Proven Tax Reduction Strategies for Sole Proprietors
If you operate your business as a sole proprietorship, there are many strategies to reduce your taxes.
Let’s start with the following 10:
- Use the Section 105 plan to make your health insurance a tax-favored business deduction on your Schedule C.
- Employ your under-age-18 child to make taxable income disappear.
- Employ your spouse without paying him or her a W-2 wage.
- Rent your office, even your home office, from your spouse to save self-employment taxes.
- Establish that an office in your home is your principal office to increase (yes, increase!) your vehicle deductions and also turn personal home expenses into business expenses.
- Give yourself flowers, fruit, and books as tax-deductible fringe benefits.
- Combine the home office and a heavy SUV, crossover vehicle, or pickup truck to grab big deductions this year.
- Design a business trip that includes some personal days—days you treat as 100 percent business even though you don’t work on those days.
- Use the seven-day tax deduction travel rule to create a business trip that is 87 percent personal vacation.
- Deduct your smartphone and provide smartphones to your employees as tax-free fringe benefits.
If one or more of these look good to you, let’s talk about how to make them work.