Wondering how to make a little extra cash in this down economy? Start a business in your free time. Besides the income that this side venture can bring, your own little business can be your best tax deduction. It also enhances your mental well being, because you have something you are passionate about that you can work on after your day job.
Beginning a business doesn’t have to cost much money. You can fill out and file the forms you need by yourself. Just be certain you take the time to be educated about the business form you use and why. I am bullish on the LLC.
The LLC has great asset protection, but it must be formed correctly and the proper tax elections need to be filed with the IRS. If you don’t have all the documents you need and you haven’t filed the proper IRS election, you may not get the asset protection and tax benefits you hoped for. Once your LLC is in place, keep careful records of your deductions. They can really help your bottom line.