Tax Benefits – Employees vs. Business Owners
Posted on 13. Jan, 2012 by Benne Clark in Blog
Real Estate And Home Business Solutions – By Benne Clark
I actually have some good news for everyone who decided to become a Home Business Entrepreneur with all of the new tax benefits – you may even look forward to tax time next year!
Unfortunately, anyone who have not decided to become a business owner and take full advantage of all the tax breaks, answer the following three most important questions regarding your finances once you reach the bottom of this page:
1. Does it make sense not to have your own business?
2. Does it make sense to continue giving my money away?
3. Does it make sense to consider looking at an opportunity?
The United States has a tax system for Employees (people just like you) and a tax system for Business Owners (people just like me).
The Employee
Employees, follow a three-step process:
Step 1: Work hard to earn a decent wage.
Step 2: Immediately lose a huge chunk of those hard-earned wages to taxes.
Step 3: Then you get to live on whatever is left after taxes are withheld.
Here are the potential tax benefits available to J.O.B employees:
• Mortgage interest & Real Estate taxes,
• Standard deductions for dependents,
• Gifts to church or charity and
• Contributions to a retirement plan.
The Business Owner
Business Owners have a very different three-step process:
Step 1: Earn unlimited revenue by providing a service or product.
Step 2: Invest time, energy, or capital in the business to materialize a profit.
Step 3: Then, pay taxes only on whatever is left over.
Here are the potential tax benefits available to Business Owners:
• Mortgage interest or Rent
• Gas, electric, water and sewer
• Cleaning crews to clean and empty the trash
• Computers, copiers,
• Fax machines
• Telephones
• Paper, pens
• Postage
• Business account banking fees
• Desks, sofas and other furniture
• Business Credit card fees
• Depreciation
• Painting, wallpaper, carpeting and
• Repairs/remodeling
• Legal and professional services
• Phones bills, cell-phones, voice-mail
• Pagers and PDAs
• Cost of goods sold
• Business education material
• Books and on-line media
• Services of Independent Contractors
• Supplies and materials
• Plane fares, hotel costs,
• Meals and rental cars
• Taxes and licenses
• Special work clothing or uniforms
• Lunches, dinners
• Ball games and theater tickets
• Security alarms and hidden cameras
• Health, life, dental, and vision benefits
• Disability and unemployment insurance
• Company cars (and even boats)
• Contributions to Employee Retirement Plans
• Holiday cards, gifts and postage
• Internet access fees
• Merchant discount fees
• Web hosting fees
• Extended-warranty costs
• Database backup services
• Ink and Toner cartridges for printers
• Software used for business
• Advertising
• Professional fees
• Chamber of Commerce membership
• Signs and promotional materials
• Software used for business
• Spyware subscription services
• Anti-virus subscription services
• Firewalls
• Routers
• Peripherals
• Surge-protection equipment
• Conference call services.
• Continuing education courses
• Insurance
• Seminars & Conferences
• Permits & fees
• Printing, copying and faxing
• and much more.
Taxes represent the highest single bill the average employee pays!
When you add together Federal taxes, State taxes, Social Security taxes, Medicare taxes, sometimes County or City taxes, and all the rest, if you are like the “average” wage earner in America, you could easily be losing between 40 and 50 percent of your hard earned wages to taxes, before you even see your paycheck!
A Business allows you to deduct many expenses you’re already paying!
I personally understood all the perks and benefits of starting a home business and working hard for yourself. However, I also understood that if I fail to make a substantial amount of income as a business owner, I will still save a substantial amount of income from my tax benefits… by the way, did you answer the 3 questions at the top of this page?
