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Speaker 3: My graduates from my school being forced back drop drop Mike.
Speaker 4: There are advantages of being a business owner, and that's
Speaker 4: something that we want to encourage. Entrepreneurship for a lot
Speaker 4: of different reasons, not just to take money of your taxes,
Speaker 4: but it's one of the perks that comes with being
Speaker 4: a business owner because even if you look at it
Speaker 4: from a corporate standpoint, like large corporations, the corporate tax
Speaker 4: rate is twenty one percent, right, that's but the highest
Speaker 4: federal tax rate for individuals is thirty seven percent. So
Speaker 4: if you're a wealthy business like Amazon, or if you're
Speaker 4: a wealthy person right like a basketball player or an
Speaker 4: NBA player, NFL player, whatever, and you're at the highest
Speaker 4: federal tax rate, you're at an advantage to be a
Speaker 4: corporation because the most you can pay is twenty one percent.
Speaker 4: Now you're working your way down from there, whereas the
Speaker 4: federal tax rate. The highest you can pay is thirty
Speaker 4: seven percent. You have to work your way down from there.
Speaker 4: So we're gonna take down a micro level, and you know,
Speaker 4: talk about small businesses because you know that's the majority
Speaker 4: of businesses in America and in the world of small businesses.
Speaker 4: Right Amazon, We talk about Amazon and Netflix, but that's
Speaker 4: not typical. Those aren't the majority of businesses in America.
Speaker 4: So as a small business owner, I'm going to speak
Speaker 4: from first had experience, whereas I can say that you
Speaker 4: have benefits of being a business owner because you can
Speaker 4: deduct a lot of things. Right, So when we talk
Speaker 4: about Amazon as far as their travel and things of
Speaker 4: that nature, it's the same thing with a small business
Speaker 4: owning on a certain level. Where you travel, you see
Speaker 4: a client, you can deduct that, you take your client
Speaker 4: out for a mal, you can deduct that. You lease
Speaker 4: a car, you can deduct that the mouths as long
Speaker 4: as it's for business, so your cell phone, you can
Speaker 4: deduct that. You buy furniture for your office, you can
Speaker 4: deduct that. So you have a lot of things that
Speaker 4: you can deduct, where if you just have a regular job,
Speaker 4: you can't deduct any of that stuff, right, So it's
Speaker 4: hard for you to do anything with your taxes if
Speaker 4: you just have a regular job, because there's only so
Speaker 4: much that you can actually deduct, right, Where a business
Speaker 4: owner you can you can get creative, be responsible, responsible,
Speaker 4: be responsible with that. So okay, it's all right. So
Speaker 4: when we talk about the advantages for people that may
Speaker 4: not be familiar or people that want to be business
Speaker 4: owners or want to be entrepreneurs, what are some basic
Speaker 4: advantages that entrepreneurs and business owners have as far as
Speaker 4: the tax system as opposed to regular individuals.
Speaker 3: Well, first, I always tell people, because do you get
Speaker 3: that question a lot, what's the advantage of me being
Speaker 3: a business owner or even claiming self employed, right, because
Speaker 3: then you are a business owner as well versus me
Speaker 3: being an employee. And I always tell them employees are
Speaker 3: taxed first and they have to pay their bills later,
Speaker 3: where a business owner pays their bills and then they
Speaker 3: are charge tax on what's left.
Speaker 5: Right.
Speaker 3: And so, like you said, we can't as a business owner.
Speaker 3: There's a ton of things that you can write off, right,
Speaker 3: Like you can write off your travel, you can write
Speaker 3: off your meals, you can write off anything that relates
Speaker 3: to your business, your supplies, your employees. Right, So everything
Speaker 3: that relates to your business you're able.
Speaker 5: To write off. You know.
Speaker 3: I know we spoke about it and covered it a
Speaker 3: little bit when we were talking about Amazon, but even Capex, right,
Speaker 3: if you have any type of machinery or you know,
Speaker 3: warehouse or even for my real estate investors or you know,
Speaker 3: just landlords, even if you have one and you don't
Speaker 3: have like multiple properties. So if you're doing things to
Speaker 3: your property like capital improvements, you're able to write that
Speaker 3: off one hundred percent, right, versus being a homeowner, where
Speaker 3: you're not able to write that off at all. Right,
Speaker 3: So those things are very important when you are a
Speaker 3: business owner.
Speaker 4: Yeah, well, yeah, exactly, And that's something that people have
Speaker 4: to fully understand. I like what you said as far
Speaker 4: as taxes, I don't know I forgot exactly how you
Speaker 4: framed it. But regular people, regular people, people, people, people
Speaker 4: were people were regular jobs pay taxes first. Business owners
Speaker 4: pay taxes last. Right, So you can make one hundred
Speaker 4: thousand dollars, but then by the time you have all
Speaker 4: your deductions, you might only pay taxes on twenty thousand. Yep.
Speaker 4: Now it's important to be responsible with that because the
Speaker 4: good thing about having a regular job when it comes
Speaker 4: to taxes that you don't have to worry about paying
Speaker 4: the taxes. It's done for you, right, it's taken out
Speaker 4: of your paycheck. So most of the time you might
Speaker 4: even get money back at the end of the year
Speaker 4: because they've they've taken too much money out right, whereas
Speaker 4: a business owner, they're not taking any money out of
Speaker 4: your paycheck. So you either pay quarterly or you pay
Speaker 4: at the end of the year. So what happens a
Speaker 4: lot of times is that you don't save to pay
Speaker 4: your taxes. Right. So let's say you make a hundred
Speaker 4: thousand dollars, right, but you're living like you make one
Speaker 4: hundred thousand, So like everybody, you're spending one hundred thousand.
Speaker 4: You're living up to the limit. So now when it's
Speaker 4: tax time, you have a tax liability for twenty five thousand,
Speaker 4: thirty thousand, but you don't have twenty five thousand saved.
Speaker 4: So now you're behind on your taxes, right, and before
Speaker 4: you know it, the next tax year comes around. And
Speaker 4: this is how a lot of business owners fall into
Speaker 4: tax trouble because it's up to you to actually pay it.
Speaker 4: It sounds easy, but it's not easy at all.
Speaker 5: It's a lot of discipline.
Speaker 3: I try to and a lot of systems for my clients,
Speaker 3: one being quarterly taxes, getting me in there doing your
Speaker 3: bookkeeping quarterly, whether it's me or you just you know,
Speaker 3: you just kind of knowing what your income and expenses
Speaker 3: are for that quarter. But that's important because at the
Speaker 3: end of the year, paying twenty five hundred quarterly versus
Speaker 3: paying ten thousand at the end of the year seems
Speaker 3: like a you know, a world of difference, you know,
Speaker 3: so I do. That is important and I'm glad that
Speaker 3: you brought that up because it sounds good, like, oh,
Speaker 3: I get to pay my taxes later. But imagine looking
Speaker 3: at your W two and you're like, oh, I paid
Speaker 3: out twelve thousand this year.
Speaker 5: Imagine that twelve thousand.
Speaker 3: Once at once at the end of the year. You're
Speaker 3: not gonna want to pay it.
Speaker 6: Oh you don't have it.
Speaker 5: Oh you don't have it.
Speaker 4: You don't have it too pay Okay, So before.
Speaker 2: We go any further, because you said a few things
Speaker 2: real estate, and you said regular people, and I guess
Speaker 2: you go with your everybody.
Speaker 4: So everybody's not a business own, right, so most people
Speaker 4: aren't business owners. Right, So we talked about the advantages
Speaker 4: of business. Well, there's also things that regular people with
Speaker 4: regular jobs can take advantage of as well. Right, So, okay,
Speaker 4: I'm a business owner. Enjoy you're a school teacher.
Speaker 2: I'm an educator.
Speaker 4: Okay, Okay, So I spoke. I spoke from the business
Speaker 4: season standpoint. Yeah, so I want you to talk on
Speaker 4: the other side of the flip side of the right.
Speaker 2: So I'm an educator, and taxes are taken out, and
Speaker 2: like I said, we have a set salary and that
Speaker 2: works in our benefit, especially when we want to go
Speaker 2: to do things like purchase a home. Right when we
Speaker 2: look at our income, our income is steady because it's
Speaker 2: the same thing. Whereas you, for example, you might have
Speaker 2: made a one hundred thousand, but if your deductions was
Speaker 2: seventy five thousand, when the bank looks at it, they
Speaker 2: said that your income's only twenty five thousand, you might
Speaker 2: not be able to be.
Speaker 4: Approved for a loan.
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Speaker 2: few times and he goes, yeah, I can help you.
Speaker 2: I can help you. Can I ask your personal question?
Speaker 2: And he says, did you get your income tax back?
Speaker 2: And I'm like what He's like, Yo, I didn't get
Speaker 2: my refund back? The mess with my money and they
Speaker 2: tell me I'm getting lest this year. So has there
Speaker 2: something has changed in the federal income tax for us
Speaker 2: regular people.
Speaker 5: I'm not going to call you guys, I'm going to
Speaker 5: call you guys employees.
Speaker 3: So yes, a lot has changed, and I think that
Speaker 3: that's important.
Speaker 6: Right.
Speaker 3: The tax code has shifted to be in favor of
Speaker 3: the real estate investor and the business owner, right, all
Speaker 3: of the perks. And I'm sure I don't know if
Speaker 3: the guy who you were talking to, like if he
Speaker 3: had a house or what his specific situation was, But
Speaker 3: to just speak a little bit about some changes that
Speaker 3: I've seen a lot with my clients, one being people
Speaker 3: who have homes have been hit hard. Right, So I'm
Speaker 3: not talking about the landlords or the real estate investors.
Speaker 3: I'm not talking about those people. I'm talking about homeowners,
Speaker 3: single family homeowners, and they've been hit the hardest because
Speaker 3: now taxes are capped at ten ten thousand.
Speaker 5: Right, So where last year you were able to, you know.
Speaker 3: Take in all of your sales tax, your sales I
Speaker 3: mean your income tax and your property tax. Now it's
Speaker 3: not even putting a dent inside of your you know,
Speaker 3: inside of your itemized deductions because it's being capped.
Speaker 5: At ten thousand.
Speaker 2: Yeah, I was, Yeah, And so what.
Speaker 3: They also did was they raised standard deduction and got
Speaker 3: rid of personal exemption. So to just elaborate a little
Speaker 3: bit about that, and prior year in twenty seventeen, we
Speaker 3: would all receive standard deductions based off of your file
Speaker 3: and status if you were single head of household, right,
Speaker 3: and then you would also, in addition, get a personal exemption. Now,
Speaker 3: personal exemptions have been taken away. Standard deductions has been increased, right,
Speaker 3: So what that means is, let's just say, let me
Speaker 3: give some numbers. If you are a married filing joint, right,
Speaker 3: your standard deduction has now been increased to twenty four
Speaker 3: thousand dollars.
Speaker 6: Right.
Speaker 3: However, in order for you to itemize, you have to
Speaker 3: get above that standard deduction.
Speaker 5: So now if you have a home.
Speaker 3: And they'll say you have your property taxes, right, and
Speaker 3: then you and your wife will have your your income taxes,
Speaker 3: your state income taxes, that's not probably going to exceed
Speaker 3: over twenty four thousand dollars once you start adding everything up.
Speaker 5: So now it's just a.
Speaker 3: Situation where everyone, not everyone, but for it's a lot
Speaker 3: harder for people to get over that standard deduction hurdle now.
Speaker 3: And so that's why people are getting hit hard, especially homeowners,
Speaker 3: because last year you guys were.
Speaker 6: Eating Any tips that people that aren't business owners, that
Speaker 6: employees can do to reduce their tax liability, to save
Speaker 6: money on taxes, yeah, anything they can.
Speaker 3: Do if you are a homeowner and you've been hit,
Speaker 3: what I would suggest is putting your property inside of
Speaker 3: an LLC because that way, with your properties in an LLC,
Speaker 3: it's now considered a business. So now that's considered a business.
Speaker 3: Now you're able to write off a one hundred percent
Speaker 3: of your CAPEX and well your capital improvement.
Speaker 5: So if you need a new AC.
Speaker 3: You know, as as a homeowner, you can't write that off,
Speaker 3: but as a business owner you're able to, right, So
Speaker 3: now and then there's also a twenty percent deduction. Right,
Speaker 3: So let's just say, if you know your home I
Speaker 3: don't know, let's just say in your LLC you're bringing
Speaker 3: in ten thousand dollars on your personal return, You're now
Speaker 3: given a twenty percent deduction. So now that would be
Speaker 3: a two thousand dollars deduction edition that you would be
Speaker 3: receiving on your on your taxes. So that would be
Speaker 3: my suggestion for for you know, people that, yeah, like employees.
Speaker 5: They own a home.
Speaker 4: Anything, somebody can do what they don't own a home.
Speaker 4: Kind of difficult, Huh, it's difficult.
Speaker 5: Yeah, it's difficult.
Speaker 4: It's just the way the tax law is set up.
Speaker 4: You know, it's set up for business owners in companies.
Speaker 4: Really yeah, And your think about it is that it's
Speaker 4: I don't even want to say it's unfortunate, because it's
Speaker 4: just it is what it is, right, it is.
Speaker 3: And one thing that I stress now more than ever
Speaker 3: is that we have to pay attention to the people
Speaker 3: that are in office and play up to that.
Speaker 5: Right.
Speaker 3: I find that if in school they taught us to
Speaker 3: focus more so on the taxes, then our mindset would
Speaker 3: be so different, right, because let's just use when Obama
Speaker 3: was in office.
Speaker 5: I believe when he.
Speaker 3: Was in office, there was a rebate for homeowners like
Speaker 3: eight thousand dollars or something like that. Right, So many
Speaker 3: people took that money and then reinvested it and purchased homes.
Speaker 5: Right.
Speaker 3: And so now with Trump, if you're going to purchase
Speaker 3: a home, now, maybe the time to you know, get
Speaker 3: that rental property that you want. Now, maybe the time
Speaker 3: to start that business that you want, because now you're
Speaker 3: able to get more, you know, you're able to write
Speaker 3: off more and get more deduction. So we just have
Speaker 3: to pay attention to the tax code a little bit more.
Speaker 2: Education is the key.
Speaker 4: And also it's a couple other things that people should
Speaker 4: be aware of too. It's a five to twenty nine plan.
Speaker 4: That's it used to be a college savings plan only,
Speaker 4: but now with the new tax law, you can use
Speaker 4: the money for anything as far as education is concerned.
Speaker 4: So you can use it for prep school, you can
Speaker 4: use it for private school, you can use it for
Speaker 4: elementary school. So that helps parents out as far as
Speaker 4: paying for the cost of education where you just don't
Speaker 4: have to use it for college. Now you can use
Speaker 4: it for anything related to education at any point in
Speaker 4: time during child life. That's important. And then also the
Speaker 4: limit has been raised as far as how much money
Speaker 4: you can put into an IRA and four one K
Speaker 4: as well. So the limit for IRA this she is
Speaker 4: six thousand dollars four one K is nineteen thousand. So
Speaker 4: those are vehicles that you can put money in for
Speaker 4: your retirement and that that helps you save money on
Speaker 4: your taxes as well. That's probably one of the biggest
Speaker 4: tax deductions that people have if they just are employees,
Speaker 4: because that allows you to save up to almost twenty
Speaker 4: thousand dollars in a four one K nineteen thousand if
Speaker 4: and if you're over fifty five, you can actually save
Speaker 4: even more than that. But that's a pretty sizable amount
Speaker 4: and it goes back to you know, it's in your
Speaker 4: account and it grows for your retirement, so.
Speaker 2: Then also reduce your income for that year.
Speaker 4: That's how Yeah, that's exactly what it does. So that's
Speaker 4: why you save money your taxes because it reduces your income.
Speaker 4: So something to be aware of. But the key is
Speaker 4: to educate yourself and to learn the political gain and
Speaker 4: you know these are these are the rules that we're
Speaker 4: in so as far as Amazon to say, like whether
Speaker 4: my personal opinion, if it's fair, if it's not, I mean,
Speaker 4: what are they supposed to do? Not do it? Right?
Speaker 4: So it's the same thing with you as an individual.
Speaker 4: You should, you know, learn the tax code, the tax
Speaker 4: law and take advantage of it. And the thing about
Speaker 4: being a business owner tool is that you don't have
Speaker 4: to be full time. You can have a business and
Speaker 4: still work a job as well, right, and then you
Speaker 4: can still take advantage of your business, right because you
Speaker 4: have just like any other business that has, you have
Speaker 4: expenses and you have things that nature as well. So
Speaker 4: you don't want to start a business just for tax benefits. Obviously,
Speaker 4: you want to start a business because you want to
Speaker 4: be successful in business. But that's another benefit and something
Speaker 4: to strive forward where it's like you don't have to
Speaker 4: do one or the other, you can do both. And
Speaker 4: by having a business as your side hustle or a
Speaker 4: part time job or whatever, now you're opening up the
Speaker 4: window where you can deduct more things, and you know
Speaker 4: it gives you a lot more flexibility.
Speaker 3: My graduates from my school being.
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