3 Ways To Pay Less Taxes | A Guide For Business Owners and Creatives
Hi Friends, Today, we’ll discuss 3 ways to legally pay less taxes. If you’re a small business owner or considering becoming one, join me as I break it down… (If you prefer to watch the video, please check it out here…)
My name is Lucas and welcome. Did you know out of 6000+ pages of tax law, 99% teaches how to pay less tax? The problem of course, is that the tax code is super boring and complex. So instead of reading that, I’d like to offer 3 really simple solutions… Let’s get into it
Employees Vs. Business Owners
Do you remember your first job? How about your first paycheck? I was 15 and so excited BUT, when I saw how much the government took and how little was left for me, I was stunned. It was so discouraging to work so hard for so little.
When I was 19, my Uncle introduced me to the book Rich Dad Poor Dad and more importantly, the difference between being taxed as an employee Vs being taxed as a business owner.
You see, How much we pay in taxes comes down to how we’re being taxed. Employees have very few options while business owners have quite a few.
Step 1: Set up a legal business entity
The first step to legally paying less taxes is to set up a business entity for your business.
Think of it like this.. when you’re taxed as a business owner, it’s like being a chef who has access to a private garden and can make whatever they would like but without the entity, it’s like only being allowed to eat fast food.
If setting up a business entity sounds like a pain in the butt to you, I felt the same way which is why I hired a tax professional. They are experts at the different types of business structures and will guide you through the entire process.
I recommend finding someone who works with small business owners often. If you’re not familiar, Mark Kohler has written several books and provides a ton of free info. His youtube channel is a great place to start.
Once you move away from being taxed as an employee, you’ll have a ton of options to lower your tax bill.
Step 2: Utilize All Tax Incentives (available to business owners)
The 2nd way to legally pay less taxes? Take advantage of the tax incentives. While the tax code is constantly changing, there are several well-known strategies that business owners commonly use..
Deducting business expenses (home office, vehicle, travel). Taking tax credits, contributing to retirement and healthcare, hiring family members, carrying over losses, depreciating assets, there’s a long list.
And if you have no idea what any of those things are, to put it simply, they will help you pay less tax. All yo need is a strategy to tae advantage of them and that brings us to the 3rd thing we can do to pay less…
Step 3: Hire a tax pro to do the heavy lifting
Let’s say you need a new pair of running shoes. Would you A. Take the time to build your own pair, or B. Buy a pair off the shelf? You wouldn’t build you’re own shoes, so why would you try to do your own taxes?
The easiest and most effective way we can pay less taxes is to hire an awesome tax professional. They’ll help you select the proper entity for your situation and set it up for you.
They’ll identify ALL of the tax incentives and create a strategy for you. AND, They’ll help you avoid costly mistakes as the tax laws change.
And if you’re thinking, “yeah but, they’re expensive” ARE THEY? A good tax pro will save you more money over the course of your life than any other person on this planet and more importantly, they’ll make your life so much easier. To me, that’s worth the price on entry.
If you’re in the US and looking for a good one, check out Mark Kohler here.
Now, there are several other reasons we pay more taxes than we need to and if you’d like to learn about those, check out this video (link) but for today, I wanted to keep things really simple.
The government offers huge tax incentives to everyone that is willing to learn about them. Millions of business owners take advantage of this everyday and so can you.
Now let’s recap the lesson and get you on your way…
Step 1: Set up a legal business Entity
Step 2: Take advantage of the tax incentives
Step 3: Hire a tax pro who is really good at help small business owners pay less taxes
Today’s lesson is a tiny fraction of what I share in the Big Split program so if you’d like to transform your finances in 1 week, click here to schedule a free 60 minute call with me.
Thank you for your time and energy. I’ll see you in the next one.
Lucas Z.