Give Yourself a Raise
By Michael B Bowman
Operating your own business is not as difficult as you may think. Everyone has a hobby or skill that I believe they can turn into income. What do you enjoy doing? What are you good at? Is it growing vegetables, fixing cars, baking, drawing? There are a lot more reasons to “formalize” your skill or hobby into a business than there are reasons not to. One reason not to do it that was recently given to me is the amount of record keeping. It intimidates some people. That requirement isn’t hard to overcome. A compelling reason for those on my program to start a small business is the opportunity to get a much larger refund on the federal income tax you paid as an employee during the year. In many cases for my students their federal income tax can be about 18% of their gross pay. If you make $50,000.00 you could pay $8,900.00 in federal tax. What could you do with even just half of that money? It would give you a lot more breathing room to get a fresh start for your personal finances, for sure.
Getting a raise is no secret!
What I show my students to do is no secret. There are volumes of free information on the internet or at the library on how to maximize your small business tax advantages. Even the IRS website offers great insight on how to take full advantage of business related tax deductions. It doesn’t hurt to have an experienced person walk you through the process at the start though. However, I can tell you that it is very possible to arrange your lifestyle and business so that you don’t owe any federal taxes. There have been years when my legitimate business deductions were more than enough to eliminate my federal tax requirement.
Don’t wait for your boss to give you a raise!
Every time you have a business deduction you are giving yourself a pay increase. Let’s use an example (that is very possible) and say you had enough business tax deductions to eliminate your federal tax requirement for the year. You paid 18% of your gross pay (after allowed personal deductions such as a flexible savings account) in federal tax. If you are getting a 3% pay increase every year and you are entitled to a refund of that money than this is like getting six years worth of raises right now!
The best way to maximize your efforts in creating tax deductions is to work with an experienced counselor and accountant. Is the IRS’ website that can get you started in the right direction. http://www.irs.gov/publications/p334/ch08.html
To learn more go BowmansMoneyCollege.com/Recordkeeping
Mike Bowman
BowmansMoneyCollege.com
