Business Growth By Design

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Tax Saving Tips

5 Simple Tax Saving Tips

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These are my favorite 5 simple tax savings tips that will help you to increase your money and take control of your future wealth.

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.  

5 Simple Tax Saving Tips

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).

Keep More Money in Your Pocket

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.

Tax Tip: Independent contractors

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You work hard for your money. Why waste it on costs and penalties?

In this article, we will focus on what every business should know about the secrets of hiring an independent contractor.

Many businesses would rather pay someone as an independent contractor rather than an employee to avoid extra payroll taxes. Other benefits may include not having to pay for workers compensation, vacation, sick leave and other costs.

The IRS has a 20 factor test on what constitutes an independent contractor.

The problem with this test is that the factors can be ambiguous and apply to both an employee as well as an independent contractor. How is a business supposed to know what to do?

Of the 20 factors, I believe the critical three factors that determine whether a person is an Independent Contractor are as follows:

1. Realization of profits or losses.

People who track profits and losses from doing work are independent contractors. Employees do not recognize profit or loss from doing work. They get a paycheck and if they mess up they still get a paycheck unless they get fired of course.

2. Working for more than one firm at a time.

If people perform services for a number of unrelated persons at the same time, they are usually independent contractors although I do understand that people may have 2 even 3 jobs but drawing a paycheck is different than submitting invoices to get paid for the work you perform.

3. Making services available to the general public.

Independent contractors make their services generally available to the public meaning they get a business license, they have a business card, they have a website, they go to networking groups and they market their services.

In my view, this last factor also is a key determiner that the government agencies use in focusing on deciding whether a person is an independent contractor.

No business license, no business card, no website, makes it a bit difficult to argue that you are holding yourself out as a business.

Saving money is as good and maybe better than making money. Knowing how to classify the people you use in your business can save you time and money.

Are You Taking All of the Deductions Available for Your 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.



Tax Tip: Home Office Deductions

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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.

The home office deduction has a couple of key rules.

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!

Are You Taking All of the Deductions Available for Your 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.







A W-9, 1099, sea of tax confusion

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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.

Two Rules that will end the W-9, 1099, a sea of tax confusion

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.



3 strategies to pay less taxes

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Yes, it is possible to pay less taxes…in this article, I share 3 strategies to pay less taxes that business owners can and should be taking advantage of.

We hear on the news that rich people avoid paying tax. We hear that rich people avoid their fair share of taxes. We hear how the average American is paying a higher and higher share of tax.

I am asked what strategies are available to pay less tax like the rich.

3 Strategies to Pay Less Taxes

Strategy Number 1:  Tax Rates are your friend

Let’s get something clear…. If you are an employee you will be taxed on what you make and there isn’t much you can do about it.

I have clients making 6 figure incomes, they own a home and they get taxed. Let’s get something else clear. The tax laws are laws that apply to everyone and you are either able to take advantage of them or you are not.

John’s story perfectly illustrates this…

John has a photography business. He has a couple of children who are entering their teenage years. John was wondering whether he could do anything to lower his business taxes.

The answer is a resounding yes.

Children are fantastic and for more than just a tax break. When you own a business and have children, there is a way you can use the tax rates as your friend.

One of the simplest tax strategies is to move money over from the person with the higher income tax rate to the person with the lower income tax rate.

The person with the lower income tax rate can receive the money, possibly pay no taxes and have the money invested into a tax-free investment vehicle that can grow to millions over time. That saves taxes and it benefits the entire family business group.

Strategy Number 2: Investments are your friend

Jane works and she had her money invested. The problem is that her investments are costing her money at the highest federal income tax rate which now has been lowered to 37%. The highest federal capital gain rate is 20%.

Her financial advisor told Jane that paying taxes is a good thing because she is making money. She wondered what a tax professional might say.

The highest tax rate on investments that you hold and do not sell is zero.

That means that if you have money in investments which are growing and you keep them and don’t sell them you will pay no tax until you do. If those investments earn income such as dividends or interest you will pay income taxes.

If those investments are owned by your children they will pay income taxes at their income tax rates.

With this information, Jane was armed and went back to her financial advisor. The advisor told her that since she was invested in safe mutual funds that the managers of those investments buy and sell all the time and that’s what ends up on Jane’s tax return.

Jane asked whether the financial advisor could invest in stocks with similar low risk and not have to pay taxes. The financial advisor told Jane that he could put together some options for Jane to consider.

Strategy Number 3: Tax-Free is tax free

If I told you there is an investment out there that is tax free you probably wouldn’t believe me, but there is.

Not only is it tax free, but this investment is a way to increase the wealth of the family. The investment is life insurance. Just the mention of this word might draw groans and skepticism, however, life insurance is a tool that when looked at as an investment, just like stocks, bonds or real estate, its power is undeniable.

If you are a business owner and you think you are paying to much in taxes, we can look at your situation and determine what strategies will work for you to build, grow and sustain your wealth.

Are You Taking All of the Deductions Available for Your 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.






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