What is a Tax Deduction? How Can You Save Money on Your Taxes as a Notary Business Owner?

As a new notary business owner, you're likely juggling many responsibilities while trying to grow and manage your business in order to maximize profitability. 

But do you know exactly what a tax deduction or write off is and how it works? 
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Tax deductions help reduce how much you pay in taxes, which means more money stays in your pocket or can be reinvested into your business. 

However, if you're new to the concept of tax deductions, it can be overwhelming to know where to start.

So let’s explore an example of how tax deductions work for business expenses and why it's important to pay attention to your expenses as a notary business owner. 

What is a Tax Deduction?

A tax deduction reduces the amount of income that is subject to tax. 

This means that when you deduct an expense from your income, the income that can be taxed by the government is less, and thus you pay less taxes overall. 

A tax deduction reduces the amount of tax you owe to the government, keeping more money in your pocket. 

Tax deductions can be applied to a wide range of expenses, including travel expenses, professional growth expenses like course or conference fees, and other business expenses.

Let’s go through a quick example to help you better understand the concept of tax deductions: 
The table above shows how much you would pay in taxes without any tax deductions as a notary who makes a $10,000 income with a tax rate of 25%. 

Without any deductions, you would pay $2,500 in taxes.
The table above highlights the substantial difference in taxes paid when deductions are taken into account.

In this scenario, if you keep track of your business expenses such as supplies, car expenses, personal growth costs like online courses, mentorship, conference fees, or other related expenses and it totals $3,000, you can deduct this amount from your gross income, leaving you with a net income of $7,000.

Assuming the same tax rate of 25%, you would only have to pay $1,750 in taxes ($7000 x 25%), which is $750 LESS than if you didn't deduct your expenses. 

This is $750 in tax savings when compared to not taking any deductions at all. 
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And this is why tracking business expenses is essential as it can result in significant tax savings, leaving more money in your pocket.

It's important to note that this is NOT tax advice. This is simply a demonstration of why tracking expenses is so important. Always consult a tax advisor and be sure to do your homework with tax matters as it can pay dividends and improve your overall return if you understand the tax laws and benefits as a business owner. 

Learn From the Tax Experts in Complete Notary Mentorship!

Watch this clip from an interview with a bookkeeping expert and see the breakdown of writing off expenses in your business so you can save money and get more money back in your pocket! 

Watch the Full Interview as a Member of Complete Notary Mentorship! 

Why is it Important to Pay Attention to Your Expenses?

Paying attention to your expenses is crucial for several reasons. 

First and foremost, it helps you identify opportunities for tax deductions, which can save you a significant amount of money on your taxes. 

By tracking your business expenses, you can deduct the cost business expenses like: 
Ultimately, paying attention to your expenses and tax deductions can help you make better financial decisions and position your business for long-term success.

*​*It's important to consult with your tax professional for state and federal tax compliance when deducting business expenses as a notary.
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