Straightforward Tax Strategies to Lower Your Tax Bill with Andrea Waymire

0:01Light that spark fire nation JLD here and welcome to entrepreneurs on fire brought to you by the HubSpot podcast network, the audio destination for business professionals with great shows like I Digress. Today, we'll be breaking down straightforward tax strategies to lower your tax bill. To drop these value bombs, I brought Andrea Wehmeyer into EO Fire Studios. Andy is a CPA and tax strategist that worked in public accounting for 10 years. She's passionate about helping entrepreneurs save money on taxes and gain financial clarity. In today's foundation, we'll talk about tax saving strategies. We'll talk about what you can do before years end.

0:37We'll talk about investing in your business and so much more. And a big thank you for sponsoring today's episode goes to Andrea and our sponsors. The Hustle Daily Show, hosted by Juliet Bennett-Ryla, Rob Litters, Ben Berkley, and Mark Dent, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. The Hustle Daily Show brings you a healthy dose of irreverent, offbeat, informative takes on business and tech news, like a recent episode on hackers versus casinos where the hosts talk about MGM Resorts and Caesars Entertainment and the devastating potential of cyber attacks.

1:11Listen to The Hustle Daily wherever you get your podcasts. Many EO Fire listeners have launched non-food franchises and Fran Bridge Consulting has guided them. Fran Bridge's founder and frequent EO Fire guest, John Ostenson, has done more placements than any other in the country and his service is free. Sign up for a consultation with John or get a free copy of his book, non-food franchising at franbridgeconsulting.com. Andrea, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. Hi, Fire Nation. I'm so excited to be here. And something that I believe about becoming successful that most people disagree with is that I hear a lot of people saying, fake it until you make it.

2:00And while I think it's important to be confident in yourself, I think it's also crucial to own up to what you don't know and get help so you can move forward faster. Fire Nation, we are going to help you move forward faster because we have straightforward tax strategies to lower your tax bill. And Andrea, I'd just like to start at the beginning because that's a great place to start. So where should we start, us, Fire Nation, entrepreneurs, small business owners, if we want to implement tax saving strategies? It's always good to start before the year that you do the tax return. So in 2024, we're going to be filing the 2023 tax return, right?

2:48So we want to get started right now. And the most important thing that you can do right now is get your bookkeeping done. You can't really do tax planning now if you don't know what's going on with your current situation. So I always tell people as well to look at your books, know your numbers, and then you can take action. Fire Nation, there's no time like the present. I mean, why do you want to wait and wait and wait when you can just say, hey, I'm going to get my stuff together. I'm going to get it to a professional like Andrea. and then she's going to tell me what I'm missing, what I need to maximize my savings and I'm going to get it to her on a timely fashion and then I'm going to do what I want to do best which is maximize the dollars and cents in my bank account, minimize the unnecessary taxes that I probably might be paying that I might not need to be paying because there's a lot of incredibly amazing and legal ways to lower your taxes.

3:46So what are a few things that business owners can do before the end of this year that will affect their tax bill. Let's get real strategic, very granular. So again, once January 1st of 24 hits, so many tax strategies just go out the door. So that's why we need to do these things now so that we can save on next year's taxes. So for cash basis taxpayers, you can do two major things. You can pay off more of your expenses before the end of the year. So pay those vendor invoices early. Or you can hold off on billing your clients until January. So of course, you want to get paid. That's the most important thing, right?

4:33But you could consider holding off on billing your customers that always pay you on time and consistently and wait to bill those clients until January. Fire Nation, again, there are things that you can do like this that are going to be very effective when it comes to your bottom line. Now, Andrea, you know, of course we want to keep everything private and we're not going to share any names or businesses or specifics, but just kind of give some examples of some things that your clients are doing or clients, you know, that you have that you would like them to do these things that are very effective when it comes to this type of stuff.

5:13If you have a vendor that you pay consistently and all the time, you know, maybe you pay a landlord for rent, that type of thing. Think of paying some of those expenses early on. That way, you know, you're ahead on your payments and you also get the tax deduction for 2023. It'll just lower your taxable income. And another important thing to note is paying off credit cards or lines of credit won't actually reduce your tax liability. So, you know, if you have a ton of credit card bills and debt racked up, just by paying that off, that's not going to lower your tax bill. It's the actual expenses and putting charges on the cards that will lower the tax bill.

6:04See, Fire Nation, you're getting advice from a tax professional. Don't take advice from your neighbor, from your friend, from your uncle next door. I mean, these people, they probably have your best interests at heart, but they may not know what they're talking about. They just might not. So this is why you talk to professionals. This is why you tune into a show like Entrepreneurs on Fire, where you know that I'm bringing on experts in their area of expertise. Now, Andrea, I hear a lot of ways to quote unquote, invest in your business to lower your tax bills. I see people that go out there and they buy vehicles.

6:37I even have a friend that literally bought a jet. They're just like, hey, I live in California. I'm just going to buy a jet. Let's talk about if this is a good way to invest in our business to save on taxes. Totally. That's an awesome way to reduce your tax liability. So buying a vehicle or a piece of equipment, you can take advantage of section 179. Basically, section 179 allows you to purchase vehicles or equipment and fully deduct the price of that piece of equipment. And for vehicles, you do have to be careful about which one it is because there are limits on smaller cars and luxury vehicles.

7:20So before you make any purchases, I would highly suggest confirming with your CPA or tax strategist that that vehicle qualifies for the full deduction. And again, Fire Nation, don't be taking these steps based off of unqualified, unprofessional advice, because it could be a big investment for you that ends up being a big time negative because you're not doing it the right way because of what Andrea just shared. Maybe you're purchasing the wrong type of investment or whatever that could look like. Just make sure you're doing it the right way. And I'm sure there's different things in different states, different countries.

7:57So wherever you are in the world, make sure you're doing things the right way. Now we have a lot to talk about around this topic and more when we get back from thanking our sponsors. Can you believe we're already in Q4? This year has flown by, but Q4 is an exciting time and not just because the holidays are right around the corner. Something magical happens when the third quarter ends and the fourth quarter begins, the energy changes. The fourth quarter is where games are won, where champions are made. And in business, it's where sales teams become legends. That's why HubSpot built Sales Hub. To give sales reps the deal-making tools they need to win in Q4 and close the year strong.

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11:08That's FranBridgeConsulting.com Andrew, we're back and let's talk about high earnings Like a lot of us are entrepreneurs You know, we want our business to be growing We hope our business is growing A lot of our businesses are growing And we probably and hopefully are expecting And again, at least hoping We're going to be making more money next year than we are this year Our earnings will be higher in 2024 than they will in 2023 So what if that is the case? Should we still be deferring as much income as we can going into this next year? If you're thinking 2024 is going to be a great year, you might want to consider picking up more income now in 2023.

11:52So it depends on each specific situation, but you could look to see which tax bracket you're in for 2023. And if it's a favorable rate, you might want to try to pick up as much income as you can in that specific tax bracket. So our goal isn't to pay zero tax one year and then a ton of tax at a high rate the following year. Instead, we want to take advantage of the graduated tax rates and smooth out our taxable income so that in the long run, we're at a tax advantage. So this is all about the long game. Now, I know nobody likes to do math on the spot. even CPAs, believe it or not. So let's just try to keep things really basic and really simple.

12:40What could this look like on a practical level? Again, we can use round numbers like a million dollars or$100 ,000 or$10 ,000. But what could that look like that you could actually do in a world that would actually have a decent benefit to you if you followed a strategy like you just shared? You could look at your numbers for 2023 and see that you're in the 24 % tax bracket and you have a little bit more breathing room to stay in that 24 % bracket. So you could try to pick up more income to keep you in that rate. And if you made any more than that, you would jump up to a higher rate, which is like 32%.

13:26So, you know, looking at your numbers and trying to pick up more income at a lower rate could save you thousands of dollars in tax. Fire Nation, we're talking thousands of dollars. And again, that just gets more exponential as your revenue increases, as the amount of money you're earning goes up. Now, let's talk about tax saving strategies that can actually be done next year that will affect this year's tax return. What are some specifics there? Yeah. So if you're listening to this podcast in 2024, and you're like, oh man, it's too late now. This came out in 2023. Well, all hope is not lost. There are a few things that you can still do to lower your tax liability.

14:13You can still make an IRA contribution before the due date of your tax return. So even though you'd make the contribution in 2024, it can reduce the income on your 2023 return. And this also applies with profit sharing plans. Fire Nation, again, this is key information that you can implement into your business no matter when you're listening to this. Again, you might not be able to exactly take it to the T if you're hearing this in 2030 or beyond, but it'll apply to what happened to you in 2029 and so on and so forth. So whatever years you're hearing here, just apply to where you're at in your life and your business and make this happen.

14:54Now, let's be honest, Andrea, do we need a CPA to do tax planning? It's a great idea to outsource what you don't know to specialists, but you don't necessarily need a CPA to start using some of these strategies. So for Fire Nation specifically, I've created a free tax planning guide that gives you 10 tax planning ideas that you can implement before the end of the year. And you can download this for free at andrea.cpa. andrea.cpa. Now, Fire Nation, again, we're going to the experts in the industry to learn about their areas of expertise. So Andrea, take a step back. Our audience, Fire Nation, they're entrepreneurs.

15:43They're small business owners. We've shared a lot of cool things today. We talked about tax saving strategies, what people can do before year ends. We talked about things you can invest in your business that can really make a good dent in what you're paying out. We talked about tax saving strategies that can happen even if it's 2024, if you want to be able to reach back into 2023. We talked about some cool things today. What is maybe one or two other things that you think that my listeners may not know or just basic tools of the trade that be very helpful for entrepreneurs when it comes to this topic?

16:18I really think that tax planning and strategy is all about the long game, right? You don't go to a dietician and plan to lose weight that next week. You really have to work with someone consistently and come up with a plan in order to be successful. And the same goes for tax. And I also think it's really important to work with a bookkeeper and a tax preparer that have a good relationship with each other. So that you don't end up as the middleman between the tax preparer and the bookkeeper trying to communicate back and forth between the two of them. or you could find a bookkeeper and a tax preparer that do the bookkeeping and tax under the same roof.

17:06Fire Nation, wise words from a wise professional who is living in her zone of genius, her area of expertise, because you're the average of the five people you spend the most time with. You've been hanging out with Adubs and JLD today, so keep up that heat. For links to everything we talked about, just go to eofire.com, type Andrea in the search bar. The show notes page will pop right up. And one more time, Andrea, give us that URL to connect directly with you. That's Andrea.CPA, A-N-D-R-E-A.C-P-A. Andrea, thank you for sharing your truth, your knowledge, your value with Fire Nation. For that, we salute you and we'll catch you on the flip side.

17:50Thank you. Hey, Fire Nation, a huge thank you to our sponsors and Andrea for sponsoring today's episode and Fire Nation. Over the last decade, I've interviewed more than 4 ,000 of the world's most successful entrepreneurs and I've created a revolutionary 17-step roadmap to your financial freedom and fulfillment. I put it all into my first traditionally published book, The Common Path to Uncommon Success, personally endorsed by Seth Godin and Gary Vaynerchuk. The Common Path to Uncommon Success is the step-by-step guidance that you need to achieve the lifestyle of your dreams. visit UncommonSuccessBook.com.

18:27I'll catch you there or on the flip side. The Hustle Daily Show, hosted by Juliet Bennett Ryla, Rob Litturs, Ben Berkley, and Mark Dent, is brought to you by the HubSpot Podcast Network, the ideal destination for business professionals. The Hustle Daily Show brings you a healthy dose of irreverent, offbeat, informative takes on business and tech news, like a recent episode on Hackers vs. Casinos, where the hosts talk about MGM Resorts and Caesars Entertainment and the devastating potential of cyber attacks. Listen to The Hustle Daily wherever you get your podcasts. Many EO Fire listeners have launched non-food franchises and Fran Bridge Consulting has guided them.

19:04Fran Bridge's founder and frequent EO Fire guest, John Ostenson, has done more placements than any other in the country and his service is free. Sign up for a consultation with John or get a free copy of his book, Non-Food Franchising at franbridgeconsulting.com.

19:23Thank you.