Congress Made the IRS Your Business Partner

The national economy depends on the power and productivity of small businesses, especially home business. Therefore, Congress passed tax laws to encourage you to own and operate a successful home business. Ron Mueller makes this observation in the 5th edition of his blockbuster book--Home business tax savings made easy--the more you know, the less you pay.

The numbers Mueller shares in this book shock, even anger you, but once you settle down, you realize that you can conquer the challenges. Consider this quote from the book: "The working American's average wage today is about $28,000. That works out to $13.50/hour . . .that's before taxes! After taxes, the average American worker only takes home about $8 an hour. That means that about 59 percent of your earned income--the nation's highest taxed income by the way--goes to taxes. That means that the average works takes home about $11,480 annually, and pays about $16,500 in taxes. In other words, during a 40-year work life, the average American will pay at least $700,000 in taxes. These taxpayers would have to live 42 years after retiring, with social security payments averaging about $1,200 per month, just to break even. Now with about $11,480 in annual take home pay, and the standard of 30% being what a person should pay in rent or mortgage, to be on budget, the average employee in this country should pay about $287 per month in rent or mortgage. According to wiki-answer.com, the median mortgage payment was about $1,700 per month, and the median monthly rent was almost $900. Therefore, the average employee in this country assumes a monthly deficit of about $1,400 if the person buys a house, and a deficit of about $600 per month in rent.

So it doesn't really matter what happens on Wall Street, or even on Main Street where the middle-class members of our society "live." The US economy crumbles because of what's happening on First, Second, Third, Arena and Pettigrew Streets throughout the nation, where the average wage-earner lives. So Congress provided a comprehensive strategy that allows the average person--the wage earner, the employed or the unemployed, the retired and even people receiving disability payments from the Social Security Administration--to solve their personal financial crisis and strengthen the national economy simultaneously.

Launch and operate a home-based business!

Now I'm not talking a fringe idea, or even a radical one because more than one in eight US households includes a home-based business, according to a Success Magazine article, published in 2008. Consider this: "Today, there are about 25 million small businesses in the United States. More than half of them are home-based business, and they generate some 10 percent of the nation's economic receipts. About 465,000 new businesses are created each month in the United States, according to the Marion Kauffman Foundation . . .At any given time, 15 percent of the US population is involved in running their own businesses, says Carl Schramm, president of the Kauffman Foundation . . .As economist Paul Zane Pilzer puts it in The Next Millionaires, 'We're in the midst of a boom in home-based businesses, and it shows no sign of slowing.'" (from Success Magazine, June/July 2008.)

In his 2007 book, The New Wellness Revolution, Pilzer also said: "Today, more than 10 million U.S. households have a net worth of $1 million or more. By 2016, there will be 20 million U.S. Millionaire households. Each household represents appeoximately 2.5 people, meaning that 50 million Americans will soon live in a household with a net worth of $1 million or more . . .Millionaires are the fastest growing minority in the United States and the developed world today."

Wait! That's what you might be thinking now. It takes money to make money, right? Good question! Undercapitalized businesses tend to crash, right? Another good question. Well, you say, I'm barely making it on the money I earn, and I cannot qualify for a bank loan. Venture capitalists will not consider me because I do not want enough money.

You ask excellent questions, and your observation targets the main issue--money! That's why Congress passed a series of tax laws, and instructed the federal tax courts to clarify other rulings to encourage and reward average citizens who would design, develop and deploy a home based business.

So Congress instructed the IRS to not make home based business owners wait a year for these benefits, but to beome eligible as soon as they launch a home-based business. Just to give you an example, let's say you have a start-up business budget of $24,600. You can use a little known, but easy to implement, strategy, and the federal government will finance about 30% of your business start-up budget, not just your first year, but every year you are employed and work your business part time. Remember, your paycheck where they now take about 59 percent of your earned income. Well, as a home based business owner, the IRS will give that money back to you every pay day.

You must comply with three simple standards to qualify for this money. You must launch a home-based business with the intent to make a profit. You must work your business regularly and consistently--at least 3-5 hours per week, and you must run your business like a business, particularly in keeping good records. That's it! Meeting those standards position you to save $5,000 or more in taxes you're currently paying.

There's much much more to all this, of course. I have neither the time nor the space to explain it all here. The link in the resource box provides additional information when you're ready to take action.