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"Better to Have Money in Your Pocket than Uncle Sam's" is the e4e December 2016 LIVE Showcase Presentation by John Brandvein. John explains different ways to hold on to more of your income by avoiding taxes, fees, and penalties.
Following his presentation, John takes questions from the audience.
Adopt a Strategy for Reducing Your Tax Liability
What’s the best business strategy for tax planning? It’s simple. Know what you’re doing and what’s available to reduce your tax liability. What you don’t know can really hurt your business! Lack of knowledge and fear of being audited often make clients overly cautious when claiming expenses and deductions. As a result, many business owners end up paying a lot more than they should. In fact, not claiming allowable deductions can cost a business 56 percent in taxes to satisfy Uncle Sam. Why should Uncle Sam get your money when there are legitimate ways to keep more?
Tax planning is a year-round opportunity. And failing to plan means planning to overpay. Very few small business owners know the system well enough to take advantage of all the money-saving opportunities allowed in our tax code. Everybody wonders, “How far can I push the envelope?” Some go too far and push it past the edge, while others choose that cautious route and don’t put anything down. Neither strategy is good. You need to be working with a tax professional who really knows what can and can’t be done to get the most benefit for your business.
What You Need to Know
It’s all about recordkeeping and keeping track of everything. Anything you use or buy that relates to your business in some way, shape or form can (and should!) be deducted. Clients will often say, “But I don’t have a receipt for that” or “It wasn’t enough to be worth writing it down.” Trust me, everything is worth writing down! It all adds up. You’d be surprised how much all those smaller expenses add up to over the course of a year. And any expense less than 25 dollars doesn’t even require a receipt.
Do you work out of your home? While a bit complicated, there’s a formula for determining the deduction for that. And if you’re not claiming it, you should. How much do you use your car for business? Mileage, gas, wear-and-tear, and repairs can all be factored in and add up quickly to reduce your tax liability. Having lunch with a client, colleague or potential client? Deduct! Travel expenses? Need pens, paper, a new calendar, iPhone or laptop? Deduct, deduct, deduct.
Large or small, if you use it for business, count it all!
Make it Easier on Yourself
If the thought of trying to keep track of every possible deduction overwhelms you, there are strategies for that. Many business owners don’t realize there are some phenomenal apps out there to keep track of expenses. There are apps to keep track of where you’re going, who you’re meeting with, the mileage, and all expenses associated with those meetings. It can be so easy to forget to make notes or enter all that information like you should, so the apps can really help. Even if you have to invest some money in one that will do all the things you need it to do, it will really streamline your recordkeeping and make your life easier.
Also, get and use a designated credit card for all your business expenses. Put all those purchases that relate to your business in any way, shape or form on that card only. That way, you have a complete and accurate accounting of expenses and purchases at the end of the year just by going online and clicking the “print” button. It doesn’t get any easier than that.
Always remember, the IRS is there to do a job. No one from the IRS is ever going to come to you and say, “Gee, you’re a nice person. I see you should’ve taken deductions for more expenses here.” While that would be nice, that’s not their job. That’s my job.
My advice… be aggressive, but smart. And always keep tax planning at the forefront of your mind throughout the year. Don’t let what you don’t know hurt your business. In the tax game, there’s no such thing as “I paid for that out of my pocket.” Hire a professional tax planner. Then give Uncle Sam what is due, but start planning today to keep every bit you can!
John Brandvein has been in public accounting since 1958 and founded Brandvein & Co. in 1994. Not only does John have copious knowledge regarding all things accounting and taxes, he provides his clients the best possible support and stability, while being gracious and humorous in the process of delivering excellent service. You can reach John at 314.725.5514 or email him at john@brandvein.com
No business starts out with the expectation of failure, but when small business owners neglect the bookkeeping side of their business they’re setting themselves up for trouble. Proper management of the financial side of your business can make all the difference between whether you succeed or fail. And making sure the numbers are in order is just as important as sales when it comes to building a business that can go the distance.
If keeping detailed, accurate records is not your strength or you don’t have the time to give it the attention it deserves, it makes sense to hire a professional whose primary job is making sure all aspects of your business finances are in order. There are some things to consider when choosing someone to handle the finances for your business however, so here are a few tips for what to keep in mind.
Many small businesses are tempted to hire someone to handle their business finances based solely on cost of the services. This might seem logical, especially with start ups where money is tight. But choosing solely based on cost or having an unqualified person handling your accounting can be a monumental mistake!
The money side of your business is far too important to entrust to just anyone, and trying to save a few dollars can lead to big headaches down the road. Especially when it comes to taxes. A good accountant may cost more than that neighbor who does it to earn extra money on the side, but they’re trained to expertly handle the services you need.
When you think about it in terms of peace-of-mind and what you would be able to do instead of slaving over the books – like doing the things that bring in the money – investing in a competent accountant is clearly a sound investment in your business.
Get recommendations, shop around, and get quotes from several accountants before making a decision, but don’t let the cost of services be the only deciding factor.
A good accountant can be a valuable, strategic addition to your business on many levels. The services offered by accounting firms can vary though, so give some thought to what types of services you need before signing on with someone. Are you looking for someone to just handle your taxes on a yearly basis or do you want a broader list of ongoing services? Are you the type of person who considers throwing receipts in a shoebox “filing” and wants someone to manage everything financial or will you be doing some of the tasks yourself?
Are there things about your specific industry requiring someone who specializes in that area? Would you like someone who not only deals with numbers, but also offers expert guidance with respect to financial and management decisions – in other words, someone who can fulfill a consulting role as well as bookkeeping? CPA’s can often function as expert business consultants in addition to handling numbers.
If you’re unclear of the services available or unsure of the level of services you would like, talk to other entrepreneurs or ask accountants you’re interviewing. There may be ways an accountant could help that you haven’t even thought of.
Your relationship with your accountant is hopefully going to be a long one, so choose someone you find easy to work with. You want someone with a high level of expertise, but also someone whose personality is a good fit with yours.
Working with an accountant means letting that person into the heart of your business and entrusting them with your finances. It is one of the most important decisions you can make as a business owner. You need someone who cares about the success of your business. You need someone who is trustworthy. You need someone who has the diplomacy to handle difficult, but necessary, conversations. And you need someone who has a good sense of humor, which can be a real plus at tax time. (I’m only half kidding.)
Hiring an accountant to keep track of the money coming in and going out can be a big relief for business owners. And knowing you have a professional on your side who understands crunching numbers and what’s needed for success can free you up to do more important things. Just make sure whoever you choose is qualified to handle the job. The success of your business may depend on it.
John Brandvein has been in public accounting since 1958 and founded Brandvein & Co. in 1994. Not only does John have copious knowledge regarding all things accounting and taxes, he provides his clients the best possible support and stability, while being gracious and humorous in the process of delivering excellent service. You can reach John at 314.725.5514 or email him at john@brandvein.com