How are small business owners and entrepreneurs like artists? Well, they combine their passion and available supplies (such as laws) to create a masterpiece (products and services that people actually want.) Entrepreneurship is associated with risk because, well, it’s risky to quit your day job with a consistent salary to start a new venture with no guarantees. After literally risking it all, it utterly amazes me that small business owners still turn to the one professional who is the exact opposite of an artist for tax advice. Yep, I’m talking about your CPA. If you show a CPA a Picasso, they’ll likely value the painting at ten bucks (or the cost of materials.) Why? Because they lack the ability to think outside the canvas.

Everyone thinks that the CPA industry does a thing that it isn’t actually trained to do. Financial Gravity, on the other hand, is trying to solve this problem by 1/ figuring out your unique situation and 2/ applying the tax code to your unique situation.  Bottom line, we help small business owners and entrepreneurs lower their personal income taxes legally, morally, and ethically by making the same strategies that the ultra-rich use, accessible and available to everyone.

Still not convinced? Ask yourself this question: When is the last time your CPA saved you at least $1000 in taxes? If your answer is “never,” then ask yourself this question. What do you think a CPA actually does?

CPAs aren’t artists, they are historians (number historians to be exact). They take what you’ve already done and record it. They don’t tell you how to do what you’ve done differently. In fact, they aren’t even trained to do proactive tax planning (which is an art in itself.) Being an artist, entrepreneur, or small business owner involves some level of risk, something that CPAs are naturally averse to. CPAs became CPAs because there is no risk involved. They may answer the questions you ask them, but they don’t get to the core of WHY you asked the question in the first place.

So, if the CPA industry can’t help you, who can? What you need is someone who knows how to ask the right questions to get to the right objectives, someone who knows that there are lots of laws located in the tax code to help business owners like you save on taxes, someone who understands the art of business…Financial Gravity.

Take this scenario for example.

I call my CPA and say “I want to put $10,000 into my IRA.” To which my CPA replies, “you can’t do that, sorry.” Financial Gravity, on the other hand, would dig a bit deeper and ask, “Are you married? If your spouse doesn’t work, then you can have your spouse put in $5000 and then you can put in $5000.”

If everything Financial Gravity recommends is legal, moral and ethical, why are CPAs so afraid of being red-flagged by the IRS if they implement the same strategies?

The simple answer is that they are just a risk-averse profession even if that risk is a fallacy. There is nothing risky about applying the laws located in the tax code to reduce your personal income taxes. That’s what they’re for. For example, there are four ways to write off a home office. If it’s a red flag to write off your home office, why are there four legal ways to do it? Bottom line, laws are hard to pass. If there’s a law in the tax code that reduces your personal income taxes, USE IT! Or call Financial Gravity and we’ll help you do just that.

Top 10 Tax Myths Busted

For the last 10 weeks, we’ve been busting tax myths left and right on our Financial Gravity blog. Below is a summary of all the myths we’ve busted in that time.

1. Having an accountant is the same thing as having a tax planner. MYTH

Everyone knows that if you are an entrepreneur or small business owner, having a good Accountant is essential to the function and success of your business, but it’s not everything. If you want to lower your personal taxes, increase your profits, and attain greater wealth, you’ll need the help of a Tax Planner. Read more here. 

2. Taking a proactive approach to tax planning will put your business at risk for an audit. MYTH

Implementing strategies that help you reduce your taxes will not raise your risk of audit. In fact, it’s why the Internal Revenue Code exists (all 70,000+ pages of it). Inside the IRC, there are plenty of legal ways that Small Business Owners like you, can learn to lower their tax liability and keep capital in your business. Read more here. 

3. Becoming an LLC prevents me from having to pay Self-Employment taxes. MYTH

Becoming an LLC will not magically prevent you from paying Self-Employment taxes. Why? Because an LLC is not a tax filing status. To determine which tax filing status is right for your business, get in touch with a Tax Professional. Read more here.

4. Having an IRA or 401k is a Sufficient Retirement Plan. MYTH

If you are a small business owner, and you have an IRA (Individual Retirement Account) or a 401k, you don’t actually have a sufficient retirement plan. Not only do conventional retirement accounts (401k, 403b, 457, SEP, SIMPLE, IRA) contain massive hidden fees but they only work if Taxes don’t go up and Your income decreases upon retirement. Read more here. 

5. Kids are an expense. Case Closed. MYTH

As long as you have a written contract, you are paying your “employee” through the payroll (so the IRS gets their fair share), and the money is being deposited into your “employee’s” account, it’s totally legal, moral, and ethical. Read more here. 

6.  The Affordable Care Act took away my ability to write off medical expenses. MYTH

There are still PLENTY of ways for you to write off glasses, braces, massages, acupuncture, and other medical related expenses. Here are just a few; Flex Plans, Health Savings Accounts (HSAs, or a Medical Expense Reimbursement Plan (MERP). Read more here.

7. A home office deduction will put me at an immediate risk for an audit. MYTH

Not only is a home office deduction LEGAL, MORAL, and ETHICAL, but there are four different ways (YES, FOUR!) to do it. If writing off your home office was risky, why on earth would the IRS give you four ways to do it? Read more here. 

8. If there is food involved, then it’s a meals and entertainment expense. MYTH

If the food is part of a marketing expense, bought while traveling for work, or purchased for staff as a “working lunch”, you may be able to deduct 100% of the cost. Read more here.

9. Mileage is the only tax write-off I can use for my car. MYTH

In addition to writing off your mileage, the Internal Revenue Code allows you to write off your leased car (but not a loan.) Read more here. 

10. If lowering my tax liability was that easy, I would already know about it. MYTH

Most accountants, attorneys, or business consultants aren’t taught to master the myths standing between you and your money. In fact, the financial industry benefits from small business owners not understanding tax myths. At Financial Gravity, however, we have expert tax planners and tax specialists who not only understand the tax code and the available “green lights” you can use to reduce your taxes but who will help you engage in proactive tax savings and tax planning. Read more here. 

If you’d like to read about the myths in further detail, you can download your own copy of the Tax Myth eBook here. After reading the eBook, you’ll have a better understanding of what you need to do to lower your tax liability, increase your profit, and enhance your quality of life.

*image by Edu Lauton

Again, I’m sorry to be the bearer of bad news, but if you are a small business owner, and you have an IRA (Individual Retirement Account) or a 401k, you don’t actually have a sufficient retirement plan. Let me explain why:

Saving money is good, but not if that means sacrificing your dreams. Not only do conventional retirement accounts (401k, 403b, 457, SEP, SIMPLE, IRA) contain massive hidden fees but they only work if:

1. Taxes don’t go up.


2. Your income decreases upon retirement.

Bottom line, taxes will likely go up between now and the time you retire. And you’re likely planning on increasing (or at least maintaining) your current standard of living, not decreasing it.

Believe it or not, there are actually retirement plans out there without Third Party Administrators, confiscatory fees, or discrimination rules. They allow you to defer hundreds of thousands of dollars and even self-compete like a pension, entitling your spouse to the benefit if you die.

If you want to maintain or increase your lifestyle upon retirement, then you’ll need to hire someone who can help you avoid the conventional 401k, 403b, 457, SEP, SIMPLE, IRA in favor of a retirement plan that supports your unique vision of retirement.

Photo by Lotte Meijer on Unsplash