Taxes (item 3 in the figure) must be paid on the difference between a project's benefits and its total cost of ownership, and these payments can be sizeable—indeed, they can make or break a project financially in some cases. Therefore, it's important to know what the taxes will be before you begin. To calculate the tax bite, subtract the total cost of a project from the benefits expected. That provides a figure for the project's likely gross earnings. Multiply gross earnings by the tax rate. Then factor in annual tax deductions that can help minimize the tax bite, such as depreciation and amortization. The total tax is the difference between the tax on gross earnings and the tax benefit.
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What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.