Start a Side Business

My first monthly tax tip is what I believe to be the number one thing you can do to save on taxes. Start a business! I am not suggesting for you to quit your job, but I am recommending to think about a side business that you could start to earn some extra money and enable you to write-off otherwise personal expenses. This has the potential to save you thousands in taxes each year. If you are having trouble thinking of what business you could start, think about what you enjoy and are passionate about.

Being in business allows you to potentially get a tax deduction for expenses you have to pay for anyway such as cell phone, auto, meals, travel, electronics, etc. Additionally, under the new Tax Cuts and Jobs Act, small business owners and independent contractors are entitled to a Qualified Business Income Deduction. Essentially, this deduction allows you to only pay tax on 80% of your net business income. This deduction is not offered to salaried employees.

If you are hesitant about starting a business, start small and build up from there to see the benefits. It is not difficult to start a business. You can operate as a sole-proprietor at the start by default and still deduct all of these business expenses. As you grow, you will want to look at forming a legal entity. Please feel free to contact me if you have any questions.