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Are you making the most of year-end tax strategies to reduce your tax liability?
In this episode, Mike Jesowshek, CPA and owner of TaxElm, dives into essential year-end tax planning strategies for business owners, focusing on income timing, deductions, and proactive spending decisions. He explains how understanding current and projected income is key for effective tax planning, particularly for cash basis businesses. Strategies covered include prepaying expenses, delaying receipts, utilizing Roth conversions in low-income years, and taking advantage of family support tax benefits through appreciated stock transfers.
Discover how income timing, deductions, and smart spending choices can save you more as a business owner!
[00:00 - 05:08] Introduction to Tax Planning with Income Projections
Mike Jesowshek introduces the importance of factoring in current and future income for year-end tax planning.He discusses the significance of strategic decisions around spending on necessary equipment.Effective tax planning requires knowing this yearâs financial standings and projecting for the next year.[05:08 - 10:47] Strategic Planning with Flow-Through Entities
Flow-through entities impact tax planning based on business profit.Mike introduces the goal of shifting after-tax expenses into pre-tax spending.He advises against prepaying in low-income years when expenses may be more beneficial in higher income years.[10:47 - 16:19] Buying Necessary Equipment for Deduction Optimization
Mike advises only purchasing necessary equipment and aligning those purchases with high-income years for optimal tax benefits.He outlines how credit card spending can secure a deduction this year, even if payment occurs in the next.Roth conversions can be a way to maximize future tax-free growth during low-income years.[16:19 - 19:56] Utilizing Appreciated Stock Gifting to Family Members
Mike advises on gifting appreciated stock to family members in lower tax brackets instead of cash for tax advantages.He discusses limitations with children due to kiddie tax but highlights opportunities with other family members.[19:56 - 25:19] Strategic Year-End Tax Planning
Mike recaps key strategies for minimizing taxes legally by year-end.He emphasizes the importance of strategic planning and using every deduction opportunity as a business owner.Direct Quotes:
"We always want to take advantage of whatâs available to you." - Mike Jesowshek, CPA
âA Roth account grows tax-free and withdrawals are tax-freeâthatâs a beautiful thing.â - Mike Jesowshek, CPA
âThe IRS loves business owners; they create jobs, employ people, and grow the economy.â - Mike Jesowshek, CPA
Check out this episodeâs blog post: What Year End Strategies Are Available to Business Owners
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
YouTube: www.TaxSav
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Are you making the most of your tax-saving strategies before the year closes?
In this episode, Mike Jesowshek provides a comprehensive checklist of essential tax strategies to implement before the end of 2024. As a CPA and founder of Tax Helm, he emphasizes maximizing tax deductions, making necessary payments, and properly documenting strategies to avoid IRS issues. Mike covers everything from pre-tax versus after-tax spending and utilizing the Augusta Rule to managing self-employed health insurance and year-end retirement contributions. With a focus on practical application, he also offers advice on planning for business expenses, using credit cards strategically, and the importance of completing necessary documentation, like the BOI report, before December 31st.
Discover practical steps to keep more of your hard-earned income in this essential episode!
[00:00 - 05:10] Pre-Tax vs. After-Tax Spending
Mike gives a reminder that most tax strategies must be implemented by December 31.He explains how business owners can convert personal spending to business expenses.Utilize pre-tax spending opportunities for valid business expenses like meals, travel, and more.[05:11 - 11:45] Travel, Augusta Rule, and Implementing Board Meetings
Business-focused travel, where the majority of the day is spent on work, can qualify as a deductible business day.The Augusta Rule allows homeowners to rent their home tax-free for up to 14 days.Mike shares the importance of board meetings for accountability and tax deductions.Even solo business owners can benefit from holding board meetings and documenting them.[11:46 - 19:20] Hiring Your Kids, IRAs, and Health Savings Accounts
Hiring children allows for tax-free income for children and provides eligibility for Roth IRA contributions.HSAs offer tax-deductible contributions and tax-free withdrawals for medical costs.[19:21 - 230:20] S Corporations and Self-Employed Health Insurance
Health insurance premiums must be included on W-2s for valid deductions.Mike gives a reminder to organize receipts, log business mileage, and complete the BOI report.Proper documentation ensures compliance and peace of mind during IRS reviews.Direct Quotes:
âLet this serve as your final reminderâimplement these strategies by December 31st to keep your hard-earned money.â - Mike Jesowshek, CPA
âA valid tax strategy, incorrectly implemented, becomes illegal. Understanding and correct implementation are key.â - Mike Jesowshek, CPA
âHiring your kids in your business not only provides a tax deduction but allows them to start growing a tax-free retirement account.â - Mike Jesowshek, CPA
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
YouTube: www.TaxSavingsTV.com
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Are you overpaying on taxes and missing out on key deductions that could boost your business's bottom line?
In this episode, CPA Mike Jesowshek shares advanced tax strategies that empower business owners to significantly reduce their tax liabilities while building wealth. Mike addresses common challenges business owners face when minimizing taxes and introduces actionable tactics such as the 14-day home rental rule, implementing an accountable plan, and leveraging charitable contributions. With a focus on proper documentation and compliance, Mike provides insights on transforming potential tax burdens into effective deductions. He also presents TaxElm, a tax software tailored for business owners looking to maximize tax savings efficiently and responsibly.
[00:00 - 05:36] Introduction to Advanced Tax Strategies
Mike introduces his goal to reveal tested tax strategies for saving significant money.Reasons for struggles: not knowing where to start, being overwhelmed by complexity, and spending time without professional guidance.Strategy #1: The 14-Day Home Rental Rule (Augusta Rule) Key steps: establishing a rental reason, finding a reasonable rate, and documenting proof.[05:36 - 11:14] Strategy #2: Implementing an Accountable Plan
Mike details how S corporations can set up accountable plans for reimbursements on business expenses like home office use, automobile, and utilities.He shares the importance of a written policy and detailed expense reporting for compliance.[11:14 - 17:42] Strategy #3: Advanced Tax Strategies for High-Income Earners
For those earning $350,000+, Mike shares insights on leveraging charitable contributions, business investments, and more to offset income.Emphasizes correct implementation to avoid potential IRS scrutiny.[17:42 - 25:45] Short-Term Rental Loophole and Hiring Your Children for Business Deduction
Short-term rentals (average stay of 7 days or less) are considered non-passive, allowing business owners to offset W-2 or business income.Mike shares the guidelines for hiring children aged 7-18 in the business for tax deductions.Compliance essentials: setting reasonable pay, tracking work hours, and direct payments.[25:45 - 29:43] Conclusion and Introduction to TaxElm
Mike introduces TaxElm, a software designed to help business owners implement these strategies and maximize tax savings.Direct Quotes:
"These arenât just theories; they are battle-tested methods that have saved my clients millions in taxes over the years." - Mike Jesowshek, CPA
"The right tax strategies can transform a businessâs financial health." - Mike Jesowshek, CPA
"These strategies can take you from being an anxious and overwhelmed business owner to one who walks around with confidence and a sense of control." - Mike Jesowshek, CPA
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
YouTube: www.TaxSavingsTV.com
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Are you missing out on key tax deductions by mixing personal and business expenses?
In this episode, Mike Jesowshek discusses the importance of setting up an accountable plan for businesses, especially S and C corporations. He breaks down how accountable plans allow business owners to reimburse themselves for personal expenses with a business use, ensuring that the reimbursements are not taxable. Mike emphasizes key requirements for an accountable plan, such as having a business connection, proper substantiation, and timely payments, while also highlighting common deductible expenses like home office, automobile use, and travel.
Find out how an accountable plan can help you save on taxes while staying compliant with the IRS!
[00:00 - 05:21] Introduction to Accountable Plans
Mike introduces the concept of an accountable plan and its importance for business owners.He explains how separating business and personal expenses is crucial to avoid IRS scrutiny.He also mentions that even if personal payments are made for business items, they can be reimbursed with a plan.[05:22 - 10:37] Key Requirements of an Accountable Plan
Mike outlines the four main requirements: business connection, substantiation, avoiding excess payments, and timely payments.He discusses examples of business-related expenses that can be reimbursed, such as home office use and automobile expenses.Turning reimbursements into taxable income can cause risks if not handled properly.[10:38 - 13:49] Setting Up an Accountable Plan
Mike walks through the process of setting up a written reimbursement policy (accountable plan).Businesses need to create a reimbursement tracker to document expenses.Taxelmâs templates and tools can help businesses implement these plans correctly.[13:50 - 17:43] Common Expenses for Reimbursement
Mike highlights the most common reimbursable expenses: home office, automobile, cell phone, internet, and travel.Business owners should take advantage of available deductions to reduce taxable income.Direct Quotes:
"The IRS looks at that as being sloppy. So the first key to understand is to always have a separate business bank account and credit card that you run all of your business activity through." - Mike Jesowshek, CPA
- "If you don't have an accountable plan put in place, it will be taxable to us, and that's why it's so important." - Mike Jesowshek, CPA
"The IRS gives us incentives as business ownersâhome office deductions, automobile deductionsâbut it's your responsibility to understand and implement them correctly." - Mike Jesowshek, CPA
Check out this episodeâs blog post: How Do I Reimburse Myself From the Business? When Does An Accountable Plan Come Into Play?
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
YouTube: www.TaxSavingsTV.com
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How could the upcoming election shape the future tax landscape for LLCs, and what strategies can business owners consider now to stay ahead?
In this episode, Mike Jesowshek explores how the upcoming 2024 presidential election could impact LLCs, particularly small business owners. He provides a non-partisan analysis of both the Harris and Trump campaign proposals regarding corporate tax rates, capital gains, and other tax policies. Highlighting potential implications for tax planning and compliance, Mike emphasizes the importance of understanding these policies and the flexibility required to adapt to changes that may or may not pass. This episode offers LLC owners insights into proactive strategies to minimize tax liabilities in light of potential policy shifts.
[00:00 - 01:18] Corporate Tax Rate Proposals
Mike Introduces the episode focus: exploring potential election impacts on LLCs.He clarifies a non-partisan approach, stating the episodeâs objective is to inform business owners, not take sides.Mike discusses Harrisâs proposal to increase the corporate tax rate to 28% versus Trumpâs proposal to lower it to 20% or 15% for U.S.-based production companies.[03:23 - 05:22] Harris Campaign on Real Estate and Trumpâs Tariff Proposal
Harris proposes limiting depreciation and interest for large real estate investors and increasing startup cost deductions to $50,000.Evaluating these deductionsâ impact on real estate and startup expenses.Trumpâs campaign discusses imposing tariffs on imports, particularly 60% for imports from China.[05:22 - 08:48] Capital Gains and Investment Taxes
Harris aims to raise the capital gains tax for incomes over $1 million and increase the net investment income tax.Planning for potential tax adjustments in high-income brackets.Harris proposes exempting tips from taxes; Trump proposes exempting overtime pay from taxation.[07:00 - 11:42] Personal Tax Adjustments
Harrisâs campaign suggests expanding the child tax credit and health insurance credits; Trump aims to make prior tax cuts permanent.There are opportunities for individual tax savings depending on outcomes.Mike discusses expiring TCJA provisions, like the reduced highest tax rate, doubled standard deduction, and QBI deduction, set to end by 2025.[11:42 - 16:36] Planning Opportunities Regardless of Outcome
Mike stresses tax planning adaptability regardless of the election outcome.Direct Quotes:
"Policy changes can catch many businesses off guard, often leading to missed opportunities or unexpected challenges." - Mike Jesowshek, CPA
"No matter what happens in this election, thereâs always room for tax planning." - Mike Jesowshek, CPA
"While a candidate might say one thing, it doesnât necessarily mean it will actually come true." - Mike Jesowshek, CPA
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
YouTube: www.TaxSavingsTV.com
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Do you know how to unlock the power of tax-free retirement savings using a Mega Backdoor Roth?
In this episode, Mike Jesowshek provides a beginner's guide to building a Mega Backdoor Roth IRA in 2024. He explains the differences between traditional and Roth IRAs, then details how to maximize retirement savings using the Mega Backdoor Roth strategy. Mike breaks down the steps for contributing beyond standard limits, focusing on how business owners can utilize solo 401(k) plans. He also discusses the long-term benefits of tax-free growth and withdrawals, addressing common concerns and mistakes along the way.
Discover the strategies to potentially grow your account to a million dollars in just a few years!
[00:00 - 05:21] Introduction and Basics of Roth IRAs
Roth IRAs allow tax-free growth and withdrawals in retirement. Traditional vs. Roth: Traditional IRAs offer tax deductions upfront, while Roth IRAs grow tax-free with withdrawals in retirement. Max contributions for 2024: $7,000 ($8,000 for those over 50).[05:22 - 11:18] Backdoor and Mega Backdoor Roth Explained
The backdoor Roth strategy involves making non-deductible contributions to a traditional IRA and then converting it to a Roth IRA. Mega Backdoor Roth allows much larger contributions using 401(k) plans. Benefits of Mega Backdoor Roth include higher contribution limits, tax-free growth, and tax-free withdrawals. This strategy is beneficial for anyone with access to a 401(k) plan, even those in lower tax brackets.[11:19 - 14:08] Strategy Steps and Example
Max out employee contributions, then after-tax contributions, and convert to a Roth the next day. A business owner can contribute up to $76,000 per year and, with a 12% return, accumulate over $1 million in just 7.5 years. The earlier you start, the greater the potential for tax-free growth.Direct Quotes:
"The beauty behind a Roth is that you take the pain today, but it grows tax-free, and your withdrawals in retirement are tax-free." - Mike Jesowshek, CPA
"The Mega Backdoor Roth strategy allows you to supercharge your retirement savings with higher contribution limits and long-term tax advantages." - Mike Jesowshek, CPA
"Imagine putting away $76,000 per year into a Roth and seeing it grow tax-free â thatâs mind-blowing." - Mike Jesowshek, CPA
Check out this episodeâs blog post: https://www.taxsavingspodcast.com/blog/guide-to-building-a-mega-backdoor-roth
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
YouTube: www.TaxSavingsTV.com
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Have you ever wondered if you could deduct a mentorship program paid for on your personal card before starting your business?
In this episode, Mike Jesowshek, a CPA, hosts a listener Q&A session addressing various tax-related questions from small business owners. He covers topics such as deducting business expenses, managing mentorship payments, selling a business, and handling high medical costs for business owners. Mike provides clear guidance on tax planning strategies and the importance of keeping thorough documentation for deductions, while also offering practical advice on avoiding issues with hobby loss rules and S-Corp-specific challenges.
Learn how to maximize your business deductions and avoid common tax pitfalls in this Q&A episode!
[00:00 - 00:40] Introduction
Mike Encourages listeners to submit their tax-related questions via the website.[00:40 - 05:23] Business Deductions and Selling a Business
Mike explains that expenses can still be deducted if theyâre legitimate business expenses and provides guidance on using an accountable plan for reimbursement.He discusses the validity of taking business deductions even when a business has minimal income.There is a need for consistent profit to be considered a legitimate business.[05:23 - 10:23] Section 105 Plans and Ownership Draws in an S-Corp
Mike details how to set up a family management company to use the Section 105 plan if operating as an S-Corp and hiring a spouse.He also emphasizes that distributions must be proportional to ownership percentages in S-Corps to avoid tax issues.[10:23 - 16:11] Travel Deductions and Consultations
Mike covers travel deductions when charging clients a travel fee and offers advice on setting up tax consultations through his company. He clarifies that even if a travel fee is charged to a client, the associated travel expenses can still be deducted.[16:11 - 21:02] Business Expenses and Accountable Plans
Mike emphasizes that while the deductions remain the same, the IRS prefers business-related expenses to be run through business accounts. Owner draws are not taxed directly; instead, taxes are based on the profit of the business, regardless of how much is drawn from the account.[21:02 - 24:10] Tax Helm Services and Consultations
Mike highlights Tax Helmâs services, which include consultations and comprehensive tax planning for small businesses, with a guarantee to provide tax savings that cover the cost of the service.Direct Quotes:
âJust because you paid for it personally, doesnât mean you lose the deductionâitâs still a valid business expense if itâs related to your business.â - Mike Jesowshek, CPA
âThe IRS always wants to see that you're running your business like a business, not like a hobby.â - Mike Jesowshek, CPA
Check out this episodeâs blog post: https://www.taxsavingspodcast.com/blog/listener-q-a-with-mike-jesowshek-cpa-10-16-2024
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
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What if you could grow your wealth, avoid taxes, and pass on your assets to your heirs without capital gains?
In this episode, Mike discusses the *Buy, Borrow, Die* strategyâa powerful tax avoidance method used by the wealthy to preserve and grow wealth. By buying appreciating assets, borrowing against them tax-free, and passing them on to heirs with a stepped-up basis, individuals can minimize taxes on both capital gains and inherited wealth. Mike breaks down how this strategy can apply to anyone with appreciating assets and provides a step-by-step guide on how to implement it effectively.
Discover the Buy, Borrow, Die strategy and how it can work for you!
[00:00 - 01:14] Introduction to the Buy, Borrow, Die Strategy
Mike introduces the concept of how the wealthy use this strategy to appear less wealthy and minimize taxes.He highlights the focus on buying assets, borrowing against them, and passing them on tax-efficiently.[01:14 - 02:35] Tax Concepts: Step-Up in Basis and Borrowing Against Assets
Explanation of the step-up in basis: heirs inherit assets at market value, avoiding capital gains.Borrowing against assets like stocks or real estate doesnât count as taxable income.[02:35 - 04:36] Example: Stock Appreciation, Tax Efficiency, Real Estate Borrowing, and Inheritance
Mike illustrates how borrowing against appreciated stocks allows tax-free access to funds.The example shows how holding assets until death can help heirs avoid capital gains.Mike shares an example of real estate borrowing and how it affects taxes for heirs.He emphasizes holding onto assets until death to maximize tax advantages.[04:36 - 07:40] Not Just for the Ultra-Wealthy
Mike explains that anyone with appreciating assets can utilize this strategy, not just billionaires.He details how it can apply to people with real estate, stocks, and businesses.The steps include acquiring appreciating assets, borrowing wisely, and planning for a tax-efficient exit.Mike highlights the importance of planning for your heirs and consulting financial advisors.[07:40 - 09:32] Final Thoughts: How to Maximize This Strategy
Mike encourages strategic planning for asset management and borrowing to avoid unnecessary capital gains.Mike suggests working with financial advisors for long-term wealth building and minimizing tax burdens.Direct Quotes:
âThe truth is that most billionaires are not paying more in taxes as their wealth skyrockets, like the average person does.â - Mike Jesowshek, CPA
âBorrowing against assets like stocks or real estate doesnât count as taxable income. That loan money is not income to you, so itâs also not taxable.â - Mike Jesowshek, CP
âIn a perfect world, you hold onto appreciating assets until death, ensuring the most tax-efficient exit for your heirs.â - Mike Jesowshek, CP
"Use borrowed funds wiselyâinvest in other things, grow your wealth, and maximize the opportunity." - Mike Jesowshek, CP
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
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Do you know the different types of 1099 forms your business may need to file?
In this episode, host Mike Jesowshek is joined by Christina Wright from Tax Bandits to discuss everything business owners need to know about 1099 forms. The conversation covers different types of 1099s, when they need to be filed, and who is required to receive them. Christina provides insights into the importance of collecting W-9 forms, staying organized with vendor payments, and filing 1099s accurately and on time. They also address changes in 1099-K requirements, discuss the new 1099-DA for reporting digital assets, and highlight how software solutions like Tax Bandits simplify the filing process.
Learn how staying organized and using the right tools can make tax season stress-free!
[00:00 - 04:45] Overview of 1099s and Types
Christina explains the purpose of 1099 forms.She discusses the various types of 1099s, including NEC (Non-Employee Compensation) and MISC (Miscellaneous).She also shares the importance of understanding 1099 filing as an IRS requirement for business owners.[04:46 - 10:27] W-9 Form Importance and Vendor Onboarding
Christina explains the $600 payment threshold for issuing 1099s.The threshold is cumulative over the year, not per individual payment.Missing or incorrect information can lead to complications when filing 1099s.[10:28 - 15:59] Common Issues and Filing Best Practices
Inaccurate details (e.g., TIN, business name) on 1099 forms can cause IRS rejections.Businesses should use processes like TIN matching to verify information early.[16:00 - 19:20] 1099 Filing Solutions: Tax Bandits
Christina shares an overview of how Tax Bandits simplifies 1099 filing.How integrating accounting software like QuickBooks and Sage can help streamline the process.She shares the benefits of cloud-based filing and validation features.[19:21 - 26:38] 1099-K and Recent Changes
Christina discusses changes to the 1099-K threshold from $20,000 to $5,000 for electronic payments.The IRS shifted towards increasing reporting transparency for third-party transactions.She Introduces the new 1099-DA for reporting cryptocurrency assets.Key takeaways for business owners: collect W-9 forms upfront and keep good payment records.Notable Quotes:
"The main thing business owners need to know is that 1099s are used to report payments for a lot of different things to different parties." â Christina Wright
"The $600 threshold is not based on one paymentâitâs cumulative over the entire year." â Christina Wright
Check out this episodeâs blog post: How Does the Home Office Deduction Work?
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
VISIT: www.TaxSavingsTV.com
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Are you missing out on one of the most overlooked tax deductions available to small business owners?
In this episode, Mike Jesowshek discusses the often misunderstood home office tax deduction, breaking down its requirements and benefits for small business owners. He covers the main qualifications, including exclusive business use and regular use, as well as the administrative office rule that opens the door for many professionals to take advantage of this deduction. Mike also compares the simplified and actual methods of calculating the deduction and offers practical advice on maintaining proper documentation to ensure compliance and maximize savings.
Learn how the home office deduction can reduce your tax bill and boost your savings by tuning in!
[00:00 - 05:25] Introduction to Home Office Deduction
Mike explains the common misconceptions about the home office deduction.He stresses that the IRS encourages this deduction as long as it's used correctly.The home office must be used exclusively for business and on a regular basis.Mike explains that areas like the dining room don't qualify, but dedicated spaces do.He introduces the administrative office rule, allowing home offices to qualify even if work is done elsewhere.[05:25 - 11:03] Calculating and How to Claim the Home Office Deduction
Simplified method: $5 per square foot, up to 300 sq. ft.Actual method: Business use percentage multiplied by total home expenses.Mike walks through an example of calculating the deduction using both methods.He highlights when the actual method may provide larger savings.Mike explains how sole proprietors and S corporations claim the deduction using different forms.[11:03 - 18:08] Importance of Documentation
Emphasizes the need for thorough documentation, such as taking pictures and keeping cost records, to protect against audits.Mike encourages business owners to take advantage of this deduction before year-end.Direct Quotes:
"The home office deduction is black and white in the tax code. The IRS wants you to take advantage of it." - Mike Jesowshek, CPA
"Every deduction is worth it. This takes very little time as long as you have the tools to help make it happen." - Mike Jesowshek, CPA
"The key to successfully using the home office deduction is proper documentation and following the rules." - Mike Jesowshek, CPA
Check out this episodeâs blog post: How Does the Home Office Deduction Work?
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
IncSight Packages (Full-Service): https://incsight.net/pricing/
Book an Initial Consultation (IncSight): https://app.simplymeet.me/o/incsight/sale
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Facebook Group: https://www.facebook.com/groups/taxsavings/
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Are you maximizing your healthcare tax savings as a business owner?
In this episode, Mike Jesowshek discusses health care-related tax strategies for business owners, focusing on tools like Health Savings Accounts (HSAs), self-employed health insurance deductions, and Medical Expense Reimbursement Plans (Section 105). He explains how these strategies can help business owners minimize taxes while optimizing healthcare costs, both for themselves and their employees. Mike emphasizes the importance of understanding tax laws and maximizing deductions to lower tax liability while ensuring business owners can grow their wealth and take care of their healthcare needs.
Learn how HSAs, Section 105 plans, and self-employed health insurance deductions can lower your tax liability while protecting your health!
[00:00 - 05:53] Health Savings Accounts (HSAs)
Mike explains how HSAs provide tax benefits: tax deduction on contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.HSAs are powerful tools for both business owners and individuals, acting as a secondary retirement account for future medical costs.[05:53 - 10:00] Self-Employed Health Insurance Deductions
Mike details how self-employed individuals can deduct health insurance costs, focusing on sole proprietors, LLCs, and S corps.S corp owners must run health insurance premiums through their business and add them to their W-2s to receive deductions.[10:00 - 19:27] Health Benefit Options for Small Business Owners with Employees
Mike discusses section 105 plans or Medical Expense Reimbursement Plans, and how it's useful for business owners with high out-of-pocket medical costs.These plans turn medical expenses into business expenses, offering significant tax savings.He explains the three primary options: group health insurance, wage increases, or QSEHRA/HRAs to reimburse employees for medical costs.QSEHRA is a flexible and cost-effective option for small businesses with fewer than 30 employees.Quotes:
"Think of an HSA as a secondary retirement plan because, at some point, weâre all going to face medical costs." - Mike Jesowshek, CPA
"If you're self-employed, you get a tax deduction for your health insurance, regardless of whether you cover your employeesâ costs or not." - Mike Jesowshek, CPA
"QSEHRA allows small businesses to support their employeesâ healthcare needs without the burden of a traditional group health plan." - Mike Jesowshek, CPA
Resources:
Blog: Tax Planning and Health Costs
https://www.taxsavingspodcast.com/blog/Health-Costs-Strategies-for-Small-business-owners
_____Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
IncSight Packages (Full-Service): https://incsight.net/pricing/
Book an Initial Consultation (IncSight): https://app.simplymeet.me/o/incsight/sale
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Could your business deductions survive an IRS audit?
In this episode, Mike Jesowshek breaks down a real-life case where a business owner lost $2 million due to an IRS audit after attempting to write off a yacht as a business expense. He explains how poor bookkeeping and a lack of proper documentation led to the disallowance of the deduction. Mike emphasizes the importance of understanding and correctly implementing tax strategies, along with maintaining detailed records to defend against audits. The episode highlights the need for business owners to carefully substantiate deductions and avoid shortcuts, even when seemingly successful entrepreneurs do so.
[00:00 - 05:06] Lessons from Poor Bookkeeping
Mike highlights a case where a business owner wrote off a $2 million yacht as a business expense.The IRS disallowed the deduction due to poor records and no evidence of business-related activities.Mike stresses the importance of having clear documentation and bookkeeping to defend business expenses in an audit.He discusses how many business owners wrongly assume that if someone else gets away with a deduction, they can too.[05:06 - 07:04] Understanding Business Deductions
Business deductions must be ordinary and necessary for the type of business.It is not enough to claim the deduction; proof must be provided through proper logs and receipts.Mike emphasizes the importance of correct implementation, using the home office deduction as an example.Even legitimate deductions can be disallowed if not implemented and documented properly.[10:12 - 14:52] Correct Documentation: A Defense Against Audits
Having detailed records and logs can protect business owners if the IRS audits them.Mike shares an example of a client who successfully navigated an audit by having all documentation in place.He also touches on various tax strategies like the Augusta rule, employee entertainment, and travel deductions.Direct Quotes:
"Bookkeeping is the backbone of a business. Not only does it help your business grow, but it also helps defend your business expenses in the event of an audit." - Mike Jesowshek, CPA
"Just because someone down the road takes a deduction and doesn't get caught doesn't mean itâs right or that you won't get caught." - Mike Jesowshek, CPA
"A business deduction has to be ordinary and necessary for your type of business, and then you need the proof to back it up." - Mike Jesowshek, CPA
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Have you ever wondered how to maximize your tax deductions while staying on the right side of the IRS?
In this episode, Mike Jesowshek provides an in-depth guide on over 30 tax write-offs and strategies that can save businesses thousands of dollars. He emphasizes the importance of understanding pre-tax versus after-tax spending, the significance of selecting the right business entity structure, and how to effectively maximize deductions. Mike also covers strategies such as using an S corporation to reduce self-employment taxes, hiring children within a business, and setting up a board for additional tax benefits. He stresses the need to correctly implement tax strategies to ensure they remain legal and beneficial.
[00:00 - 12:24] Pre-Tax vs. After-Tax Spending, Entity Structure, and S Corporations
Mike introduces the importance of understanding tax strategies.Optimize spending to shift after-tax expenses into pre-tax deductions.He discusses how the business entity structure forms the foundation of your business.Different types of entity structures: sole proprietorship, LLC, C corporation.Choose the right entity structure to ensure proper tax benefits and legal protection.Consider S corporation status once your business reaches a certain profit level.[12:24 - 26:03] Maximizing Deductions
Mike breaks down the various business expenses that qualify as deductions, including advertising, contract labor, equipment, and gifts.Regularly review personal expenses to identify potential business deductions.[26:03 - 35:18] Accountable Plan and Setting Up a Board for Tax
Ensure proper documentation and exclusivity in home office use.Use a board for accountability, perspective, and additional tax deductions.[35:18 - 44:47] Additional Tax Strategies: Meals, Travel, Automobile, and Retirement Planning
Proper documentation and fair market value rental rates are crucial.Be strategic in everyday business activities to maximize deductions.[44:47 - 57:30] Implementation of Tax Strategies
Mike emphasizes the importance of not only learning tax strategies but also correctly implementing them.Correct documentation and cautious implementation are key to successful tax strategies.Direct Quotes:
"The government doesn't come knocking and let you know when you missed out on an incentive that they gave you." - Mike Jesowshek, CPA
"Every business owner should have a home office of some sort." - Mike Jesowshek, CPA
"The implementation piece is where you start to see those tax savings." - Mike Jesowshek, CPA
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Mike Jesowshek shares how he saved a small business owner over $15,000 in taxes in just 12 months. Mike breaks down the practical strategies implemented, including changing the business entity structure, maximizing home office and vehicle deductions, strategically categorizing business expenses, and more!
Learn how these strategies led to over $132,000 in tax savings for Alex's business over five years.
[00:00 - 03:28] Case Study
Alex is a former corporate digital marketer who transitioned from a W2 employee to an entrepreneur in the healthy eating influencer spaceAlex's quick growth, generating about $100,000 profit in the first year as a sole proprietorshipDuring tax season Alex got hit with an unexpectedly large tax bill in the first yearHe realized he lacked knowledge of tax-saving strategies[03:29 - 06:18] Tax Saving Solutions Implemented
We changed Alexâs entity type from sole proprietorship to S CorporationWe implemented home office deduction through an accountable planWe utilized a personal vehicle for business and claimed deductionsWe maximized deductions by finding business purposes for existing spendingMeals with clients or business discussionsTravel combined with business purposesOffice equipment and supplies[06:19 - 12:01] Advanced Tax Saving Strategies
Set up a board for the businessCreated opportunities for travel and meal expense deductionsImplemented the 14-day home rental rule for board meetingsEstablished retirement savings with a solo 401(k)Set up a Health Savings Account (HSA)Properly deducted self-employed health insuranceImplemented estimated tax payments to avoid penalties[12:02 - 19:47] Results and Key Takeaways
These strategies saved Alex over $15,000 in taxes in the first yearOver five years, Alex saved more than $132,000 in taxesThese strategies are available to most small business ownersProper implementation is crucial for realizing tax savingsDirect Quotes
"Implementation, understanding strategy is one thing you do not see any tax savings until you implement that strategy. And I also want to put in the effort that says implementation is one thing. The correct implementation is the key." â Mike Jesowshek, CPA
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
IncSight Packages (Full-Service): https://incsight.net/pricing/
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Business owners are now facing a new reporting requirement called Beneficial Ownership Information (BOI) reporting. In this episode, Christina from Tax Bandits provides a comprehensive guide on BOI reporting, explaining what it is, who needs to file, how to file, and the potential penalties for non-compliance. Christina shares practical advice and examples to help business owners understand and comply with this new requirement.
Blog: https://www.taxsavingspodcast.com/blog/what-is-beneficial-ownership-information-boi-reporting-and-why-is-it-important
[00:00:00 - 03:59] Introduction to BOI Reporting
A new requirement for many small businesses across the United StatesMandated by the Corporate Transparency Act, starting January 1, 2024Designed to help law enforcement identify real owners of companies and prevent financial crimes[04:00 - 06:13] Who Needs to File and Exemptions
Most small businesses are required to file unless they fall under one of 23 specific exemptionsCommon exemption (21st exemption) for large operating companies:More than 20 full-time employees in the U.S.A physical office in the U.S.Over $5 million in gross receipts reported on U.S. federal tax returns[06:14 - 09:12] Information Required and Filing Process
Company information: name, EIN, address, registration location, domestic/foreign statusBeneficial owner information: name, FinCEN identifier (if available), or date of birth, address, and valid IDFiling can be done through services like Tax Bandits or directly through FinCENTax Bandits offers a user-friendly interface and record-keeping features[09:13 - 15:25] Deadlines, Penalties, and Costs
Deadlines:Existing businesses (before Jan 1, 2024): Must file by January 1, 2025New businesses (registered on/after Jan 1, 2024): 90 days to fileNew businesses (registered on/after Jan 1, 2025): 30 days to filePenalties for non-compliance:Civil penalties: Up to $960,591 per dayCriminal penalties: Up to $10,000 fine or 2 years imprisonmentCosts for filing (via Tax Bandits):One-time filing: $49Lifetime reporting: $199 for one entity (recommended option)[15:26 - 20:50] Final Thoughts and Recommendations
BOI reporting is not an annual filing, but updates are required when information changesFour types of reports: Initial, Corrected, Updated, and Newly ExemptImportance of filing promptly to avoid penaltiesRecommendation to use Tax Bandits for easier tracking and management of BOI reportsDirect Quotes:
"The BOI report requires that many small businesses submit this beneficial ownership information report to FinCEN. Basically, submitting this information is helping law enforcement to identify real owners of companies versus, preventing financial crimes that are happening through some not so savory means there.â â Christina Wright, Tax Bandits
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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Are you leaving money on the table when it comes to your business taxes? In this Q&A episode, Mike Jesowshek answers your tax questions! From S corporation salary conundrums to the surprising deductibility of gym memberships, Mike provides actionable insights that could save you thousands.
[00:00 - 07:15] S Corp Salaries and Retirement Accounts
Can an S corporation owner take only dividends and no salary?How to determine a reasonable S corp salary?Can I start a solo 401k in my side hustle without breaking control group rules?[07:16 - 13:30] Deductible Expenses and Hiring Family
Is a gym membership with business offices tax-deductible?How to allocate costs between personal and business use?What are the tax implications of hiring my teen in a sole proprietorship?[13:31 - 21:00] Solo 401(k)s and Bookkeeping
What are the contribution options for solo 401(k)s for both spouses?How to structure businesses for married couples?Can bookkeeping be automated? What software is recommended?[21:01 - 26:30] Accountable Plans and Cash Purchases
Do husband-wife-owned LLCs need accountable plans?How to handle partnership filing in non-community property states?How to document and prove business purchases from Facebook Marketplace?[26:31 - 35:00] Tax Deductions and Management Fees
What expenses can self-employed pastors deduct?Should I set aside taxes based on gross revenue or profit?What's a reasonable fee for a family management company?Direct Quotes:
"Don't invest something just for a tax benefit. Like they always say, âDon't let the tax tail wag the dog.â" - Mike Jesowshek, CPA
Resources Mentioned:
Life Inc Retirement ServicesXero accounting softwareQuickBooks Online______
Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
IncSight Packages (Full-Service): https://incsight.net/pricing/
Book an Initial Consultation (IncSight): https://app.simplymeet.me/o/incsight/sale
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Business owners are always hiring new employees, but most of the time they're missing out on potential tax credits just because theyâre unaware about whatâs available.
In this episode, Mike Jesowshek, provides a comprehensive guide on the Work Opportunity Tax Credit (WOTC) and how you as a business owner might be able to take advantage of this tax credit. He explains what the WOTC is, who qualifies for it, how to claim it, and its benefits. Throughout the episode, Mike shares practical advice and examples to help business owners understand and implement this valuable tax credit.
[00:00 - 03:30] What Is The Work Opportunity Tax Credit
A business credit available to employers who hire individuals from targeted groupsDesigned to incentivize businesses to hire from specific populations that may face barriers to employmentA way for businesses to reduce their tax liability while diversifying their workforce and making a positive community impact[03:31 - 06:45] Targeted Groups and Credit Amount
The targeted groups eligible for WOTC include:VeteransState assistance recipients under part four of title four of the Social Security Act (SSA)FelonsResidents in designated empowerment zones or rural renewal countiesIndividuals referred following a rehabilitation plan or programRecipients of Supplemental Nutrition Assistance Program (SNAP)Recipients of Supplemental Security Income Benefits under Title 16 of the Social Security ActIndividuals experiencing long-term unemploymentThe general rule for credit amount is 40% of the first $6,000 in wages for employees working 400+ hours.The maximum credit is typically $2,400 per eligible employee[06:46 - 09:15] Claiming the WOTC
Complete IRS Form 8850 before or on the day of job offer.Submit the form to the local agency within 28 calendar days of the employee's start date.Wait for certification from the local agency.Claim the credit using Form 5884 on your business tax return.[09:16 - 15:00] Benefits, Examples and Considerations
Benefits include tax savings, a diverse workforce, and community impact.The WOTC is a dollar-for-dollar tax credit, not a deduction.Direct Quotes:
"The truth is that business owners are always hiring new employees, but all too often they're missing out on potential tax credits simply because they don't know about them." - Mike Jesowshek, CPA
"This is a credit, which means it's a dollar for dollar in tax savings. This is not a tax reduction. This doesn't reduce your income." - Mike Jesowshek, CPA
Resources Mentioned:
IRS Form 8850Form 5884______
Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
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How can business owners effectively build trust and transparency in remote teams while ensuring they aren't the bottleneck in their company's growth?
In this episode, Mike Jesowshek interviews Tyler Winn from Serious Payroll to discuss strategies for mastering remote team success. Tyler shares insights on the importance of hiring the right people, establishing trust in remote teams, and the value of transparency in work processes. He also delves into their hiring process, the systems they use for effective remote work, and the significance of delegation for business owners. Tyler emphasizes the need for continuous improvement and the benefits of having clear, shared processes to maintain accountability and elevate team standards.
[00:00 - 05:22] Trusting Remote Teams
Tyler shares the origin story of Serious Payroll and their remote-first approach.Tyler talks about the early challenges and decisions that shaped their remote work model.He emphasizes measuring outcomes rather than hours worked.[05:22 - 12:05] The Hiring Process: Systems and Transparency
Tyler explains the steps in their hiring process, involving multiple team members.He discusses the critical role of systems in managing remote work.How transparency elevates standards and accountability are shared.[12:06 - 16:35] Continuous Improvement
Templates and repeatable systems help improve efficiency.Tyler shares the importance of propagating values and expectations within the team.[16:36 - 20:05] Building Connection in Remote Teams
Tyler shares the strategies for fostering connection and communication among remote team members.What is the importance of meaningful meetings focused on human connection rather than logistics?Regular team meetings and one-on-one check-ins maintain rapport.[20:06 - 27:12] Delegation and Scaling the Business
Letting go as a business owner is vital to prevent becoming the bottleneck.Hiring assistants can allow focusing on high-value activities..
Direct Quotes:
"Butts in seats don't matter. The outcome is what matters." - Tyler Winn
"Transparency is not a 'big brother' thing; it's a gift that elevates standards and accountability." - Tyler Winn
"80 percent done by somebody else is 100 percent freaking awesome." - Tyler Winn
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
IncSight Packages (Full-Service): https://incsight.net/pricing/
Book an Initial Consultation (IncSight): https://app.simplymeet.me/o/incsight/sale
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Are you leveraging the right tax strategies to minimize your business's tax liability and maximize your savings?
In this episode, Mike Jesowshek offers a comprehensive guide on tax strategies for business owners to minimize tax liability and optimize financial planning. He emphasizes the importance of understanding the appropriate business structure, maintaining accurate bookkeeping, maximizing deductions, and implementing effective tax planning strategies. Throughout the episode, he shares practical advice and examples to help business owners make informed decisions and avoid common tax pitfalls.
[00:00 - 05:21] Introduction and Business Structure
Mike Jesowshek emphasizes the importance of choosing the right business structure (e.g., LLC, S Corporation).He discusses common mistakes and the impact of business structure on tax liability.[05:22 - 08:16] Importance of Accurate Bookkeeping
Mike highlights the necessity of maintaining separate business and personal accounts.He also recommends using cloud-based accounting systems like QuickBooks Online or XERO.Update your bookkeeping systems monthly to stay organized and plan for estimated taxes.[08:17 - 12:05] Maximizing Deductions
What are the concepts of pre-tax vs. after-tax spending?Mike provides examples of common deductions, such as home office, cell phone, internet, and travel expenses.Documenting expenses properly is important to take advantage of deductions.[12:06 - 16:04] Tax Planning vs. Tax Paying
What are the differences between tax planning (strategizing to save on taxes) and tax paying (filing taxes)?Mike encourages learning and implementing tax strategies to optimize tax savings.He emphasizes the significance of proper implementation of tax strategies for effective tax savings.Direct Quotes:
"The problem is not that it's hard to structure everything in a way to beat the IRS. The problem is simply that you have not been educated on how to do that." - Mike Jesowshek, CPA
"Bookkeeping is the backbone of your business. Without solid bookkeeping, you don't know how you are performing, and you have increased stress during tax season." - Mike Jesowshek, CPA
"Our goal as business owners is to move after-tax spending into pre-tax spending. Find a business purpose for spending you're already doing and get a business deduction for it." - Mike Jesowshek, CPA
"Tax planning is about learning strategies and then putting them into practice. Implementation is the key to actual tax savings." - Mike Jesowshek, CPA
Resources Mentioned:
QuickBooks OnlineXERO______
Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
IncSight Packages (Full-Service): https://incsight.net/pricing/
Book an Initial Consultation (IncSight): https://app.simplymeet.me/o/incsight/sale
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Have you ever wondered how to maximize your tax deductions through depreciation without getting lost in complex accounting rules?
In this episode, Mike Jesowshek delves into the concept of depreciation, explaining its importance and application for small business owners. He covers the basics of depreciation, different methods available, and a little-known policy that simplifies the process for assets under a certain value. Mike provides insights into regular depreciation, bonus depreciation, and Section 179 expensing, while also highlighting the significance of having a capitalization policy in place. Additionally, he discusses the rules for when depreciation begins and the implications of selling depreciated assets.
[00:00 - 05:21] Introduction to Depreciation
Mike Jesowshek introduces the topic of depreciation.He explains the basic concept of depreciation and its significance for small business owners.[05:22 - 10:23] Types of Depreciable Assets
Mike shares some details on what types of property can be depreciated, such as machinery, equipment, buildings, vehicles, etc.How is it that land cannot be depreciated?[10:24 - 15:34] Depreciation Methods
Mike shares an overview of regular depreciation, bonus depreciation, and Section 179 expenses.Bonus depreciation allows for a significant deduction in the first year, decreasing over time.Section 179 expensing permits a full deduction in the first year up to a specific limit.[15:35 - 20:30] Example and Application
Mike provides a detailed example of how different depreciation methods would apply to a computer purchase.He discusses the importance of consulting with a tax professional to determine the best method.[20:31 - 25:42] Rules of Depreciation
Rule 1: Must be in business to take depreciation deductions.Rule 2: Depreciation begins when an asset is placed in service.Direct Quotes:
"Depreciation is essentially just taking the cost of an asset and spreading it out over time." - Mike Jesowshek, CPA
"Land cannot be depreciated, but buildings, equipment, vehicles, and furniture can." - Mike Jesowshek, CPA
"Bonus depreciation allows you to take a significant portion of the asset's cost in the first year, which can be very beneficial for small businesses." - Mike Jesowshek, CPA
"Every business owner should have a capitalization policy in place to simplify the process of expensing smaller asset purchases." - Mike Jesowshek, CPA
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join TaxElm: https://taxelm.com/
IncSight Packages (Full-Service): https://incsight.net/pricing/
Book an Initial Consultation (IncSight): https://app.simplymeet.me/o/incsight/sale
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