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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12
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Last Post Dec 12, 2007 11:03 AM by: deirdre@ebay.com
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deirdre@ebay.com
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Nov 29, 2007 11:25 PM
Topic: Member Workshop: 25 Last Minute Ways to Pay Less Tax

Host: dkennedycpa
Date: Wednesday 12/12
Time: 10:00 a.m. to 11:00 a.m. Pacific time
Location: Workshop Discussion Board

Description: The end of the year is almost here. Bring your questions and join CPA and best selling-author Diane Kennedy for a lively discussion about what you can do in these last few weeks that can save you hundreds, maybe thousands of dollars in taxes.

Cheers,

Deirdre
eBay Community Development
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dkennedycpa
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:47 AM
Hello. My name is Diane Kennedy. I’ve been a CPA and Tax Strategist for over 25 years. My specialty is working with small business owners and real estate investors. My tax education company, TaxLoopholes, LLC, teaches people through books like Tax Loopholes for eBay Sellers, tapes and seminars on how to take advantage of the legal tax loopholes available to everyone. First though, the stuff that our lawyers make us say: Laws and practices vary from state to state and if tax, accounting, legal and other specific expert advice is required, the services of a professional should be obtained.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:47 AM
For our last workshop of 2007 I'm presenting 25 Last Minute Ways to Pay Less Tax. The end of the tax year is coming quickly for those of you operating as Schedule C businesses or flow-through businesses like LLCs and S Corps. But that doesn't mean you're out of time to take steps to reduce your tax bill!

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:48 AM
And, as always before we start I'd like to tell you about this month's special gift. We love your questions, and so for the first 10 people who ask a question today, we’ll send you a 3-part series of Special Reports called The Language of Money. This is the first time we've ever offered this series to our eBay workshop readers, so get your questions in first to get on the list!

Diane Kennedy, CPA
www.taxloopholes.com
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:48 AM
Tip 1. Make sure your business is a business. A business is an enterprise that exists to make a profit. A hobby is something that you do with no anticipation of making a profit. The difference between them is that with a hobby business you can only ever break even. Your business losses can only be offset up to the amount of income you make. Anything above that is lost. And that defeats one of the benefits of having a business in the first place - in early years, business losses can be offset against your other income, lowering your overall tax bill.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:48 AM
We've got a simple test you can take to find out if your business is a business or a hobby. It's called the 9 Steps to a Strong Business Quiz, and you'll find it on our web site, under the TaxLoopholes for eBay Sellers section of our Reader's Club.

Diane Kennedy, CPA
www.taxloopholes.com
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:49 AM
Tip 2. Operate through a Business Structure. Using a business structure like an S Corporation or an LLC taxed as an S Corporation can do three things. First, it gives you a level of liability protection from your business, and vice-versa. If it's set up and operated properly, your business operates independently of you, and vice-versa. That means the debts of your business stay its debts, Second, once your business is past its infancy and is earning a reasonable income you can begin to save taxes and have increased business deductions. For starters you can save on the 15.3% self-employment tax you're paying if you operate through a Schedule C. And third, it can help reduce your risk of being audited. Even the IRS acknowledges that it audits Schedule C businesses at a rate that is 10 times higher than business operating in a formal structure.

Diane Kennedy, CPA
www.taxloopholes.com
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:49 AM
Tip 3. Avoid IRS Risk. Moving into a formal business structure isn't the only way you can lower the risk of an IRS audit. There are plenty of red flags you can avoid by making sure you get your tax return done properly. Math mistakes are one of the biggest! Even if you do your tax return using a computer program, take the time to double-check the numbers. When things don't add up the IRS pulls that return aside for a closer look.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:49 AM
Another big red flag is selecting the wrong business code for your business. The business code is usually assigned when you get your business's Tax ID Number or file a tax return. If you pick the wrong code, your return can be flagged for audit because it's not showing the numbers or accounts the IRS is expecting to see.

Diane Kennedy, CPA
www.taxloopholes.com
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:49 AM
And a third big red flag is inventory. As business owners selling on eBay, the IRS is expecting to see entries on your return dealing with your inventory - beginning amount, additions, costs of goods sold and ending inventory. Leaving inventory off your return could cause problems at tax time.

Diane Kennedy, CPA
www.taxloopholes.com
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:49 AM
Tip 4. Good Recordkeeping. There's a reason why the IRS selects sole proprietorships (Schedule C businesses) for audit far more often than formal business structures. Many of the same things that make operating this type of business attractive (no filing fees, no separate records, no separate bank account, etc.) can also make for some sloppy recordkeeping - and an easy target for an IRS examiner. Without receipts to back up your purchases or expenses, you'll lose them if it comes to an audit.

Diane Kennedy, CPA
www.taxloopholes.com
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:50 AM
The next nine tips all have to do with commonly-missed expenses that can add up to big savings. These are expenses many people miss, especially if they aren't practicing good record-keeping habits.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:50 AM
Tip 5. Look at EVERYTHING. When it comes to expenses, the mantra is "ordinary and necessary to the production of income." When you look at your business operations, always keep that in the front of your mind. Could you operate your business effectively and efficiently without XXX (work-arounds are great, but if you spend all your time working around something how efficient is that?) Ask yourself: is this a reasonable expense for my business? Or, think outside the box a little and as yourself "How can I make this expense a business expense?"

Diane Kennedy, CPA
www.taxloopholes.com
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:50 AM
Tip 6. Early-Stage Contributions. When you get started in business it's often on a shoe-string budget, using items you already owned. A very common mistake I see in new business owners is failing to write off those early stage items. Are you using a computer for business now? How about a printer, a desk, office chair, and shelves to hold your inventory? How about a phone? All of those things can be contributed to your business (at fair market value) and written off.

Diane Kennedy, CPA
www.taxloopholes.com
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Member Workshop: 25 Last Minute Ways to Pay Less Tax - Dec 12

Dec 11, 2007 9:50 AM
Tip 7. Home Office. I can't believe that I am STILL hearing people tell me that taking the home office is a red flag deduction. That information is so 10 years ago! The truth is the home office deduction hasn't been a red flag for several years now - actually the IRS actively encourages home business owners to take it. There are just two tests you need to meet: exclusive use, and regular use. A spare room works really well here - somewhere you can set up your office space, perhaps store inventory (or not) and use on a regular, continuing basis. When things become a problem is if your office also doubles as the guest room, or if you use a portion of a multi-use room, like your kitchen, for example, and try to write off the entire room. Exclusive and regular use is the key here.

Diane Kennedy, CPA
www.taxloopholes.com
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