If you don't understand taxes, you'll never be truly wealthy.
Owning a small business is the best tax deal in America.
Here's everything you need to know about how to leverage it (in 3 minutes):
Owning a small business is the best tax deal in America.
Here's everything you need to know about how to leverage it (in 3 minutes):
Traditional work today is a massive disadvantage:
• puts people in carpeted cubicles
• away from the sun
• makes them sit for 8-9 hours
• tells them they get a 3-5% raise per year
but the biggest disadvantage: not having access to a wealth of tax write-offs.
• puts people in carpeted cubicles
• away from the sun
• makes them sit for 8-9 hours
• tells them they get a 3-5% raise per year
but the biggest disadvantage: not having access to a wealth of tax write-offs.
Tax write-offs are massively powerful.
You can earn less, and spend just as much, but come out better from savings.
Here are some examples:
You can earn less, and spend just as much, but come out better from savings.
Here are some examples:
Biz Assets
Under a small business:
You can get real estate, vehicles, and even furniture deducted/depreciated.
Under a small business:
You can get real estate, vehicles, and even furniture deducted/depreciated.
Not only does owning an SMB allow you to qualify for 199A...
(deduct 20% for passthrough businesses)
But you can also expense leases, mileage + insurance
(deduct 20% for passthrough businesses)
But you can also expense leases, mileage + insurance
Biz Expenses
SMB owners have more flexibility v. W-2 employees in terms of business expenses.
The direct costs of running a biz can be deducted:
• Inventory costs
• Advertising and marketing costs
• Salaries and employee benefits
• Freelance / contract labor
SMB owners have more flexibility v. W-2 employees in terms of business expenses.
The direct costs of running a biz can be deducted:
• Inventory costs
• Advertising and marketing costs
• Salaries and employee benefits
• Freelance / contract labor
There are a number of deductions that wouldn't be available to W-2 employees:
• Software subscriptions
• Legal + accounting costs
• Home office supplies + furniture
• Repairs and energy efficiency expenses
• Insurance expenses (property, liability, etc.)
• Software subscriptions
• Legal + accounting costs
• Home office supplies + furniture
• Repairs and energy efficiency expenses
• Insurance expenses (property, liability, etc.)
Benefits
One of the big risks in building an SMB early is having to provide benefits...
(for themselves + their employees)
But owning an SMB allows you to deduct them + save thousands:
• 401ks
• SEPs
• Medical reimbursement plans
One of the big risks in building an SMB early is having to provide benefits...
(for themselves + their employees)
But owning an SMB allows you to deduct them + save thousands:
• 401ks
• SEPs
• Medical reimbursement plans
Employment Taxes
If you want to save 15.3% on employment taxes...
S-Corps are a great vehicle to work around this issue.
Easily transition there from your LLC and start paying yourself an estimated salary.
By employing yourself, you can save thousands of $$.
If you want to save 15.3% on employment taxes...
S-Corps are a great vehicle to work around this issue.
Easily transition there from your LLC and start paying yourself an estimated salary.
By employing yourself, you can save thousands of $$.
Solo 401k
Most people know you can get a 401k from any corporate job.
But unlike corporate 401k's, a solo 401k allows you to decide:
• What type of risk profile you want
• Where you want to invest (stocks, crypto, index funds, etc.)
Most people know you can get a 401k from any corporate job.
But unlike corporate 401k's, a solo 401k allows you to decide:
• What type of risk profile you want
• Where you want to invest (stocks, crypto, index funds, etc.)
Here's how they work:
• You can contribute $20,500 as an employee
• You can contribute 25% of profit as an employer
• There's a cap of contributing $61k of pre-tax income
• You pay zero taxes on maturity
• You can withdraw post-tax contributions with no penalty
• You can contribute $20,500 as an employee
• You can contribute 25% of profit as an employer
• There's a cap of contributing $61k of pre-tax income
• You pay zero taxes on maturity
• You can withdraw post-tax contributions with no penalty
It's not apparent early on but...
Tax savings is one of the most underrated aspects of being an SMB owner.
Tax savings is one of the most underrated aspects of being an SMB owner.
It's hard to always quantify exactly how much you're saving via write-offs and other tax break opportunities.
Follow at @Codie_Sanchez for more content like this.
Follow at @Codie_Sanchez for more content like this.
If you're looking for more ways to free your mind and build your bank account...
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I write deep-dive breakdowns & playbooks each week to 230,000+ others.
Subscribe to my newsletter here:
contrarianthinking.co
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