Tax minimization: Business vs Real Estate ownership

Here's what's deductible for your business: Everything (almost) that is directly (and some indirectly) necessary for running your business.

That's not an IRS definition and I'm not an accountant, that's just a simple summary as best as I understand (but who does understand our tax code?) in a nutshell. I gave that summary to say that, if you do everything legally, you're not going to find a business to be a tax shelter for a bunch of unrelated stuff. That's a myth. That's a huge misconception born out of four things mainly: the prevailing lack of understanding of business ownership in America, believing what we see and hear on TV and from other people in general, liars who say they write off certain things when, in fact, they don't or can't, and tax cheats (like Timothy Geithner) who either knowingly or unknowingly break the law.

If you ever get audited, you need to be able to stand in front of the IRS and a judge and convince them why the deduction you took was necessary for you to do business.

Find the best accountant you can who does things legally. There are too many ways to make money and save on taxes legally to chance getting caught doing something illegal. It's not worth it.

What becoming an entrepreneur does do for you is it opens up a whole new world of tax-advantaged options for you that are not available to an employee. Some of these plans available to you allow you to shovel tons of money into them every year to save for retirement.