You almost certainly know that you can write off the mileage for business use of your car. That advice is still true. A nice bonus is that it is easier than ever to track your business mileage with a variety of smartphone apps available. Mileage, however, isn’t the only automotive write-off that you should be pursuing. If you use your vehicle for anything work-related, there are deductions that you might be missing out on. Lease payments, oil changes, insurance, repairs, and even car washing and polishing could be written off. Don’t fall for tax myths, fuel your savings with automotive write-offs.
Taxes may be the least favorite topic for business owners. The saying goes there are only two things in life that are certain—death and taxes. For a business, there are just taxes. It doesn’t matter who you are, how influential you are, or how much money you earn, everyone still has to pay taxes. It’s natural that business owners would want to pay the least amount of taxes possible. That usually happens through tax evasion, tax avoidance, or strategic tax planning. As a business owner, it’s important that you understand which one of these methods is the right one. Learn the difference between strategic tax planning, tax avoidance, and tax evasion.
For business owners, lower taxes are likely a gift that you’d like to see under the tree. Thankfully, it’s not too late to add it to your holiday wish list. It even has a name, strategic tax planning. Strategic tax planning is a gift that won’t fade once the newness wears off, and it’s one that continues to give to your business year after year. Strategic tax planning could save your business $20,000, $50,000, even $100,000 in taxes every year. This year stop wasting money on taxes you don’t owe. Instead, give yourself the gift of strategic tax planning, and get rewarded year after year with lower taxes.
You’ve likely heard of a little thing called Black Friday. The day after Thanksgiving is also known as the biggest shopping day in the United States. Stores offer major markdowns, mind-blowing doorbusters, and rock-bottom prices. If you’re a die-hard bargain hunter who goes to great lengths to score the best deals and deepest discounts, Black Friday is where you shine. People stand in line hours before the stores are opened, to grab the bargains of the year. It’s clear that Americans like to save money where we can. So, what if there were a Black Friday sale on taxes? There is, and it’s called strategic tax planning.
Legend holds that in 1494, an Italian friar named Luca Pacioli was sitting under an apple tree when an apple bounced off his head. In a flash of insight, he invented the “double-entry bookkeeping” system where each entry has a corresponding and opposite entry to a different account. Those entries, called debits and credits, help accountants avoid headaches — if the debits and credits don’t balance, there’s a mistake somewhere. (Some of you may be thinking that was Sir Isaac Newton with the apple inventing gravity, but this is our story and we’re sticking to it.)
Double-entry bookkeeping has ruled accounting for over 500 years. We see it everywhere today, including in our tax code. Revenue flows in, balanced by expenses flowing out. Anything left over eventually winds up in the “taxable income” account.
Sometimes, with taxes, that balance breaks down, and many of those disconnects spell opportunity. Real estate investors, for example, can depreciate the price of their properties over time. (We can help you with “cost segregation” strategies to do it even faster.) In the IRS’s ideal world, you’ll repay those breaks by “recapturing” them as income when you sell. But with tax-free exchanges, stepped-up basis, and other strategies to avoid that reckoning, most of those depreciation deductions never get recaptured at all.
Now it’s Halloween: America’s second-favorite, and second-priciest, holiday. The National Retail Federation reports we dropped $9.1 billion on the spooky season last year, including $2.7 billion on candy. (Fun fact: Halloween candy is cheapest exactly four days before the 31st.) How does all that fit into Luca Pacioli’s neat little boxes? Well, it gets scary the minute the greedy little trick-or-treater on the other side of your door goes running down your sidewalk with their loot!
Here’s the disconnect. The candy company sells sweets to a retailer. That’s a taxable transaction. The retailer sells them to you. That’s another taxable transaction. But then you just give it to the little goblins, pirates, and princesses on your porch. No deduction for you, no income for them, no 1099s for the IRS. (Ugh. Can you imagine the 1099s?) That removes everything from the IRS’s world of debits and credits. Seriously, if the IRS taxed kids on their Halloween candy, they could collect millions of dollars to cover free dental care for everyone.
It’s all very ironic because, as any parent knows, Halloween is an exercise in managing the waste of assets. Your kids come home with bulging bags of candy and dreams of sugar highs lasting until Thanksgiving. But pretty soon the good stuff is gone. No more Kit-Kats or Snickers! They’re left with a couple of “fun-size” Milky Ways, some of those Jolly Ranchers nobody really likes, and a few stale candy corns. At that point, you “charge off the goodwill” by throwing out the dregs while they’re at school and hoping the kids don’t even notice.
Today, your average accountant or tax professional focus their effort on making sure the debits match the credits. But we don’t just stop there. We take the time to look for those tax “disconnects” that can rescue thousands in taxes. There’s nothing scary about it at all. So call us when you’re ready to pay less. You’ll think the savings are pretty sweet!
Some people spend their whole lives grasping for the white-hot spotlight of fame. Others avoid it like the plague. Still others work to stand out in their field, only to make headlines for entirely different reasons. Porn “star” Stormy Daniels clearly falls into that third group. The 38-year-old performer excels in her craft, with spots in the Night Moves, Adult Video News, and X-Rated Critics Organization Halls of Fame. But despite all that hard work, she’ll go down in history for taking $130,000 in hush money to cover up an affair with the President.
(Of course, “Stormy” isn’t the name her parents gave her. Her real name is Stephanie Clifford, which makes her sound more like a debutante than a girl who started stripping at age 17 – “introducing Stephanie Clifford, of the Main Line Cliffords . . . “)
Politicians and pundits are feverishly debating exactly how and why that money wound up in Stormy’s account. Did the President or one of his associates secretly foot the bill? Is it an illegal campaign contribution or campaign finance violation? Will it find its way into Special Counsel Robert Mueller’s investigation? But really, who cares about that stuff? We want to know what the IRS thinks!
What does the IRS think?
The Tax Code defines gross income as “all income from whatever source derived,” and there’s no section excluding payoffs from presidential candidates. So it’s pretty clear that Stormy’s windfall is taxable. (Minus legal fees, of course. “Hush Money for Porn Stars” isn’t a required law school class – for most schools, it’s a third-year elective. Still, only the best lawyers have that particular expertise under their belts.)
The real question is: how is that windfall taxed? Is it ordinary income? Or could it be capital gains? And what difference would that make?
Most tax professionals would probably include the income in Stormy’s business of being a porn star. If that’s the case, it’s taxed as ordinary income at marginal rates of up to 37%. It’s also subject to self-employment tax, unless Stormy has organized her business as an S corporation and paid herself a reasonable salary to cap that particular liability.
Treat the Property as a Capital Asset!
But there may be another way to skin this particular cat. The settlement agreement itself provides that Stormy is actually selling her rights to certain information and “property.” So why not treat the “property” as a capital asset? In that case, considering the story grows out of an affair that took place in 2006-07, it would be treated as long-term gain, and tax would be capped at 20%. The gain would also be subject to a 3.8% net investment income tax if her adjusted gross income tops $200,000.
Now, what about deducting the payment? If the President’s personal lawyer is telling the truth when he suggests that he paid out of his own pocket, then he can plausibly deduct it as an expense of his law practice. The attorney also claims he originally pulled the cash out of his personal home-equity line of credit, which means he can deduct the interest he pays, too.
Want a free book on the new tax law?
Here at Financial Gravity, we confess we have no experience whatsoever with tax planning for hush money. But we’ve helped business owners just like you save thousands on their taxes. We also just created the first book we are aware of on the implications of the new tax law. The New Tax Law book doesn’t just walk through you the new rules. We explain how to take advantage of the most powerful strategy for paying less tax. And that strategy is planning, proactive planning (not the reactive planning most people do now, which doesn’t work) and most important, strategic tax planning!
How do you get your FREE copy of The New Tax Law? Schedule a FREE assessment call today with a Financial Gravity Tax Team Member and we will deliver the book to you for FREE. We will even cover shipping, or hand deliver it to you when possible. Schedule your FREE assessment today, get a free book and stop wasting money on taxes you don’t have to pay!
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.
Maybe you graduated with honors with a major in Communications and a minor in Business Management only to start a few side hustles in order to pay your student loans, or maybe you’re more of a self-learner, skipping college to jump straight into the workforce only to realize that you were more of a leader and less of a follower. Regardless of how you ended up in your entrepreneurial role, it’s safe to say, you probably aren’t investing much time, money, or energy in yourself anymore. And why not? Self-investment is not only a great way to expand your skill set, but according to this article on LifeHack.com, it’s the surest way to achieve a better quality of life.
Here are some ways you can make a self-investment:
1/ Learn a new skill. You can either take an online class at your local community college, go to a relevant Meetup, or attend a nearby conference related to your industry.
2/ Read a leadership book or a motivational book. Here’s a list to get you started.
3/ Join a gym, running club, or Zumba class. According to this article on IRS.com, you may even be able to deduct your fitness costs as a medical expense, but make sure you get a doctor’s note first!
Ok, I know what you’re thinking: Invest in myself? I barely have enough time to finish the tasks on my todo list, have dinner with my family, and nurture my partner every day, let alone take time to invest in myself. Besides that, all your “suggestions” require expendable income, money is tight as it is.
That’s the glorious part about getting in touch with Financial Gravity. We find you ways to keep more of your hard-earned income BEFORE you ever have to schlep it away to the IRS. Paying taxes is an inevitable part of being a small business owner, but there are literally thousands of legal, moral and ethical ways to pay less tax located in the tax code. After a 15-30 minute assessment, we will determine if we can substantially decrease your tax liability. If so, we will then develop and implement a Tax Blueprint, a clear tax reduction plan customized to you and your business. Oh, and you will always save more than what the service costs you, backed by our 2x guarantee.
So what will you do with all that extra money? Invest in yourself, of course!
Billionaire Warren Buffet wisely said, “someone’s sitting in the shade today because someone planted a tree a long time ago.” There is no denying that financial planning is an essential part of your business (if you want to position yourself for success), but what do you do when the current financial system is either biased or irrational? Instead of reaching out to a financial advisor (who might as well be called a salesman) or your IRS-averse, Type-A CPA…get in touch with Financial Gravity. Financial Gravity provides legal, ethical, and moral ways to help you pay less money in taxes (and take home more personal income).
Most financial advisors sell products, transactions, or strategies that are driven by commissions. According to an article in The Wall Street Journal, even if an advisor claims he or she is “fee-only,” they can still receive commissions.
What does that mean for you, the small business owner? If your financial advice isn’t tax-centric, then you’re likely receiving biased advice.
Most CPAs weren’t trained to give you financial advice. Though the CPA exam is a rigorous 16-hour test that spans 2 days, there isn’t one question related to personal income taxes.
What does that mean for you, the small business owner?
Because your CPA is unaware of how to proactively and strategically use the tax code, he or she may be irrationally afraid of being red-flagged by the IRS, (which means they probably won’t help you use the tax code to lower your income tax.)
Ask any small business owner or entrepreneur what their least favorite thing about running a business is and you’ll likely hear this response, “TAXES.” But like most things in life, we usually hate the things we don’t understand. Financial Gravity knows how to make the tax code work in your favor. We help small business owners, like you, recapture the hope of financial freedom by providing Strategic Tax Planning, something that you probably aren’t getting from your current financial advisor or CPA.
So what do the IRS and clowns have in common? If you guessed “they are both terrifying!” you’d only be half correct. As a small or medium-sized business owner, taxes are only scary if you don’t have a sound tax saving strategy in place. Clowns, on the other hand, are creepy no matter what. Sorry, Bozo.
As your business becomes more successful, and your profit increases, your tax liability will also increase (and if you’re easily spooked, you may even notice a spike in nightmares and panic attacks.) As a small business owner, there isn’t anything scarier than taxes.
So how do you mitigate the fear you feel towards the IRS? Strategic Tax Planning. Like Brian Tracy, once said, “A clear vision, backed by definite plans, gives you a tremendous feeling of confidence and personal power.”
While Financial Gravity can’t help you overcome your fear of clowns or creepy crawlers, we can help you develop a tax savings plan, or Tax Blueprint®, that will allow you to get good night’s rest. Our Tax Blueprint is a tax reduction plan that is customised specifically to you and your business. And the absolute best part about implementing our Tax Blueprint? You’ll never pay more than half of what we save you. The cost of the service will always be less than your total reduction, backed by our 2x savings guarantee.
Let me repeat myself, the amount we save you will ALWAYS be more than what the service costs.
Whether you’ll be shuffling your kiddos around the neighborhood as they beg for treats, watching a Chucky marathon with your significant other, or running away from a chainsaw-wielding zombie butcher at a haunted house, Financial Gravity hopes your Halloween is filled with WAY more treats than tricks.
Member Office Locations
Alabama Arkansas Arizona California Colorado Connecticut Delaware Florida Georgia Hawaii Iowa Illinois Indiana Kansas Kentucky Louisiana Massachusetts Maryland Michigan Missouri Montana North Carolina New Jersey New York Ohio Oklahoma Pennsylvania South Carolina Tennessee Texas Utah Virginia Washington Wisconsin Wyoming