You can get a very good tax shelter without sending your money off to the Cayman Islandsby forming your own business. Even some forms of hobbies can be reorganized as a business and be turned into a huge, and legal tax shelter. The key things are:
1. Keep meticulous records of income and expenses. If you present paintings that you either painted or acquired, you can attempt to sell them. Even if you do not sell a single one, keep records of your expenses, they can be used as a tax write-off. See http://www.incparadise.com
2. Maintain evidence that you have a profit motive. The IRS defines a true business to be one that is geared to making a profit. That does not mean you have to actually make a profit. Say your business is betting on the horses. If you set up careful accountant records of your bets and your wins, you can present this as a business, even if you overall have losses for years in a row. Some research companies that receive outside investment can go for five or ten years without showing a profit, yet considered totally legitimate businesses with a profit motive. Its assumed that many businesses can have long and even extremely long start-off times.
3. Be able to write-off many household expenses as tax deductions. Take for example, someone running a transcription service for doctors, lawyers or bankers. They set up a room in their home to listen to cassette tapes or audio computer files, such as MP3s, and transcribe them for a fee. They have to buy a Personal Computer, a PC to process all this data. They need a telephone line, a DSL Internet line, a fax machine, and some US Mail communications to run their business. Part of their household rent, mortgage, heat, and electricity can be looked at as possible business expenses. Please consult your accountant, lawyer or tax advisor. This can even be a part-time job. Keep your day job if that suits you, you can still reap the rewards in tax deductions.
4. Take courses to improve your business abilities. Another potential tax write-off is the education that youll need to carry out this part-time or full-time business. Do you need computer courses to make it possible to carry out your tasks? You may need to learn other skills. Many businesses require writing ability for ads and other business written materials. You may even need to take legal courses. As one of my business instructors reminded me, enjoy the benefits of having your own business. The tax code was written by people who had their own business, and who generally believed in people having their own business as a positive factor in society.
There is no need to spend hundreds of dollars incorporating yourself, at least not when you first get started. You may want to form an LLC, a limited liability company, in order to make sure that your personal asset, your home and property are protected in the event of lawsuits. Still, this is not required by the Internal Revenue Service (IRS). |
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