I was talking to a guy recently who told me that he had made a nice £15,000 extra with a side business he was working on in his evenings.
He loved the fact that he had fattened out his bank account with that extra money, but he wasn’t so happy that a large chunk of it will be taken by the taxman.
The problem here is that by allowing that money to build up in his bank as profits, he had given himself a large tax bill.
One of the problems is that he wasn’t using that money for ‘business’ purchases or to grow his business.
This is the secret to setting up a business…
A business allows you to purchase items for the business that you can use yourself which reduces the tax bill… and also adds an extra level of protection to your possessions.
I remember watching a clip from one of those television shows that followed debt collectors and bailiffs around.
In this clip a team of bailiffs called on a guy who had failed to make payments on a car he had bought on HP (I believe) and the bailiffs came to seize items as a way to recover the lost payments.
The problem for the bailiffs was that they could not take many of his personal items to make up for the lost money due to the fact they weren’t actually his… they had been bought by his company.
He, the individual person, was struggling financially and was in debt, but the company he owned and ran wasn’t in such a bad way and he had bought a lot of equipment and furniture through the business.
The car was in his name; his other items were in the name of the company.
He had kept all of the receipts to prove what he had bought through the business meaning that the bailiffs could not remove those items.
Obviously, I am not saying that you should be buying everything through a business as an accountant can only hide so much before the tax office becomes a little suspicious, but you should certainly use as much of the money as you can to ‘grow’ the business and purchase business related products.
For example, if you use a laptop and a mobile phone to make money online, buy them through the business.
Not only does that reduce the amount of tax to pay because those purchases are ‘expenses’ which lower the profit figure, it also means that the laptop is owned by the company… that you can use.
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Starting your own business is a great way to make money… and it is also a great way to pay for ‘toys’ that you may not necessarily be able to afford normally.
I know of a writer who needed a new laptop but his personal financial situation meant that he was never out of his bank overdraft, yet his business bank account was full of money and he was able to buy a new laptop.
With the laptop being a tool of his trade, he was able to purchase it and offset it against tax reducing his tax bill while being able to enjoy new tools.
Usually, people who work for an employee, they can only buy toys such as laptops and mobile phones with the money that is left after tax has been paid.
People with their own companies, can purchase those items with their profits and lower the amount of tax they need to pay.
I remember a few years ago, a politician was given an important position of being the Secretary of State for Business and Trade (or something similar), yet the running joke was that his family business had been running at a loss for many years.
Truth is, that is probably a good business because the ‘profits’ were being invested back into the business, buying new equipment (and toys), lowering the tax bill to the point they were deemed as making a ‘loss’.
The fact that the family business was still running for many years, even though it was technically making a loss, tells me that it wasn’t actually making a loss; it was funding the family well in one way or another.
I imagine that they had a good accountant who was reducing the tax liability to zero using one or several loop holes and methods.
The point of this article is to show you how having your own business can actually benefit you in different ways and that a business that is not making a ‘tonne of profits’ is not necessarily a bad thing.
It can be good.
For example:
Let’s say that you start an online business where you sell information products such as eBooks and eCourses giving you a decent £1,000 per month.
Instead of banking that money each month and giving yourself a tax bill to pay, use it to drive more people to your website, build your email list, and create more products.
While you invest every penny that you make for the first year or two, you will pay nothing in tax.
While you earn £12,000 you are also spending £12,000 to grow the business, meaning that you will not pay any tax as you are not technically making a profit.
What you are doing though, is spending £12,000 of other people’s money on building a business that is going to pay you a lot more in the future.
Eventually, you will grow your business to the point that you will be making a lot of sales and a lot of money.
Yes, eventually you will be forced to pay tax on your future profits, but while you use today’s profits to grow the business and buy equipment, you are benefiting greatly without having to pay tax.
Reducing your tax bill takes a lot of ‘ducking and diving’. It’s about knowing how to best use your money, what to buy, and when. It’s a little like hiding your money in plain sight.
It can be quite a bit of work.
There is an easier way.
And that is to use a system to make money where the profits are completely TAX-FREE!
For those that are not yet aware, gambling in the UK is tax free due to the fact that most people lose more money than they actually make.
However…
There are people who make consistent profits using simple easy-to-do systems.
Take ‘The Easy As 1-2-3 Betfair System’ by John Banks for example, John makes a couple of simple checks to see which horses qualify and then he places his bets.
It’s as easy as that.
There is nothing complex to learn, or any complicated working-out to be done, simply check that a specific criterion is met, and you are good to go.
You could be doubling your money every 3 to 4 weeks with this system.
Learn more here:
Easy As 1-2-3
Kind regards.
John Harrison.
P.S… You can started right away with just £100 and after 6 months, you could be sitting on a decent tax free £12,800!
Here’s that link again: