a business expense qualify as a deduction?

To be deductible, a business expense must be both ordinary and necessary.

“An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business.”

https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses#what

A necessary expense will either produce a profit or increase your market share.

You also must ensure that there is a business purpose behind the expense that you wish to deduct.

I will be creating the following videos in the future, so subscribe and turn on the notification bell to be notified when I release new videos.

Avoid paying taxes on amazon
Avoid paying taxes on stock gains
How to avoid paying taxes on rental income
How to avoid paying taxes on dividends
How to avoid paying taxes when selling a home
How to avoid paying income taxes legally
How to avoid paying property taxes legally

Check out some of these awesome channels!
Graham Stephan Chinaza Speaks The Better Men Project The Rich Dad Channel Minority Mindset

DISCLAIMER
I am not a licensed tax professional. Nothing in this video should be misinterpreted as tax advice This is not financial advice. You may not even qualify for anything discussed in this video. By watching this video you agree that we will not be held liable for any incorrect information, your actions, or any of your decisions . Please consult a CPA who has a licence before attempting to implement any tax strategy. This video is for entertainment purposes only.