The cost of living has escalated dramatically since we were raising our family. It was possible at that time to survive financially with one income. I am convinced the budget I talked about in a previous posting enabled us to live a quality lifestyle on one income. As our children approached high school ages, our finances fell short and it became a challenge to survive on one income. Instead of my wife seeking employment that would take her away from home we started an in-home nutrition business to generate additional income. We became distributors of Shaklee products. The first year was very discouraging because we seemed to be consuming all of our profits. We felt great! Our health improved but the additional cash flow was slim. You can check out the Shaklee banner on the side for additional information about this company.
When we met with our CPA to prepare our taxes he enlightened us regarding the many advantages of a home business. This allowed a portion of many of the fixed expenses of operating our house to qualify as legitimate deductible expenses. We qualified for a Shaklee car. As I have mentioned previously travel has always been a passion in my life. Our home business offered us the opportunity to travel to Nashville, Orlando, California, Bermuda and many more areas of the country. All travel for these conventions and seminars were taxable expenses.
Entertaining clients and many other things also became taxable expenses. Another benefit of our home business was that we were able to shelter a percent of the net profit of the business by setting up a SEP account for retirement. By the time we left our CPA’s office we were really fired up about the great benefit of doing something we loved and saving money on taxes.
Over the years I have met with many young couples showing them the net gain of their take home income by having a home business verses having the major breadwinner seek a second job or their partner seek outside employment. The key to making this happen is finding something you love doing and turning it into a profitable business. We know a retired couple from whom we order homemade fig cookies and many delicious wonderful cakes. They are doing what they love at home, earning extra income and are still able available to have their grandchildren visit and stay with them often!
Many people fail to take the opportunity to give themselves a raise by finding legitimate ways to reduce their taxes. In my last postings I talked about Buckets of Income. Not all buckets are assets to generate cash flow. This bucket of income is generated by tax savings and the yearend tax refund verses an end of year tax burden.
In seeking a CPA it is important to have someone that is very familiar with tax advantages of operating a home business out of the home. The wife of our CPA operates a home business which has certainly heightened his enthusiasm about the tax savings they receive. He is well qualified to pass on this valuable information to his clients.