Small Business Strategies
OK, you are ready to start your business – here are some key strategies that will help!
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Turn Any Business Into a Tremendous Tax Shelter
This small business strategy should be considered by everyone who works for someone or who is retired. A small business, even run part-time from home, can create a legitimate tax shelter every year, no matter how profitable your business is or is not.
In a small business, the personal things you own and do, can become fully or partially tax-deductible. The key to deductions is a legitimate intent to create a profit, typically two out of every five years.
These deductions are just a sampling of the tax power of operating a business, there are many, many more. If you are not getting tax deductions for these expenses, plan to start a small business immediately, even part time. As always, seek out the professional advice of a seasoned accountant or CPA as you begin your trek into small business or real estate.
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Begin a Small Business as a “Sole Proprietorship,” instead of a Corporation, Especially in the Beginning
The easiest, simplest form of business organization is a “sole proprietorship.” You use your Social Security number as the business ID for tax purposes. We say, “especially in the beginning” because typically it’s easier (and a whole lot less paperwork) to go from a sole proprietorship and then evolve into a corporation, than in reverse.
Simply register and obtain an occupational license with either the city or local county where your business is located. If you intend to operate your business under a different name, be sure to comply with the “fictitious names” statute (also commonly referred to as D.B.A., Doing Business As, for your municipality.
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Use Business “Paper” Losses to Tax Shelter Job and Investment Income
With a sole proprietorship, you are the business. All tax deductions in excess of business income reduce your personal taxes. Look on the front of a Form 1040 individual tax return and you will notice that business profit or loss is included with your other income from your job or investments. A business becomes a personal tax shelter when your business shows a “paper” loss. Your personal taxable income is reduced by the amount of the loss, therefore, your personal income taxes are reduced accordingly.
The same is true of an “S” corporation, where the business operates as a corporation, but all income or losses flow through to your personal tax return. If your first year of business income is $2,000 but your deductible expenses are $10,000, the $8,000 difference reduces your taxable income from your job, investments or retirement account. In effect, the investment to start the business ‘pays for itself’ if only in the beginning through legitimate tax deductions.
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Diversify
What can we say here but the wealthiest of the wealthy throughout the WORLD know and practice this principal – DIVERSIFY. Wherever you make your money-real estate or business-always, always spread your risk of losing it all by investing in multiple streams of income, obviously small business being a primary target.
Divide and conquer in whatever arena you make your money, always split the pie up so that you (or your family and heirs) are never dependent on any one income. In other words, Plan B should always be in focus. Here are some hard fought strategies to help you scratch that small business itch.
Links And Additional Resources:
In our ongoing effort for excellence, we’ve searched the globe for the best in links and resources for our like-minded students “quest for the best.” Below are some of our favorites for small business…enjoy the surf!
Small Business Administration
Training, loans, grants, subsidies
www.sbaonline.sba.gov
General Services Administration
Business and Selling to the federal government
www.gsa.gov
Government Selling Opportunities
Get RFP’s on line
www.fbo.gov
Patent and Trademark Office
Protecting your ideas and inventions
www.uspto.gov
Exporting-International Trade Administration
Assistance and training to export
www.ita.doc.gov
Minority Business Development
Funding and assistance for registered and certified minority businesses
www.mbda.gov
Women’s Business Development
Business centers, services and networking
www.onlinewbc.gov
National Business Incubator Association
A “safe” environment to start and grow a business
www.nbia.org
Government Grant Sources
Sources and five steps to apply
www.grants.gov
Please be sure to read our disclaimer prior to acting on any information you find on this website There is never any substitute for personalized professional advice.
