"Tax Time is coming," he said as ominously as a Stark announcing the impending onset of White Walkers. As a business owner, you must learn how to talk about money.
As self-employed business owners, that's the game we're in now: to earn as much as we can, and then apply as many expenses dollars against that revenue to minimize our taxable income.
If what I just said is gibberish, it's time for you to get some basic business accounting and tax education. Local colleges will offer these and guess what: that's an expense. Right now is a great time to start learning about accounting and tax for your business, because it'll give you a couple months' head start before the tax season begins.
Tax Time Requires Preparation
Let me give a legal disclaimer before we go any further: I am not an accountant and this is not professional business advice. However, the general rule is: if whatever you're buying gives you a "view to a profit", it's an expense. Not "makes you a profit". Just gives you a "view to a profit", ie. it might help you make money.
I expense Amazon/Kindle books, courses, consulting fees, hosting fees, membership fees, advertising costs, all the costs of running my home office...tons of things that I must spend money on to run my business.
Training programs like the ones I offer are definitely tax-deductible expenses, and that's why I say they are essentially free. After you bring in the revenue to cover their initial investment, the deduction from that revenue makes their cost $0.
If you've been an employee all your life, and have only recently gotten into the business owner game, this can be a hard mental shift to make. But if you don't, a) you won't be playing the game effectively, and b) you'll be paying much higher taxes than you should.
Free Resources to Learn About Tax Time
It's not even necessary for you to spend money to learn about how tax works. There are free courses like this one from the IRS:
(I watched the first couple videos and they were quite approachable! For content that came out of the IRS, they're understandable.)
Other online sources are also available, such as:
Now I got my basic tax education as part of the Accounting portion of my business degree 20 years ago. Learning how to speak that language was one of the more valuable things about my education. And if you're going to succeed in business, you MUST learn how to do this...no matter how unexciting it may seem to you at this moment. I mean, does saving yourself, say, an additional $9000 or maybe 20% of your tax bill sound exciting?
It does to me! And that's what a fellow business owner hired a consultant to help him do in the past couple months. We're talking REAL MONEY here. I hope that has an impact on you. As a business owner, you must learn how to talk about money.
Every field of study has its gibberish. Remember that. If you decide to start learning about photography, web design, or types of birds, just like with the study of accounting and tax, there will be new terminology to learn. Don't be scared, and realize the value and effectiveness of what you'll learn.
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