Tuesday, August 18th, 2009

Tax Savings From Your Website!

robin_hood_taxes
Home Based Business Tax Advantages

What does your Internet provider and your auto responder have in Common?  Or your membership in a course online? They are ALL free money in your pocket. They are all tax deductible and the money you save will off-set your online income by a considerable sum if you’re making large sums of money on line.

You already know how wonderful it is working at home in your Jammies, without Mr Boss over you, and the long commute now is from the bedroom to your home office.  Do you realize how many tax advantages you also get?   Here in the United States, many people operate home based businesses just to take advantage of the numerous tax deductions.

The most important rule:  ALWAYS get a receipt for EVERYTHING!

Claiming the use of your home in your business can give you some hefty deductions on your tax return. As with anything tax-related,  you must meet certain requirements determined by the Internal Revenue Service.  However, if you use one room or part of a room specifically for your business, you can receive a significant home based business tax deduction.  This can include portions of your utility bills specifically related to that area of your house as well as any relevant home improvements and furnishings.

Your phone and other office services can also provide you with a substantial home based business tax deduction.  If you maintain a separate fixed phone line or cell phone specifically for your business, then all costs related to those phone lines can be tax deductible.  However, if you use equipment or services in both personal and business environments, it is more difficult to establish a tax deduction.  It’s not impossible, but you must meet some fairly strict requirements and maintain good records.

Using your car in your business gives you the potential for another good tax deduction.  Of course, you must keep excellent records but you can deduct mileage and car-related expenses that you incur while conducting your business, such as those big bags of cash you take to the bank. With any type of business, other incidental costs come up.

Naturally, you can take deductions for purchases of items such as office supplies, postage, advertising materials and expenses. You can potentially deduct even more by hiring your children or spouse to work as employees for you.  This enables you to deduct health insurance premiums and other typical employee-related expenses.  This might be a two-edged sword though, as you may have to pay taxes on their wages.

As an online marketer, you have many more deductions than the average Home-Business owner.  To name a few that you might overlook, fire up your Excel program, and make columns for each of your online expenses:

  • Your phone or cable connection
  • Your ISP
  • Everything you pay for online
  • Hosting
  • Autoresponder
  • Website expenses
  • Advertising:
  • Every site you pay a fee
  • Sub Contractors:  your online workers: programmers, copywriters, graphics and such
  • The fees charged by your Bank; and online such as PayPal and merchant credit card fees
  • Affiliate commissions and fees
  • Monthly courses you belong to
  • Other membership fees
  • Video equipment;  that expensive video cam and all its parts
  • Audio equipment  (video and this for making online videos)
  • Don’t forget all their accessories
  • Other materials you may buy:  articles; graphics; copywriters etc

And here’s one your local accountant will certainly miss unless you tell them:  Giveaways! Yes, they ARE deductible! Say you sell a product for $97 and on launch day you give bonuses (value) equal to $77. Your income will be $20,  and yes you can also give value of more than the price (that’s considered advertising.)  Caution:  those bonus values need to be the regular price you do sell them for. The same goes for marketers who give bonuses for other marketers products Naturally ALL your computers and the equipment that goes with them. These will be depreciated,  but still deducted.  And everything in your home office: paper, all office supplies, and don’t forget  your printer inks and that type of “small” thing that’s easy to forget.

If you think about it for a while,  and check over your receipts, you will probably find more things to cheat Uncle Sam out of.

Check with an accountant or tax professional before you decide on what action would be best.  Find all the many home based business tax advantages and deductions available to you. With proper advice and good recordkeeping, your home based business can earn you money other than your online income and you will become even more successful!

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18 Responses

August 25, 2009

Hi Daylynne,

The can’t be another first name spelt like this surely.

You had me all excited and frothing at the mouth until you got to the bit that said here in United States.

No – but in all seriousness Daylynne (there – I’ve had to spell it again), there must be very similar, if not practically identical tax allowances in the UK – perhaps someone could enlighten us?

S


August 25, 2009

Hi (I’m not spelling it again),

That last bit was supposed to say “Speak soon”, but my finger caught something on my keypad and I inadvertently posted the comment.

Andrew.


August 26, 2009

Daylynne:

very interesting piece about writing off bonuses that you give. That’s cool! Never thought of it.

How’s your video coming?

Cheers,
Thomas


August 27, 2009
admin

Well Andrew and Thomas…
Why didn’t you name the famous movie star shown as Robin Hood? I’ll give you
a free gift if you do. :-)
Andrew, I’m pretty sure the UK will have something similar in the Tax Code. All
business Tax goes like this: Gross sales -cost of goods -cost of Sales = taxable amount.
Best piece of advice: Get Help if you dont know. My intention is to make you aware its
available.
I don’t know why you UK people find my name so difficult just put the 2 parts
together.. Day + Lynne I know it comes out like Dylan (Irish) to yall, just tough through it!
LOL. And that “yall” is US southern meaning you-all tee hee.
Hope to see you in Vegas…. OH yeah…
My video. Thomas.. I’m afraid I’ll get a D- on it if not a straight Fail. BooHoo.
I’m lucky I got that 2 week extension. I didn’t have a camera, and was sick
with pneumonia and couldn’t get out to get one. (Sigh), but my support guy and
I worked out an alternative solution.. :-)
Thanks for the comments guys…
Daylynne


August 27, 2009

Daylynne:

Thanks for the information regarding tax return. I’m living in New Zealand, I think that will work here too. I never thought the giveaway bonuses are deductible. Great information.

Regards
Kin


August 29, 2009

Daylynne,

Never thought giveaways as an advertising expense… Now I do.

Also, I’m glad you put always get a receipt… This is always my downfall..

But it only takes one or two taxation years to get hit upside the head in
this area… Anyways thanks for the reminder.

Cheers,

Rob


August 30, 2009

Hello Daylynne

This is all useful advice. If I could get myself into a position of earning a really good income off the internet I would go and set up an offshore account and pay 0% tax.
Then you do not have to worry about getting receipts. It sounds fanciful I know at the moment, but I know people who are doing this.

When you pay 0% tax, you do not have to submit accounts and therefore you do not have to worry about getting receipts. Once you have the offshore account set up you pay in the region of $2000 dollars in fees anually to adminsiter the offshore account, but when you consider the tax savings, this is a small price to pay.

It is amazing what expenses you can channel through an offshore account to minimize any personal tax you might have to pay whilst living in your own (or should I say the company’s) home.

Regards
David


September 1, 2009

I don’t know if I qualify for the prize, so I sent you a PM on Alex’s forum. I did not have to guess the actor’s name. I also know how to pronounce your name.

One thing that my business has helped with is taxes. Unfortunately it’s because I have operated at a loss for the past few years. Hopefully that is going to change.

Thanks for the information.

Gene


September 2, 2009

Hey Daylynne
Great post, especially with ROBIN HOOD or should I say Errol Flynn. I have had a brick and motar business for 35 years and new a lot about tax deductions for business But with this new online business I have NEVER thought about Giveaways and the value difference. Thanks so much for the info.
Glenn
PS Now you need to get to the top 25 I really wanr to read about it.


September 2, 2009
admin

Hey Glenn…
Way to Go… Yup that actor is indeed the famous Errol Flynn, and Robin Hood is one of the
roles that made him a super star (one R you see) of the 40′s.
I have a very pleasing gift for you too. This month you can send your solo Email ads to a 1000 targeted
list, twice. Get in touch with me Email me here, at Days@DaylynnesBlog.com
Hope the Tax help, helps too…
Top 25 what? well read further down the page, where it says you are now
dealing with a “WHO.”
Daylynne :-)


September 2, 2009
admin

Hey David..
Really? are you a Mr. Monk? Too bad you’re going off the air this season. LOL

Well, I wouldn’t advocate that people hide their income away in off-shore banks. Your money is as
safe there as in a paper bag on a beach. Even if the bank itself is solid, you never can know when
they can change their laws, to be most unkind to us. :-)

Mostly, they’re only worth while if you’re trying to hide over a million or so anyways… There are other
ways, but I’m afraid Uncle Sam doesn’t like any of them and you could wind up being his guest in one
of those Big Houses he owns. It just seems to me to be a lot easier to save the stupid receipts and
pile them all in a big box for my accountant. :-)

Come back and read my series on Life’s a Journey, you may enjoy them.
Daylynne


September 6, 2009

Hi I’m Trevor
Twiter ID: Trevor_T_Jones
I am a student of Alex Jeffreys I have been looking around at fellow students blogs and came across yours. Definitely one of the best. I felt I had to leave a comment because your blog is simply, so inspirational and informative, It has given me hope and ideas to better mine.
It is so clean and fresh looking. I am always worried I overdo it myself, to much content you know. Your blog is just right. I would appreciate if you would pass comment on mine just to confirm I haven’t overdone it. On my blog I am doing a theme on successful internet marketers. Really like to know what you think as I am pretty new to all this layout stuff. I hope one day that I can write about your internet success. Keep up the good work
Rgds Trevor
PS my blog http://www.trevjones.info
Hey maybe we could follow each other on twitter.


September 8, 2009

Hey Daylynne
Love your 25 Says a lot about you I have to agree with several of them, Love Chocolate,
When your on the top side of life (Wealthy) it is easier but when it is the other way around You apperciate the top side of life more. Am jealous of the way you write, very easy to read and understand . Thanks for sharing things about you
Glenn


September 18, 2009

Hi Daylynne,

Setting up an “official” home business was not even something that I have thought of just yet, so this was a great post. And to tell you the truth, I cannot wait for the day that I actually do so, to claim some of my expenses.

I’m shooting for January of ’10.

Take care,
Karen


September 19, 2009
Daylynne

Ohhh Karen…
I NEED to tell you… and the rest of my readers, you dont
need to actually make any money for it to be deductible!

Everything you’re spending now, is the investment in “your business.”
Depending upon what you are spending it for, different items will be
handled differently on your tax returns. Some large items, like your
computer, will be depreciated, that is, deducted over a period of time.
While your everyday expenses, will be totally deducible each tax period.

While you’re NOT making any money, keeping track and receipts can
make you some money back when you DO start making money. You can
also carry these current expenses 3 years BACK. So say you paid a good
hunk of tax last year on your “job” these current expenses can actually
off set those you paid. OH… isn’t Uncle Wonderful? And even better than
that, you can carry these loses 15 years forward too. So, you can see,
NOT making any money at the present time… can ACTUALLY make you
money! Wooooo Hooooo

Of course, dont try to do your tax return by yourself, be sure to consult a
professional. I am going to post more on this… see the front page… :-)
Thanks for your comment, it has sparked the need for further information
on this subject.
Daylynne


June 17, 2010

Hey Daylynne,

Great post on tax savings. I think some of it applies over in Aussie land. Since I’ve been online, I’ve always kept that side of it on an accrual basis with the tax office and not a financial year basis that I report to them. Only recently when I started sending my earnings in Australia and declaring them in the financial year to ATO that I’m having to ponder on what to claim as deductions. This post definitely helps. Look forward to the more info that you will reveal.

- Louis


July 5, 2010
Daylynne

Thanks for writing Louis
and for your nice comments. You are also reminding me of some
missing items here on the blog. I have a nice little 8 page report on the savings
you can glean on your taxes… here’s the link: its free:

http://www.daylynnestarr.com/TaxSavings/Download22/thankYou.html

It is more complete than the post, and will give you lots more ideas on how to
give yourself a bonus from the tax man… lol

Come again… more good stuff coming on the blog…


February 17, 2013
tom

as for saving tax with give aways ask Face book they gave aay bonuses and got a 26 million rebate star buck did the same tranfering to other shopwho were losing and they paid no tax on 266million