Small Business Tax Tricks
March 29th, 2011
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Question: 47% of Americans don’t pay income tax. How come?
http://www.businessinsider.com/coincidence-47-of-americans-dont-pay-income-tax-45-think-tax-is-just-fine-2010-4
How many of you fall into this category?
How many percent of these do you think make very little (under 20,000). How many percent of these make a good amount and just have good accountants helping write everything off?
A friend of mine once told me that if you have a small business and make more than $250,000, you must be making 10 times that amount, because of all the accounting tricks you can do to write off your income as a small business owner and just keeping everything as cash.
Answer: Well, never trust a statistic but let’s break down the questions. Think about how many poor people there are that earn less than $9,350 (the standard deduction plus one personal exemption). This includes children and adults. All those people don’t pay tax.
Now look at all the cash basis workers in the world. I know a lot of them. They don’t pay tax.
Yes, you can write off a lot of things as a business owner. Both legitimately and illegitimately. However, playing with the IRS is like playing a game of Russian roulette with your bank account. If you are misplacing items in your tax returns and are audited, they will find it. The chamber with the bullet comes around eventually and you will be audited. In any case, these business owners don’t pay tax for as long as they aren’t audited… In any case, these guys/gals don’t pay tax for awhile.
Then look at the people that work the system… One guy I know keeps his income at or below the limit that allows for him to maximize all the refundable credits. That way he doesn’t have to work to much and Uncle Sam (you and I) still pay his ass. GOD BLESS AMERICA!
Lastly, a good accountant isn’t really “good.” They usually suck! Guess who will have to pay the penalties and fees when you get audited? Not the accountant. Can you sue him? Yes, but you will lose! At most, you can recover the cost of his/her fees, but not what you owe the IRS. Just remember, you are signing off on your tax return. He just is admitting to “preparing” them for you. They are all your numbers, not his/hers.
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Tags: business, business tax, finance, money, reference, small business, small business tax tricks, tips