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5 ways to save big on taxes for your small business

The IRS tax code actually provides many ways for small business owners to save big on their taxes–ways that many of which business owners may not be aware. Here are just five:

Lease Your Home to Your Business for the Maximum Time the IRS Allows

Your home has to be rented for less than 15 days to get the deduction. For example, if you have a board meeting every month, you could host all 12 in your home and claim the deduction. You must also rent your home at a fair rate. The IRS does not allow you to just make up an arbitrary amount to charge your company when you rent your home to your business. It must be commensurate with the average price you would pay to rent another location. You must also issue yourself a 1099 form from your company with the total rent amount paid, which you will then claim on your personal taxes. This will be offset once you list your less-than-15-days deduction. Don’t forget: you must record the minutes of any meetings you have in your home–this will provide further proof to the IRS of the validity of the business conducted there if it is called into question.

Hire Your Children to Work in Your Business as Spelled Out in the IRS Code

A business owner can hire and pay their own child under eighteen tax-free. As long as your child is doing legitimate work and getting paid a reasonable rate, you can pay them up to $6,300 per year before they have to pay a dime in income tax. However, you may still have to pay payroll taxes such as FICA and FUTA, which go towards unemployment and social security benefits. On the other hand, you don’t have to pay payroll taxes for employing your kids if your business is a sole-proprietorship, a single-member LLC taxed as a disregarded entity, or an LLC taxed as a partnership and owned solely by you and your spouse. But if your business is a corporation, you must pay payroll taxes on income to your children. Even in this last case, there may be workarounds, but these are best discussed with a professional tax advisor.

Change Your Health Plan to a Qualified HSA Plan to Save the Most Taxes Possible

HSAs escape taxation by allowing holders to save tax-free money for medical expenses not covered by insurance. Contributions are made into such accounts by employees and/or employers, and unused funds roll over from year to year. The contributions are invested, earning returns over time, thanks to the power of compound interest. Funds can be removed tax-free to pay for qualified medical expenses, including vision and dental. HSA deposits (from an employer or individual) are federal income tax-free and not subject to employment taxes. Secondly, HSA growth from income and investment appreciation is not subject to federal income taxes. Finally, if the HSA funds are withdrawn for qualified medical expenses by the account owner, spouse and/or dependents, such withdrawals are not subject to federal income tax. There is no other place in the tax code which allows ordinary income to escape federal taxation forever. But of course, you have to know the HSA rules and follow them carefully. This is another case where it would be good to consult a tax advisor to help you create the best plan for your business and unique situation.

Maximize Retirement Savings to the Fullest (If You’re Over 50 Chances Are You Are Not)

There are many legal ways to maximize your retirement savings and lower the taxes you pay on them. For example, you could start a diversified retirement plan–the funds will help cut down your tax bill now and grow tax-deferred until you make withdrawals in retirement. In most cases, the cost of opening and administering a plan is pretty small. The four main options for small business owners are a SEP-IRA, a SIMPLE IRA, a Solo 401(k) and a SIMPLE 401(k). For all but SEP-IRAs, a business can be a sole proprietorship, a partnership, a limited liability company or a corporation.

Start a Private Foundation

Establishing a private foundation is a great way to use family funds and property tax-free, all while engaging in charity. However, under the IRS Code, a not-for-profit is not exempt per se from federal income tax. In fact, a private foundation is fully taxable unless and until it applies to the IRS for recognition of its status as a tax-exempt organization; even then, it may lose its tax-favored status if it fails to file annual tax returns with the IRS.

It pays to do your homework–consulting with a tax or financial planner can greatly help with setting up tax savings strategies properly. Find out more about how you can bring on a financial advisor who will truly assist you in not only saving on your taxes but give you a solid plan for the future. Speak today with a Financial Gravity team member, Let’s Talk!

One of our company-wide goals is to help small and medium business owners retain their hard-earned capital through Strategic Tax Planning. If you think you may need a strategic tax plan, but you still aren’t sure, take this quick tax quiz below to find out.

Financial Gravity Tax Quiz


1/ Are you an SME or SMB owner?

If yes, proceed to question 2.

If you’re not sure, here’s a definition of a Small or Medium Sized Enterprise (SME) or Business (SMB) according to this article on SMBResearch.com. A small business or enterprise has fewer than 100 employees (startups and self-employed peoples fall into this category) while a medium sized business or enterprise can have between 100 and 10,0000 employees. Anything more than 10,000 and you’re jumping into the large enterprise category, aka The Big Dogs.

If not, don’t fret. You can still follow our blog, Twitter, and podcast for tax saving strategies and entrepreneurial inspiration. When you finally open up shop, let us know, we also help with business strategy!

2/ Do you pay more than $20,000 in taxes per year?

If yes, proceed to question 3.

If not, perhaps you’d benefit from our Business Blueprint. The Business Blueprint™ provides a “jumpstart” for clients struggling to obtain traction with operations to support the owner’s vision. It provides the basic foundations to operate a healthy and happy team and is the beginning of realizing a company’s true potential. 

3/ Do you think you’re paying too much in taxes?

If yes, proceed to question 4, if not sure, proceed to question 4 anyway.

If not, are you sure you filed taxes this year? If you are a small business owner, it’s highly likely you’re paying too much in taxes.

4/ Has your accountant, tax preparer, CPA, or financial advisor provided you with a strategic tax plan that saves you more than $1000 per year?

If yes, then congratulations! Call him or her right this minute and invite them out for a drink. You’ve found yourself a rare gem. Most accountants don’t offer strategic tax planning. Here’s why.

If no, it’s time to ditch the zero and get with the hero.

Financial Gravity exists so that we can help small and medium-sized business owners reduce their tax liability, increase their profit, and attain greater wealth. We do that by providing Strategic Tax Planning which is derived from over 70,000 legal tax laws located in the tax code. Our Tax Blueprint™ (a clear tax reduction plan) will never cost more money than it saves you, backed by our 2x guarantee. Without a Tax Blueprint, you don’t have a Strategic Tax Plan.

Here are your next steps:

1/ Get in touch with us today. After a 15-30 minute no obligation assessment, we will determine if we can lower your tax liability.

2/ Do your happy dance! 

*Photo by rawpixel.com on Unsplash

Financial Gravity isn’t just your average run of the mill financial services company whose sole purpose is to create a transaction or sell you a strategy or product. We exist so that we can help small business owners like you lower their personal income taxes, increase their profits, and attain greater wealth. So, how does Financial Gravity help small business owners recapture the hope of financial freedom AND retain more of their hard-earned capital? Strategic Tax Planning.

Strategic Tax Planning is something you most likely aren’t receiving from your CPA. There are a few reasons why this is true.

1/ Accountants only understand a small portion of the tax code. Instead of being future focused, they are more interested in historical record keeping. While some may provide reactive tax advice, they are unaware of how to proactively and strategically make the tax code work in your favor.

2/ Accountants are likely to have Type-A personalities. While that’s great for plugging numbers into boxes, it means they probably aren’t flexible or open to change. A strategic tax planner must take into account the small business owner’s lifestyle, short and long-term financial goals, and spending habits.

3/ Accountants err on the side of caution. Though there are over 70,000 pages of green lights in the tax code, accountants tend to focus on the five pages of red lights to avoid being flagged by the IRS. It’s important to understand, however, that a green light is not the same as a “loophole.” It’s not a “red flag” to go through the intersection and it does not increase your risk of getting a ticket because you “used” this particular law to get through the intersection. Remember, the tax code was meant to be used, not feared.

What does Strategic Tax Planning at Financial Gravity look like? Designed and implemented by our insanely smart tax and wealth professionals, the following two products seek to give small business owners proactive fiduciary-type advice that serves their best interest:

Tax Blueprint

Without a Tax Blueprint®, you don’t have a Tax Plan. After a free 15-30 minute no obligation assessment, Financial Gravity will determine if we can substantially reduce your tax burden. If so, we take 200+ proactive tax strategies and create a personalized Tax Blueprint® just for you. All of our strategies come directly from the IRS Tax Code and are legal, ethical, and moral. The best part is that we guarantee to deliver a tax savings of at least 2x the cost of the Tax Blueprint®, or it’s free. That means you have nothing to lose except overpaying taxes. Your Tax Blueprint® has the potential to return tens or even hundreds-of-thousands of dollars annually to your bottom line.

Tax Operating System

Designed to fit any budget and circumstance, the Tax Operating System® works in coordination with the Tax Blueprint by providing a suite of solutions to save you money. Regardless of which solution you select, you can count on access to our advisors, annual tax planning assistance, ongoing newsletter, and educational materials. Some of the solutions you can choose from including Advisory, Tax Preparation, and Bookkeeping with Purpose®.

Financial Gravity has a national partner network of financial advisors and accounting professionals that help small business owners, like you, attain business and personal goals, reduce their tax burden, and keep more of their hard-earned capital through Strategic Tax Planning. If you are a small business owner who is tired of paying too much in taxes, get in touch today. 

Photo by Maarten van den Heuvel on Unsplash

Though the initials behind a financial advisor’s name might initially make them appear more professional, intelligent or experienced, that isn’t always the case. You’ll have to dig a bit deeper into the advisor’s business model before you give him or her or stamp of approval (and reigns to your money wagon.) Though some senior designations do imply years of education and experience behind them, most are just used as marketing tools. According to this article by AARP, most states have laws restricting “self-serving or misleading senior designations” but that doesn’t really matter considering most consumers don’t understand the slight differences anyhow.

Let’s take the CFP for example. CFP stands for Certified Financial Planner, but what does that mean exactly? If someone has a CFP behind their name you can bet they have attended a variety of courses and pre-requisites, passed a rigorous exam, had at least three years of financial planning experience, and committed to completing at least 30 hours of continuing education every two years. You can also bet that they have a pretty broad knowledge covering a variety of *exciting* topics such as personal financial planning, portfolio management, budgeting, estate planning and tax. But all that knowledge, experience, and confidence gained means nothing if your CFP works for a company that only sells specific financial products or strategies.

You may have heard us say that we are product-agnostic. That means that we let the tax code determine which products or strategies work best for you, not which commissions are going to make us richer. If you don’t like a product or strategy we recommend, no problem, we will find you another one.

When you are shopping for a financial advisor, make sure you find out the company’s business model before you sign your name on the dotted line. It’s far more important than the initials behind the advisor’s name. If an advisor is merely peddling a high commission product or using their designation as a marketing gimmick, toss their business card in the trash and keep searching for an advisor who has YOUR best interest in mind. Like us.

Tax-centric Financial Advice

It’s that time of year again, a time to reflect on all the things you are most grateful for. Similar to raising a child, starting and maintaining a successful business can’t be done unless you enlist the help of an entire village. By implementing some of Financial Gravity’s tax-centric financial advice, small and medium-sized business owners (like you) will receive two things you can be grateful for, for years to come,  1/ time to think about big-picture issues, and 2/ money to invest back into your business.

Below are three clients who are thankful for Financial Gravity’s tax-centric financial advice:

1/ Jeanne Johnston and Bobbie Parker, co-owners of Johnston, Parker & Associates (JPA), are thankful for their retirement plans.

Thanks to Financial Gravity, both Jeanne Johnston and Bobbie Parker, co-owners of JPA associates, now have retirement plans that make sense. In addition to retirement plans, JPA also decided to implement Financial Gravity’s Tax Operating System®, bookkeeping, and payroll services. Outsourcing those functions cleared up their schedules, allowing them more time to “develop their people.”

2/ Dr. Ron Perkins, owner of Perkins Orthodontics, is thankful for real investment diversity without commissions.

Though Dr. Perkins first came to us for investments, he quickly jumped at the chance to save money on taxes with our various tax planning services. Unlike other advisors who are product, commission, or transaction driven, all of our financial advice is tax-centric, meaning we let the tax code call the shots. 

3/ Kim Holmes, owner of Holmes Service Company, LLC, is thankful for lower taxes.

Kim Holmes was experiencing excellent success and increased revenue as a small business owner. Unfortunately, that also meant she was experiencing an increased tax liability. By implementing our tax and financial planning services, we prevented Holmes from paying $12,000 too much in taxes.

Receiving good financial advice can be hard to come by when you consider all that is currently wrong with the financial system. Your CPA isn’t trained to help you save money on your taxes, and your financial advisor is more concerned with selling you a product or making a commission than giving you advice that positions your company for success. At Financial Gravity, we are thankful for the Tax Code. It’s over 70,000 pages of “green lights,” or legal, moral, and ethical ways to lower your personal income taxes. If understood and implemented correctly, the Tax Code will save you thousands of dollars in taxes a year.

Having doubts if Financial Gravity can help you? Read these case studies, featuring real customer experiences.

Photo by Chris Lawton on Unsplash

Hero X

Financial Gravity wants to digitize the tax code in order to make sure that everyone (not just the uber wealthy) pays the lowest amount of taxes by law. But…we can’t do it alone, that’s why we’ve decided to crowdsource knowledge using Hero X (but more on that later.)

What’s the problem, exactly?

For years, the uber wealthy (those with $20-30 million or more in assets) have had exclusive access to the Family Office.

Hold up, I’m confused. What is a Family Office?

A Family Office integrates the following advice; wealth planning, risk management, insurance planning, tax planning, and legal planning. By integrating all of these “offices,” wealthy people receive financial advice that is streamlined and tailored to their particular financial needs and goals. Since operating a Family Office requires an entire team of connected individuals to maintain an understanding of ever-changing tax codes and financial products, this streamlined advice can be expensive, very expensive.

Isn’t there a software that can do that for me?

Despite the number of tax planning and wealth management services out there — ones that enable people to plan in advance of tax time have not yet been automated…yet. Financial Gravity wants to develop an automated strategic tax planning assistant software so that people like you and me have the same access the uber-wealthy do to financial planning through the Fractional Family Office™.

Why can’t I just ask my Financial Advisor for advice?

Financial Advisors can’t give nonbiased financial advice because they are either product-centric, strategy-centric, or transaction-centric. Bottom line: 99% of Financial Advisors are selling something.

But what about my Accountant?

Accountants don’t give financial advice because they aren’t trained to help entrepreneurs and small business owners lower their personal income taxes and then give them numbers to help them run their business. Bottom line: The CPA exam has nothing to do with tax planning.

And how are you going to fix this problem? 

By digitizing the Tax Code and creating a tax centric advice platform that is moral, legal and ethical. That way entrepreneurs, high net worth individuals, and small business owners pay the least amount of taxes required by law (which will then allow them to pump more of their money back into their business and into the economy.)

Sounds great, but you said you needed my help…? 

We do. We need your help building Odele’s Brain.

Um, what? Who is Odele™?

Odele™ is the name of the tax planning assistant software that will disrupt the financial services industry as we know it. Not only will Odele™ centralize all financial planning around tax savings and planning, she will make proactive tax planning, wealth-building, risk management, business strategy, and financial planning strategies both accessible and affordable to business owners at ALL wealth levels. Think of Odele™ as anyone’s access to a Fractional Family Office™… and in AI form.

Still a bit confused as to where I fit into all of this…

My bad. I was so excited that I must have gotten ahead of myself. Here’s the gist: Financial Gravity is already working on a Fractional Family Office™ for small and medium sized business owners by partnering with the different “offices” I mentioned before. However, there are still a lot of people who don’t have access to our services due to financial constraints (such as a mompreneur who sells monogrammed cloth diapers on Etsy as a side-hustle.) That’s why we want to build Odele — to allow tax payers from ALL income levels to benefit from the legal tax saving strategies provided in the tax code. This technology has the opportunity to save a LOT of people a LOT of money (once it’s built, of course.)

How can I help? 

In order to help us build Odele™, we are crowdsourcing knowledge via Hero X (think of Hero X like Kickstarter…but instead of raising money, we are searching for an individual or team of individuals to help us map out Odele’s brain.) Brands such as Netflix and Coca Cola have already used Hero X to successfully recruit innovators to help them make breakthroughs in technology, health, education, and communities. In some cases, the chosen innovators have even won prize money.

Wait, there’s prize money involved? 

Haha, yes. Glad I got your attention. Financial Gravity will award a total prize pool of up to $125,000. This prize may be split by up to 5 winners. The minimum prize is expected to be $20,000.

How are the winners chosen?

    To be eligible for an award, your proposal must, at a minimum:

  • 1. Satisfy the Judging Scorecard requirements.
  • 2. Thoughtfully address the Submission Form questions.
  • 3. Be scored higher than your competitors!

 

Sounds exciting, where can I find out more information?

In the upcoming blog posts, we will address more specifically what we are looking for. If you can’t wait that long, however, you can head over to our Hero X page to learn more about Odele’s Brain and the Automated Tax Blueprint Challenge.