Tax Strategies Most Entrepreneurs Miss with Shannon Weinstein: An EOFire Classic from 2022

0:02Who's ready to rock today, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. brought to you by High Level, the all-in-one sales and marketing platform. On today's Class Cup, we'll be breaking down tax strategies most entrepreneurs miss. To drop these value bombs, I have brought Shannon Weinstein in EO Fire Studios. Shannon is a CPA coach and mentor for growth-minded small business owners. Her company, Financial Solutions, offers fractional CFO and tax strategy services delivered from the heart of a teacher. And today, we talk about how you hire a pro who will teach you how to implement and execute strategies, and you have a chance.

0:34Tech Strategies is about playing the game to win and build wealth and oh, so much more. And a big thing for sponsoring today's episode goes to Shannon and our sponsors. Are you ready for the ultimate all-in-one platform for entrepreneurs, marketers, coaches, and agencies? Build funnels, automate follow-ups, manage clients, and even white label your own software. Say hello to our featured partner, High Level, and visit highlevelfire.com to start your free trial today. Fire Nation, it's time to stop guessing and start winning with a proven playbook. Inside the Freedom Circle, you'll have access to my step-by-step systems for creating offers, building processes, and driving traffic all in just 90 days.

1:20Ready for freedom? Visit freedom-circle.com to learn more. Shannon, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with? I would say that most people have been taught and believe that you need education, experience, and all of the training in the world and certifications, credentials to generate success. But I don't believe that to be the case at all. I believe all you need is enough motivation and resourcefulness, and you can pretty much conquer anything. Well, the Beatles said all you need is love. So that's exactly. Well, say what's up to Fire Nation.

2:03Hi, everyone. What's up? Yes, we're going to rock it today, Fire Nation. We're talking tax strategies most entrepreneurs miss. And I want to start off with a why question, Shannon. Why should entrepreneurs be spending any time at all thinking in terms of tax strategy? Because it's not going away. Taxes are not going away anytime soon unless they live in Puerto Rico with you. taxes are part of life they are part of this awful board game we've all been forced to play it's like we're all in a monopoly game and we go around the uh the board every single year some people pass go and you know collect two hundred dollars and and go about their lives and then some people play to win and that's what tax strategy is all about is playing to win the game and build wealth and i'm kind of curious on your thoughts on this because I actually am a personal believer that taxes are not inherently evil.

2:55Like they're not bad. Like a lot of people like to just talk bad about them. But do you really think through that fire nation, if you are one of those individuals, because look at the roads that we drive on the electrical grid that we have, the bridges, the infrastructure, and believe me, nothing's perfect. It's far from it. But none of that would be possible if the government had no money. So what is your kind of thoughts on that kind of thing? Because for me, it's like, you know, there's a point where I'm happy to pay taxes, but then it starts to get to the evil category after a certain percentage.

3:26And for me, that's somewhere between 20 to 30%, if I'm being honest. Yeah, I feel the same way. And actually, I look at it as, you know, you're supposed to pay your fair share, but for a lot of people, they assume their fair share is actually higher than it needs to be. And there's really two schools of thought, one that think that all of it is evil, and one that thinks that, you know, I just, oh, I don't want to pay too little. I don't want to get audited. I don't want, they're kind of fear-based and they end up paying more than they need to legally pay. And as I say, don't give the IRS a tip.

3:57They haven't exactly earned it. No. No. Very interesting thoughts. And so Fire Nation, I mean, you know, it's important again that, you know, we are looking at it in a way that a certain amount is definitely necessary and needed in a lot of areas. And then anything above that, we have people like Shannon who's saying, okay, okay, enough is enough. Now let's let you keep the rest of the money that you make so that you can invest in yourself and your business and your family and your loved ones. Because entrepreneurs, Shannon, and you know this, they are so busy. So if we hire a tax professional, we're just like, oh, thank God I hired a tax professional.

4:29I gave them money. They're going to do everything that they need to do. Like I can just focus on all the other things I need to do in my business. But are they implementing all of these things? Not necessarily. So thinking of it like that is like saying I hired a personal trainer, so I'm going to lose 40 pounds this summer and I'm going to fit in a bikini. That's a good analogy. You got to put the work in. You also have to make sure that they're a good match for you. It's not just about a person with those three letters at the end of their name and saying, I hired a CPA, therefore problem solved.

5:00You have to put the work in. You have to invest in engaging with that person and making sure that you're part of the conversation and part of the decision making because, I hate to break it to you entrepreneurs, and I'm one of you, no one is going to care about your business as much as you do. And it's really important to remember that, that even when you're hiring someone who is an expert in a field like taxes, that you are still in the driver's seat. You still have that in your control and you have to make sure that you're taking their advice, but you're also, you know, the ultimate decision maker and, and feel just own that role.

5:33And that's an everything in life too, Fire Nation. I mean, I want to kind of repeat that phrase that Shannon just said, because it's so important is that nobody's going to care about, and then here, fill in the blank as much as you do. Cause it's really everything. I mean, I see it in every part of my business and my life in general. Like, you know, I have a great lawnmower guy. Like I have a great lawn keeper. He does his thing. But the other day, like I was just kind of walking up behind him and he's just like, you know, picking up trash and kind of like throwing it over the wall. And you know, I happen to own the next law next to me.

6:00And I'm like, you know, you're just throwing trash onto my other lot. And he's like, Oh, I didn't really think you cared. And I'm like, well, of course I care. That's trash. And it's just, you know, again, it's just like, nobody's going to care about anything that has to do with you specifically, Fire Nation, as much as you do. And they shouldn't because they got their own things to be worrying about. I mean, there's a certain level that they should be doing because it's their professional duty to do so. But beyond that, it's on you. Like it's on you to dot those I's, to cross those T's, to make sure that things are getting done.

6:28And what I'm really excited about is we're going to talk next about Shannon's top three strategies on how to save money in taxes. We're going to go into this really deep. when we get back Fire Nation from thanking our sponsors. Okay, let's talk about a platform that's completely changing how entrepreneurs are running their business. And they are also our featured partner, High Level. If you're an entrepreneur, coach, agency, or course creator looking to grow faster and smarter, High Level is the all-in-one platform that replaces your entire tech stack. Seriously, think ClickFunnels, Calendly, MailChimp, Kajabi, and even your CRM all rolled up into one powerful white label solution.

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7:38Seriously, every question that pops up, they will have your answer waiting. And if you visit my special partnership link, you'll get a free trial. So visit highlevelfire.com to start your free trial and see why thousands of businesses are switching. That's highlevelfire.com, where marketing, sales, and automation finally come together. High level, join the revolution. Fire Nation, let me ask you a question. What if you could stop guessing your way through entrepreneurship and start following a proven playbook? That's exactly why I created the Freedom Circle. Over the years, I built multiple businesses and helped countless entrepreneurs build theirs, and I learned one powerful truth.

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8:55So Fire Nation, stop reinventing the wheel. start following the proven path. Visit freedom-circle.com to learn more. That's freedom-circle.com. Shannon, we're back and I want to really dive into these top three strategies. So maybe let's go through one by one and if you've got to give a specific example on each one on a client who did this or just an example that you've heard of, we don't need to use specifics or names or anything like that. But I love the examples if we can bring those in. Of course. So the number one thing that you can do right off the bat is optimize your business entity. Make sure that you're choosing a business entity that is right for your profit levels and your goals when it comes to saving in taxes.

9:37And one of those is the S corporation, which is available to all entrepreneurs in America. And if you're making a profit of over$40 ,000 and you're still an LLC, I'd like to stage an intervention and tell you that you can do better. You can do better. And let's kind of maybe give an example of that as far as what I'm thinking. Maybe you found a client or you acquired a client at one point and say they're making like$300 ,000 a year, but they're still in LLC. What did that look like dollars and cents wise? Oh yeah. And I come across those all the time and I love helping them because we're talking major tax savings.

10:12So we're looking at, I would say a client like that could be 20 to 30 K tax savings ballpark when we're done with them. Um, you're talking about, you know, serious actual tax savings, dollar for dollar. I'm not talking about deductions. I'm talking about, you know, you will pay five figures less in taxes. Most likely if you're above, you know, a hundred K profit, if you switch to an S corporation, there's a ton of opportunity there. Now I don't want to go too far under the hood here because there's only so much that we really like need to know as entrepreneurs, but we just got done talking about how, you know, Nobody's going to care as much as us.

10:48So we do need to be at least armed with the knowledge. So what exactly is the benefit? Why from switching from an LLC to what you're talking about, what is just kind of the rhyme and reason as to why that's such a better move? So I would challenge everyone in Fire Nation to open up their tax return that they filed this year and look at what they paid in self-employment taxes. That is really where the savings hits. So if you're looking at how much you paid in self-employment tax, you're probably thinking, oh God, I didn't even know that was part of the deal. They just tack that on like an extra fee.

11:18And you're paying, if you're an LLC, 15.3 % on top of the income tax you're paying. And that's ridiculous. You're paying all the payroll taxes that would normally come out of a paycheck. And what you don't realize is being self-employed, you get that burden, I guess, of paying both sides of the equation, the employee and the employer. So what this does is this breaks that apart and says, no, you don't have to pay self-employment taxes on all of that income. and it reduces how much you have to pay. And that's where the savings really generate. Wow. I mean, Fire Nation, just right at the top. I mean, that's literally tip and strategy numero uno, number one.

11:55So let's move on to number two. Sure. And that's maximize your deductions. I think that so many entrepreneurs miss out on opportunities to max out their deductions. And by that, I mean taking business expenses against your business income. A lot of folks will just go about their day. You know, they spend the necessary things in their business. they make money, but you're taxed on that profit at the end of the day. You're after your income after all your expenses. So what you want to do is you want to actually show the government that your profit's really low because you want to pay less in taxes.

12:28So the key here is to convert expenses that you're already paying into business expenses by arguing a business purpose for those. So that's the phrase I really want to stick to is that last one, Fire Nation, is you're converting expenses you're already paying into justifiable business expenses because it's helping your business, it's improving your business. So is there an example that you can kind of reach back and say, wow, I really saved a client of mine a lot of money when we were just able to do this one thing because they just weren't claiming X or Y or Z year after year when it was so clear that they could do that?

13:03Right. One of them is the home office, which I think has a stigma for some reason. But the home office is a major way to save money in taxes, especially if you have a large office, a small home, or you live in a place like New York or California. You can definitely save a lot of money. The other one is actually taking your vacations. So taking vacations, trips, whenever you're traveling, we spend a lot of money on travel. I mean, now that we're out of the pandemic and travel is really opening up again, I'm seeing sold out flights left and right. And I would say, if you're traveling, you've got to find a business purpose for the majority of the days that you're out there on location, whether that's looking at real estate, whether that's finding colleagues or clients or potential clients to go have meals with, or even recording a podcast live with someone who's on location there.

13:53Find business reasons to be in those locations, and you'll be amazed at how much you can deduct from those trips. Oh, I love that example of the live podcast. I mean, hey, it's fun. It's so on point. And, you know, there you are connecting with somebody you're hopefully going to connect with anyways, because you want those in-person meetings as much as possible. And then boom, now you can potentially say, hey, I spent some serious time on my business. What can we, you know, safely and legally deduct here? So what's number three? So number three, it's a bit self-serving, but hire a pro who'll teach you how to implement and execute these strategies.

14:27But you want to have somebody who's going to kind of coach you through this. and the way I put it is find someone to co-author this story of your money with you during the year and not just publish the manuscript that you write. Because if you have someone in your corner the whole year, not just your CPA who you meet with once a year, I call it the April 15th one night stand. You don't want that. You want a good relationship, somebody who will actually be there to support you. You deserve better, right? And you want to make sure that that person is in your corner all year round, whispering in your ear, telling you how to save in taxes with the behaviors you're already exhibiting without feeling this sense of panic or this rush of procrastination at the end of the year that you have to catch up with your taxes.

15:10It can be easy if you have somebody with you that will actually advise you and not just publish the paperwork. And let's go back to that amazing analogy that you had earlier in this episode, which is, hey, you don't just show up to the gym and go to a personal trainer and say, hey, I'm getting married tomorrow. I need a six pack. I need guns. Like I need to look good. Like I want, I want to be lean. I want to drop 20 pounds. It's like, you're working with that fitness trainer for hopefully six months, nine months, 12 months leading up to that big day, that big event that you want to look absolutely fantastic.

15:43Just like, again, I love that phrase. You should be co-authoring, you know, that entire journey with your tax professional, because that person needs to know your business. They can help so much more when they know your business instead of finding like, you know, the most overworked CPA, the last minute possible, that's just going to look at your stuff and say, hey, how can we just itemize everything and just, you know, get this out the door? I mean, they're just kind of like on turnstiles. So that's such great advice and such a great way to look at it. But I want to talk action. How can we actually start implementing these tips, these strategies that we're talking about?

16:18Let's get down to brass tacks. Yeah. So just as you put it, you have to commit to taking action, right? It's not going to get done for you. No one's going to care about it more than you do. And you have to be ready to put in the work. Now you don't have to go to school to become a CPA. You don't have to study taxes, but you have to listen, be engaged and, um, treat your, uh, professional as a member of your team, work with them, right? Make sure that they're informed of what you're doing and your decisions. The way I put it to my clients is I hate past tense. like, hey, Shannon, I went on this trip.

16:51What can I deduct? And I'm like, oh, I don't like past tense. I want you to tell me, hey, Shannon, I'm taking a trip in two months and I want to optimize this. How can I do that? And I say, okay, great. Let's draft an itinerary. Let's get that all documented. Here's your homework and we'll put it on the books. And there you go. Checkbox done. The last thing is shop around for a tax pro that, and you have the right to shop around. first thing foremost, right? You have the right to shop around. You have a choice. So you get to assemble your board of advisors. You get to choose who's in your ear and giving you advice.

17:24So it's not just about finding that guy down the street or your uncle or your dad's friend who did your taxes since you were a kid or does your mom's taxes. You want to actually be conscious about who you're choosing to work with, who understands your industry, your business, and has a similar risk tolerance as you. And most importantly, understands your goals and is willing to anchor decisions back to those goals. Because it's not always about minimizing taxes. Sometimes they have to really listen and understand, well, we want to minimize taxes, but I also want to contribute the max to my retirement account.

17:59And I also want to go buy a house next year. What does that mean for how we are presenting our taxes this year? And looking at that holistically, not just from the lens of, as you put it, itemize this, itemize this, and get out the door. Shanna, you've shared a lot of valuable knowledge this entire interview. We've talked about a lot of things. Themes have developed. What's the one thing you really want to make sure Fire Nation gets from our entire conversation today? It's that you have the ability, you're in control and in the driver's seat of your fate when it comes to taxes. If you think that the IRS is just kind of shaking a magic eight ball to decide your fate and you just get this random number and you have to accept it, that is not the case.

18:40You have complete control during the course of the year on how the ending of that story turns out. So find yourself a co-author and start taking control. Give us a call to action, how we can learn more from you, how we can maybe get more information on what you're sharing on a day-to-day basis so that we can be, you know, start to kind of be the co-authors of this journey, which is so important. So again, any call to action you have, and then we'll say goodbye. So if you'd like some more of this advice in your ear more frequently, I have a podcast called Keep What You Earn, available on Apple, Google, and Spotify.

19:13So definitely check that out and interact with me there. I love that. I don't know if you know this, but in the last chapter of The Common Path to Uncommon Success, chapter 17, it is keep the money you make. Because of the 17 steps that we take to get financial freedom and independence, man, so many people struggle with that last one. Because Fire Nation, you can do all the things right. But at the end of the day, if you're not keeping the money you earn, if you're not keeping the money you make, man, what is it all for? Like you're just spitting those wheels. So I love that. So keep what you earn.

19:49That is Shannon's amazing podcast. And Fire Nation, you're the average of the five people you spend the most time with. You've been hanging out with S-dubs and JLD today. So keep up the heat. Head over to eofire.com, type Shannon in the search bar. Her show notes page will pop up with everything that we've talked about here today. Shannon, I want to say thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we'll catch you on the flip side. Thanks, John. Hey, Fire Nation. Today's value bomb content was brought to you by Shannon and Fire Nation.

20:23Over the last decade, I've interviewed more than 3 ,000 of the world's most successful entrepreneurs and 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 to order your copy, and I'll catch you there, or I'll catch you on the flip side. Are you ready for the ultimate all-in-one platform for entrepreneurs, marketers, coaches, and agencies?

21:08Build funnels, automate follow-ups, manage clients, and even white label your own software. Say hello to our featured partner, High Level, and visit highlevelfire.com to start your free trial today. Fire Nation, it's time to stop guessing and start winning with a proven playbook inside the Freedom Circle, you'll have access to my step-by-step systems for creating offers, building processes, and driving traffic all in just 90 days. Ready for freedom? Visit freedom-circle.com to learn more.