Home Based Business: Your Ultimate Tax Shelter
Starting and operating your own home based business is the ultimate tax shelter.
Although this article has been written from a Canadian income tax perspective, the principles should be practical in other tax jurisdictions.
1. Non-Deductible Personal Living Expenses
All of us have expenses that we incur in everyday living.
Either you rent an apartment or house or you own your residence. Utilities, insurance, rent, mortgage interest, property taxes, and maintenance and repairs are typical costs of operating your home.
Likely, you have a vehicle which also consumes large amounts of cash.
Add to this, dining out, entertainment, gifts, alcoholic beverages, office supplies, telephone and many other expenditures, and you have a significant cash outflow.
In most cases, as an employee, retired person, investor, student, or homemaker, few of these expenses are tax-deductible to you.
This means that you must earn a considerable income, pay your income taxes first, and then use what is left to pay all your expenses.
Some employees may be able to write-off some of their employment related expenses, if such are required by their contract of employment. However, even in this situation, the tax deductions are very limited.
"Home Based Business: Your Ultimate Tax Shelter - Page 2"
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"Home Based Business: Your Ultimate Tax Shelter - Page 2"
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