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So many business owners for far too long have been told that they need to go out and buy things in order to lower their taxes. In this episode, we want you to change your way of thinking and maximize deductions and write-offs. We dig deep into concepts you need to know and steps you need to take.
[01:09] Pre Tax vs. After Tax Dollars
- After tax dollars: money that you spend after it's been taxed
- Pre tax dollars: spending done prior to the money being taxed
- This is spending that you do within your business prior to them being taxed
- Strategize on how you can find after tax dollars that can be moved to pre tax dollars
[03:32] What Can You Deduct as a Business Expense?
- In your business, you will have ordinary and necessary expenses that you can deduct when filing your taxes
- Ordinary expenses: common and accepted expenses in your industry
- Necessary expenses: expenses that are helpful and appropriate in operating your small business
[04:57] What Are Examples of Business Expenses?
- Here's a list of common business expenses
[06:56] Maximizing Business Deductions and Write-Offs
- How can you move spending that you are already doing from after tax spending into pre tax spending by finding a business purpose?
- Go through your personal credit card statement and see if you can find a business purpose to spending that you have already done
- Utilize an accountable plan to reimburse yourself
- For every spending, ask yourself, "Is there a business purpose for this?" and if so, run it through the business and get a pre tax deduction for it
[09:27] What Do I Need to Document When Maximizing Deductions?
- Talk with your tax professional before acting to ensure it’s valid in your line of business
- Have a separate bank account (and credit card) for your business
- Keep records and receipts
- Don’t be greedy
[13:00] Final Thoughts
- Don’t be afraid to take advantage of the tax law the way it's written for you
Key Quote
“We always want to be thinking about how can we move after tax spending, spending that we're already doing, finding a business purpose to it, and move it to pre tax spending.” - Mike Jesowshek
Resources Mentioned
Blog Posts:
The Ultimate List of Business Deductions Free Ebook:
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join Our Tax Minimization Program: https://www.taxsavingspodcast.com/tax
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Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
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To find out more on this topic and many others visit our website at www.TaxSavingsPodcast.com. You can also give us a call at 844-327-9272 or send your questions to us at: Ask@TaxSav
