--- title: 5 Ways To Pay Less In Taxes For Business Owners description: In today's video, I'm going to go through the five fundamental ways for you to pay less in taxes. And I'm smiling right now image: https://info.betterwealth.com/hubfs/Imported_Blog_Media/hqdefault-Jan-28-2025-02-29-20-8325-AM.jpg --- ![BetterWealth Logo BLACK PNG](https://info.betterwealth.com/hubfs/BetterWealth%20Logo%20BLACK%20PNG.png) ![menu](https://f.hubspotusercontent40.net/hubfs/7479797/menu.png) ![close_24px](https://7479797.fs1.hubspotusercontent-na1.net/hubfs/7479797/close_24px.svg) - [Blog](https://info.betterwealth.com/blog) - [Blog](https://info.betterwealth.com/blog) [Free Clarity Call](https://46932579.hs-sites.com/#book-call) [Tax](https://info.betterwealth.com/blog/the-betterwealth-show/tag/tax) [YouTube](https://info.betterwealth.com/blog/the-betterwealth-show/tag/youtube) [Business Owners](https://info.betterwealth.com/blog/the-betterwealth-show/tag/business-owners) # 5 Ways To Pay Less In Taxes For Business Owners [![Caleb Guilliams](https://info.betterwealth.com/hs-fs/hubfs/team/caleb_profile.png?width=50&height=50&name=caleb_profile.png)](https://info.betterwealth.com/blog/the-betterwealth-show/author/caleb-guilliams) [Caleb Guilliams](https://info.betterwealth.com/blog/the-betterwealth-show/author/caleb-guilliams) 28 January, 2025 ![5 Ways To Pay Less In Taxes For Business Owners](https://info.betterwealth.com/hubfs/Imported_Blog_Media/hqdefault-Jan-28-2025-02-29-20-8325-AM.jpg) In today's video, I'm going to explore five fundamental strategies to help you pay less in taxes. I'm smiling right now because this is one of my favorite topics. Statistics show that nine out of ten business owners and entrepreneurs overpay on their taxes. If you're raising your hand and thinking there must be better ways to pay less, you're in the right place. We've created a comprehensive video that covers these five fundamental areas. There's also a worksheet and checklist available for you to use with your tax team or CPA. Let's equip you with strategies to lower your tax bill! ## 1. Tax Planning Do you have a proactive team in place to help you strategize your tax situation? Tax planning involves regularly talking with a tax strategist and your team throughout the year. Ask yourself: - Are you confident that you're not overpaying on taxes? - Do you have a tax strategy? - Do you have a proper entity structure for maximum protection and tax efficiency? - Do you meet with your accountant quarterly? - Are you behind on bookkeeping? ## 2. Deductions Tax deductions lower your tax liability by reducing taxable income. Ensure deductions are ordinary, necessary, and reasonable. Here's a quick checklist: 1. Business meals and interest 2. Phone and internet 3. Business insurance and travel expense 4. Home office, advertising, and marketing 5. Office supplies and business use of car 6. Startup expense, education, and depreciation 7. Business casualty loss and charitable donations 8. Legal fees, moving expenses, and investment interest 9. Rent, salaries, benefits, and retirement ## 3. Tax Credits Tax credits directly reduce the amount of taxes owed, unlike deductions. It's crucial to ask: - Are you aware of 25 business and 15 personal tax credits available? - Has your accountant reviewed your last three years of returns for retroactive credits? ## 4. Depreciation Depreciation allows for tax write-offs for the loss of value in tangible assets. Ask yourself: - Are you aware of Section 179 and 100% bonus depreciation for certain vehicles? - Have you taken advantage of cost segregation? - Are you leveraging depreciation with real estate investments? ## 5. Advanced Strategies - Do you use the Augusta Rule for tax-free income? - Have you hired your spouse or children? - Have you gotten your business professionally valued? - Do you utilize trusts and private foundations? These strategies can significantly reduce your tax liabilities. This isn't direct tax advice, but a guide to discussing further with your tax professional. If you'd like to know more about how BetterWealth can help, follow the link below for a tax clarity call. ![5 Ways To Pay Less In Taxes For Business Owners](https://info.betterwealth.com/hs-fs/hubfs/Imported_Blog_Media/hqdefault-Jan-28-2025-02-29-20-8325-AM.jpg?width=1080&height=810&name=hqdefault-Jan-28-2025-02-29-20-8325-AM.jpg) ###### Full Transcript  In today's video, I'm going to go through the five fundamental ways for you to pay less in taxes. And I'm smiling right now because this is one of my favorite subjects to talk about. Because statistics say that nine out of 10 business owners and entrepreneurs overpay on their taxes. You probably are feeling it. You're probably raising your hand and saying, I feel like there's better ways to pay less in taxes. And so with that, we as a team, we're like, okay, we got to do something about this. And so we put together this comprehensive video that are going to go through the five fundamental areas. We have a worksheet and checklist that you can have at the end of this video for you to use with your tax team with your CPA. If you're in the the mix of trying to find how you can better your tax situation, I really, really believe this video is going to equip you to lowering your tax bill. A couple things that I want to say is in the midst of helping people with their financial situations, it's actually very simple. You can make more money, you can better control it, or you can reduce your consumption. And when we're looking at consumption, there's a couple areas, but the biggest area, especially for business owners, as it relates to consumption is taxes. And when we throw out this statistic that 90% of you business owners are paying on taxes, this is obviously an area that we can look at because if we can free up a dollar, that is super valuable. And it can either enhance the way we live our life, or it can be used to better and be invested or controlled for our future. So obviously, this is a subject that I get really passionate about. I have a fundamental belief that you can be a better steward of that money than the government. And so we should legally try to find the very best ways for us to pay as little taxes possible. The other thing I want to say is a lot of people that throw out tax videos, their big thing is deferral. Like essentially saying, hey, the big strategy is put your money in qualified accounts, like set IRAs and whatnot, and you get a tax deduction. Well, if we challenge that for a moment, you're actually not reducing your taxes, you're just deferring your post-poning that taxes. And so these five fundamental ways to lower your tax bill, we're not going to just give you the obvious of put your money into a retirement plan because I fundamentally believe, especially if you're an entrepreneur, maybe the last thing you should do is give up control of money, postpone it, kick the can down the road to a future date, where our government's over 30 trillion in debt has over 90 trillion dollars of unfunded liabilities, and spending money like it's going on a style. I don't believe taxes are going to be lower in the future. So meaning post-poning a tax today is not reducing your taxes. You're just putting your head in the sand and hoping taxes don't get out of control in the future. And if I had to bet on one thing, it's taxes aren't coming down in the future. And so I just want to make that clear. The second thing I want to make clear is this is not tax advice. I am not speaking directly into your life and saying, this is what you should do with your tax situation. So don't sue me. Hopefully you can use this big picture and then go to someone, whether it's us or the people that you work with, to help implement. And the third thing is you might be watching this and maybe getting a little frustrated or overwhelmed. And you're like, I need to relook at who's helping me with taxes. And in full disclosure, we do this at better wealth. And so if you want to have a tax clarity call or learn more about how we can potentially help you with taxes, it'll be a link down below that you can find out more information. So with that, let's jump into the tax checklist that we'll be able to help you hopefully pay less in taxes. So the first area that we want to look at is this concept of tax planning. Now it might sound very simple or an elementary, but do you have a plan? Do you have a team in place that can help you proactively look at your tax situation? Because a lot of you, especially if you're a business owner and entrepreneur, are like December 31st, are calling your CPA frantically saying, what do I need to buy to lower my tax bill? Like that's not tax planning. Spending a dollar just to not pay tax could be one of the dumbest things that you do, especially if you don't need that thing that you bought. And so just buying a truck at the end of the year may or may not be what you need to do. Tax planning is proactively looking and talking to a tax strategist and your team throughout the year, three or four times in the year, proactively looking at your situation, saying, what can I do? What can I do with my entities? What can I do with where we're putting investments? Are there opportunities that I can do? Is there a way for me to structure my business where I can be more tax advantage? And so the questions that we ask here are number one, are you confident that you're not overpaying on taxes? A number two question, do you have a tax strategy? Majority of people that come to us don't have a tax strategy. We don't have a tax strategy. You're not being proactive. You're just being reactive. The third question that we have under the tax planning is do you have a proper entity structure for a maximum protection and tax efficiency? A lot of people are not strategic as it relates to entities. And without getting too much in detail, there's S-Corp filing, there's C-Corp, and there's sole proprietor. And so there's different ways to file your taxes. And at the end of the day, it may make sense for you to do an S-Corp or C-Corp depending on your goals that you're looking to accomplish in the future. Do you meet with your accountant on a quarterly basis? If the answer's no, there may be an opportunity for you to be more proactive. And are you behind on billkeeping? Here's a sad reality is a lot of times we can talk about strategy, but if we don't have a system for good bookkeeping, it's going to be problematic now in the future. And so really be thinking about whether you work with someone like us or someone else, how do you make sure that your books can be in good order? So number one is tax planning, the proactive and not reactive. Number two is deductions. Now tax deduction lowers your entities' tax liability by reducing your taxable income. Now here's the key secret to deductions. To deduct money from your gross income, it needs to be ordinary, necessary, and reasonable. So a lot of times in business, if we're getting audited, we have to prove that this is an ordinary business expense. This is a necessary for our business, and this is reasonable. And there's a lot of different examples I can give. There is someone very prominent on YouTube that has a jet that has a helicopter and does a lot of things. And you know, he can deduct a lot of those things because he can prove that it is ordinary, necessary, and reasonable. And so one of the things, just in big picture when we're thinking about this, is this is why it's so important to have a proactive tax plan because we can look at, hey, I'm making videos right now. And so maybe there's certain things that I can start writing off because this is part of my ordinary, necessary, and reasonable in doing business. And so we can start thinking about this and really building a case to why we should be able to use deductions in our life. And so what I'm actually doing is I'm going to give you 20 different areas that you should at least look at. And again, this will be part of the checklist that you'll be able to use after. These are 20 areas for you to, you know, look at and ask the question, do you use these for business? And if that's the case, you might want to have a conversation with someone on your tax team to potentially be able to leverage this for your business. We're going to go through this quick. But I think the key thing is, do you have a system for keeping receipts and tracking your money? That's going to be really key. And so I'm just going to read these really fast business meals, business interest, phone and internet, business insurance, travel expense, home office, advertising and marketing, office supplies and expenses, business use of car, startup expense, education, depreciation, business casualty, loss, charitable donations, legal fees, moving expenses, investment interest, rent, salaries and benefits. And then retirement, which I'm including because it is part of a deduction, even though I'm not, I'm definitely not endorsing just maxing out retirement for the deduction because that's very much a post-poment. Out of all the things on this list, retirement could be the big no-no. But overall, I would encourage you to go through this checklist and ask the question, do you check any of these boxes? And this would be part of your conversation that you just had with your tax team. Number three is tax credits. And a tax credit is the amount of money that taxpayers can subtract directly from taxes own. So unlike a deduction, which reduces the amount of taxable income, tax credits reduce the actual amount of tax owned. So in another way, a deduction reduces what you have to pay tax on. A credit literally puts a dollars in your pocket. So credits can be very, very valuable. And it's really important for you to be able to ask the question, do you qualify for credit? So did you know that there are 25 tax credits for business owners and self-employed? If you don't, you should at least know. And there's a couple key ones and to make this video more evergreen, I'm not going to go into it. But there are some key business credits that you should know about. And if you don't have any business credits that come to your mind, you should definitely get this worksheet. And you should definitely give us a call because there might be some ways that you can significantly add money to your pocket just by understanding how business tax credits work. Number two is that you know that there are 15 personal tax credits. Yes, some of us know some of these business tax credits, but it's important for you to know. And if you want to learn more information, go get the checklist down below. And we will get you access to business tax credits and personal tax credits because one of our belief is at least if you have an understanding of where to begin, you can do more research and talk to your tax team about this. And then the other question that we have under the tax credits is has your accountant reviewed your last three years of tax returns to see if you can retroactively go backwards and qualify for credits. And we have plenty of clients and I know plenty of people that have gone backwards and gotten money back because they worked with a taxi and they said, hey, you qualified for X, Y, or Z, we can actually go back and get that money. So this is just something to be aware as a relates to tax credit. So number one is tax planning. Be proactive about your entities and really have a team that's set up to really be able to help you. The duckions is saying, hey, am I spending money that I can literally reduce the income that I'm paying. This is huge, especially for business owners. And there's so many things that are available to do this. And obviously, we provide gave you a checklist. Number three is understanding credits and how money can be added to your pocket and just be aware of these credits and make sure that someone knows your your situation and can see, do you qualify for credits. Number four is depreciation. And depreciation is expense claim to compensate for losses of value of a tangible asset. So depreciation is how a lot of wealthy people buy assets and also get tax write offs at the same time. These are how a lot of real estate investors can create cash flow and also reduce their income. And so really depreciation is just like it's saying, it's writing off the tangible loss of value that you have in something. And so I'm going to go through four questions. I can make a whole video on depreciation. It's important that you understand this is important that you have someone in your life that understands this as relates to your taxes. So are you aware of section 179 of depreciation? Are you aware of 100% bonus depreciation for vehicles over 6,000 pounds? Have you taken advantage of cost segregation? Cost segregation is where if you have a property instead of depreciating it over like 30 years, you can speed up certain areas of depreciation because there's things like carpets and whatnot that aren't going to last 30 years. And so it's a way for you to front load your tax benefit up front. And the time value of money says I would rather have the tax benefit up front and spread out over 29, 30 years. And so that's the idea of cost segregation. And then number four, have you taken advantage of depreciation when owning or investing real estate? And so there's a lot of different strategies as relates to this. The rules of depreciation are constantly changing. And certain rules are phasing out. So it's important again that you're talking to someone about how you can use depreciation in your life to pay less taxes. Finally, the advanced strategies. These are the unique ways to legally reduce your tax liability. And again, I'm just going to read these. And I'm not giving investment advice. These are things that you should talk to your tax professional and ask a question, does this apply to me? So number one, do you use the Augusta Rule for tax free income and your business deduction? Essentially, the Augusta Rule allows you to rent your house to your business 14 times or less tax free. And it's a way for you to take money on one from one pocket, transfer it to the other. And it can be a tax loophole when set up and use properly and done properly. It can be an amazing thing for you to do to lower your taxes. Number two, you hire your spouse or children. There are ways, especially with your children to pay them. And it's a way, especially if you're doing things like college planning and whatnot, this is an amazing loophole. I say loophole is fully legal that when done properly, you can literally take money from a higher tax bracket and put it into a lower. And it can be incredible. So that's something that you should look into. Have you gotten your business professionally valued? This is really, really key, depending on if you have exit strategies. So understanding the value of your business is key, you utilize trust. You utilize private foundations or donor advice funds. Have you invested in opportunity zones? There's other advanced strategies that I'm not even going to mention on this, because some advanced strategies can be great in theory, but can massively increase your chances of an audit. And the last thing I want to do is in any way have that happen. So I think the disclaimer is, here's the checklist. There's a link down below that you can get this. I want every single person watching this video, if you're interested to get this checklist, bring it to your CPA, your tax team, and review it for yourself. And if there's anything that we can do, if there's any questions that we can help answer, schedule a call with us. But at the end of the day, it is your moral obligation to pay as little taxes possible. And my hope through this channel and through what we're doing at Better Well is to help people think differently, which includes helping you make more, helping you better control, but helping you pay less or lose less money. And this is an area that we are going to spend more time on. And so consider this one of the first videos in our tax series as relates to paying less to the government. So with that, thank you and have a great rest of your day. 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