How To Use Business To Write Off Your Life
One of the most common questions we get asked in business is "how do I pay myself?" And we have a unique approach to this, one that optimizes the tax code, and ensures that the maximum amount of our life's expenses are paid by the business (with zero taxes paid!) before we start taking a paycheck. This is a strategy any business owner can utilize and in this article, we will share our top tips on how to make it work for you!
You see, here's the thing. Prior to becoming entrepreneurs, there was one way we knew how to bring money into our household: through a paycheck. But as a result of being self employed since 2014, we've learned lots of strategy on how to funnel money into our home that eliminates the need to pay tax, and actually benefits all parties involved. We're so passionate about sharing this information because building wealth and getting to a place of financial freedom is what so many are seeking. There's one area where we feel like we've "cracked the code" and we're anxious to share it with everyone we know! Though we have learned a lot of this ourselves over the years, we'd also recommend following our Tax Strategist @YourTaxCoach on instagram for more info too.
Listen to our podcast episode on Barbara of Your Tax Coach’s podcast “Life Changing Money”!
Ideas for Writing Off Your Life
How to use The Augusta Rule In your business.
This is a tax code that allows business owners to rent their home for up to 14 days per year without paying taxes on the rental income. This means that 14x per year, you can charge your business to "hold a meeting" in your home. The amount you charge your business per night is determined by fair market rates in your area, but can equal as much as your mortgage sometimes. This means, you could be paying your mortgage (or at least a portion of it) from your business, completely tax free!
How to Use Board Meetings Be Leveraged for Travel?
Anytime you conduct a board meeting, the expenses associated with it are write offs. And you have the sole discretion on where to hold these meetings and the expense you'd like to incur in order to hold them.... which means, that the upcoming trip to Hawaii or Miami could possible be a business write off if you notate it as a board meeting. Bonus if you could also meet with a potential client or walk the space of a potential income opportunity. You likely can't write off the entire trip for a single board meeting, but if you're conducting up to 50% of business while you're there, then the entire trip can be expensed!
How common is writing off your home office through a business?
This is one that most people already familiar with, but don't always know the extent to it's reach. Not only can you take the percentage of your home (rental or owned) that the office space occupies, but you can also take the same percentage for just about every expense related to your home: gardening, HOA, security system, pool maintenance, internet, electricity, etc. So, if your home office occupies 10% of your home, you can also take that same percentage of all those other costs. This is in addition to the Augusta Rule (for homeowners, not renters). And, you can also expense snacks, water, coffee, candles, furniture, and anything else that goes into maintaining your office space.
Can you write off staff wellness in your business?
As the owner of a business, there are certain aspects of your life that must be maintained in order to be effective. This may include monthly massages, chiropractic appointments, herbal supplements, and other wellness aspects that you have within your regular routine to ensure you stay at the top of your game for your business.
Can you purchase Luxury items through your business?
Want to purchase that new handbag or have your eye on some designer shoes? Purchase it for an upcoming photoshoot or business trip you have planned and you can write it off on the business. A laptop bag, new luggage, attire for a photoshoot, jewelry to wear at your upcoming exhibit, are all legitimate ways to secure personal items for yourself while using business money.
Conclusion
Be mindful that we are not tax professionals or accountants. Please be sure to speak with your designated accounting professional if you desire to pursue any of these expenses within your business. Each one of these are areas we've taken advantage of and can speak from experience of our ability to do so. However, circumstances vary for each individual and business situation. With that said, if we've learned nothing else over the last 10 years of being entrepreneurs, it's that tax code is written to benefit business owners. The more you can filter money through a business, the less you will pay in taxes.
↓ Barbara went VIRAL on TikTok sharing about these very topics! ↓
Call-to-Action
Want more information on how to start a business or better take advantage of these tax havens? Enroll in our Start-Up Incubator course where there's an entire module dedicated solely to this content.
