Do You Know That You May Be losing $3,000 - $10,000 Per Year In Tax Savings?

Do You Know That You May Be losing $3,000 - $10,000 Per Year In Tax Savings?

I believe that it goes without saying that we all began this journey into entrepreneurship with the belief and intent to change our financial lives to create and build wealth for ourselves and our families.

Unfortunately, I’ve come to realize that millions of us were not taught how vitally important an effective working knowledge of taxes is to us reaching the goal of financial independence. I believe that with more knowledge and understanding comes more confidence. With more confidence comes more effective action. And ultimately with more action comes better results.

Believe it or not, Taxes represent the number one expense of any business and poses a threat to its Cashflow. The right strategy will allow you to pay the least amount of taxes allowable by law, regardless of your business situation.

That means an effective Tax Strategy allows you to control Cashflow, which is an essential ingredient in the recipe to create Wealth.

The United States has two Tax Systems. There’s one tax system for employees, and the other for businesses.

Which group do you believe bares the greater tax burden?

Exactly!

Employees, or W-2 wage earners bare the greater tax burden because they have very few tax deductions available to them. Most working Americans fall into this category. Their tax deductions are typically limited to Standard deductions, Contribution to retirement plan, Mortgage interest, Property tax, Gifts to church or charity, and a few other items typically captured on the Schedule A (Form 1040, Itemized Deductions).

The employee typically works to earn wages, immediately 1/3 of their income is withheld for taxes, then the rest is given to the employee in the form of take home pay. Taxes represent the single largest bill most working American pays; typically more than transportation, food, and clothing combined.

Business Owners on the other hand, well, let’s just say, they get to write-off nearly everything from car/truck expenses to cellphone to lunches and travel.

Business Owners have it good; they make money, spend whatever they want or need to in/on their business, and then pay taxes on whatever’s left over.

Sweet deal!

There are literally hundreds of tax deductions for businesses and self-employed individuals. Here is a list of a several of them:

• Company cars/trucks (and even boats)

• Parking, tolls, maintenance, oil, tires

• Cellphones, Internet access

• Travel (Plane fares, trains, hotel costs, meals and rental cars)

• Coffee, donuts, lunches, and dinners

• Wages to children

• Computers, copiers/printers, and telephones

• Supplies, paper, pens, ink cartridges, and copies

• Mortgage interest or Rent

• Gas, electric, water and sewer

• Newspapers, magazines, books and online media

• Landscaping, snow and leaf removal, and driveway repair

• Health, life, dental, vision, disability and unemployment insurance

• Contributions to Employee Retirement Plans

• Cleaning crews to dust, vacuum and empty the trash

• Desks, sofas, coffee tables and other furniture

• Gifts to charity, non-profits, libraries, etc.

An individual or Employee, who is also a Business Owner, can legally and easily qualify for nearly all of the same tax deductions businesses get year after year.

Another important key to cashflow, especially for individuals that are both W2 employees and entrepreneurs, is the W4.

The W-4 is a very important document to our lives financially. The USA Today and many other news publications have featured articles on the W-4 and employee tax withholding. A major point made in the articles is millions of employees allow their employer to withhold too much money from their paychecks for taxes throughout the year. The articles also made the point that employees would be better off having less money withheld from their paychecks, which would increase their take home pay.

The IRS issued a bulletin on April 29th, 2005 that made the same points. They stated that over eighty percent of employees have too much money withheld from their paychecks for taxes. When employees have too much money withheld for taxes, they lose money because of something called ROI or Return on Investment. Our money has value. We can use our money to make money by investing, by paying debt off early, or by the entrepreneur to build their business.

Think about this example: If someone received an additional $400 in take home pay and added it to their debt payments, they would eliminate the debts faster and save thousands of dollars in interest payments. If they invested the $400 into their retirement account, they would save money on taxes and grow their retirement savings quickly. If they invested the money into their business on marketing tools, software, adspend, etc, they could grow their business and possibly get an even bigger ROI.

Again, with cashflow being such an essential component to building wealth, a smart financial strategy would be to keep as much of your hard earned money as legally possible and use it to buy, build, and grow income producing assets.

So as you see, taxes play a huge role and I’m just scratching the surface.

To learn more, use the following link to watch a webinar sharing information about an invaluable tool for the entrepreneur; Empire Growth Secrets Tax Course: www.empiregrowthsecretsmvp.com

So are you losing $3,000 - $10,000 per year in tax savings?