As I mentioned yesterday, since it’s tax time here in the U.S., I’m going to do a series on ways successful entrepreneurs can legally save money on their taxes.
In my experience most entrepreneurs are good at making money…
But they’re not good at keeping that money.
Cause they usually pay more in taxes than they need to.
I’d like to help you prevent that.
Cause here’s the reality…
Companies like Amazon and Apple get away with murder when it comes to taxes. They pay next to nothing.
Yet it’s small business owners like me and you that get stuck with the bill.
Well I say if they can legally lower their tax bill…
Than so can you.
And I’m gonna show you how to do that this week.
Now with that said…
Two caveats before we start…
1. I am by no means a tax expert. I’m simply sharing a few of the things I’ve learned over the last few years that have helped me cut my tax bill in half (all while making more money).
2. Most of what I’m going to share is only applicable if you’re making at least $600k a year. If you’re making $50k, $100k or even $200k there’s very little you can do outside of getting an s-corp, and writing off regular deductions. You’d be better off focusing on increasing your income than you would be trying to save $10k on your taxes.
So with that out of the way…
Let’s dive in to the first lesson…
And this lesson has to do with why most CPA’s actually cost their clients money.
I remember the first time my income really shot up and I made $700k in a year,
I went to my CPA and asked him “what can we do to lower my tax bill?”.
His response?
“You could make less money“
Not exactly the answer I was looking for.
I found this to be a common occurrence over the years with CPA’s I had.
I would read an article in Forbes about tax saving strategies…
And then I would bring it to him asking if we could do the same.
Some of the strategies we could do.
Others he said we couldn’t.
But my big issue was always…
“Why am I always the one bringing these ideas to you! Why aren’t you suggesting this stuff already?“
That was a huge frustration for me.
It seemed like the only thing my CPA was good for was simply telling me how much to pay each year.
There was no planning…
No actual tax strategy.
It wasn’t until 2016 or so when I hired my first tax strategist on a recommendation from my friend Jon Correll, that I found what I was looking for.
I still remember our first meeting at their office…
I sat down at a big wooden conference table…
And the main guy pulled up my current business structure on their TV.
“There’s two types of tax payers in this country, Justin” he said with a gruff voice. “The naive ones and the smart ones. Right now you’re one of the naive ones but we’re gonna change that for you”.
That was an eye-opener.
And I was excited to hear what he had to say…
Especially because I knew he was right.
I had no clue what I was doing.
Like most entrepreneurs I was good at marketing and making sales.
I didn’t know shit about taxes.
All I had was a single LLC for my business.
So I was paying out the nose in taxes.
But over the next year they got me fixed up.
They set me up with an s-corp.
And a c-corp.
They showed me how to take deductions for things that I had never even thought of before.
Hell, just the simple act of having my stake in my supplement business be through an s-corp instead of through me personally saved me a TON of money with the self employment tax.
This is also pretty basic stuff.
But it’s stuff that my regular CPA never told me about.
Why?
Well I’ve learned over the years that most CPA’s are simply “order takers”.
So they take your expenses and your deductions, and add them up – and then tell you what you owe.
They don’t actually help you lower your taxes.
They’re not suggesting ways to setup your business structure so that your tax bill is lower.
They’re not telling you that you could take a $500,000 R&D tax credit for the physical products, or the software you created.
Or that you can have one of your companies paying the other company marketing fees to lower your tax bill.
Or that you can go on a trip to Cabo every year and write the whole thing off as your yearly board meeting (if you have a c-corp).
Most CPA’s don’t tell you any of this.
They just take the numbers you give them…
And tell you to write a check for X amount.
This is a big problem.
And it’s a problem that took me many years of frustration to finally solve.
And I’m willing to bet…
If you’re a successful entrepreneur that’s relying on a regular ole’ CPA who isn’t helping you with tax strategy, you are leaving a TON of money on the table.
Seriously.
I just referred a friend of mine who was doing this to my current tax strategist (who I’ll intro you to later this week) and he already found about $200,000 in tax savings for him for 2020.
$200,000!
Like my friend Kevin Nations says…
Every little $200,000 helps.
But that’s the power of having a tax strategist in your corner.
So the big thing I want you to take away from this email is that you don’t want a regular ole’ order taker CPA doing your taxes.
You want a tax strategist.
Someone that understands the tax code inside and out.
Someone that’s sole focus is lowering your tax bill.
And not just telling you how much to pay at the end of the year.
Make sense?
Hope so – cause this is a big, big lesson that can really help you keep a lot more of your hard-earned money.
Hopefully this was an eye opener for you like it was for me.
I’m going to be talking taxes all week on these emails.
So if you have any questions, feel free to respond to this and let me know.
– Justin
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