Wake Up, Junior, You're Hired
Kids spending too much time in front of the TV? As a sole proprietor, you can save money by hiring them--so long as they are under 18 years of age. When it comes to hiring children, the IRS tends to use, well, kid gloves. There are no Social Security or federal unemployment taxes involved, and kids can shelter up to $5,400 of wage income with their available standard deduction.

Let us assume, for instance, your tax rate is 35 percent. If you are shorthanded during your business's busy season, you can save $560 by paying two of your kids $800 (at $8 an hour for 100 hours) apiece to pitch in.

Corporations, on the other hand, are not so kid-friendly, as you might expect. You can still hire children and deduct their wages on the company tax return. But the payments are subject to Social Security and federal unemployment taxes, just like wages paid to regular workers. Therefore, unless little Charlie has a real knack for corporate accounting, you are better off hiring someone who does not live at your house.

If you do hire your child, make sure he or she actually does something. IRS auditors will ask.

Baby, You Can Drive My Car
Owning a new car can be expensive these days. As a business owner, however, you can defray some of the cost of your vehicle by deducting business-related mileage expenses. Under 2008 tax law, deduction rates are 58.5 cents per business mile, 14 cents per charitable mile, and 27 cents per moving/medical mile. There are no longer any mileage limits, either, so drive as far as you want. Just remember to keep a log of your travel miles so you can get the most out of your deduction.

The Home Office Tax Picture
There are more and more telecommuters and home businesses these days, and the home office deduction has changed over time to benefit these self-employed taxpayers. According to IRS rules, so long as you use the space regularly and exclusively for business, you get the full home office deduction. Even if you are just using the room as a quiet place in which to pay bills or handle other administrative tasks, you can take advantage of this deduction--so long as you don't do the same chores in other locations as well. Self-employed salespeople and contractors are some of the more common examples of taxpayers that benefit from this provision in the tax law.

Accelerating Deductions
So you have established that you are running a home-based business. Now it's time to begin accelerating those write-offs. If you are a sole proprietor, you will be recording these deductions on Form 8829 (Expenses for Business Use of Your Home).

You can begin by deducting any preparation work you did turning your garage or spare bedroom into an office. Painting, spackling, rug cleaning--any type of maintenance work intended to spruce up the place qualifies. If you attach a rider to your home insurance to add a home office, deduct that, too.

The next step is deducting all the costs linked to your infrastructure, such as telephone lines, internet services and utilities. Also, make sure to deduct the home office portion of the insurance on your home (considered an indirect expense by the IRS). If you rent, deduct the home office portion of your rental payments, too. Look to IRS Form 8829 for further instruction on how much to deduct from indirect expenses.

Flying the Tax Friendly Skies
You may have a hazy definition of the difference between business travel and recreational travel, but you can bet the IRS aims to draw a clear line between the two.

If you are self-employed, however, that line is currently drawn in your favor. If you can prove you were doing some sort of business on your visit to Key Biscayne or Honolulu, you can deduct the trip on your taxes. There is a good reason, after all, why many larger companies traditionally host their seminars and conventions in the Grand Caymans instead of Grand Rapids. You can deduct expenses on your trip, too, such as convention or seminar fees, hotel accommodations, meals and entertainment, and travel expenses to and from your destination. If you can prove it's business-related, your spouse could come and expense the trip, too.

Obviously, when you add up all these expenses, it can really make a big dent in your final tax bill. A self employed business owner in the 30 percent tax bracket spending $10,000 to travel to Tokyo to drum up some business can have $3,000 of the trip subsidized by Uncle Sam. Pretty generous, huh?

Of course, not everything can be deducted as a business trip expense. The IRS will not be impressed by those financial advisory seminars that are held on a deep sea-fishing cruise and at golf courses resorts. Likewise, that quilting bee convention in Las Vegas is not going to qualify as business-related if you are mainly selling power tools. The IRS tend to take a dim view of trying to deduct expenses on trips that do not have anything to do with your business.

Roni is the founder and owner of the nation's largest tax resolution law firm, Roni Lynn Deutch, A Professional Tax Corp. She is also founder and owner of Roni Deutch Tax Center, one of the fastest-growing tax preparation franchises in the U.S.