Drastically Slash Your Single Biggest Business Expense

If you’re wondering what the single biggest expense is for your business, think again. It may surprise you!

As a business owner you’ve already experienced the benefits of self-employment. You know what I mean: no schedules or performance reviews, a steady income for expenses and extras, total control over your tax bill, and more qualified, capable workers lining up for your next job opening than you could ever hire.

Sound familiar? Well, at least it sounded great when you laid out your options on paper before taking the entrepreneur plunge.

If some of those benefits haven’t worked out like you’d planned, you can still take steps today to seize control over your single biggest expense for your business: taxes.

You’ve probably experienced what I call the “April 15 terror” as you wait to see the bottom line of your tax return. This often means a nasty surprise when you realize you owe Uncle Sam much more than you’d hoped, or sometimes can even afford!

Imagine how much better you’d sleep on April 14 if you could plan your taxes — how much you pay and even when you pay.

The single most expensive tax mistake people make is failing to plan. The key to beating the IRS – completely legally — is developing a proactive tax strategy to take advantage of the hundreds of tax loopholes available to you. The good news is, you still have 61 days left in 2009 to be proactive, implement some money saving ideas, and save those deductions. Here are two surefire ways to pay less tax in 2009.

Tip # 1, be aware of your AMT status, and avoid AMT! The alternative minimum tax (AMT) has become a virtual “flat tax” for thousands of people earning more than $50,000 per year. Most of us fall into the trap due to itemized deductions. The AMT rules force you to calculate your regular tax – then calculate it again, under an alternative tax system, which takes back your deductions for state income and property taxes, medical expenses, home-equity interest, and more.

What’s worse, traditional tax planning can backfire and cost you more under the AMT! But there are strategies you can use to minimize the bite. One good solution for avoiding AMT: maximize your 401(k) contributions to lower your adjusted gross income. The best thing you can do is act PROACTIVELY and work with your tax professional to create a plan to work with AMT.

Tip# 2, Avoid missing deductions! Review how and where you are spending your money. Most business owners just like you leave thousands of dollars on the table when it comes to tax deductions.

If you have a legitimate business and your expenses are necessary for you to earn your income, you’re probably entitled to a deduction. These expenses include things such as auto, cell phone, meals, entertainment, travel, computers, and even tax-planning expenses. (That’s right – a good tax planner is deductible herself!) Reviewing your spending doesn’t just help prepare you for tax time. It rescues lost deductions before the end of the year.

Don’t get caught in the terror! Advanced planning can save you thousands in wasted deductions and AMT tax! Be sure to keep more of what you earn by being proactive and have a plan!


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