1st EVER Stock Market Retreat Exclusively For Women!!!

April 28, 2008 – Hi Ladies! On June 13-15, 2008 I will be hosting the first EVER Stock Market Retreat Exclusively for Women in Atlanta, Georgia. Feel free to log on to my website to enroll, and in the mean time, learn a little more about one of my favorite topics below.nn‘tis the season to be wealthy….tax season that is. As many of us have heard, the government has authorized a refund check to those who filed an income tax return by April 15th of this year. They are calling it an economic stimulus package, which reminds me of one of my favorite topics…tax deductible. What does “tax deductible” really mean?

Ladies, how many of us believe in spending money because it’s tax deductible? I hear it all the time in the sales pitch of the mortgage companies who try to get us to take out some of our home’s equity to pay off credit card bills. What do they say? “Well, if you take out a home equity loan, then the interest is tax deductible.”

Ladies, for those of you who like to spend money solely because the expense will be tax deductible, I have a deal for you. How about you give me a dollar, and I’ll give you 30 cents back. Sound like a good deal to you? I didn’t think so. Yet, this is exactly what happens when you spend money for the sole purpose of getting a tax refund. In fact, I overhear conversations where people use spending additional money on a home mortgage versus what they are currently spending in rent because they can write off the interest. Now, ladies, don’t get me wrong, as there is nothing wrong with buying a house to help build wealth by increasing your net worth. But, frankly, most folks have got it backwards. The financially literate don’t spend money for the sole purpose of getting a tax refund. Instead, they learn ways to deduct expenses that they already have anyway through a legitimate business.

I started my first business, an e-commerce / network marketing business, five years ago. I was looking for a way to minimize my yearly tax bill. In essence, I was able to reduce my yearly tax bill by employing a simple financial model used by business owners. Basically, it works like this – Business owners take in income, incur business expenses, which they deduct first, and pay taxes on the rest. Employees, on the other hand, use another financial model. They take in income, pay taxes first, and then use what is left over to pay their expenses.

However, I want to reiterate the statement I made earlier. The key is not to spend more money in order to deduct the expenses from your taxable income. That would be like spending a dollar to get 30 cents back. And I see many business owners fall into this trap of buying things that they don’t absolutely need for their business’ success. But, if you already have existing expenses, which can legitimately be claimed as business expenses, this is where owning a business can pay off.

Ladies, take a look at the following scenario as an example:

Say you have a business owner and an employee who each make $50,000 per year. Assume they are both taxed at the same annual rate of 30%. The business owner spends $20,000 in business expenses. What’s the result? Well, the tax bill of the business owner would be substantially different. Why? Remember the financial model.

The business owner makes $50,000, but she gets to subtract the $20,000 from the original $50,000 and pay taxes on the rest. So, for her, the resulting taxable income is $50,000 minus $20,000 equaling $30,000. And 30% of $30,000 is $9000. She pays $9000 in taxes for the year.

Now, on the flip side, the employee makes $50,000 and is immediately taxed. And 30% of $50,000 is $15,000. The employee pays $15,000 in taxes.

Ladies, that’s a $6000 advantage that a business owner has. That’s $500 per month. As the saying goes, “a penny saved is a penny earned.” So in this case, $500 saved is $500 earned. Just imagine what you could do with an extra $500 per month!

Ladies, this is the way to create your very own economic stimulus package, every month I might add. In this case, it’s a $500 per month stimulus package. If you are wondering where to get some extra money, you’ve probably already got it, and it’s in the form of your existing tax bill. Find a way to reduce your taxes so that you are giving less of your money to the government and more back to yourself.