My philosophy on business expenses

This has been on my mind so I wanted to write about it quickly.

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I am a firm believer in spending money on things we need for our business, including education (carefully selected).

When I was in college I had a good buddy (we'll call him Anthony) who always seemed to be doing something entrepreneurial....his philosophy was that if he didn't spend money on a business, he'd be just handing it over to Uncle Sam with taxes anyway. Even when his business venture fell flat on its face, it didn't matter. It didn't really cost him anything anyway due to the tax deductions. Basically he said that either we can be enterprising American citizens or we can just be tax payers...and relatively big taxpayers at that because we were both software engineers making decent incomes. I've heeded Anthony's advice for 9 years now (since leaving college)...way before we were even thinking much about real estate investing....you don't have to spend money you don't have (although it can be done successfully leveraging other people's money)...but if you have it, start a business - even if its a very small one - and enjoy the tax benefits, and make some extra money while you're at it!!

Yes, there are other ways to get tax deductions...like giving money away (tithing and/or charitable contributions). We give away around 15% of our income now and want to do even more than that in years to come....but don't forget about business too. Even if you don't have big dreams for your own business, you can even turn a hobby into a small business and write off all the things you'd spend personal money on anyway. :-)

If you do your own taxes with TaxCut/TurboTax, you can model this idea in the software very easily and see the difference in taxes you pay and whether you could've benefitted from spending some of that tax money to make a business (no matter how big or small) out of something you love.

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