Maximizing Your Business Tax Deductions in 2018, with Mark Schreiber – TMA 007
Do you know if you’re maximizing your business tax deductions? If the thought of the new year brings you tax anxiety, you’re not alone.
Many business owners fear tax season and the “day of reckoning” when they find out how much they owe to Uncle Sam.
No one likes to part with hard-earned dollars or wonder whether they may have overpaid.
To make matters worse, taxes seem like an endless maze of confusion. Blindly trusting a professional and hoping they’re doing everything in your best interest is a sure-fire way to feel disempowered and out of control.
In our work with business owners, one question rises to the forefront of all financial strategy – how do I pay less in taxes?
Overpaying taxes is one of the most impactful money leaks we see for business owners because their money is flowing out of their control.
Instead, we’re leaning into that dysphoria.
We believe that education empowers you with the confidence to take action and make better decisions.
Where Taxes Fit into the Cash Flow System
Strategically (and legally) shrinking your tax liability is a huge part of fixing your money leaks. But it’s just one small step of a greater journey of building time and money freedom.
That’s why we’ve put together the 3-step Entrepreneur’s Cash Flow System.
The first step is keeping more of the money you make. This includes tax planning, debt restructuring, cash flow awareness, and restructuring your savings so you can access it as an emergency/opportunity fund. This step frees up and increases your cash flow, so you have more to save, and consequently, more to invest.
Then, you’ll protect your money with savings, insurance and legal protection. Locating and solving your money leaks is just a temporary bandaid if there’s risk that you could lose it.
Finally, you’ll put your money to work and get it to make more by investing in cash-flowing assets to build financial freedom and leave a rich legacy.
Plan for Your Best Tax Year Yet
2018 is a brand-new year.
Instead of taxes being something that makes you cringe, we want to empower you with a mindset, tips, knowledge, and strategy to help you keep more of your money by leveraging the tax code and maximizing your tax deductions.
In this interview with Mark Schreiber, CPA and Tax Strategist with e3 Wealth, we discuss the best way to start 2018 prepared to make it your best year for tax savings.
Mark has worked in public accounting for 35 years.
In his work with small businesses and entrepreneurs, he focuses on doing taxes, tax planning, and estate tax planning. He’s been with one of the “large eight” CPA firms and joined e3 2 years ago.
- A lot of Tax Planning is Reactive:
- At the end of the year, you hand over your books, your CPA crunches the numbers and gives you a tax return. It’s not often proactive, forward-looking tax planning that takes into consideration your specific business and plans with an objective to minimize taxes this year and every year going forward.
- Tax Deferrals, Deductions, and Credits:
- Tax deferrals reduce taxable income this year by postponing a portion of income to pay tax in the future instead. On the other hand, tax deductions reduce taxable income this year, and never come back to be taxed again. Tax credits shrink your tax bill dollar-for-dollar.
- How to Save 15.3% on Your Taxes With 1 Strategy:
- Many self-employed people are Sole Proprietors. They file a Schedule C and pay ordinary tax, PLUS 7.65% for the employee portion of FICA and Medicare, PLUS another 7.65% for the employer portion of FICA and Medicare. This additional 15.3% is referred to as the self-employment tax, and business owners pay it on top of regular income tax. A business entity taxed as an S Corp has a way to minimize the self-employment tax. After paying a reasonable salary to the business owner at the full self-employment tax rate, the business can distribute the rest of the income to the business owner as Distributions, on the Schedule K1. The K1 bypasses the 15.3% rate, shrinking your total taxes owed.
Additional Business Tax Deductions Discussed:
- Business expenses reduce your taxable income. There’s great variation in how business expenses are classified and accounted for. There are many business tax deductions that business owners could take but don’t. Here are just a few:
- Home office deduction
- Vehicle or mileage expense deduction
- Cell phone
- Meals and entertainment
- Self-employed Health Insurance Deduction
- Hiring your kids
- Cost segregation study for any owner of real estate
- Charitable contributions through deconstruction or easements
- Highlights in the pending tax reform
To Take the Next Step
If you have questions about your taxes or the business tax deductions you can leverage, you can contact Mark Schreiber.
We hope this episode will help you know how to take action and save taxes in 2018.
Tax savings means increased cash flow, and more of your money in your control.
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