How & What do you need to keep track of!

There are really only four ways to change your financial future. You’ve heard the saying, “If
you always do what you’ve always done, then you’ll always get what you’ve always got.” If you
don’t change what you are doing now, do you think your results are going to change? Once you
make a change, then your results will change.
Four ways to improve your financial future:
1. Make more money (invest the increase)
2. Spend less money (invest the difference)
3. Reduce taxes (invest the savings)
4. Become debt-free and use the current payments to invest.
By far the easiest and quickest is TAX REDUCTION, via setting up a home-based business.
The average American Family pays 35% of taxable income to Federal & State taxes! You can
stop the bleeding, because the IRS WANTS you to start a home-based business.

SOME BASIC IRS RULES:
1. You must INTEND to make a profit.
2. You make a good faith effort to make that money
3. The expenses must be reasonable and ordinary for conducting your business.
4. That you document each expense with as much of the information below:
The IRS will ask these five key questions:
1. WHO was it with?
2. WHAT is it for?
3. WHERE did it take place?
4. WHEN did it occur?
5. HOW much did you spend?
If you keep receipts and document these 5 different things for your expenditures, you will be
audit proof! Keep those receipts in a tax filing system. Receipts are like money!
If you spend :
$100 in tax deductible business activities, that receipt is like $35 to sitting in your pocket.
$10,000 in a year… the documentation is worth $3,500 to the average tax-paying family.
GETTING STARTED
1. Sign up in MLM. You are now an Independent Contractor.
2. Create a business plan and write it down. You need to state your objectives and how you
plan to get there. This will establish a profit intent.
3. Setup your Tax Filing System (see below)
4. Start saving all your receipts and organize them into their proper files at least once a month,
if not once a week.

TAX FILING SYSTEM
Modify these if you need too, but this is an excellent place to start.
1. Training & Educational Expenses (Seminars/Meeting Expenses, etc.)
2. Travel: Airline Tickets, Car Rentals, Hotel, Parking, Toll fees, etc.
3. Office Supplies & Stationary. Postage/Shipping costs too
4. Homeowners or Renters Expenses: Homeowners & Condo Fees, Utilities, Insurance,etc
5. Office Equipment & Furnishings. Improvements and Repairs. WAGES paid to children,
house keeper, other business-related payments to people.
6. Entertainment, Meals, Gifts.
7. Vehicle 1 expenses (Mileage Log Suggested)
8. Vehicle 2 expenses (Mileage Log Suggested)
9. Qualifying Orders. Product Purchases. Sales income.
10. Demos / Samples. Advertising, printing, copying, marketing materials
11. Telephone, Internet Fees, Contract Services, Lead Generation.
12. Miscellaneous

Go to your local office supply store and find a “Hanging File Folder” or other filing folder
system that you are comfortable and setup this system as soon as possible. This will help you
“Think Receipt” right from the beginning, and allow you to not miss out on any legitimate
deductions that you should rightfully take.

DO
1. Keep a phone log (who you called, when, etc.)
2. Save receipts, records of payments, credit card billing statements, etc.
3. Have a guest book at your house to record meetings.
4. Save business cards and other Contact Information (prove your meetings)
5. Find an aggressive tax preparer who knows your business… or use excellent computer
software that fills in information for you (TurboTax, TaxCut, etc.)
6. Save tax information for five years after filing.
7. Keep a shipping log, fax list, and e-mail list
8. Use Quicken, Microsoft Money, or even QuickBooks (more professional level) to keep
track of your money. Consider opening a separate bank account specifically for the
business to simplify record-entry.
9. Keep a mileage log of all business trip travel. Write starting mileage, arrival mileage,
finishing mileage. Write where you’re going, who you meet with, etc. ALSO keep track
of odometer readings at the beginning and end of each year.

DON’T
1. Cheat
2. Exaggerate
3. Claim deductions that never occurred.
4. Be scared into not taking your legitimate deductions for which you have documentation!
There is NO LAW that says you have to pay as much tax as possible. Tax avoidance is
commendable, TAX EVASION is what can put you in jail.
Tax Evasion vs. Tax Avoidance? = Tax evasion is not paying the taxes you legitimately owe,
or creating false information about your income/expenses to avoid paying taxes. Tax avoidance
is simply using the IRS laws to legally reduce the taxes you owe.

HOW MUCH CAN YOU SAVE?
First of all, do you have any idea how much you paid to the government for state & federal taxes
last year?
Go and review your last tax return and take a look at the total taxes paid to the federal
and state governments. It isn’t important what you might have received as a tax “refund”… look
at the actual amount you paid.
With proper documentation and deductions, you can legally reduce this tax burden.
Either you can decide to increase the number of dependents on your W-2 (thus instantly improving your
cash flow), or you can wait and get a much larger tax refund the following year.
Odds are 100 to 1 that you will get audited. If you file taxes for 100 years, you'll get audited 1
time.
Use the documents and the filing system to make the audit an easy chore.
Your strategy is to convert as many existing deductions into tax deductions:
Rent, car & house payments (via automobile mileage deductions and home-office business
deduction), phone, utilities, having children on payroll, gift-giving, purchases, etc.
2 children on payroll can represent a $9,000 a year write off.
THE #1 thing to remember is:
DOCUMENTATION IS EVERYTHING!
Receipts are CASH!
When it comes time to prepare your taxes, use a competent software program like TaxCut, or
TurboTax. These programs make it easy to do you taxes as they will ask questions and you
simply provide the answers.
If you use a tax preparer, then they need to know the ins-n-outs of
your business (a Home-Based Business).
Don’t expect a tax preparer to know what you’re doing!
Intimidated by an audit?
If you have good records, and are taking your deductions honestly, then
you should not worry. IRS tries to create issues, but you don't have to offer any more
information than what is asked for by the documentation.
INTENT to make a profit.
You have to make a good-faith effort to build a business. You need
to validate not only your receipts, but also need to show that you are indeed trying to make a
profit.
Overhead in a home-based business is FAR less. We're converting some expenses that we
already have to operate our business. We already have a home, cars, etc. so we just use what we
have.
3 Tax Laws in America:
1. Business Owners
2. Home Owners
3. Renters
Renters get the short-end of the stick. No write-offs for rent or anything else like that. So
operating a home-based business as a renter can be a huge windfall.
You can have an office in the home, and write-off a portion of the rent, utilities, phone, etc.
The area that is used for business use must be EXCLUSIVE to the business.
Set aside specific area for business.
Take total square footage of business area, vs. total sq. footage of house = a percentage of how
much you can write off of Home Owner's Insurance, utilities, etc. etc.
Your furniture and equipment can be converted to business use.
Automobiles:
2nd largest expenditure.
Mileage from home to a location for business meetings is deductible.
Keep a high percentage of business use for your vehicle.
Insurance, gas, appreciation, even some deductions for a car loan.
Actual expenses vs. per-mile expenses. Try out both methods, see which saves you more.
Convert your pre-existing expenses into business expenses.
Pay the children:
100% business activities (answering phones, computers, filings, meetings, etc.)
Start with minimum wages, and work their way up.
2 Children can be paid over $9,000 with NO TAX CONSEQUENCES.
Each child has the personal exemptions rules.
Tax Advantages begin immediately when you start a Home-Based Business:
Setup record keeping immediately.
Keep all receipts, mark down mileage, write down who, where, and why!
A brand-new person has every tax benefit that a long-term veteran has.
80-90% of the time, people will save enough on the taxes that it funds their business for them!
Normal Operating Business Expenses are all deductible.
DSL service
Phone costs
Marketing
Advertising
-- as long as it is ordinary & necessary, and has a business building reason for it. Make sure it is
appropriate and helpful.
Itemized Deductions go on Schedule A
Your Profit/Loss reports are filled out on Schedule C
A Home-Based Business lets you setup pension plans, IRA's, SEP-IRA's, etc.
This gives you huge leverage in setting up a healthy retirement plan. Allows you to put away as
much money as the law allows, tax-free.
START a home-based business to build up your skills, offer something of value, create cash flow,
but also build up equity -- and equity is NOT taxable.
The equity is the value of the business if you went out and sold it. You can sell a residual income type
business!
2-income homes pays a lot higher tax rate than we realize. The 2nd earner does not make nearly
as much per hour as they might think.
Developing a 2nd income source, which would eventually allow at least one person to stay home, reduces
taxes, raise the kids, grow a business, etc.
Geographic flexibility!
You have a home-based business, you can move anywhere you want!
When you're paying a lot in taxes, having a HBB makes a lot of sense. You can start converting
lifestyle expenses into tax write-offs, develop a new income source to replace someone's job, etc.
2 worker family = 4 incomes:
2 jobs
1 business
1 tax savings
Setup a RECORD-KEEPING system immediately!!
It makes you start thinking about receipts immediately and puts the legitimacy of the business in your mind
right away.
At the very least, save all receipts and file them at least once-a-month if not weekly.
Make yourself AUDIT-PROOF! Keep good records.
When you realize that just a few hours every month saves you thousands of dollars... you realize that you're
paying yourself HUNDREDS OF DOLLARS AN HOUR to do the important filing information.
Tax Benefits can be a recruiting tool... and a retention tool. USE IT!