One of my favorite subjects on which I lecture in a business class which I teach to holistic health practitioners is an overview to taxes, or as I title the lecture, “Playing with Taxes.” Specifically, I provide an overview of the benefits of our tax system which rewards entrepreneurs, even those utilizing the most simple form of business, a sole proprietorship.
The savings in personal income tax are particularly profound when a portion of one’s home also functions as a place business, since the overhead of having a roof over one’s head is an expense which all must incur anyway, and having a means to legitimately convert a portion of these living/operating costs as deductible business expenses can really add up to significant tax savings.
There are a number of different industries and business models which may be reasonably run from home, especially in today’s age of ubiquitous e-commerce and efficient delivery systems. A few of the benefits in running a business from home include:
- Little to no overhead cost
- Zero travel/commute time to one’s home office
- Increased time flexibility
- Ability to employ children tax-free up to the standard deduction amount
- Reduction of personal tax liability through migrating a percentage of personal expenses to legitimate business deductions
The latter is an extremely valuable benefit of which many are unaware and is available to all home-business entrepreneurs. The key requirement is having a sufficient system of recordkeeping (tax journal) which must be maintained regularly in the course of running one’s home business. One of my favorite authors and speakers on the subject is Sandy Botkin of the Tax Reduction Institute.
So, how does one select an appropriate business model, particularly if one is only looking to run his or her business part-time?
Even more so, how does one grow a business part-time which can ultimately be nurtured to provide an income stream which may replace, or even exceed, the income which is earned from a current full-time job? The short video below profiles a number of individuals who have done just that by using the same corporate partner that I have in building such a residual income stream.