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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 Online
• XERO

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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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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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Podcast Website: https://www.TaxSavingsPodcast.com

Facebook Group: https://www.facebook.com/groups/taxsavings/

YouTube: https://www.youtube.com

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Are you sure electing S corporation status is the right move for your business in 2024?

In this episode, Mike discusses why some business owners should avoid electing S corporation status in 2024. He provides a detailed explanation of what an S corporation is, how it works, and the primary reason people choose this tax election: to reduce self-employment taxes. However, Mike outlines several scenarios where electing S corporation status might not be beneficial, such as for businesses with passive income, small profits, foreign owners, or unfavorable state and local tax laws. He emphasizes the importance of understanding individual circumstances and consulting with tax professionals before making this decision.

[00:00 - 05:21] Introduction to S Corporations

• What is an S corporation and its tax election status?

[05:21 - 10:42] Benefits of S Corporations

• Mike gives a detailed example of how S corporations help avoid self-employment taxes.
• He discusses splitting income into a reasonable salary and distributions to save on taxes.

[10:42 - 20:18] Reasons to Avoid S Corporation Status

• Passive activities: rental properties and passive investments should not elect S corp status.
• Small businesses: businesses with profits under $50,000 may not benefit due to additional costs.
• Foreign owners: S corporations cannot have foreign owners.
• Unfavorable state or local laws: states like Tennessee and New York City might have laws that negate federal tax savings.
• High W-2 income: if already maximizing Social Security, additional income might not justify S corp status.

[20:18 - 22:27] Conclusion

• Mike emphasizes the importance of consulting tax professionals.

Direct Quotes:

"An S corporation is simply a tax election on an already established structure." - Mike Jesowshek, CPA

"The main reason people set up an S corporation is to avoid self-employment taxes." - Mike Jesowshek, CPA

"Always dot your I's and cross your T's to ensure correct implementation of any tax strategy." - 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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Podcast Website: https://www.TaxSavingsPodcast.com

Facebook Group: https://www.facebook.com/groups/taxsavings/

YouTube: https://www.youtube.com