5 Tax Tips for High-Earning Business Owners with The Tax Goddess, #154
Business owners! Are you taking advantage of every tax break available to you? If you’re not already working with a tax strategist, the answer is probably no. Join me as I sit down with seasoned tax strategist Shauna Wekherlien, a.k.a The Tax Goddess, as she delivers five tax tips that could mean thousands of dollars in deductions on your next return.
You will want to hear this episode if you are interested in…
What is a tax strategist? [1:37]
Defining a high-earning business and one of Shauna’s favorite tax strategies [4:57]
Understanding the Augusta Rule [14:54]
Getting your kids on the payroll [20:35]
Why your dog could be human’s best tax write-off [23:51]
The tax deduction mistake too many CPAs make [27:00]
The four-Legged Financial approach
Without CPAs American business owners wouldn’t be able to file their taxes. Well, they could, but it probably wouldn’t go well. That being said, a CPA isn’t the only financial professional you need to get the most out of tax season. Shauna recommends that businesses use all four legs of her financial stool for stability: a bookkeeper, a tax strategist, a CPA, and a financial advisor. After your bookkeeper handles the day-to-day accounting, a tax strategist helps you manage your entire financial world. They keep track of where you’re spending money, how much you’re spending, and how you’re investing that money from a tax perspective.
A tax strategist like Shauna will help you tweak all of those things so that by December 31, you are reporting the lowest profit possible and keeping the largest amount of money in your pocket. Then it’s time to hand everything over to your CPA, who files the return, protects you from audit, and ensures you're not breaking any rules. This is when you and your financial advisor have fun choosing how to invest that money, build your portfolio, and get ready for retirement.
Risk and Reward
One of the biggest things Shauna wants prospective clients to understand is the idea of risk. Similar to the risk assessed in a retirement portfolio, tax strategies also have risk. Every business needs to know where they fall on the aggression scale, with 1 being zero IRS contact (except for a random audit) and 10 being everyone is going to jail. Obviously, we don’t want to be anywhere near a 10, but Shauna says clients can go as high as an 8 while still being aboveboard. You just have to be willing to speak with the IRS and provide proof of your deductions.
Shauna shared so many great tax tips in this episode, but one of them is known as the Augusta Rule. Also known as the Master’s Exception, this tax rule allows you to rent your home for business use and deduct the cost from your taxes. Because your business is technically a separate entity from you, the rule allows you to rent your home out to your business for up to 14 days per year without paying income tax on the revenue. For more on this and other tax strategies that could save your business thousands in deductions, listen to the full episode!
Resources Mentioned:
Shauna’s website
Take my Retirement Readiness Review online course!