10 Sure Ways An Independent Contractor Can Save Money On Taxes

Tax laws are written by politicians and they write the IRS laws to tailor society the way they and their constituents want. This is something that accountants and tax preparers are taught every tax season.

Politicians today want workers for the rich so they can live in bigger houses and take vacations that their employees can only dream of winning the lottery. Those who want to help others end up giving the taxes paid by honest taxpayers to dishonest people, instead of those who really need it. However, you can help yourself pay less in tax and make sure your tax dollars go where it counts.

Big business and the rich spend money on accountants to figure out how to dodge taxes and give money to politicians to pass the laws they want. As a small business person, you can take advantage of those same laws that the rich spend a lot of money to get.

Here are ten surefire ways you can use the IRS and your small business to your advantage, just like big business, and pay less in tax.

  1. Run a business bank account because depositing into your personal account leaves it open to IRS inspection. If you want to keep the IRS out of your personal account, you should put all business money in an account that is only used by your business. That’s the way big business keeps the IRS out of your other money.

  1. Don’t give away or donate, advertise instead. A business is only allowed one $25 gift per customer, donations go on your personal form if it is not incorporated, but you can spend all advertising done for your business directly on your Schedule C. When prompted to gift or donate, Ask if there is an opportunity to advertise in your niche.

  1. Never go without the necessary equipment in a business. Any necessary equipment is deductible, so buy what you need to make the most money. Dont wait!

  1. Travel is also deductible if you go on business. Hire your spouse to work the booth at a convention and you’ll both be covered for the trip. What you do at night is your business as long as you both work on the show.

  1. Track every business mile you drive. This is usually a large deductible for a small business, so it’s important to account for every trip to the bank or post office, to the store, to buy supplies, etc. Commute miles are not deductible unless you go to your second job (which includes self-employment) and follow special rules. Find out if you qualify or not.

  1. Learn what expenses are considered “normal and necessary” in your industry, and keep track of all business expenses you incur that fall into this category. You will lose less than what is deductible if you do. Any business expenses offset your business income.

  1. Spend money in the last few months of the business year on whatever your business needs to get ahead. Do this and you will lower your taxes and grow your business faster.

  1. Anyone who is double submerged must be turned over and you must Never add to your income. Dishonest people take their regular income from taxpayers in the form of unearned social security disability, tax-free income, free housing, earned income checks, tax credits, taxpayer-funded support, health care, etc. and double dipping by keeping 100% of all income they earn for themselves. People who lie about their income or the number of children they have in order for taxpayers to support them are cheating you and making everyone’s taxes higher. An independent contractor pays 17% of his earnings to social security plus state and federal taxes. That means he can multiply the money for a double bucket by a minimum of two, since they pay neither. These people steal from taxpayers like you, your spouse, parents, children, and others, and many make more money than some of these people. If every honest taxpayer turned in one or two of these dishonest scammers, we’d have more tax dollars for those who really need our help. Use IRS Form 3949a, you can be anonymous and you can earn a reward.

  1. Invest money now for your retirement. Anyone can save money for retirement, and most get an IRS deduction for some or all of the money saved. A business owner can set up a SEP and save 25% of their compensation for retirement. That figure may be hard to drop now, but you’ll pay less in taxes if you do, and when he’s old he’ll have money waiting.

  1. Go after the IRS to change the current tax laws for your benefit. There is clout in numbers, so you’ll want to join a group of similar businesses before you get started, but then you need to work to get the tax laws changed in your industry’s favor. There is probably a group for business owners in your industry. Check there first. This has worked for other industries in the past and it will work for you.

If you follow these 10 simple rules as an independent contractor, self-employed person, or small business owner, you’ll pay less in tax. Skip one or two and you’ll pay more than the big companies pay, and more than your fair share.

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