In plain English
Spending a dollar to deduct a dollar still costs you most of that dollar. You save only the tax you would have paid on it.
Blueprint explains concepts such as vehicle use, depreciation and equipment purchases. It does not give individualised tax advice. Those decisions belong with your accountant.
Example
At a 25% effective rate, a $1,000 deductible purchase saves roughly $250 of tax and costs $750 in cash.
Why it matters
Buying things for the deduction is one of the most expensive habits in small business.
COMMON MISTAKESpending profit in December purely to reduce a tax bill.
Related
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