There are 12 easy, specific actions you can take RIGHT NOW,
that will slash your 2014 taxes to the legal minimum.
HERE IS ACTION STEP #3 of #12 –
Question: Do you have a separate checking account for your business?
If YES, congratulations; you get a pass for today.
(Watch your inbox for Issue #4 tomorrow.)
If NO, here are a few points to consider….
If you are ever audited, the auditor has been told to make you prove that your
“business” is really a business. Have you ever worked for a business that gave
you a “personal’ check on payday?
Can you really keep your business income and business expenses separate
from your personal income and expenses using a joint account?
If your business is ever audited, the auditor will comb through your business
checking and savings accounts to see if you claimed all of your taxable income.
If you used a joint personal/business account, you will have to give them access
to all of your personal info as well as business. Do you really want to do that?
Come on, this is a little deal to you, even if it is a big deal to auditors.
Just go to the bank where you have your personal checking accounts,
and tell them you want to open a second account. It does not have to be a
“business” account by banking terminology. Open up a second “personal”
account just make sure, from day-one, you use it only for business income
and expenses. What if your business is new, and you are not yet making
enough business income to pay all of your business expenses? Fair question,
and this is why many home-based business owners use their joint account.
There is actually an easy solution – especially if you open your business
account at the same bank as your personal account.
Step 1: For your opening balance, transfer funds ($100?) out of your
personal account and into your business account, recording it in both
check registers as “Loan to Business from Personal Funds.”
This is very important so that some auditor someday will not try to
claim you had $100 worth of “unreported business income.”
Step 2: Begin depositing ALL business income into that business
Step 3: If you continue to have business expenses that are greater
than your business checking balance, make another loan from your
‘P’ account into your ‘B’ account.
Step 4: When business income is sufficient, begin to repay yourself
by transferring money the other way, from B to P. And always label it
in both check registers, as “Repayment of Personal Funds loaned to
Business on (date).”
While you are at the bank be sure to get not only a debit card, but also
a new credit card which, of course, you begin using only for business.
If the checking account and/or the credit card have any fees associated
with them, remember that all fees will be tax-deductible as business expenses.
That’s #3 of the 12 best tips I can give you for legally slashing your 2014
taxes to the bone.
SEARCH THIS BLOG for “Special Edition 4 of 12” tomorrow.