Many people believe they are helpless when it comes to paying taxes. Most people think that tax shelters and deductions are only applicable to corporations and international investors.



These people cheat themselves of their hard earned money because they failed to learn the benefits governments give anyone, if only they will start a business.





No one likes to pay taxes, but they are a part of life. Think of taxes like you would an investment. Smart investors make more. Smart tax payers pay less.



Most small business owners never think of taxes until it is time to fill out their tax forms. By then, it is too late. Most deductions depend on the individuals personal situation.



There are a few tax principles that apply to investors and small business owners. Most can help them save money.



Smart investment decisions, writing off expenses, effectively managing capital gains and paying attention to deductions, all year, will save a small business owner thousands of dollars.



Write Offs



It is amazing how many investors do not consider themselves as business owners. They invest money in an effort to make money. They take courses. They buy periodicals. And, all this goes to waste because they fail to take advantage of the tax write offs offered them as small business owners.



Have you purchased office equipment lately? Do you have a home based office? You can write off any portion of this equipment, your home, or automobile used to earn an income.



The important thing is to keep records. Work at home businesses, and investors, need to keep records of their business practices. At the end of the year they need to calculate the percentage of use went to the business.



If the automobile was used for business 20% of the time then every bill through the year that went into the vehicle, from air freshener to insurance, is a tax write off.



This is the same for the house. Everything from mortgage, insurance, renovations, utilities, lawn care, paint, and even the cleaning supplies can be written off. If the home office takes up 10% of the homes floor space, then 10% of every dollar that goes into the home, from mortgage insurance to window washing is a part of the tax write off.



Investors who invest in small businesses or are self-employed, generate operating expenses which can be written off. These include business trips, education, grooming, clothing, and cosmetic supplies.



However, all of these receipts must be kept, and logs must be maintained on a daily basis, or the revenue agency can refuse to allow the claim.



Capital Gains



Homeowners who sell need to report the capital gain on the sale is the actual cost of the home. If the home was improved then the cost of the improvements is calculated into the adjusted cost base of the home reducing capital gains.



This is important for investors who trade stocks. Deferred payments can save the stock investor thousands of dollars.



Losses



Almost all work at home endeavours, and home based ventures experience losses. A client doesnt pay. A contract is broken, and the business owner experiences a lost.



This loss can be is tax deductible, especially if the business owner sends the account to collections. They may never recover their money, but they can use the loss as a tax write off against revenue.



However, there are other losses many home based business owners overlook. These include fees paid and commissions. Most new business owners and investors never think of deducting the bank fees from the account used for business purposes.



Conclusion



In the business world, there is no difference between saving money and making money. Anything that keeps the business in the black is equal. That means saving $1 equates to earning $1 or making $1 in sales. All are equally important to the ventures bottom line.