“What’s your biggest expense?”
Without giving it much thought I said the first thing that popped into my head. I answered, “my mortgage.”
He said “nope”. “Most people think ‘mortgage’ or ‘rent’, but there’s something else that’s bigger.”
I was stumped. I awaited his answer.
As soon as he said it, it seemed obvious. Yes, taxes were my biggest expense although I didn’t think about it that way. After all, you have to pay taxes, right? I mean, what can you do about it?
I was about to learn something that day.
You see, it was a financial advisor who asked me about my biggest expense. He had already helped me calculate how much I needed to put away each month to hit my retirement goals. The next step was to help me figure out how to divert my current spending into savings.
So, when he asked me about my biggest expense, taxes didn’t come to mind. I always saw taxes as a given. After all, what’s that saying?…
“There’s two things you can’t avoid…death and taxes.”
With taxes being right up there with my own mortality, it didn’t occur to me that it was possible to divert those dollars into something like retirement savings.
What my advisor told me next totally changed my point of view.
He told me that most people in the United States pay too much in taxes because they employ no strategy to do anything about it. Consequently, they know nothing about the #1 best legal strategy to dramatically lower taxes.
What is this strategy, you ask?
Owning and operating a home based business.
Former IRS insider Sandy Botkin and author of Lower Your Taxes—Big Time says so too. In the very first chapter of his book titled, “Why You Would Be Brain Dead Not To Start A Home Based Business (If You Don’t Already Have One)”, he states you will probably save $2,000 to $10,000 per year just by starting a part-time business.
To illustrate his point, the financial advisor put it to me like this:
“Every time you drive your car, watch the odometer, and every two miles, roll down your window, pull a dollar out of your wallet and throw it out.”
It was a shocking mental image. I don’t like to waste money! I got the message.
If you don’t have a business, you can’t deduct your mileage which is like throwing money away.
But mileage is only one of many areas where owning a home business can entitle you to tax savings. Other areas include:
- Entertainment and Meals
- Home Mortgage/Rent
- Medical Expenses
- Kids’ College
- Mobile Phone
There are a host of others depending on how you structure your business.
I’m no tax expert and you certainly shouldn’t take anything I say as tax advice. But, if an extra $2,000 to $10,000 per year in tax savings sounds good to you, you might want to do what I did.
First, I looked for a home based business that was right for me. Second, I talked to a qualified tax professional to map out my tax strategy. Finally, I learned the proper way to track and document my expenses for tax reporting.
So if you’re thinking about starting a home based business (and by now you should), I invite you to take a look at what I do. I was fortunate enough to find a business that is fun, rewarding, and can be run part-time from home. It also includes a professional subscription to Deductr to help track expenses and make tax time easier. To learn more about Deductr and how it can help you track business expenses watch this short overview video:
Click this link and I’ll contact you in Facebook Messenger. I’ll give you all the details on what I do on the side and you can see if it’s a good fit for you. If it’s for you, I’ll personally show you how to get started and I look forward to working with you. If not, don’t stop looking. Find something you love, make a profit, and cut your biggest expense all at the same time.