Tax benefits are the number one reason to consider starting your own business in America. The tax benefits alone can be a huge difference maker in your life, and change the outlook for your future. Owning a business in America is the definition of the American Dream. The government makes these tax benefits available to us so that we can grow our businesses, and in turn create more tax revenue for the economy.
It is all about those tax write offs!
Owning a business in America means that you are allowed to write off any and all expenses on your taxes every year. This incredible feature of owning a business is actually quite a benefit when you consider the large number of possible tax write offs that you have. Many times, these write offs are tied in with expenses you would have anyway. Here are some examples:
Day to day supplies – This is a very wide reaching example that often carries over into your private life. If for example, you bought a stapler to keep your papers organized, then you can write it off. If you also use this stapler to organize your papers at home, then so be it. That is a small example, and the examples can be much larger.
Traveling Expenses – This is also fairly wide ranging, but if you have to travel in your business, then all expenses are fully deductible. For example, you go to a trade show in Las Vegas and have to get a room for the weekend show. The room, the gas getting there, the food, and even the entry fee to the trade show are all under the tax benefit umbrella.
Cars – If you drive to the store for copy paper, then this is a business expense. The car itself is not a write off, but the mileage and gas is. If you happen to stop and grab supper for the family along the way, then you just got a free trip.
Your work space – Many businesses today are operated from the comfort of home, and this is a huge tax advantage. The office space that you work in at home is also a write off, right down to the pictures you hang on the walls if you have clients over to do business. This is also a home deduction that is based on percentage. Whatever percentage of size your office is of your home, it is that much of a tax write off.
If you use a write off, be prepared to prove it. Many people just assume that these are accepted sight unseen by the IRS, and sometimes they are. If you are audited, however, you will need to be able to provide excellent records and receipts. This aspect of record keeping must be perfect and organized. It is advised that you keep a daily log of expenses with appropriate documentation attached.
Tax benefits for owning a business are certainly a huge draw to a great many people, but you must have a legitimate business to earn them. Make sure that your business is legitimate and that you hold the proper licences. If not, then the IRS may come knocking at your door.