Copyright 2004 by Windy Dawn Marketing and Windy Windblad. This article may be freely copied and used on other web sites only if it is copied complete with all links and text intact and unchanged except for minor improvements such as misspellings and typos. You ask, “Okay, I’m starting a small homebased business, not a huge million dollar International Conglomerate! But should I incorporate or keep it a proprietorship?” Actually, there are arguments in favor of either decision. This argument will be in favor of
proprietorship.
The first thing is that you need to know there is a totally different set of laws, regulations and tax law that governs proprietorships and corporations. And for small business entrepreneur tax advantages offered during first 5 years are enormous. After 5 years you are expected to begin showing a profit but this is not necessarily “written in stone”. Let’s take a closer look at some of advantages of a proprietorship.
If I were to show you how a one-time $439 USD investment could gain you from $1000 to $2500 in tax refunds and write offs per year would you be interested in learning more? Okay, here goes.
If you are a blue or white collar worker, a doctor, lawyer or other professional, can you write off on your taxes gas and other travel and parking expenses you accumulate driving to and from work? Your lunch expenses? Your home office? Travel and vacations? Any part of your household utilities expenses?
The answer is NO - you cannot write these expenses off your income tax.
If you start a business, a proprietorship, working out of your home, call it "your name consulting" or whatever seems to fit best, you are now able to write off all of following:
Automobile mileage Gasoline Other car maintenance % of automobile depreciation* Home office (as a % of your home) % of home utilities expenses & of your home telephone bill Entertainment expenses Vacation expenses Meals *100% of a Leased Car And more, these are just bigger ones.
There are, of course, conditions. You cannot go on vacation and simply “write off” all of your vacation expenses. You must “share information” about your product or service with others while you are on vacation --- more than just “passing out business cards --- and you must also keep records of every contact you make. This will also help you with follow-ups.
These contacts, with whom you are sharing details of your business service or product, are contacts that will validate your write off. You should have at least two a day while on vacation. Who? The barber, your golfing partners, beautician, people you meet in store or casually just about anywhere? All you have to do is talk to people, share your information and you have succeeded. You will be surprised, also, by how many will want to join you? But you must keep records of these contacts.
