Tuesday, February 24, 2009
To deduct or not to deduct.
I'm a small business owner online retailer for 1 year.
Is it wiser to spend more money through my business and claim legitimate deductions, than to spend less? If you spend less of your business income, or "save money", then the IRS is going to get a larger portion of the unspent money as taxable income, so why not just spend more through the business? You can spend more on what you want, while reducing your taxable income at the same time.
Any downsides to this?
El Paso Texas
This is a confusing question. I am not sure what you are asking. However, here is what you and every indie should do regarding business expenses: Deduct every single legitimate business expense you possibly can. Don't cheat by deducting personal expenses.
A business deduction typically saves 1/3 in taxes. So a $900 expense save $300 in taxes. Could be less. Could be more.
The upside to a low income: Helps when applying for school financial aid or government benefits.
The downside to low income: It make it more difficult to get a mortgage or other loan or credit card.
Be sure to read Is it a deductible Business Expense? on my website.
And visit here for a complimentary List of 100+ Indie Business Expenses .