Your working understanding of tax Law is that you probably think the tax code is way too large and way too complicated for you to understand. But that is simply not true. You can develop a working understanding of tax law in half an hour. That doesnt mean you will suddenly be an accomplished tax professional, but it does mean you will have the tools necessary to manage your income tax and identify legitimate deductions.

The two basics of tax law are which income is taxable and when, and which expenditures are deductible. If you don't know the basics you are flying blind. One thing is certain, if you don't understand tax law it is impossible to manage your income tax.

One of our goals today is to simplify tax code and make it discernable to you. One of the major points many overlook in starting a business from their home is the type of entity they create, determining a tax strategy and how important it is to choose the correct ones. You don't always have to start out in the perfect entity but you should have a plan to migrate to it as soon as possible or as soon as the funds become available.

Is this important? Yes it is! There is a major difference in the way entities are taxed. If you are filling your taxes under your personal social security number, you will be filling a separate schedule C on your 1040. If you have created a separate entity (Corporation) you will file a completely separate filing.

So what is the difference? Lots, One is legislated so that someone else (Governing Body) determines what you can or can not deduct and the other is not. A corporation's by-laws and business plan determines what is deductible or not, and that makes a huge difference.

When we are through we will arrive at this conclusion. Section 162 giveth, and the rest of the tax code taketh away. That is the conclusion we will eventually come to in this paper, but we aren't there yet. In our experience, very few taxpayers have an effective working knowledge of tax law.

Most tax professionals do have a working knowledge of the technical details of the code, but few of them have the knowledge I am going to give you today. In half an hour, you may very well know more about tax law than your tax professional does. Are you ready for that?

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Author's Bio: 

Andrew Van Valer been on the startup team of four disruptive technology companies. He held a number of positions in operations, strategic planning and marketing with three very successful companies. He has set up and managed businesses in five countries, and has been learning continuously about trends, real estate, investing, business models and, more importantly, patterns of success.

He gets enjoyment from coaching others on life skills – money management, debt elimination, the creation of multiple pipelines of income and, most importantly, discovering someone’s passion and purpose in life.