3 Things Every Self-Employed Business Owner Needs To Save $10,000 (or more) on Taxes in 2019
Ever feel like you pay TOO MUCH in taxes?
If so, you’re probably right.
According to Forbes, 93% of Self-Employed Business Owners are overpaying on taxes every single year.
We see similar numbers from the 40,000+ people who use the Taxbot app to automatically track their taxes and mileage.
On average, they are able to save $10,587 per YEAR using the exact 3-step system I’m about to share with you in this post.
So let’s talk about the most effective tax saving strategies in 2019.
Sidenote – the core concepts in this post are pulled from our free book ‘7 Simple Ways To Legally Avoid Paying Taxes.’ If you’re an action taker and want to maximize this strategy for your business you can grab a copy here.
1. Build A Strategic ‘Day 1’ Tax Plan That Maximizes Your Deductions and Takes Advantage of Legal Loopholes
A lot of people don’t realize that maximizing your deductions for next year starts NOW.
That’s why this needs to be a ‘Day 1’ strategy.
Because ideally, you build your tax strategy at the BEGINNING of the year.
Not when you are getting ready to file.
With a ‘last minute’ strategy it’s HIGHLY likely that you are missing out on deductions.
Probably to the tune of $10k or more.
Which basically means you are donating to the IRS.
And no – your accountant won’t do this for you.
By the time they see your paperwork, it’s too late.
Besides that, when tax season hits they are so crunched for time that they don’t have TIME to help you build a solid tax strategy.
I can’t cover everything you need to know on tax strategy this post, but here are the 5 most underutilized deductions to get you started:
- Your vehicle (mileage AND depreciation)
- Meals and entertainment
- Tools of your trade (probably more here than you think)
- Deductions on your kids expenses (this is a BIG one that most people are missing)
That should give you some ideas.
There’s a ton of info spread across the internet on this stuff, or you can learn everything you need to know in our free book ‘7 Simple Ways To Legally Avoid Paying Taxes.’
This next one is critical…
2. Audit-Proof Your Books So You Aren’t At Risk If (and when) You Get Audited By The IRS
Everyone thinks, “I’ll never get audited – the IRS has bigger fish to fry.”
I wish that were the case.
The truth is – as a self-employed business owner you are 700% MORE likely to get audited.
And what a lot of people don’t realize is…
…if you don’t have perfect records for every single receipt…
…the IRS automatically wins.
That’s why they win 88% of audits.
If that happens, you could be subject to huge penalties and YEARS of back pay on taxes.
So to stay on top of this, you need to:
- Keep all of your receipts
- Track your mileage
- Use the 5 Ws and an H to stay 100% compliant
See, just keeping your receipts and mileage isn’t enough.
You need to record the 5 Ws and an H – otherwise the IRS can disallow your deductions.
Here they are:
And as I talk about in ‘7 Simple Ways To Legally Avoid Paying Taxes,’ your bank statement is NOT enough.
The IRS wants detailed records and receipts.
Which is why I highly recommend that you…
3. Make Your Tracking System EASY, SYSTEMIZED, and COMPLIANT
The truth is, keeping track of every single receipt and maintaining perfect records with the 5 Ws and an H is a pain.
Especially if you are doing it all manually.
That’s why so many self-employed lose track a few weeks or months into the year.
The key here is to make your tracking system EASY by using a system to keep you compliant.
Now, you’ve got a couple options here…
First, you could hire a bookkeeper.
They will charge you around $40 per hour, and you’ll still need to keep all of your receipts and send them your 5 Ws and and H notes.
The problem is that 99% of bookkeepers will not help you maximize your deductions with a powerful tax strategy.
So you’ll need to do that in addition.
The second option is using accounting software.
This is pretty cost effective and it can work.
However most accounting software is NOT designed to keep you compliant.
So if you go this route make sure you are actually keeping track of the information the IRS requires (the 5 Ws and an H).
If you’re looking for a simple and easy system that is designed for self-employed business owners, I highly recommend checking out the bonus masterclass that comes with our free tax book.
It’s called ‘The 24-Second Tax Tracking System for Entrepreneurs’ and it’s all about how to maximize your deductions WHILE staying 100% IRS compliant…
…in just 24-seconds of ‘bookkeeping’ per day.
It doesn’t get much easier than that.
Whatever you do, start taking action on your tax savings NOW so that you aren’t stuck with a huge tax bill next year.
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