Having recently filed our 2020 taxes by the filing extension deadline, October 15, the subject of taxes is fresh on my mind. And, I have a better understanding of how to prepare for 2021 taxes. I purchased a book titled 475 Tax Deductions for Businesses and Self-Employed Individuals: An A-to-Z Guide to Hundreds of Tax Write-Offs by Bernard Kamaroff, which has been the most exciting tax book I have ever read. Well, it's not the book itself. Rather, it is what the book is teaching me that is exciting.
Sorting
In the previous post, I wrote about the limited number of categories in which business expenses can be placed. The book allows you to search for a purchase and figure out where to categorize it.
Just to remind you, here are the business expense categories the IRS uses.
- Advertising
- Car and truck expenses
- Commissions and fees
- Contract labor
- Depletion
- Depreciation
- Employee benefits
- Insurance
- Interest
- Mortgage
- Other
- Legal and Professional services
- Office expense
- Pension and profit-sharing plans
- Rent or lease
- Repairs and maintenance
- Supplies
- Taxes and licenses
- Travel and meals
- Utilities
- Wages
- Other expenses
Home-Based Business Deductions
For a home-based business, there are a number of tax deductions that are possible, such as a portion of the cost of utilities and other household expenses. If we had younger children, we could deduct a certain amount of childcare expenses. Our youngest child is a teen. We can pay her a little over $6000 annually for help with the business without her or us paying taxes on it. Education that is related to our content creation business is deductible, as is the travel to such seminars or conferences.
The Beauty of a Media Company
Officially, we are operating a media company as a sole proprietorship. However, as a couple, we can operate somewhat as an unofficial partnership. TravelWriteMoney is one of our creative outlets. Under the brand, we can write about travel and money. The writing part opens up the possibility of book publishing or offering writing services. But, the overall media company can also make podcasts, videos, and publications.
Whatever the focus of our content is fair game for deduction. For example, if we are writing about 16th Century English history, it is within scope to travel to the UK to take classes. Both the travel and tuition would be deductible. There has to be a legitimate business case for the expense, obviously. There has to be an earnest effort to make a profit from the venture.
HIVE Is An Ideal Business Income
In traditional publishing, we would have to pitch an editor at a magazine about an idea for an article. Or, we would pitch a book. We would work on it, submit, and have it published, and get paid. It can take a number of pitches before getting an assignment.
With Hive, we have an idea and run with it.
Traditional social media expects you to build up an audience before you can expect to monetize. For example, YouTube requires you to have 1,000 subscribers and a certain amount of watch time to qualify for rewards. It can take months or years to reach those hurdles. Other platforms require you to be an influencer before they approach you with any profit opportunities. In many cases, you end up paying to promote your content.
With Hive, we can curate to earn until we build a following. A large audience is not necessary to start earning.
Hive is different in that you start earning right away. The more engaging your content is, the more you can earn. Sure, the earnings are meager at the beginning. But, you can always buy your stake. If you plop $1000, $5000, $10,000, or more into your account, you can start earning good rewards that much sooner. There's no law that requires you to suffer through being a Plankton or a Minnow for several months. If you opened a restaurant, you would be better off having full tables from the start than slowly building up your customers. With Hive, you would be well served with a large stake at the outset.
So long as you don't cash out Hive Power, only HBD and liquid HIVE you accumulate, you can be sure that your income will continue to increase year over year as your stake grows.
If you treat Hive as a crypto play, then your taxes will increase every year. However, if you treat it as a business, you could be better positioned to earn more and pay less taxes.
Goal to Pay Taxes
If we do this right, we will have the good fortune of paying taxes. It sounds counterintuitive to make such a statement. That is to say, if we earn enough income from our media production, and we maximize our tax deductions, and we still have money left over so that we have to pay taxes, it's a good thing. If you're paying taxes it's because you're making money. Making money is good, right?
Our goal is not to avoid paying any taxes. Our goal is to make better use of our earnings than just paying them out in tax. If you had to choose between buying a computer for your business and paying tax on the same amount, wouldn't you rather have the computer?
Exciting Q4
This final quarter of 2021 is getting exciting. We can be more strategic about our business activities because Hive is somewhat guaranteed income. The income amount fluctuates. But, the overall income trend is upwards as our stake grows and we continue to add our own power-ups. It's exciting to end the year with a plan and a few months of results.
You should talk to your financial advisor to figure out how you can maximize your earnings from Hive. You can't take anything here as financial advice. What kind of lunatic gets excited about taxes? Better safe than sorry, is what I'm saying.
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