When it comes to tax strategies - Self Employment is one of the best going. With the numerous advantages and savings available, when it comes to tax time, most experts believe it is hands-down the best. Self-employment allows you full command of your tax situation and, with the right knowledge, you can have greater control over the amount of taxes you pay.
Following are some tips for making the most of your self-employed status: The most important advice you can utilize as the owner of your own business is to keep thorough and accurate records. Keep all of your receipts and make sure you have the documentation to support your tax deductions. What about childcare? Think that just because you work for yourself or from your home you can't deduct for childcare? Not so. Childcare credit is just as available for self-employed and in-home business operators as for 9-5 workers. Use it when necessary and take advantage of the savings.
But your children can not only save you money, you can help them earn money. Why not let them be involved in your business with you. Pay them a fair wage, then deduct their wages, bonuses and even fringe bonuses on your taxes. Good, huh? Did you know that you can help pay for your electric bill with a business in your home? Figure out the space you use for your business and deduct the portion of your household expenses that space costs you: utilities; mortgage or rent; repairs; etc.
Although you cannot use these types of deductions to bring about a loss in your business, you can use them to bring your business down to no profit. This reduces both your income tax and your self-employment tax. Can't use all your expenses? Carry them forward to next year. While you're thinking about one asset, your domicile, think about another, your car.
It also can be a tool to reduce your taxes. Bank trips for the business, office supplies runs, meeting a client for lunch - you get the idea. Don't miss getting the deduction! The Internal Revenue Service (IRS) is very aware of the many tax advantages of self-employment, thus it is an area they are subject to keeping closer tabs on.
So, you need to be aware of the latest changes in Tax Law for small/home businesses.
Debbie the TAXpert has 25+ years helping people "Save Money on Taxes!" Articles like this are available through "The TAXpert Tips Online". It's a good way to stay abreast of changes in Tax Law, particularly for small or home business.