Tax Tips to Save Money on Taxes - Get the Corporate Kick and Save Loads of Money
Why a Corporation Helps Save You Taxes
The Tax Rates (Notice anything unusual?):
The following tables provide a list of the tax rates for individuals and corporations:
Personal:
$0-$24,650 15%
$24,651-$59,750 28%
$59, 750-$124,650 31%
$124,651-$271,050 36%
$271,050+ 39.6%
Corporate:
0-$50,000 15%
$50,001-$75,000 25%
$75,001-100,000 34%
$100,001-$335,000 39%
$335-000-$10M 34%
If you examine them closely, you will see at least one glaring contrast. The individual making $49,000 per year is in the 28% percent bracket, while a corporation that earns $49,000 is only in the 15% bracket. That¡¦s a potential 13% difference in your tax rate if you organize your finances to take advantage of this one little item.
But, that¡¦s just part of the story. An individual who makes $49,000 in salary pays taxes on almost the entire $49,000. However, a business can first deduct its operating expenses, and only pay taxes on what¡¦s left. As Robert Kiyosaki says ?± the corporation acts as a filter that is used to reduce the corporation¡¦s taxable income by utilizing the tax deductions afforded by the tax code.
Basic corporate deductions include telephone expenses, equipment (faxes, computers, photocopy machines, telephones), automobile gas, repairs and insurance, travel, entertainment, seminars, etc. Do you have any of these types of expenses? Sure you do!
The difference is that businesses subtract these first, then pay taxes on the balance. You, as an individual taxpayer, pay taxes on the greater amount, then pay for these expenses (you call them living expenses) out of what¡¦s left. Did you ever wonder why there¡¦s not much left for living at the end of the month? Now you can see why. The question is "Are you going to do something about it?"
Keep in mind that there are two steps here; first you must start to shift your efforts from earning a salary to earning more money through your business. There are many ways that you can do this.
For instance, you can start with your own business concept. Maybe you¡¦ve already got an idea that you want to pursue. It could be a product or a service or something along the lines of art and crafts. It doesn¡¦t have to be sophisticated or high tech; it just has to have a profit motive.
Secondly, you may have something that you already enjoy doing as a hobby. You can probably convert that activity into a viable business enterprise. Just remember that there are rules that you must follow to ensure that your new-found business is not treated as a hobby by the I.R.S, and the deductions voided.
Thirdly, you can get into a network marketing business. There are many available, some of which don¡¦t require a lot of money to get going. The older types of network marketing schemes available in the past made little money for anyone except the original promoters.
Today, Wave 3 network marketing companies offer legitimate profit potential and significant residual income streams. I will be happy to make a recommendation if you like. Lastly, you may be able to sell the services of your new company to your employer. Suppose for example that there is some aspect of your job that you think can be done less expensively or more efficiently on an out-sourced basis. Tax Strategies It could be anything really, clerical services, database management, sales or marketing. Instead of working overtime and on weekends to make more fully taxable income, your company could generate revenue by providing the ¡§outsourced¡¨ service to your employer, and, in doing so, you could take advantage of the tax benefits.
And the nice thing is that any of the above can be done on a part-time basis. You can maintain your current job (and income) while you grow your new business.
The next step is to learn to maximize your deductible expenses. The items listed above are only a few of the many deductions that are available. We will be going into more advanced topics later in this booklet.
One of the best ways to start this process is to review your current expenses and see if there is a way to convert these expenses to business expenses. Start with your checkbook; list all of the expenses that you pay each month on a piece of paper. Next, go through your credit card bills for the last year and list them. Next, go through your cash receipts and see where your cash was spent.
Now, having done that, you want to see which of these expenses can be converted into business expenses. For instance, I¡¦m sure that you spent money on your automobile lease or note payments, gas, insurance, repairs, etc. In many cases, a portion of these can be converted to business expenses, if properly documented. Then, take a look at your phone bill. Some of this can be converted. The same is true of travel, meals and entertainment. And work your way down the list. The key is not to add additional expenses just because they are deductible, but rather to convert those things that you are already spending money on into legitimate business expenses.
Keep in mind, that the I.R.S. has specific rules concerning each kind of deductible expense. These rules must be followed. It is imperative, therefore, that you work closely with your accountant to insure that you are in compliance with these rules. THERE ARE STIFF PENALTIES IF YOU FAIL TO DO SO.
Why a Corporation Helps you Save Taxes *
Lets look at the tax advantages of the corporation. The difference between how much or how little you pay in taxes is when you pay your taxes as an individual or as a corporation and what your tax rate is.
Your Tax Base and Tax Rate Make a Big Difference to Your Savings! Tax Help
Individual Corporation
Your income (Your Tax Base) Your Income
Tax at 28% **
Expenditures Expenditures
Your Tax Base Tax at 15% ***
Savings Savings
Sincerely,
Drew Miles, The Tax Saving Attorney
Drew has combined what he learned during formal education, informal education and twenty five years of business experience in the development of programs designed to teach people how to build and preserve lasting wealth. He is an author, teacher and international speaker in the areas of asset protection, and tax saving and wealth building strategies.
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MORE RESOURCES:
 ABC News | IRS offers help paying taxes Washington Post When you have 140 million individual tax returns, "you need to be continually looking at ways to serve people," Shulman said. "This effort continues my ... Time Is Running Out to Collect 2006 Refund Record Number of Tax Filers Owed No Taxes in 2008 IRS Waiting For Claimants To $1.3 Billion Tax Refunds For 2006 |
 ABC Online | Government digs itself into tax hole The Age THE Henry review of Australia's tax system was handed to the government in December. A similar review of New Zealand's tax system was handed to its ... Govt to release tax review by May budget |
 National Post | Miller may face fight over surplus allocation plan National Post Some councillors, such as Gloria Lindsay Luby (Etobicoke Centre), are saying the vast majority should go to reducing property taxes; others, ... Lower taxes for Toronto: Miller James: How did a city that's broke find $100 million? A 'lame duck' squawks one last time |
Time to go home; bills on taxes, schools and more were completed Henderson Gleaner INDIANAPOLIS — Businesses got a breather on taxes. Schools won authority to shift some extra dollars into the classroom. Taxpayers received the right to ... Fiscal crisis doesn't deter lawmakers from filing hundreds of bills Local lawmakers back sales tax increase Bolling wades into rules dispute |
 Globe and Mail | Tax staff to be paid $25M in severance, rehired National Post An agreement signed by the Liberals and the Canada Revenue Agency will see the provincial tax workers become employees of the federal government, ... Ont. tax collectors looking at $45000 severance but won't lose jobs |
Condo buyer's welcoming gift: Bill for taxes owed by developer Chicago Tribune Kenya Merritt has no problem paying the property taxes on her Austin neighborhood condo, but she isn't keen on paying taxes for the developer. ... |
 Mirror.co.uk | UK Liberal Democrats Seek UK Tax, Voting Reform BusinessWeek March 14 (Bloomberg) -- Liberal Democrat leader Nick Clegg said the opposition party will demand tax reform and a new electoral system if it ... Voters fear Tory cuts and tax rises Nick Clegg: I won't be kingmaker in a hung parliament Lib Dems refuse to support Tory spending cuts |
 Boston Globe | Social Security to start cashing Uncle Sam's IOUs The Associated Press For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year. Not anymore. ... Boomers' retirement offers opportunities, challenges Social Security to start cashing government IOUs |
Marois blasts premier on his integrity Montreal Gazette Proposals put up for discussion included tax measures, like the elimination of payroll taxes, favouring consumption taxes over income taxes and lower taxes ... |
NB increases property tax rebate CBC.ca The New Brunswick government is going to offer more money to more people with low incomes who are hit hard by property tax increases, says the finance ... Income tax break on the way Province to tackle tax hikes New property tax formula coming: Minister |
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Tax Tips to Save Money on Taxes - Get the Corporate Kick and Save Loads of Money
Why a Corporation Helps Save You TaxesThe Tax Rates (Notice anything unusual?):The following tables provide a list of the tax rates for individuals and corporations:Personal: $0-$24,650 15% $24,651-$59,750 28% $59, 750-$124,650 31% $124,651-$271,050 36% $271,050+ 39.6%Tax SecretsCorporate: 0-$50,000 15% $50,001-$75,000 25% $75,001-100,000 34% $100,001-$335,000 39% $335-000-$10M 34%If you examine them closely, you will see at least one glaring contrast.
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