How understanding taxes allows you to manipulate tax law and learn how to pay less tax (legally)!
If you are a business owner, an employee or have any type of income then you know already that you will have to pay tax on your income. It is just one of those things that nobody like (unless you’re the taxman) but we all have to do it. We all have to file a tax return and potentially hand over a lot of money to the powers that be.
Tax is something we cannot evade but by learning how tax works you will have an amazing ability to now understand how to manipulate tax law and make it work to your advantage whilst still staying within the realm of tax law. Are you interested in paying less tax? I think the answer to this is yes so read on.
So, what do I mean by this? Once upon a time I didn’t know much about tax except for the fact that I had to pay it as I had a business and had to file income tax returns and corporation tax returns. But I didn’t know how to effectively make any changes that could reduce my liability. I then took it upon myself to study business tax and income tax and my mind was blown. I suddenly understood where I was failing to claim expenses that would reduce my tax bill and realised I had been drip feeding precious business funds into expenses that I couldn’t even use to reduce my taxable profit.
Think about that for a minute. Imagine taking your hard-earned money from your business and just blowing it on things that were ultimately of no tax benefit to you or your business so not only had you harmed your bank balance but now you still have a huge tax liability at the end of the year. Yes, I was feeling sore over that too.
When I say to business owners, “tax can be a doddle”, I generally am received by what can only be described as a glazed set of eyes looking back at me. Many people assume you have to be a maths genius, a legal boffin or a glutton for punishment to learn about taxes but when I explain that understanding tax can be one of the most powerful things you will learn for your business as you will develop a set of skills that will allow you to make calculated decisions for your business as you will now know what expenses can be claimed, what can’t be claimed, when and why you should buy an asset and how to reduce that taxable profit.
You have now learned the skill of paying less tax. More money for you and you have just given the taxman a pay cut.
Understanding the day to day aspects of taxes that affect your business such as income tax, corporation tax, VAT, employers taxes and much more you have now empowered yourself to make really effective decisions every time you spend money as you are now actively working towards paying less tax. Your entire mindset changes and tax is no longer that scary enigma full of jargon.
As the title of this post says, tax cannot be evaded (that’s illegal) but learning those essential tax hacks has now enabled you to learn the sweet art of avoiding taxes. That is, you know how to legally reduce your tax liability just by making some savvy spending and investment choices and in my book that means you are winning.