Shifting Personal Expenses Into Business Deductions Part 1

The following three part series will show you how to take expenses that you are already incurring and change them into business deductions. Why would you want to do this? Salary is highly taxed. Shifting these personal expenses will reduce the amount of salary you take out of the business thus lowering taxes. Also this will shift the expenses to the business. This reduces the amount of net income in the business. These two basic concepts can save you tens of thousands of dollars!

When working with a tax professional they will typically pull from a small pool of deductions. This is because they generally work with individuals and not businesses. When we demand more deductions they often will push the envelope on this incredibly small group of basic deductions. Our goal should be to use as many deductions properly in order to give us the largest tax savings possible. Very often a given expense can be categorized many ways, some of which will have better tax savings than others.

Before you start worrying about tax deductions, make sure you have an operating account. This is where you should pay your day to day expenses. Minimize paying with cash and get a corporate credit card. This makes it easier to keep track of your expenses. Obviously we are not recommending that you run up your credit card. It should be paid off every month. Otherwise you are going against any logical wealth building strategy. It should simply be used to keep track of your spending.

The next two parts of this series will cover a few examples of the many business deductions that your company is eligible to take. You can also visit us at pfbs.com to find out more helpful information about tax saving strategies.