WATCH YOUR WALLET
A quarterly newsletter for taxpayers
from A.D. Singleton & Co.
START YOUR OWN BUSINESS -
It's the Ultimate Tax Shelter!
Start your own business for the number one way to reduce
your income taxes. It can be your primary source of income, or
it can be a sideline even if you are employed elsewhere. As a
business owner you may be able to convert some personal
expenses into legitimate business expenses. Starting your own
business can even be fun; many hobbies have been converted
into successful businesses with allowable expense deductions.
A Profit Motive is Key! You don’t have to make a profit
for expenses to be deductible, but you do have to establish a
profit motive. A profit motive is assumed if you have net
income in any three out of five business years.
The Deductibility Test! Is your profit objective actual and
honest? In deciding whether ornot your intentions are
honorable, the IRS may look at:
· The manner in which you carry on the business activity
· Your expertise and the expertise of your advisers
· The time and effort you expend in carrying out the
activity
· The expectation that assets used in your business may
appreciate in value
· Your success in carrying on similar or dissimilar
activities
· Your history of income and losses with respect to the
activity
· The amount of occasional profits, if any, that are
earned
· Your financial status
· The elements of pleasure and recreation (suffering is
not a prerequisite to deductibility)
Business Deductions! To qualify as deductions, your
expenses must be:
· Ordinary and necessary (defined as “reasonable and
customary”),
· Paid or incurred during the taxable year, and
· Connected with the conduct of a trade or business.
Remember – It isn’t what you pay in taxes that counts,
it’s what you keep in your wallet! And, no one ever got rich
just by piling up deductions. So, focus on your profit motive,
and call on us for help in maximizing the profit potential of
your business.
WEALTH BUILDING 101
Spending less is one way to create wealth.
Putting your money to work for you is another.
There is no one road to wealth, but you can tilt the odds
in your favor.
Your job is to set goals to make certain it happens.
Our newsletter publishes every quarter. Watch this page for
more ideas on how to Watch Your Wallet!
|
