Design a business you can live with
Business growth expert Rich Gaines talks about the 4 proven profit-making strategies that you can immediately in your business to make more money.
Business owners work hard and they are passionate about what they do but many times the money they make doesn’t reflect their efforts.
These are my
Just how do individuals and business owners take advantage of the tax laws to legally avoid taxes?
Judge Learned Hand of the U.S. Supreme Court once said that no man need arrange his affairs as to pay the Treasury any more than legally required.
This concept is known as tax avoidance and tax avoidance is perfectly legal. Tax avoidance is something that I advise my clients to take advantage of when ever it is legally possible.
In contrast, tax evasion is a willful intent to evade paying taxes and is a crime that gets you a new roommate and three square meals a day in jail. Nobody wants to experience that.
Part of the strategy of tax avoidance is to do things with your money before you receive it and not pay taxes.
I get asked what are some of the best ways to avoid taxes and these are my top tips that will help to save you more money at tax time.
Tax Tip Number 1: Individual Retirement Accounts (IRA)
Wouldn’t it be nice to put money away without paying taxes and reduce how much tax you pay today?
That’s exactly what an individual retirement account can do for you. The money you put into an IRA will grow tax free until you reach age 70 ½.
If you happen to die prior to that age, the IRA can transfer to your spouse and children with some very beneficial results.
Tax Tip Number 2: Qualified Retirement Accounts like 401(k)’s.
A 401(k) also is a way to take money before it is taxed and put it away for your future.
Sometimes called free money, the really good thing about a 401(k) is that oftentimes your employer will make contributions to your 401(k) so you are getting free money from your employer which grows without tax.
Like the individual retirement account, at age 701/2 you must start taking money out unless you are still working in which case you can defer the tax even longer.
Tax Tip Number 3: Annuities
Certain kinds of annuities are promises by a life insurance company to grow your money without tax until you die.
Then it goes to your children. In some cases, they can spread the receipt of money over their life and pay only a tiny bit of tax when they receive the money.
That’s a pretty good promise.
Tax Tip Number 4: Life Insurance
Do you want to make your children millionaires?
Buy a million dollar life insurance policy. It’s that simple. Life insurance is tax free. You put money in and you never have to take it out.
Your money grows and you never have to pay tax on it. You can pull money out of the policy and not pay tax.
At your death, your children will receive the money and never have to pay tax on it. It’s that simple.
Tax Tip Number 5: Roth IRA’s and Roth 401(k)’s.
I call these the tax angels. Tax free.
The money you put into Roth IRA’s and Roth 401(k)’s is tax free. And, it grows tax free.
Another benefit is that the money also comes out tax free and you never have to withdraw the money like you do in a regular IRA or regular 401(k).
If you are ready to start avoiding tax and build, grow and sustain your wealth for yourself and future generations Business Growth By Design is ready to help you.
Take action by creating a long range plan for your business that will help you keep more money in your pocket rather than the government’s.
Set up a meeting with one of our tax professionals and discuss ways to position your company for success by giving us a call at (760) 579-0079.
Or you can contact us >>HERE<<
Unless your situation is very straightforward we are well positioned to find ways that will more than compensate you for the time and cost you spend with us.
More and more business owners are working from home.
Grab a laptop and off you go. No rent to pay. No traffic. A short commute from the kitchen to the home office.
What could be better? A Tax Deduction. That’s what could be better.
Normally personal expenses like the home telephone, the home computer, the home utilities and more cannot be used to lower your income and your taxes. However, when you work for yourself you can take advantage of deductions for a home office that you wouldn’t normally be able to take. What a deal!
This article uncovers the secrets of the home office deduction for you to take advantage of..
Home office deductions can be very beneficial for a business owner.
The key to the home office deduction is that you are reducing business income which can be subject to double taxation. In the case of the home office, if you use part of the home say 200 square feet and your total home space is 2,000 square feet, you will be able to take a 10% deduction for mortgage, property taxes, utilities and other expenses right off your business income which can save you a fair amount of money.
For sole proprietors, this can mean thousands of dollars in tax savings.
Home Office Deduction Rule #1:
First, the home office must be used regularly for a trade or business. That means you want to log in time working in your home office on a regular basis, especially if you have a second place where you conduct business.
Home Office Deduction Rule #2:
Second, the home office must be used as a place which is used by patients, clients, or customers in meeting or dealing with the taxpayer in the normal course of his trade or business.
If you are an employee of a business and your employer requires you to have a home office for the employer’s convenience, then an employee also can take a home office deduction.
For many home-based businesses such as those selling health care or skin products, internet business and others, the requirement of meeting customers or clients is pretty straightforward.
There is no question that telephone calls made, appointments set and even meetings with prospective customers can be established and proven to justify the home office deduction.
However, in cases where a person has a regular place of business outside of the home, it will be rare for the home office deduction to be permitted.
The home office deduction is an IRS favorite of mine for business owners.
It can be perilous or it can be a real treasure. Contact us with your questions we’re glad to assist you!
Take action by creating a long range plan for your business that will help you keep more money in your pocket rather than the government’s.
Set up a meeting with one of our tax professionals and discuss ways to position your company for success by giving us a call at (760) 579-0079.
Or you can contact us >>HERE<<
Unless your situation is very straightforward we are well positioned to find ways that will more than compensate you for the time and cost you spend with us.
In this article, I share the pitfalls that many small business owners face: Paying taxes twice and what you can do to avoid this trap.
Let me share the story of Monica…there are lots of business owners just like Monica who start a business and end up paying tax twice.
Monica was a Masseuse. Monica worked hard, she was passionate about what she did, but her net worth didn’t reflect her efforts. Like most business owners Monica went to school. After school, she started working for a Massage company.
She was trained in the different muscle groups and manipulations and she became really at good at doing massage. One day Monica looked in the mirror and she didn’t like what she saw. Here was a woman in her mid 30’s working long hours, taking orders from a boss, who wasn’t all that bad and tired of being told what to do.
Monica had the romantic ideal that she could start her own massage business.
She would be independent, in control and keep 100% of the revenue for herself. What Monica didn’t realize was this thinking was a false perception. Just because Monica understood the doing of the business didn’t mean she understood the business of business.
You can never keep 100% of the revenue because you have to pay the business expenses which is what the company that Monica worked for was doing.
At the time Monica didn’t realize this truth. In any case, Monica went home, she talked to her husband, she talked to the dog. The dog gave her permission and poof she gave hers notice, took her knowledge and skills, opened a bank account, got a business license found a location and started her own Monica’s massage business.
Monica’s romantic ideal quickly ran into the brick wall of reality.
She had no customers, she hadn’t thought about the structure of her business. She was unaware of the legal and financial aspects of business and she was unsure about her goals. To make matters worse, Monica was now working for someone who demanded more hours, more sales, less profit, less family time and 9 jobs instead of one.
For the price of independence and control you sacrifice 14 hour days, 7 days a week, wondering how you got into this mess, you are overworked, overloaded and overwhelmed, you see the dream getting farther and farther away.
To add insult to injury, you can end up with two types of taxes.
I get this question from business owners like Monica all the time: how come I am paying so much in tax and what can I do to stop having to pay so much?
Principle Number 1: Double Taxes
When you are self-employed operating your company as a sole proprietorship you are paying payroll taxes.
That means as an employee of your own business you pay roughly 7.5% on your net income or profit from the business. In addition, your company, the sole proprietorship, also has a responsibility to match the 7.5% and pay it over to the government.
Therefore, you have to pay 15% in payroll or self-employment taxes.
There is nothing you can do to avoid paying this tax. There are no deductions or credits like there is on the income tax side to reduce the self-employment tax.
Principle Number 2: The S Corporation
To avoid the double tax we recommend that at a certain point in time the business owner should consider becoming an S corporation.
The profit of an S corporation is not subject to payroll tax. There are many factors that need to be considered before just going out and setting up an S corporation.
At Business Growth By Design, we have expertise in tax law and can guide and advise you correctly on whether the time is right to become an S corporation, the advantages and disadvantages and if it is right for you.
Take action by creating a long-range plan for your business that will help you keep more money in your pocket rather than the government’s.
Set up a meeting with one of our tax professionals and discuss ways to position your company for success by giving us a call at (760) 579-0079.
Or you can contact us >>HERE<<
Unless your situation is very straightforward we are well positioned to find ways that will more than compensate you for the time and cost you spend with us.
I am drowning in W-9, 1099, sea of tax confusion, what am I supposed to do?
Here the scenario: new business owner is asked by a customer for their social security number. That’s private. Why are they asking me for my information? They say they want to send me a 1099. What am I supposed to do?
I am asked all the time by business owners what is a W-9, a 1099 and, what are they for and when am I supposed to use them?
Let’s end the W-9, 1099, a sea of tax confusion right here for you.
Rule Number 1
You do work for a client. They want a tax deduction for the money they pay you. A W-9 is the form that tells the client whether they have to report the money they pay you to the IRS.
If the business owner is a sole proprietor the answer is yes. With some exceptions, if the business owner is a corporation, the answer is no. Either way, the W-9 is the client’s proof of what it needs to do. An example where you as the client don’t need a W-9 is where you are getting your personal family photos taken.
Rule Number 2
A 1099 is the form used by the business client to report to the IRS and the business owner, how much the client paid to the business owner for services during the year. The business client wants to deduct as an expense on their tax return the amount paid to the business owner providing the service. If the amount of money paid is less than 600 dollars, then no 1099 needs to be issued.
I had this real life question come up with a photography business.
The photographer had done a personal photo shoot. The client later called asking for the photographer’s social security number. It seemed odd. The photographer called me up and we talked about the situation.
Turns out the client wanted to deduct the personal photo shoot expense on his business tax return. As such, he needed the photographers W-9 so he could give her a 1099 and take the tax deduction.
I told the photographer that since she is reporting the income she received from the client anyway, as she should, that she has no downside risk of providing the W-9 to the client.
The client bears all the risk. If the IRS audits the client’s tax return they would have to explain how a personal photo shoot turned into a business deduction. If the IRS audits the photographer she has reported the income. As such, she has done everything she was required to do.
Questions about these tax forms, what they mean and how they can be used for your benefit is the core work of our business.
The wrong choice and wrong decision can result in substantial penalties and money. It is better to be armed and prepared when it comes to taxes.
End Your W-9, 1099, sea of tax confusion Today
Take action by creating a long range plan for your business that will help you keep more money in your pocket rather than the government’s.
Set up a meeting with one of our tax professionals and discuss ways to position your company for success by giving us a call at (760) 579-0079.
Or you can contact us >>HERE<<
Unless your situation is very straightforward we are well positioned to find ways that will more than compensate you for the time and cost you spend with us.
How you do business is how you pay taxes! In this article, I share my favorite tax strategies for growing businesses.
How do entrepreneurs get ahead by using tax strategies to grow their business?
The story of Cal the plumber perfectly illustrates how this can be done…
Cal owns his own business. That’s what he knows. That’s what he learned, that’s what he does everyday and he does it well. Cal doesn’t know tax law. He doesn’t know where to invest his money for the future.
Cal doesn’t know whether he is paying too much in tax or too little in tax. He relies on his tax professional to give him the answers to these questions.
He hopes his tax professional has been trained correctly. The problem is that there are many tax professionals that don’t understand the deep insights of the tax laws as a tax attorney.
I am asked what are the advantages of my being a tax attorney?
I explain that my knowledge, experience and training is the highest that any tax professional can achieve. I am trained in law and I am trained in tax law.
This means that if and when you ever are faced explaining what you did before the IRS, I am able to give you advice on how the law will look favorably or unfavorably on your situation.
The advantage is the training in the understanding of how the law exists, how it is interpreted, how it applies and how it can be applied either as a shield or a sword. It doesn’t matter whether you think what you are doing is right when push comes to shove, it only matters whether you are in compliance with the law or not.
When it comes to the type of entity that is the best structure for a business, a proper understanding of the laws and tax laws are essential.
This tax strategy can change your wealth- Use of an S corporation instead of an LLC or sole proprietorship.
Most business owners start their business as a sole proprietorship.
One of the reasons for this is they don’t have much money nor are they making much. When your income is low and you have a very little risk this kind of structure can be perfectly fine.
As your income grows, though, and particularly when you take on more liability to your customers and clients, moving to a different form of doing business can make a huge difference in how you are protected and how your efforts can affect your net worth.
A C.P.A. stands for certified public accountant.
This has nothing to do with law, tax law or the type of business structure that is most suitable for a business. However, because some C.P.A’s prepare tax returns, the client looks to their C.P.A. for advice on the type and structure of their business.
Although the C.P.A. is not a lawyer, many times a C.P.A. will advise a client to structure their business as a Limited Liability Company (LLC). The can be a BIG mistake.
When business owners do business as an LLC, they are taxed just like sole proprietorships.
That means they are going to pay two taxes. One, the payroll tax on their net profit from their business and two, income taxes. If you like being separated from your money this is a good way for it to happen.
As a 35-year tax attorney who has advised thousands of business owners and their families, I generally recommend that an LLC should never be used for business.
LLC’s are fantastic when you own real estate.
For business, I almost invariably recommend the business be structured as S corporation. Using an S Corporation, there is a tax trick where some of the profit avoids the 15% payroll tax.
This can end up being thousands to tens of thousands of dollars. That’s a lot of money every year just from how you operate your business.
Identifying the right entity for you takes the right knowledge and experience. Business Growth By Design through its legal arm, Legacy Legal, can give you the right information and put you on the right path to growing a wealthier business.
Take action by creating a long-range plan for your business that will help you keep more money in your pocket rather than the government’s.
Set up a meeting with one of our tax professionals and discuss ways to position your company for success by giving us a call at (760) 579-0079.
Or you can contact us >>HERE<<
Unless your situation is very straightforward we are well positioned to find ways that will more than compensate you for the time and cost you spend with us.
