Blog | Entrepreneurship

Two Rules to Put Money Back in Your Pocket, Now

Almost any expense can be deductible under the right circumstances, the tax law requires it meet these three requirements. Is it time to start reducing your taxes? Here's how to start:

play cashflow now

Learn How To Make Everything You Do Decrease Your Taxes

Almost any expense can be deductible under the right circumstances. This includes things like food, entertainment and travel—even your house. But first, you must know your facts.

In the U.S., the tax law requires each business deduction to meet three requirements.

  1. Must have a business purpose
  2. The expense must be ordinary
  3. The expense must be necessary

These three rules are not difficult to meet. You just have to change the way you see your business.

One rule of thumb to understand is that “pigs get fat and hogs get slaughtered.” If you are greedy and go out to expensive restaurants on a regular basis, the IRS may not look so kindly on your deductions, for example.

Here are the two rules to start following right now to immediately put more money in your pocket.

Rule #1: The fastest way to put money in your pocket is to reduce your taxes

I often get asked, “Tom, how can I make more money?” Many people need the cash right away. I am absolutely against get-rich-quick schemes, and I steer those who ask about making more money far away from those types of opportunities. My clients are hardworking people and are looking for ways to increase their cash flow and long-term wealth. My first rule that I tell everyone who is looking for more money is: reduce your taxes.

By reducing your taxes, you immediately reduce how much money comes out of your paycheck. And if you’re an entrepreneur or investor, you can reduce your quarterly payments.

The best part is, you don’t have to wait “until next time” to enjoy the benefit of lower taxes. In many countries, including the U.S., you can amend your returns anytime—for up to three years.

One important note: You and only you have the power and control over your money and taxes. Nobody else. This includes your tax preparer or our tax adviser. They cannot reduce your taxes. They can only help equip you to do so.

Rule #2: Everything you do either increases or lowers your taxes

This rule is simple to follow. All you have to do is learn the difference between bad, good, and better income—and then learn how to turn your expenses into tax deductions.

The best part is that every expense has the potential to reduce your taxes—really, every expense.

I know a lot of people who love to shop for bargains and look for sales and specials before leaving the house. Believe it or not, Robert Kiyosaki is one of them. But the point here is, if people spent as much time changing their personal expense to a business deduction as they do looking for bargains, they’d be a whole lot better off when April 15th rolls around.

Don’t Wait For Year-end To Do Tax Planning

The good news is that you can reduce your taxes right now. Anybody can. And you can do it every day of the week. All you have to do is change your facts. Just keep in mind as you consider how to reduce your taxes: Every dollar, pound or euro you earn can increase your taxes, and every dollar, pound or euro you spend can decrease your taxes.

To learn more tax planning secrets, get my my book, Tax-Free Wealth today.

Original publish date: December 10, 2018

Recent Posts

The (Many) Pros and (Few) Cons of Real Estate Investing (And How to Get Started Now!)
Real Estate

The (Many) Pros and (Few) Cons of Real Estate Investing (And How to Get Started Now!)

Nearly every successful real estate investor I know started small, too. Wondering if real estate is right for you? See for yourself.

Read the full post
How to Become a Successful Business Owner

How to Become a Successful Business Owner

The importance of business systems built on mission and how to own them. If you want to become a successful business owner, here's how to start today.

Read the full post
Entrepreneurs: Take Advice but Think For Yourself!

Hey, Entrepreneurs, Take Advice but Think For Yourself!

It seems like everyone’s got an opinion when it comes to starting a business — but who should you really listen to?

Read the full post