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What Is The Key To Slashing Your Taxes?
One very foggy night the captain of a large ship saw what
appeared to be another ship's lights approaching in the
distance.
The two were on a course that would mean a certain head-on
collision.
So quickly the captain signaled to the approaching vessel,
"Change your course ten degrees west."
The reply came, blinking back through the thickening fog,
"You change your course ten degrees east."
The captain became insulted, pulled rank, and angrily sent a
message back: "I'm a sea captain with 35 years experience.
Change your course ten degrees west."
Without hesitation, the signal flashed back, "I'm a seaman,
fourth class. You change your course ten degree east."
The captain, now becoming enraged, realized that the two
ships were rapidly approaching one another, and would
certainly crash in a few short minutes.
So he sent his final warning: "Now you listen hear. I'm a
fifty thousand ton freighter. Change your course ten degree
west - now!"
A simple message came blinking back: "I'm a light house."
*************************
I'm often asked, "What can I do to lower my small business
taxes?" And I'm always glad to offer an answer packed with
potential tax-saving strategies: form a corporation,
start a medical reimbursement plan, start a SIMPLE
retirement plan, take the home office deduction, keep
track of your mileage, etc., etc., etc.
Of course, the easiest way to start paying less tax is to
start keeping better records of the expenses you already
have, but have failed to report because of poor bookkeeping.
But lately, I'm wondering if I'm giving the best possible
answer to this question.
I'm wondering this because of a recent conversation I had
with a client, who came to me for (surprise!) tax-reduction
advice.
This man was an ideal candidate for converting his sole
proprietorship to a corporation. In about 30 minutes I
showed him how he could save
over $5,000 in taxes per year
by implementing that one strategy of incorporating.
His response: "I don't have the time."
Yes, it would take some time to implement this strategy.
And it would take some time to maintain this strategy.
Guess how much? About two hours a month, max.
You do the math. Better yet, I'll do it for you.
If he spends 24 hours a year doing what it takes to maintain
a corporation, he's just made $208.33 per hour at this new
part-time "job".
Hmmm. How many self-employed people can go out and make
five grand a year for 24 hours of work? Can you think of
any? I sure can't.
I showed him the numbers I just showed you.
His response: "But I don't want to change the way I do
business."
Ahh, now we're getting somewhere. Now we just got to the
heart of the matter. He finally told me the real reason for
his unwillingness to save $5,000/year: he was unwilling to
change.
Did you get that?
And this is actually a very common reaction to an effective
tax reduction strategy. I've seen it many times.
If there is change involved, people are often unwilling
to implement tax reduction strategies -- it's too new,
too different, too time consuming. Too whatever.
So I'd like to challenge you with this simple
question: Are you really willing to make the changes
required by an effective tax-reduction plan?
All the tax knowledge in the world won't do you any good
without the right attitude toward change. Before pursuing
tax reduction strategies, make sure you are ready to change.
About the Author
Wayne M. Davies is author of 3 tax-slashing eBooks for
the self-employed, available separately or as a 3-volume
set, "The Ultimate Small Business Tax Reduction Guide".
http://www.YouSaveOnTaxes.com/ultimate-guide
To get your free copy of Wayne's 25-page report,
"How To Instantly Double Your Deductions" visit:
http://www.YouSaveOnTaxes.com
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