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October 04, 2007
Home Business Tax Deductions
In any home business you definitely have more tax advantages than if you were self-employed. The tax advantages become substantial when you consider how you can improve the profitability of your home business by declaring all of the deductions you are entitled to. You may be missing some very important deductions. You must itemize your deductions for your home business operation on a separate schedule just as you would for your personal deductions. Knowing which deductions you are entitled to can save your home business hundreds of dollars a year.
Here is some background information on how your income tax amount is arrived at by the IRS.
The U.S. taxation code states that almost all income is subject to federal income tax. The way that you, as the owner of your home business, arrive at the final amount of income tax is as follows:
Gross Income - (All Expenses + Miscellaneous Deductions + Depreciation on Assets) = Taxable Income.
Taxable Income X (Your Tax Rate) = Income tax for the fiscal year.
Here is a quick definition of the terms in the above taxation equation:
Gross Income = The total of all income for the year after the cost of the inventory has been paid for.
Expenses = All costs of doing business during the fiscal tax year. Examples include payroll, materials, supplies and interest on business loans, etc. To find out if an expense qualifies as a legitimate business expense, consult your accountant or the IRS.
Depreciation = This is the way of spreading out the deductibility of an asset over a period of more than one year.
The IRS has certain different depreciation schedules for different business property. This is done for assets like real estate, equipment and other assets with a long economic life. This method of taxation write-off has certain advantages. Be sure to talk to your accountant regarding proper depreciation rules. These rules are subject to change by the Congress and the IRS.
Miscellaneous Deductions:
This is an often misunderstood and overlooked way to save a lot of money on taxes. Remember that these types of expenses must be totaled up and declared on a separate schedule of your income tax forms.
Always track your expenses and be sure to save at least one copy of every deduction. You will be asked for proof of every transaction that is declared as a deduction if you are audited by the IRS!
Here is a list of some of the things you can deduct from your income taxes:
Business related expenses include:
1. Air fares
2. Auto expenses
3. Books and Magazines
4. Educational Expenses
5. Home Office Space* + a portion of utilities, telephone, and maintenance costs
6. Office Furniture
7. Cleaning Expenses
8. Meals with Business Clients
9. Laundry Expenses (When Traveling)
10. Advertising
11. Impairment-related Expenses
12. Licenses and Regulatory Fees
* If you own your home you must use the IRS depreciation rules to determine this deduction. If you rent you may also deduct a portion of your rent.
Check IRS Publication 535 to find out if you can deduct any or all of the above.
As you can see there are many deductions that are allowable for your home business. The best way to get more information on tax deductions and related information on income taxes is to go online to www.irs.gov. There you will find a helpful search engine containing thousands of government publications that you can research and print out if you need to.
Now you have a good idea of the deductions you are entitled to take. So do your research, keep track of your expenses and take all of the deductions you can for maximum profit every year.
Posted by OneWebCo at 09:14 PM | Comments (0)
October 01, 2007
Network Marketing Business ?
Network Marketing is also called Multi-Level Marketing or MLM for short. If you happen to be thinking about getting into Network Marketing then this may be helpful for you. There are things to look for in a Network Marketing business that will keep you from just spinning your wheels and getting nowhere. It is true that most Network Marketing businesses fail. That is what happens to most any business in their first five years. But if you know how to do it right, then Network Marketing is the best career in the world!
You should be able to start with little cost. Avoid big sign-up fees and expensive frontloading where you have to spend thousands of dollars to get started, buying your way to the top of a pay plan, having to purchase large volumes to qualify for your check, and having to stock inventory yourself. Run away from anybody requiring you to do those things.
Do not fall for outrageous claims such as making money with no selling. In Network Marketing you can get people placed under you without having to do anything if the people above you are doing a lot of work and your compensation plan is a forced matrix or power leg binary. That kind of thing is called spillover, but you cannot count on getting rich from that. People joining with that expectation will be disappointed. Even worse, do not get involved with a company that is offering a business opportunity but has no product or service to sell other than the opportunity. Always, before you join any company, go to the Internet search engines and check for complaints and scam warnings.
Sales and distribution are the backbone of all business. Direct sales are the type we are more familiar with. The products of a company are peddled by a salesperson that receives a commission, which is a percentage of the money gained by the sale. That is the traditional sales approach. The salesperson can also be paid on an hourly or salaried basis, even per lead contacted as long as they meet a sales quota, but the source of income for business is always sales driven.
Network Marketing is proving to be a better way, both for the companies and their product distributors or salespeople. You are still selling a product or service for the company, but you also are looking for people who want to do what you are doing, selling the company's product and making money doing it. You are building a team. What that does is take sales to another level, because once you get someone else selling for the company, the company has a new distributor and you get paid not only on your sales, but also on the new distributor's sales as well.
That is why it is called Multi-Level Marketing. When that distributor on your first level gets a new seller for the company, you also get paid from the work of that new seller. If that new seller on your second level recruits, then you have a third level. You can have a team building under you, doing sales for you, making money for you, and it can be happening without extra effort on your part! The payment plans in MLM mostly include binary, breakaway, matrix, stair-step, and the best is unilevel.
With the unilevel plan there is no limit to the number of people you can have under you at the first level. The purchases from your first level are where you get the highest commission. Commissions for purchases from your second level on down are not as high percentage-wise, but can add up to a big amount through the shear number of sales. Those earnings are often called leveraged earnings because you have utilized the work and the time of other people. That is the way to get wealthy!
Network Marketing is about the referral and soft sell. You do not have to give people the hard sell to be successful. You simply use the company's product or service and recommend it to others. It helps a great deal if you are passionate about it. The company provides promotional materials such as sales letters, brochures, recruiting calls, recorded messages, websites, flash movie presentations, DVDs, and even magazines. They should be persuasive materials that put forth the benefits of the product or service to the prospect and should include plenty of testimonials.
The company should have a valuable and desired product or service that people would really want to have. Preferably, the product should be unique and manufactured by the company itself. You want the service to be a continuing monthly service or the product to be a consumable one, so that you get recurring purchases every month and an ongoing income from each customer.
With Network Marketing you will not just be making one-time sales as in direct marketing. You will be building a residual income that keeps coming in whether you work or not. It is the perfect way to build a retirement income, so the company you choose should be debt free and have been in business for at least 5 years so that you know it is solid.
Having found those things, you then present the business opportunity and the product to as many people as possible. Your warm market is people you know, such as friends, family, and co-workers. Beyond that, you can advertise, or buy lead lists of people interested in starting a business or interested in your type of product or service.
For Network Marketing the most targeted list you can get are MLM Genealogy Lists. Those are people who have showed an interest in Network Marketing by already having been involved in it. Do an Internet search for MLM Genealogy Lists if you want to buy one. Those lists are not expensive and many of the people on it already have experience building a business. Those are the people you want on your team!
Posted by OneWebCo at 08:28 AM | Comments (0)
