I got a lot of positive responses from my self-employed tax-related post yesterday. I’ll be happy to continue sharing more of my experiences, but given the complexity of tax issues I wanted to throw out a book recommendation – Home Business Tax Deductions: Keep What You Earn by Fishman.
This is my hands-down favorite book on tax deductions for those with home-based businesses. It has saved me many times the $20 cover cost. I checked this book out from the library first as well, but ordered it online within a few days. I’ve read several other tax books and they are either (1) too light on the details, or (2) too aggressive and bordering on both the unethical and illegal. This book provides a good summary of the IRS code, and practical ways to substantiate deductions that you qualify for.
The primary benefit of a good tax book is that it gives you the confidence to take the deductions that you deserve and qualify for. Many times people simply don’t try because they are afraid of the Big Bad Audit. Instead, I am now confident that I followed the rules and can pass an IRS inspection. Remember the difference between tax avoidance and tax evasion:
Tax Avoidance is perfectly legal. The courts have stated clearly that you have no duty to pay more taxes that what is minimally required by law. You have every right to take all legitimate deductions and also to structure your business to minimize taxes.
Tax Evasion is a crime. This involves fraud, misreporting income, or taking deductions that you do not qualify for.
(Is it tacky to quote yourself?) Even if you have an accountant, I think it is good to understand a bit of what is going on.
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(Is it tacky to quote yourself?)
Not at all. I hope that one day you have the chance to quote yourself quoting yourself.
Thanks for this, I wanted a resource like this for my blog.
Great! Thanks, Jonathan – I just put a hold on that book at my local library. This post and your previous one are so well done. Thank you!
This is OT but does anyone know of a good tax book for the general person? I am looking to gain a useful knowledge being 22 and looking for deductions and what not. Any suggestions?
(Is it tacky to quote yourself?)
“He that tooteth not his own horn getteth it not tooted”
I have to agree with Red that it is certainly not tacky to quote yourself, especiall if the information is as important as yours.
Tax avoidance is not only legal, but it is something that all accountants practice and use as a benefit to our clients. The goal is not to evade the responsibility of paying what is owed, but to minimize that liability through legal and ethical means.
I also must add that while a this book has some very thorough and insightful information, it cannot take the place of a tax professional with knowledge of the Internal Revenue Code, and experience in dealing with it. Just like a book on home repair will never enable you to forgo the need to hire a plumber or contractor, an accountant or tax professional is someone that every business owner should have a relationship with.
Out of curiosity, can you identify two pieces of tax advice from these books that was new to you?
Periodically, I check out the latest version of Lasker’s tax or something like it, but never seem to find anything I did not already know.
Thanks for the tip. I’ve been looking for a book like this.
Self employment is a great adventure after being a wage slave, but all too often your total energy is drained through having to co-ordinate your entire business yourself from accountancy to advertising.
I have been self employed for fifteen years and have difficulty gaining loans and a mortgage which I would not experience as an employee. So I have finally decided to become an employee – employed by my own company.
If you are a sole trader be sure to look into the numerous advantages of setting your business as a corporation or limited company. You can own all the shares but you will look a lot better on paper for financial decisions. Good Luck 🙂
Where is it stated that tax evasion is a crime? Where is it also stated that paying personal income taxes is mandatory?
I love this book, it does a great job explaining Section 179 deductions for my freelancing business. I was lucky enough to check out a digital copy from my public library.