Tax Tips to Save Money on Taxes - Get the "Corporate Kick" and Save Loads of Money
Why a Corporation Helps Save You Taxes
The Tax Rates (Notice anything unusual?):
The following tables provide a list of the tax rates for individuals and corporations:
Personal:
$0-$24,650 15%
$24,651-$59,750 28%
$59, 750-$124,650 31%
$124,651-$271,050 36%
$271,050+ 39.6%
Corporate:
0-$50,000 15%
$50,001-$75,000 25%
$75,001-100,000 34%
$100,001-$335,000 39%
$335-000-$10M 34%
If you examine them closely, you will see at least one glaring contrast. The individual making $49,000 per year is in the 28% percent bracket, while a corporation that earns $49,000 is only in the 15% bracket. Thats a potential 13% difference in your tax rate if you organize your finances to take advantage of this one little item.
But, thats just part of the story. An individual who makes $49,000 in salary pays taxes on almost the entire $49,000. However, a business can first deduct its operating expenses, and only pay taxes on whats left. As Robert Kiyosaki says the corporation acts as a filter that is used to reduce the corporations taxable income by utilizing the tax deductions afforded by the tax code.
Basic corporate deductions include telephone expenses, equipment (faxes, computers, photocopy machines, telephones), automobile gas, repairs and insurance, travel, entertainment, seminars, etc. Do you have any of these types of expenses? Sure you do!
The difference is that businesses subtract these first, then pay taxes on the balance. You, as an individual taxpayer, pay taxes on the greater amount, then pay for these expenses (you call them living expenses) out of whats left. Did you ever wonder why theres not much left for living at the end of the month? Now you can see why. The question is "Are you going to do something about it?"
Keep in mind that there are two steps here; first you must start to shift your efforts from earning a salary to earning more money through your business. There are many ways that you can do this.
For instance, you can start with your own business concept. Maybe youve already got an idea that you want to pursue. It could be a product or a service or something along the lines of art and crafts. It doesnt have to be sophisticated or high tech; it just has to have a profit motive.
Secondly, you may have something that you already enjoy doing as a hobby. You can probably convert that activity into a viable business enterprise. Just remember that there are rules that you must follow to ensure that your new-found business is not treated as a hobby by the I.R.S, and the deductions voided.
Thirdly, you can get into a network marketing business. There are many available, some of which dont require a lot of money to get going. The older types of network marketing schemes available in the past made little money for anyone except the original promoters.
Today, Wave 3 network marketing companies offer legitimate profit potential and significant residual income streams. I will be happy to make a recommendation if you like. Lastly, you may be able to sell the services of your new company to your employer. Suppose for example that there is some aspect of your job that you think can be done less expensively or more efficiently on an out-sourced basis. Tax Strategies It could be anything really, clerical services, database management, sales or marketing. Instead of working overtime and on weekends to make more fully taxable income, your company could generate revenue by providing the outsourced service to your employer, and, in doing so, you could take advantage of the tax benefits.
And the nice thing is that any of the above can be done on a part-time basis. You can maintain your current job (and income) while you grow your new business.
The next step is to learn to maximize your deductible expenses. The items listed above are only a few of the many deductions that are available. We will be going into more advanced topics later in this booklet.
One of the best ways to start this process is to review your current expenses and see if there is a way to convert these expenses to business expenses. Start with your checkbook; list all of the expenses that you pay each month on a piece of paper. Next, go through your credit card bills for the last year and list them. Next, go through your cash receipts and see where your cash was spent.
Now, having done that, you want to see which of these expenses can be converted into business expenses. For instance, Im sure that you spent money on your automobile lease or note payments, gas, insurance, repairs, etc. In many cases, a portion of these can be converted to business expenses, if properly documented. Then, take a look at your phone bill. Some of this can be converted. The same is true of travel, meals and entertainment. And work your way down the list. The key is not to add additional expenses just because they are deductible, but rather to convert those things that you are already spending money on into legitimate business expenses.
Keep in mind, that the I.R.S. has specific rules concerning each kind of deductible expense. These rules must be followed. It is imperative, therefore, that you work closely with your accountant to insure that you are in compliance with these rules. THERE ARE STIFF PENALTIES IF YOU FAIL TO DO SO.
Why a Corporation Helps you Save Taxes *
Lets look at the tax advantages of the corporation. The difference between how much or how little you pay in taxes is when you pay your taxes as an individual or as a corporation and what your tax rate is.
Your Tax Base and Tax Rate Make a Big Difference to Your Savings! Tax Help
Individual Corporation
Your income (Your Tax Base) Your Income
Tax at 28% **
Expenditures Expenditures
Your Tax Base Tax at 15% ***
Savings Savings
Sincerely,
Drew Miles, The Tax Saving Attorney
Drew has combined what he learned during formal education, informal education and twenty five years of business experience in the development of programs designed to teach people how to build and preserve lasting wealth. He is an author, teacher and international speaker in the areas of asset protection, and tax saving and wealth building strategies.
5 Things You Should Know About Tax Deductions
Tax deductions are one of the great, if only, things that are good when concerning tax time. We all grudgingly send in those ...
Doing Your Own Taxes Can Cost You A Lot Of Money
Sure, you can buy software that will guide you through the tax process, for about $50 or less, so why would you pay $500 or m...
Tax Planning: Legal And Savings Issues
Tax planning has been in the eye of the storm recently, owing to the many corporate scandals that have shaken the market. If ...
How To Choose A Good Tax Advisor
There is a major difference between a tax preparer and a tax advisor. Tax preparers, although many may advertise that they ca...
Real Estate Tax Support
Real estate taxes various from each state. Despite this, real estate tax is often based on the outer structure and surroundin...
The Best Way to Save on your Taxes is with Tax Deductions
Tax time! Aaaahhhhhh! Sound familiar? Tax time is the one time of the year that everyone gets nervous and anxious because we ...
Fiscal Deity: Tax Consultant
Strategic planning throughout the year results in a minimal tax balance. The objective of planning your tax payables is not ...
Lower Your Taxes and Save Thousands With Deductions
Though you are obliged to pay your taxes, nothing forces you to pay higher taxes when you could pay less by means of deductio...
Four Deductions You Can Use to Reduce Your Taxes
1. Contribute to your employers 401(k)The easiest way to reduce the amount of your taxable income is to contribute the maximu...
The Purpose of Your Accountant
Many people are confused about the purpose of accountants given tax software and so on. To get the biggest benefit for the fe...
Per Diem Rates and Business Taxes
The tax code for the United States is over 50,000 pages. Buried in this code is the subject of per diem rates, a topic that c...
Student Loan Consolidation Is Great Money Management Which Save Money and Time With a Loan
Just finished College and you need to reduce your student loans?? Student Loan Consolidation is a great way to manage your mo...
4 Tips for Paying Off Your Student Loans
While going to college is almost a must today, it can be quite expensive and usually leads to a great deal of student loans t...
Financial Consultant: Top 10 Tax Savings Tips
W-2 Employees have tax options. Although they often feel left out of the tax-loop, those who work for W-2 payroll have a wide...
Finding Assistance with Your Taxes
Organizing your taxes can get quite nerve-racking. This is the main reason why many people would find some assistance in prep...
Tax Saving Tips: Keep More of Your Hard Earned Money in Your Pocket
During Tax Season, everyones biggest concern is how to keep from paying in more taxes. Often its too late during those lag mo...
Tax Preparation-Here is a Great Solution
When it comes to getting your taxes done, you have a few options to choose from. You can choose to do your taxes yourself or ...
UK Tax Services
The word tax evokes different kind of responses from different people. While some see it as a yearly headache that they have ...
EU VAT Understanding European Tax
If you are purchasing anything from the European Union (EU), and do not live in any of the member countries, then you have pr...
Tax Refunds: How Do They Work?
The best part about filing your taxes is getting the tax refund check! Chances are, you have been paying your taxes directly,...