Small Business Tax Savings Podcast

Send us a textIt is important to pay yourself as an owner, but sometimes the process can be messy and confusing. There are a variety of options available, depending on the type of business entity you have. Certain payroll deductions will reduce your business income, but guaranteed payments are unaffected by profit or loss. In this episode, Mike discusses ways to pay yourself from your business and what requirements must be met to do so. He also dives into how to save money on taxes through proper accounting and salary deductions. [00:00] How to Pay Yourself as a Business Owner: An Overview·         An owner's draw is not considered a business expense and therefore does not reduce your business profit.·         Payroll requires doing payroll tax withholdings, form filings, and making payments to various government agencies.·         Payroll is a business expense that reduces your business income. [04:11] Owner's Draw, Guaranteed Payment, or Dividend·         Paying yourself as an owner via payroll is an expense to your business, but it's gonna be reported on your tax return as income.·         A dividend is a rarer way to pay yourself as a business owner and it's similar to an owner's draw distribution but oftentimes requires some extra year-end paperwork.·         With a sole proprietorship or single-member LLC, paying yourself via an owner's draw is the simplest way to do it [11:49] How to Pay Yourself Before Year End•       If you're operating as a sole proprietorship or single-member LLC, you'll pay yourself with an owner's draw or distribution. •       If you're operating as a partnership, you'll pay yourself as an owner's draw and/or guaranteed payment. •       If you're operating as an S corporation, you'll pay yourself with both distribution and payroll. [16:00] Strategies for Saving on Taxes•       Some strategies include paying yourself a reasonable salary, taking a salary from your business, and running an S corporation correctly.   Key Quotes “Always remember with a pass-through entity, you are taxed on the profit of your business regardless of how much money you leave in or take out of that.” – Mike Jesowshek   Resources Mentioned ●     Accounting software: https://gusto.com/●     Bookkeeping blog article: https://taxsavingspodcast.com/bookkeeping. --------Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings PodcastJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/tax IncSight Packages: https://incsight.net/pricing/ Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale-------Podcast Website: https://www.TaxSavingsPodcast.comFacebook Group: https://www.facebook.com/groups/taxsavings/--------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@TaxSavingsPodcast.com 

Send us a textUnderstanding what your business entity is will allow you to take advantage of tax strategies and maximize your deductions. In this episode, we talk about what are the different types of business entities and how they are taxed.[01:01] The Types of Business EntitiesNo Entity or Sole ProprietorshipLimited Liability CompanyC CorporationAn S Corporation is not an entity at the state level but a tax election [02:37] What is a Pass Through Entity?Most small businesses do not pay federal income taxes at the corporate levelThe profits from their business pass through to the owners of the company where it is then taxedThis includes a Sole Proprietor, an LLC, or an S CorporationA C Corporation is not considered a pass through because the company pays taxes on the profit of the business at the corporate level[04:04] Where Do You Report Your Business Activity and How Is Your Business Income Taxed? Sole Proprietorship or Single Member LLC (No S Corp Election) File your business information on a Schedule C on your personal tax return (Form 1040) You will pay both ordinary income taxes and self-employment taxes on the business profit on your personal returnPartnership or Multi Member LLC (No S Corp Election) File your business information on Form 1065Each partner will then receive a K1 with their share of activity which will be used to report on their personal tax return (Form 1040)Each active partner will pay both ordinary income taxes and self-employment taxes on their share of business profit on their personal return S CorporationFile your business information on Form 1120SEach owner will receive a K1 with their share of activity which will be used to report on their personal tax return (Form 1040)Each active individual owner will pay ordinary income taxes on their share of profit on their personal tax returnC CorporationFile your business information on Form 1120The corporation will pay corporate taxes on the income of the business on the corporate level [08:40] Final ThoughtsIt's so important to understand how your business entity is structured to get clear on how it’s taxedKey Quote“With a pass through entity, you are taxed on the profit of the business regardless of how much money you leave in or take out of the business.” - Mike Jesowshek Resources MentionedBlog Posts:https://www.taxsavingspodcast.com/blog/how-is-my-business-entity-taxedhttps://www.taxsavingspodcast.com/blog/earned-income-how-is-my-income-taxedhttps://taxsavingspodcast.com/scorp --------Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings PodcastJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/taxIncSight Packages: https://incsight.net/pricing/Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale-------Podcast Website: https://www.TaxSavingsPodcast.comFacebook Group: https://www.facebook.com/groups/taxsavings/--------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@TaxSavingsPodcast.com

Send us a textSo 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 DollarsAfter 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 taxesOrdinary expenses: common and accepted expenses in your industryNecessary 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-OffsHow 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 doneUtilize an accountable plan to reimburse yourselfFor 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 businessHave a separate bank account (and credit card) for your businessKeep records and receiptsDon’t be greedy[13:00] Final ThoughtsDon’t be afraid to take advantage of the tax law the way it's written for youKey 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 MentionedBlog Posts:https://www.taxsavingspodcast.com/blog/how-can-i-maximize-business-deductions-and-write-offs https://www.taxsavingspodcast.com/blog/how-do-i-reimburse-myself-from-the-business-when-does-an-accountable-plan-come-into-play The Ultimate List of Business Deductions Free Ebook:https://www.taxsavingspodcast.com/deductions  --------Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings PodcastJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/taxIncSight Packages: https://incsight.net/pricing/Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale-------Podcast Website: https://www.TaxSavingsPodcast.comFacebook Group: https://www.facebook.com/groups/taxsavings/--------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

Send us a textUsing a car for your business comes with expenses but it also has tax deduction benefits. In this episode, we break down everything you need to know before you decide to buy or lease a business vehicle and how you can take a tax write-off and save money.[02:27] Should I Buy or Lease a Vehicle?How often do you expect to drive it? If you're going to be driving a lot of miles, a lease might not be a good optionHow long do you plan to keep it?A lease is better if you always want a new vehicleHow much do you want for your monthly payment? Lease payments are generally less than a loan[04:45] Should I Put the Vehicle Under My Personal Name or Business Name?Find the Business Use Percentage (BUP) = Business Miles / Total Miles If the vehicle is going to be used for business (>50%), it is recommended to put it in the business nameIf the vehicle is going to be used for personal (>50%), it is recommended to put it in your personal nameS or C Corp: use an accountable plan to reimburse yourselfSole Proprietor or Single Member LLC: include the business use on the Schedule C filing [08:41] How Do I Write Off a Business Vehicle?Mileage Method: you get a specific tax deduction per mile drivenIf you use the vehicle for business less than 50% of the time, you must use this method Actual Method: BUP x Total Actual Expense If you use the actual expense method, you cannot also use mileage deduction When disposing of a purchased vehicle, you will have a gain or loss depending on the basis of the vehicle[13:17] How Does Depreciation of a Business Vehicle Work?If Gross Vehicle Weight Rating is more than 6,000 pounds: you can write off 100% with bonus depreciationIf GVWR is 6,000 pounds or less: you can write off up to $19,200 in 2022 if you buy it and place it in service before year-end[16:39] Final ThoughtsAlways keep a mileage log and track all of your expensesKey Quote“If you're going to have a business vehicle, make sure you record your mileage, track it, do all that extra legwork you need to do to prove the business use of that vehicle.” - Mike JesowshekResources MentionedBlog Posts:https://www.taxsavingspodcast.com/blog/how-do-i-write-off-a-business-vehiclehttps://www.taxsavingspodcast.com/blog/what-do-i-need-to-know-about-purchasing-deducting-and-depreciating-a-business-vehicle  Podcast Episode:https://podcasts.apple.com/us/podcast/accountable-plan-importance-expense-reimbursement/id1377376636?i=1000451160618 --------Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings PodcastJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/taxIncSight Packages: https://incsight.net/pricing/Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale-------Podcast Website: https://www.TaxSavingsPodcast.comFacebook Group: https://www.facebook.com/groups/taxsavings/--------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 844-327-9

Send us a textHealth care matters not just for you but also for your business. In this episode, we examine how employers can set up medical plans based on their business structure and what strategies to apply to save on taxes.[01:28] Self-Employed Health Insurance DeductionIf you're self-employed, you will always get a business deduction for the health insurance costs that you incurFor Sole Proprietorship or Single Member LLC: deduct self-employed health insurance premiums on Schedule 1 of your personal tax return (1040)For S Corporation Owner: Have the S Corp pay for the insuranceAdd it to your W2 payroll as S Corp owner self-employed health insurance. Your payroll provider should know how to handle this.Deduct on your personal tax return (Schedule 1) If you are providing health insurance for non-owner employees, include those on their W2, in Box 12 with code DD[04:21] Options Available to Business Owners With High Medical CostsYou can utilize a Section 105 plan to turn personal medical expenses into a business deduction and be able to reimburse employees for medical costs incurred[06:16] Options are Available for Small Businesses With EmployeesSome options are: group health insurance, increased wages, HRA or QSEHRAFor small businesses with less than 50 full-time  employees that don't offer a group health insurance policy:With a QSEHRA, employers reimburse employees tax-free for medical expensesYou can offer yearly allowances of up to $5,450 for single employees and $11,050 for employees with a family[10:27] What Is An HSA and How Do They Work?If you contribute to an HSA, withdrawals are tax-free when used for qualified medical expenses and interest or earnings are NOT taxed The maximum you can contribute to an HSA for 2022 is $3,650 for self-only or $7,300 for familiesAn HSA is a great savings vehicle because there is no tax on the interest or gains earned within it[13:00] Final ThoughtsStart thinking about these health insurance options and be on top of tax planningKey Quotes“Taking care of your health is so important, and oftentimes as a busy professional, that's something that gets put to the side. And so there's also tax planning that comes into play when we talk about various aspects of health.” - Mike Jesowshek“I was afraid to bring employees simply because of this little piece of medical. I was afraid would cost too much. But there are options out there.” - Mike JesowshekResources MentionedBlog Posts:https://www.taxsavingspodcast.com/blog/what-health-related-tax-strategies-should-i-consider-for-2022 https://www.taxsavingspodcast.com/blog/how-does-the-deduction-for-self-employed-health-insurance-work --------Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings PodcastJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/taxIncSight Packages: https://incsight.net/pricing/Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale-------Podcast Website: https://www.TaxSavingsPodcast.comFacebook Group: https://www.facebook.com/groups/taxsavings/--------To find out more on this topic and many others visit our website at www.TaxSavingsPodcast.com. You can also give us a ca

Send us a textBeing an entrepreneur can be challenging and having a board of advisors is a great way to get guidance and outside perspective that can positively impact your business. In this episode, we tell you all about its benefits: from tax deductions to personal and professional growth.[00:58] Tax Advantages of Board MeetingsA board of advisors or advisory board is a group of people appointed to provide advice and counsel for a businessThe members of your advisory board could be family members, friends, colleagues, or anyone you want to bring inHolding regular board meetings can be a tax advantage, as all travel and expenses related to the meetings are deductible except for entertainment expensesOne way to utilize this advantage is to have board meetings at your home, which is known as the Augusta Rule[04:41] What Documentation Should I Be Recording or Keeping?The meetings must be ordinary and necessaryHave a record or minutes of the meeting on file to outline what was accomplished and discussedInclude who attended, location, time spent, agenda items, outcomes, etc.The more documentation, the betterKeep receipts and store them digitally[05:53] The Power of Having a Board of AdvisorsWith a board of advisors, you get insights from othersDepending on your entity structure and location, you may actually be required to hold the annual meetingYou are held accountable and become motivated to get things doneBoard meetings can also help with planning and alignment because you have the opportunity to think about the future of the businessIt provides stress relief[08:29] Final ThoughtsConsult your attorney to know which type of board would be the best for you and how to set it upKey Quotes“What better way to not only get a tax deduction but you’re getting your family involved in your business, and they could potentially be better prepared to pass it on in the future to future generations.” - Mike Jesowshek“If you're having these monthly meetings, it helps keep you accountable. Your board wants to see what was accomplished. They want to see the progress, and this can help move you along.” - Mike Jesowshek“You can have anybody on your board that you want, as long as you think they're going to be able to provide some great guidance to you and really be a stamping point to help your business out.” - Mike JesowshekResources MentionedBlog Posts: https://www.taxsavingspodcast.com/blog/how-can-i-utilize-a-board-meeting-for-tax-savings https://www.taxsavingspodcast.com/blog/what-is-the-14-day-home-rental-strategy-aka-the-augusta-rule --------Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings PodcastJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/taxIncSight Packages: https://incsight.net/pricing/Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale-------Podcast Website: https://www.TaxSavingsPodcast.comFacebook Group: https://www.facebook.com/groups/taxsavings/--------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

Send us a textOn this episode Mike Jesowshek, CPA talks with Attorney Andrew M Ayers about things you need to have in place to maintain your corporate entity.1) Your Corporate Binder2) Why Do I Need to Keep Corporate Records?3) Do I Need to File My Corporate Records with the State?LINKS FROM THE SHOWShow Blog: https://www.taxsavingspodcast.com/blog/what-do-i-need-to-maintain-my-corporate-entityJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/tax  --------Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings PodcastArticle: https://www.taxsavingspodcast.com/blog/what-do-i-need-to-maintain-my-corporate-entityJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/taxIncSight Packages: https://incsight.net/pricing/Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale-------Podcast Website: https://www.TaxSavingsPodcast.comFacebook Group: https://www.facebook.com/groups/taxsavings/--------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@TaxSavingsPodcast.com

Send us a textWith January fast approaching, it’s important for business owners to start preparing their 1099-NECs. If you want to stay ahead and get everything in order before the deadline, this episode is for you! We discuss whether or not a transaction needs a 1099, what the process for filing is, and what will happen if you missed filing a 1099. [01:07] Fast Facts About 1099-NECsIf your business pays a subcontractor or vendor, whether it’s an individual or a company, a total of $600+, you need to request a W9 so you can send them a 1099-NECIf you received a 1099-NEC as a contractor, you must report this income to the IRSBe it one-time or accumulative, as long as the total payment is over $600, you need to file a 1099-NEC[04:05] When It Is NOT Required to File 1099-NECsPayments to C or S CorporationsEmployees Payments for merchandise, telephone, freight, or storage Payments to non-U.S. citizens performing work outside of the U.SPayments made via Credit Card or PayPal[06:25] 1099-NEC Preparation Made EasyStep 1 – Collect a W9 from all contractors before you payStep 2 – Fill out the 1099-NECStep 3 – Send a copy of the 1099-NEC form to the contractorStep 4 – File a copy of the 1099-NEC with the IRS and State (if required)For contractors who are  non-U.S. citizens - get an accomplished W8-BEN or W8-BEN-E instead[08:54] Penalties for Failing to File a 1099-NEC1099-NECs must be filed at the IRS and sent to the recipient by January 31st of the following yearThe fine will depend on how late you are[10:16] Different Types of 1099sThere are over 15 types of 1099 forms that are used for various purposes[12:30] Final ThoughtsDo that legwork now so you can get on top of the forms neededUtilize software to make processing and filing easierKey Quotes“If you are the one paying the contractor, you are the one that files the 1099-NEC.” - Mike Jesowshek“Sometimes it's hard to get a W9 from someone after the fact so just ask for it upfront. Again, one rule of thumb before you pay anyone, collect a W9 from them.” - Mike JesowshekResources MentionedBlog Post: https://www.taxsavingspodcast.com/blog/what-do-i-need-to-know-about-1099s-for-business-ownersSoftware: https://www.track1099.com/ Downloads: IRS: Instructions for Forms 1099-MISC and 1099-NECIRS: Form 1099-NECIRS: Form 1099-MISC--------Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings PodcastJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/taxIncSight Packages: https://incsight.net/pricing/Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale-------Podcast Website: https://www.TaxSavingsPodcast.comFacebook Group: https://www.facebook.com/groups/taxsavings/--------To find out more on this topic and many others visit our website at www.TaxSavingsPodcast.com. You can also give us a

Discover the ins and outs of the home office deduction for small business owners, debunking myths and explaining qualification criteria. Learn about the different calculation methods, how to claim the deduction, and the benefits it can bring. Find out how keeping detailed records and using smart tax strategies can maximize your savings.

Send us a textOn this episode Mike Jesowshek, CPA brings on guest, Jack Wang, to discuss the strategies available to increase college financial aid as part 3 of our mini series around college savings and financial aid.1) Which of these schools give - and which students get money?2) What does this all mean?LINKS FROM THE SHOWShow Blog: https://www.taxsavingspodcast.com/blog/what-strategies-are-available-to-increase-college-financial-aidJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/tax  --------Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings PodcastArticle: https://www.taxsavingspodcast.com/blog/what-strategies-are-available-to-increase-college-financial-aidJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/taxIncSight Packages: https://incsight.net/pricing/Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale-------Podcast Website: https://www.TaxSavingsPodcast.comFacebook Group: https://www.facebook.com/groups/taxsavings/--------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@TaxSavingsPodcast.com