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Have you ever wondered how to maximize your tax deductions while staying on the right side of the IRS?

In this episode, Mike Jesowshek provides an in-depth guide on over 30 tax write-offs and strategies that can save businesses thousands of dollars. He emphasizes the importance of understanding pre-tax versus after-tax spending, the significance of selecting the right business entity structure, and how to effectively maximize deductions. Mike also covers strategies such as using an S corporation to reduce self-employment taxes, hiring children within a business, and setting up a board for additional tax benefits. He stresses the need to correctly implement tax strategies to ensure they remain legal and beneficial.

[00:00 - 12:24] Pre-Tax vs. After-Tax Spending, Entity Structure, and S Corporations

• Mike introduces the importance of understanding tax strategies.
• Optimize spending to shift after-tax expenses into pre-tax deductions.
• He discusses how the business entity structure forms the foundation of your business.
• Different types of entity structures: sole proprietorship, LLC, C corporation.
• Choose the right entity structure to ensure proper tax benefits and legal protection.
• Consider S corporation status once your business reaches a certain profit level.

[12:24 - 26:03] Maximizing Deductions

• Mike breaks down the various business expenses that qualify as deductions, including advertising, contract labor, equipment, and gifts.
• Regularly review personal expenses to identify potential business deductions.

[26:03 - 35:18] Accountable Plan and Setting Up a Board for Tax

• Ensure proper documentation and exclusivity in home office use.
• Use a board for accountability, perspective, and additional tax deductions.

[35:18 - 44:47] Additional Tax Strategies: Meals, Travel, Automobile, and Retirement Planning

• Proper documentation and fair market value rental rates are crucial.
• Be strategic in everyday business activities to maximize deductions.

[44:47 - 57:30] Implementation of Tax Strategies

• Mike emphasizes the importance of not only learning tax strategies but also correctly implementing them.
• Correct documentation and cautious implementation are key to successful tax strategies.

Direct Quotes:

"The government doesn't come knocking and let you know when you missed out on an incentive that they gave you." - Mike Jesowshek, CPA

"Every business owner should have a home office of some sort." - Mike Jesowshek, CPA

"The implementation piece is where you start to see those tax savings." - 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/

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Mike Jesowshek shares how he saved a small business owner over $15,000 in taxes in just 12 months. Mike breaks down the practical strategies implemented, including changing the business entity structure, maximizing home office and vehicle deductions, strategically categorizing business expenses, and more!

Learn how these strategies led to over $132,000 in tax savings for Alex's business over five years.

[00:00 - 03:28] Case Study

• Alex is a former corporate digital marketer who transitioned from a W2 employee to an entrepreneur in the healthy eating influencer space
• Alex's quick growth, generating about $100,000 profit in the first year as a sole proprietorship
• During tax season Alex got hit with an unexpectedly large tax bill in the first year
• He realized he lacked knowledge of tax-saving strategies

[03:29 - 06:18] Tax Saving Solutions Implemented

• We changed Alex’s entity type from sole proprietorship to S Corporation
• We implemented home office deduction through an accountable plan
• We utilized a personal vehicle for business and claimed deductions
• We maximized deductions by finding business purposes for existing spending
  • Meals with clients or business discussions
  • Travel combined with business purposes
  • Office equipment and supplies

[06:19 - 12:01] Advanced Tax Saving Strategies

• Set up a board for the business
  • Created opportunities for travel and meal expense deductions
  • Implemented the 14-day home rental rule for board meetings
• Established retirement savings with a solo 401(k)
• Set up a Health Savings Account (HSA)
• Properly deducted self-employed health insurance
• Implemented estimated tax payments to avoid penalties

[12:02 - 19:47] Results and Key Takeaways

• These strategies saved Alex over $15,000 in taxes in the first year
• Over five years, Alex saved more than $132,000 in taxes
• These strategies are available to most small business owners
• Proper implementation is crucial for realizing tax savings

Direct Quotes

"Implementation, understanding strategy is one thing you do not see any tax savings until you implement that strategy. And I also want to put in the effort that says implementation is one thing. The correct implementation is the key." – 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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Business owners are now facing a new reporting requirement called Beneficial Ownership Information (BOI) reporting. In this episode, Christina from Tax Bandits provides a comprehensive guide on BOI reporting, explaining what it is, who needs to file, how to file, and the potential penalties for non-compliance. Christina shares practical advice and examples to help business owners understand and comply with this new requirement.

Blog: https://www.taxsavingspodcast.com/blog/what-is-beneficial-ownership-information-boi-reporting-and-why-is-it-important

[00:00:00 - 03:59] Introduction to BOI Reporting

• A new requirement for many small businesses across the United States
• Mandated by the Corporate Transparency Act, starting January 1, 2024
• Designed to help law enforcement identify real owners of companies and prevent financial crimes

[04:00 - 06:13] Who Needs to File and Exemptions

• Most small businesses are required to file unless they fall under one of 23 specific exemptions
• Common exemption (21st exemption) for large operating companies:
  • More than 20 full-time employees in the U.S.
  • A physical office in the U.S.
  • Over $5 million in gross receipts reported on U.S. federal tax returns

[06:14 - 09:12] Information Required and Filing Process

• Company information: name, EIN, address, registration location, domestic/foreign status
• Beneficial owner information: name, FinCEN identifier (if available), or date of birth, address, and valid ID
• Filing can be done through services like Tax Bandits or directly through FinCEN
• Tax Bandits offers a user-friendly interface and record-keeping features

[09:13 - 15:25] Deadlines, Penalties, and Costs

• Deadlines:
  • Existing businesses (before Jan 1, 2024): Must file by January 1, 2025
  • New businesses (registered on/after Jan 1, 2024): 90 days to file
  • New businesses (registered on/after Jan 1, 2025): 30 days to file
• Penalties for non-compliance:
  • Civil penalties: Up to $960,591 per day
  • Criminal penalties: Up to $10,000 fine or 2 years imprisonment
• Costs for filing (via Tax Bandits):
  • One-time filing: $49
  • Lifetime reporting: $199 for one entity (recommended option)

[15:26 - 20:50] Final Thoughts and Recommendations

• BOI reporting is not an annual filing, but updates are required when information changes
• Four types of reports: Initial, Corrected, Updated, and Newly Exempt
• Importance of filing promptly to avoid penalties
• Recommendation to use Tax Bandits for easier tracking and management of BOI reports

Direct Quotes:

"The BOI report requires that many small businesses submit this beneficial ownership information report to FinCEN. Basically, submitting this information is helping law enforcement to identify real owners of companies versus, preventing financial crimes that are happening through some not so savory means there.” – Christina Wright, Tax Bandits

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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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Are you leaving money on the table when it comes to your business taxes? In this Q&A episode, Mike Jesowshek answers your tax questions! From S corporation salary conundrums to the surprising deductibility of gym memberships, Mike provides actionable insights that could save you thousands.

[00:00 - 07:15] S Corp Salaries and Retirement Accounts

• Can an S corporation owner take only dividends and no salary?
• How to determine a reasonable S corp salary?
• Can I start a solo 401k in my side hustle without breaking control group rules?

[07:16 - 13:30] Deductible Expenses and Hiring Family

• Is a gym membership with business offices tax-deductible?
• How to allocate costs between personal and business use?
• What are the tax implications of hiring my teen in a sole proprietorship?

[13:31 - 21:00] Solo 401(k)s and Bookkeeping

• What are the contribution options for solo 401(k)s for both spouses?
• How to structure businesses for married couples?
• Can bookkeeping be automated? What software is recommended?

[21:01 - 26:30] Accountable Plans and Cash Purchases

• Do husband-wife-owned LLCs need accountable plans?
• How to handle partnership filing in non-community property states?
• How to document and prove business purchases from Facebook Marketplace?

[26:31 - 35:00] Tax Deductions and Management Fees

• What expenses can self-employed pastors deduct?
• Should I set aside taxes based on gross revenue or profit?
• What's a reasonable fee for a family management company?

Direct Quotes:

"Don't invest something just for a tax benefit. Like they always say, ‘Don't let the tax tail wag the dog.’" - Mike Jesowshek, CPA

Resources Mentioned:

• Life Inc Retirement Services
• Xero accounting software
• QuickBooks Online

______

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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Business owners are always hiring new employees, but most of the time they're missing out on potential tax credits just because they’re unaware about what’s available.

In this episode, Mike Jesowshek, provides a comprehensive guide on the Work Opportunity Tax Credit (WOTC) and how you as a business owner might be able to take advantage of this tax credit. He explains what the WOTC is, who qualifies for it, how to claim it, and its benefits. Throughout the episode, Mike shares practical advice and examples to help business owners understand and implement this valuable tax credit.

[00:00 - 03:30] What Is The Work Opportunity Tax Credit

• A business credit available to employers who hire individuals from targeted groups
• Designed to incentivize businesses to hire from specific populations that may face barriers to employment
• A way for businesses to reduce their tax liability while diversifying their workforce and making a positive community impact

[03:31 - 06:45] Targeted Groups and Credit Amount

• The targeted groups eligible for WOTC include:
  • Veterans
  • State assistance recipients under part four of title four of the Social Security Act (SSA)
  • Felons
  • Residents in designated empowerment zones or rural renewal counties
  • Individuals referred following a rehabilitation plan or program
  • Recipients of Supplemental Nutrition Assistance Program (SNAP)
  • Recipients of Supplemental Security Income Benefits under Title 16 of the Social Security Act
  • Individuals experiencing long-term unemployment
• The general rule for credit amount is 40% of the first $6,000 in wages for employees working 400+ hours.
• The maximum credit is typically $2,400 per eligible employee

[06:46 - 09:15] Claiming the WOTC

• Complete IRS Form 8850 before or on the day of job offer.
• Submit the form to the local agency within 28 calendar days of the employee's start date.
• Wait for certification from the local agency.
• Claim the credit using Form 5884 on your business tax return.

[09:16 - 15:00] Benefits, Examples and Considerations

• Benefits include tax savings, a diverse workforce, and community impact.
• The WOTC is a dollar-for-dollar tax credit, not a deduction.

Direct Quotes:

"The truth is that business owners are always hiring new employees, but all too often they're missing out on potential tax credits simply because they don't know about them." - Mike Jesowshek, CPA

"This is a credit, which means it's a dollar for dollar in tax savings. This is not a tax reduction. This doesn't reduce your income." - Mike Jesowshek, CPA

Resources Mentioned:

• IRS Form 8850
• Form 5884

______

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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How can business owners effectively build trust and transparency in remote teams while ensuring they aren't the bottleneck in their company's growth?

In this episode, Mike Jesowshek interviews Tyler Winn from Serious Payroll to discuss strategies for mastering remote team success. Tyler shares insights on the importance of hiring the right people, establishing trust in remote teams, and the value of transparency in work processes. He also delves into their hiring process, the systems they use for effective remote work, and the significance of delegation for business owners. Tyler emphasizes the need for continuous improvement and the benefits of having clear, shared processes to maintain accountability and elevate team standards.

[00:00 - 05:22] Trusting Remote Teams

• Tyler shares the origin story of Serious Payroll and their remote-first approach.
• Tyler talks about the early challenges and decisions that shaped their remote work model.
• He emphasizes measuring outcomes rather than hours worked.

[05:22 - 12:05] The Hiring Process: Systems and Transparency

• Tyler explains the steps in their hiring process, involving multiple team members.
• He discusses the critical role of systems in managing remote work.
• How transparency elevates standards and accountability are shared.

[12:06 - 16:35] Continuous Improvement

• Templates and repeatable systems help improve efficiency.
• Tyler shares the importance of propagating values and expectations within the team.

[16:36 - 20:05] Building Connection in Remote Teams

• Tyler shares the strategies for fostering connection and communication among remote team members.
• What is the importance of meaningful meetings focused on human connection rather than logistics?
• Regular team meetings and one-on-one check-ins maintain rapport.

[20:06 - 27:12] Delegation and Scaling the Business

• Letting go as a business owner is vital to prevent becoming the bottleneck.
• Hiring assistants can allow focusing on high-value activities.

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Direct Quotes:

"Butts in seats don't matter. The outcome is what matters." - Tyler Winn

"Transparency is not a 'big brother' thing; it's a gift that elevates standards and accountability." - Tyler Winn

"80 percent done by somebody else is 100 percent freaking awesome." - Tyler Winn

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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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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

______

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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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