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Starting and operating your own home based business is the ultimate tax shelter.

Although this article has been written from a Canadian income tax perspective, the principles should be practical in other tax jurisdictions.

1. Non-Deductible Personal Living Expenses

All of us have expenses that we incur in everyday living.

Either you rent an apartment or house or you own your residence. Utilities, insurance, rent, mortgage interest, property taxes, and maintenance and repairs are typical costs of operating your home.

Likely, you have a vehicle which also consumes large amounts of cash.

Add to this, dining out, entertainment, gifts, alcoholic beverages, office supplies, telephone and many other expenditures, and you have a significant cash outflow.

In most cases, as an employee, retired person, investor, student, or homemaker, few of these expenses are tax-deductible to you.

This means that you must earn a considerable income, pay your income taxes first, and then use what is left to pay all your expenses.

Some employees may be able to write-off some of their employment related expenses, if such are required by their contract of employment. However, even in this situation, the tax deductions are very limited.

2. Your Own Home Based Business Means Tax Deductions

Now consider the situation where you decide to start your own home based business.

Suddenly, many of your everyday expenses are now being used for business purposes and are now tax-deductible.

If you use one quarter of your home exclusively for business use, you will be able to deduct (or write-off) one quarter of all related occupancy costs. These expenses may include maintenance and repairs (that are not capital in nature), rent, mortgage interest, house or apartment insurance, power, heat, water, and property taxes.

As well, your vehicle expenses used for business purposes are another tax write-off. If you use your car ninety percent for business purposes, you can deduct ninety percent of your vehicle insurance, gas and oil, maintenance and repairs, car washes, license and registration, auto club, loan interest (within certain limits), and other costs from your income. You may also write-off one hundred percent of your business related parking. Capital Cost Allownance (C.C.A.) on your vehicle is also allowed for income tax purposes; depreciation is the accounting term for this tax deduction.

The Canadian government also allows as a deduction, fifty percent of your business related entertainment expenses.

Also tax-deductible are business related telephone expenses, Internet access, office supplies, travel, books, memberships, and a host of other expenditures.

3. Income Splitting with Your Home Based Business

If you have a high paying job, you will pay higher taxes because the rates of tax increase as your income does.

With your own business, you can pay reasonable wages to your spouse and children. In this way, you can legally divert income taxed at your higher rate to your family members that are in a lower tax bracket.

This tax saving technique is called income splitting. It is another good reason why your own home based business is the ultimate tax shelter.

4. Even a Part-Time Home Based Business Works

Even if you have a full-time job, running a part-time business can be advantageous.

Of course, you must actually run a real, moneymaking business. Any attempts to write unprofitable hobbies off will ultimately fail with the taxation authorities.

If you earned eight thousand dollars during the year from your part-time business and were able to deduct eight thousand dollars in car expenses, home office expenses, entertainment costs, office supplies, and other business related expenditures, you would have a net business income of nil. You would pay no tax on this additional income.

Don`t miss this important point! Although these tax deductions are actual, legitimate business expenses, these are expenditures you would probably have made anyway, whether you had a business or not.

Thus, by rearranging your affairs to start and operate a home based business, you have been able to convert non-deductible personal expenditures into legally deductible business expenses. You have successfully sheltered your income from tax and have split your income with family members in lower tax brackets.

Yes, indeed, your home based business has become your ultimate tax shelter.

Probably just like you, I had an overwhelming desire to spend more time with my family and friends, doing the things that are important to me and living a comfortable lifestyle without financial worries and yes, less time working to pay for it!!!

So with my quest to find financial freedom, I googled my way through searches looking for ideas on how I could fulfil this desire with minimum effort and expense. After all, I wanted to make money not spend it! I had aspirations of making wad loads of cash so my family & I could truly enjoy the pleasures of life - together.

Now Ive been involved with eBay for a number of years and enjoyed the success and extra incidental profits from selling our own surplus & bought items but never really considered that we could substantially make money on eBay alone. So when I stumbled across some websites claiming to be able to do just that, I was intrigued.

This could very well be the best home business money making opportunity to have evolved in the past 50 years ... possibly ever! eBay is one of the fastest growing companies in history. This in itself presents the opportunity for anyone to step right into a massive marketplace of over 47 million enthusiastic buyers and make money on eBay. With this kind of unlimited exposure for under a dollar, I thought ANYONE can launch a profitable home based business starting from scratch! So why not me?

Greatly excited by what I had discovered, I began to see my enjoyment for eBay as no longer a hobby but an amazing opportunity to fulfil our dreams and accomplish them with something I actually love to do eBay!!!

Ok, so I settled by what means I wanted to achieve success but how would I go from being an occasional seller to being a high profit powerseller making serious money on eBay? I needed more information but I really did not want to pay for it.

You see, I was a freebie seeker. I was prepared to scour the vastness of the internet to find the secrets of success without monetary expense. Ironically though, I ended up spending all that precious time I was trying to save, searching and implementing instead. Hundreds of others had quit their jobs and were making a killing with their own home based business and so I was driven to find out how they did it website after website after website, day after day after day before I knew it, Id spent a couple of months day and night trying desperately to piece it all together.

What was I thinking?! Wasnt the whole idea that I wanted to spend less time working and more time with my loved ones enjoying life!!! .. SO what happened?

I lost the plot! Along the way I saw a number of quality informative websites offering all the secrets for a reasonable cost that I could access instantly but I fooled myself into thinking I could find out all this information easily and without spending a dime. I continued to muffle my way through copious amounts of information and found bits and pieces, tips and suggestions for making money on eBay I thought I could use, but for the record, I made many mistakes along the way which cost me even more precious time.

So what have I learned? Well, actually Ive learnt a great deal about how to make money on eBay but Ive also gotten wiser! No longer am I prepared to sacrifice my precious commodity of time for the sake of saving a small amount of money (which incidentally, I would make back promptly by following the experts examples). If I find a resource I truly believe will be of benefit, I will happily purchase it to instantly get the information I need and make it work for me pronto.

My recommendation to you is to forget the notion of relying solely on freebie information and learn firsthand from the experts who have tweaked their knowledge & wealth with years of experience and tried and tested practices who are ready to reveal their eBay secrets to success.

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~ Are you ready? ... You really could be the next "eBay Success Story".

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