Top 10 US Tax Tips for US Business Owners with Ryan Ross

If we're going to do any sort of tax estimates or planning or optimization, we definitely need to have up to date numbers because if we're not, then we're dealing with historical information that's inaccurate and it misleads us. Misleads us as tax planners, but also as business owners. When I think of business structure, there's typical points in time where one structure works better than others. And typically that's based on how much taxable income we have. As our income as a business owner continues to evolve. As it gets higher, we just always have to be checking what the status is of our structure to see if a different structure would be more beneficial. Good day and welcome to the Wealthy Entrepreneur podcast. I am your host, Bob Govro. It's a pleasure to have you here. This is the place where we dissect the elements that contribute to your entrepreneurial success, from mindset and leadership to profits and revenue. This episode I'm actually bringing a friend in. A colleague, in fact, is Mastering US Taxes, Navigating Complex Tax Laws and Top Tax Tips for Business Owners. Ryan, who is also essentially the director of our U.S. tax department, is a graduate of New Mexico State University. He's been in accounting and finance for over 25 years. He will share his story.

He.

He's been the CFO in Fortune 500. He's been in public accounting, specifically focusing on tax for the last 18 years. An extensive background in many aspects of business and personal finances, which allowed him to go from Fortune 500 back into public practice. He's well versed in business formation, business taxes, individual taxes. He is the leader of our US tax department and a 10 out of 10 guy. So excited that Ryan is joining us today.

So.

So everybody please welcome Ryan Ross to the show. All right, Ryan Ross, as my favorite uscpa, at least at the moment, you know, there's always gonna be competition for that spot. I'm really thrilled to have you. Have you part of this episode today because I know what we wanna talk about is specifically Items related to U.S. tax planning and that's obviously where you're an expert. So welcome to the show, Ryan. And welcome. Would love for you to maybe just share your journey of how you've come up through and learned, you know, some of the tax process, some of the roles that you've had, and essentially how you got to where you are today.

Okay. Geez. That's could be a long story, but the short version.

No, I'm just kidding.

Yeah, yeah. Short version. So essentially got my accounting degree here in the States. And then I, right as I was in school finishing up my degree, I was actually working in Las Cruces, New Mexico, with a, with a CPA firm and was doing taxes with. Doing audit. When I graduated. I stuck around for another two years, got out of the public. Public accounting profession. Was at a young age, in my 20s, CFO for a nonprofit organization that had a huge endowment. So I learned a lot about the market and this and that and, and, and how money, man, money is managed after that responsibly. Responsibly, yeah.

You never do know what it did.

It helped me also understand there's, there's can there can be tax savings in, in investing in certain vehicles and stuff like that. So that was just, just the tip of the iceberg for me because then I ended up working for A.G. edwards, which is now Wells Fargo. It went from A.G. edwards to Wachovia. And then Wells Fargo didn't do that for too long. Got into the public arena, meaning publicly traded stock company. It's Fortune 500 companies. Lord have mercy, Ryan. And got into the.

We got, we got there, though. We got.

There is a Fortune. Fortune 500 company. Manufacturing. So I learned a lot on the manufacturing, manufacturing side. Sarbanes, Oxley, all that kind of stuff, all the good stuff after Enron happened. And then I got the opportunity to come back to El Paso about. I guess we're going on about 18 years now to be the retirement plan, if you will, for my, for my dad and his partner in their CPA firm. So I came back, had an extensive accounting background after working in, in those, those fields and just picked up tax. I had a little bit of tax before, like I said, and then just got into it big time. Stayed away from audits. You know, one of my, one of my agreements was if I come back, I'm not doing any audits. I'm strictly doing tax. So anyhow. And now here I am 18 years later and. And I've learned a ton in those 18 years.

Yeah, bound to happen, right? 18 years. I didn't, I don't think I realized, Ryan, 18 years that you've been back with the firm.

Yes, sir.

Wow, that's impressive. That's great. And so maybe talk a little bit about your team as well that you have.

So we have two older partners, and that's partly why I came back. And then we have one younger partner. He's a little bit younger than I am and so very young. Yeah, I would, you know, he's in his 30s, I'm in my 40s. And my, my, my dad is and, and his partner, they're, they're in their 70s. Looking to, looking to slowly get out of the game. Very slowly, but glad we still have it around 100, but we have, we have 16, 17 down in El Paso and then another 10 up in our Las Cruces office. And in our Las Cruces office does audit. Of course, during tax season, they, they do taxes. But, but the majority of what the work we do are, are accounting and, and tax. We stay away from audit down, down.

Here down in the El Paso zone.

Oh, yeah, yeah.

Well, it's, you know, it's been great. So I think we've maybe known each other a couple years at this point. Coming up to a couple years at least anyway. And you know, one of the opportunities for my team and I was the fact that we continue to have so many U.S. individuals who, you know, maybe were outside of our scope because we didn't have the US Tax expertise in house to be able to, to really support it, not at a scalable level. And one of the opportunities that presented itself was that Ryan was introduced to me. Can't help but love Ryan. Ross and his team have been nothing but fantastic working with us. So they've sort of partnered with our govro team out of Canada and they're acting as our US Tax arm for us, which has been great and continuing to look at expanding that and that relationship in the future as well. And one of the things that they really focus on for us is supporting our US Tax clients with tax planning opportunities, tax compliance, and just ultimately making sure that we're paying the least amount of tax legally possible. As, as any sort of US Enterprise, whether it's an llc, an S Corp or C Corp, whether it's individually, you know, we're looking at optimizing tax plans to make sure that, you know, all of our US Taxpayers are in that position of paying the least amount of tax legally possible. So one of the things, Ryan, that I brought you on today that we wanted to chat about and to share with people, you know, at the time of recording, we're getting close to the end of the year. Likely this is going to be released at the start of 2025. Really looking at, let's say, a top 10 list for US tax tips for business owners. Because ultimately, you know, our, our business is focusing on supporting business owners. Ryan and his team on our behalf specifically focus on helping support our, our US Business owners with tax planning. Ryan, do you have a top 10 list for us to go through Today.

I have a top 10 list. Yes, sir.

All right. I feel like I'm on David Letterman all of a sudden. It's like the top 10 list. I don't have the music and the.

Animations that to this at all either.

Okay. Yeah, exactly. All right, well, let's, let's, let's enter into this. I'm sure we can make it fun regardless, but. All right, Ryan, let's walk us through. What's your, your first top tax tip for us today?

So my number one, I think it's going to be the most, second most important would be having a clean set of books throughout.

Hold on, hold on. Okay, so you're saying this is your second most important and you made it number one?

Yes, I want to end with the most important.

Okay, all right. Okay. All right. So clean set of books, 100% agree. Why is that, Ryan?

If you don't have a clean set of books and know where you stand during the year, it makes it almost impossible to do accurate tax planning. And there's sometimes where in the middle of the year you want to do tax planning, you don't want to wait till December, you don't want to wait till the end of the third quarter. Sometimes it's prudent to do it right in the middle of the year. If you don't have a clean set of books, it makes it extremely difficult to properly and accurately tax plan.

Absolutely. And you know, I, I talk about this in almost every presentation I go to. I talk about the importance of an up to date financial scoreboard. Something that is up to date, it's accurate, important so that you can rely upon it and then understand what, what the hell it means. And that's more so as a business owner side. But you're right. If we're going to do any sort of tax estimates or planning or optimization, we definitely need to have up to date numbers because if we're not, then we're dealing with historical information that's inaccurate and it, it misleads us. Misleads us as tax planners, but also as business owners. So love number one, Ryan. That's a, that's a good one to kick it off with.

Okay, good. I'm glad. That's my second most important. Right, so, okay, this one, a lot of times it's industry specific, but you want to be aware of and always take advantage of certain business tax credits depending on the industry. There are tax credits out there, especially for those that produce, literally make their product. And then there's other tax credits if you Hire employees from or that you work in. Slash hire employees in what we call the economically challenged areas. There's a lot of credits that are out there that a lot of people don't realize.

Okay. So number two is to optimize and be aware of all available tax credits, whether you're in manufacturing, whether you're hiring employees, whether you're in R and D looking at all available tax credits. Because if you miss those, those are really lucrative if one is eligible, right?

Yes sir. And again, the business owner doesn't necessarily always have to be the one that's aware of this, but we'll get to that. Right? So yes, I think number. So number three, this one's huge. And, and under the current U.S. tax structure, there's some rumors out there that it could change going forward with the new administration. But under the current tax structure, typically being an S Corp is a huge tax advantage and people don't really understand that if you're strictly a US customer and not necessarily a Canadian national that does business in the US There's S Corp's not going to work. But for US Businesses, S Corp is going to be the best way to go. In 90%, 95% of the situations, S Corp is going to be the best way to go because there's certain tax advantages from taking distributions. From a self employment tax standpoint, S Corp is just typically the way to go. Plus you get the qbi, the qualified business deduction on the personal income tax as it flows through or can, I should say you can.

So number three is making sure that you understand the business tax structure. Typically an S corporation is going to provide the best tax advantages to you specifically because of, from my understanding that employment self employed tax credit is a huge one in there with our filing because an S Corp is a flow through entity that typically just flows through our personal taxes. So we get access to self employed credit there, which is, which is very powerful. So. Okay, so this is good. Number three is. I normally when I talk about this, Ryan, I usually throw the, the power of an effective structure higher. But I appreciate number three, that is a solid spot.

Okay, well let's, let's clarify something real quick.

Okay.

Yeah, this is in no particular order.

Oh, okay. All right, so I, well I get that now. You know, I had to qualify that on number one because you said it was the second most important, important one.

So I figured that's why I qualified that one. The others are not necessarily in any particular order, although I would say three is, three is pretty high up there.

It's three.

Three is probably number three, if you will.

And you know. Yeah, and fair. And you know, one of the things that I think about too when I think of business structure is there's typical points in time where the one structure works better than others. And typically that's based on how much taxable income that we have. Right. As our income as a business owner continues to evolve as it gets higher, we just always have to be checking what the status is of our structure to see if a different structure would be more beneficial. Because as we know with flow through entities like an LLC or an S Corp, you know, they're flowing through to us individually and we're in a marginal tax system, which means that as we go from lower income at zero tax rates all the way up to higher tax rates depending on your state, you know, you're upwards of potentially 50% in those structures. So we have to understand how that works. And then looking at, you know, a C corporation, which is more of a flat tax, separate legal entity filing on its own, paying tax on its business income, more of a flat tax, around 21% plus state taxes. So depending on, on where you are as well. So we need to understand how that system works and why the importance of a good and effective structure makes so much sense to you. So always be paying attention to the changes in how your business is operating, the taxable income, because chances are the day that you start, to the day that you exit, there's going to be a change in your structure that makes more sense for you.

And to piggyback off that, we have one particular client comes into mind. It also depends on state laws because of course in the U.S. you know, each state has their own different laws and the feds allow each state to sometimes work independently in that regard. Not necessarily from a tax standpoint, but from a strict legal standpoint. So to get to my point, we have client that tax wise would be far more beneficial for him to be an S corp. But because of certain legal things in his state, from a cash flow standpoint, when it was all said and done, it was far better for him to be a C corp. So we made him a C corp. Well, as the years have gone on, we are now at that threshold where we say, okay, we need to move you back to an S corp. And he's in agreement because from a cash flow standpoint, being an S corp is going to be far better for him now. So we don't always look at what's the best, you know, mitigating taxes in the end, cash is king, as they always say. Right. Mitigating and limiting the amount of cash that's going out, sometimes, you know, it's going to be more beneficial to be under a certain structure than another. That makes sense at all.

It 100% does. Yep. And I think, you know, that's an area that I know Ryan and I talk to a lot of our US Clients about as well, is always trying to assess the appropriate structure to ensure that, and that's something that we can proactively adjust. We can't retroactively adjust the structure. It needs to be a proactive sort of solution. So it's very forward thinking. So back to Ryan's number one point. I think it was your number one point, which was have your up to date financial information. You know, when we're looking at projecting forward, if we're dealing with last year and it's just, oh, well, we're going to be making X X amount of money, you know, it's kind of blind faith in a conversation to say, well, yeah, that structure is going to be more beneficial or we're going to have to change this. But if you don't have up to date information, you know, we don't have a lot of information to rely on aside from what the business owner says. So we'd like to, as accountants, we like to be able to back this up because numbers don't lie and say, is that actually the best way? You know, and then we can support that with legislation, opportunities, depending on the state cash flow. So there's a lot of different areas that come into play. But yeah, for sure. One for me is always making sure that we're optimizing the business structure. Love that one, Ryan. Okay, what else you got in store?

All right, so number four, again, no particular order is, if you'll allow me, I'm going to do four and five at the same time.

Let's do it.

So number four is look for ways to spend cash. Well, not necessarily cash you can. You can also finance and if cash flow is tight. But look, ways. Look for ways at the end of the year to spend money in order to cut your taxes, create some expenses. Of course, typically that ends up being capital assets. Right. So I'm going to add number five right now, and then I'll explain what I'm saying. It's invest in the business. Don't spend a dollar to save 30 cents. Okay. That's not necessarily a tax tip, more of a cash flow. But I think those two go hand in hand. Meaning you don't want to spend a dollar at the end of the year just so you can save 30 cents. If you need the asset, buy it. If it's going to give you an roi, a return on investment, go ahead and do it. The example I love to give is we've got a contractor who went out and bought a foam insulation machine. I'm sorry, check that. He first started out by subbing that out. Turned around, he bought. He bought his own, said, you know what? I don't want to pay the subs anymore. I'm going to do it myself. He ended up at the end of the year buying two. They're expensive, but he did the work himself. And then he started running those machines out within six months. He paid for those for those machines. He got the tax saving at the end of the year. Plus the cash came back on an roi, a quick ROI in this particular case. So, point being is if you're going to spend at the end of year to save tax, make sure it's to invest back into your business to where you're going to get a return on that investment. That's. That's typically my advice. Some people, they want a new truck, they go and buy a new truck, but that's okay. At least they get their tax savings.

Yeah. 100. I. And I talk about this all the time being, you know, maybe one of the highly asked questions of the year that we typically get is, especially at the end of the year, like, where we're at right now, you know, what is it, Bob, that I spend money on to save tax money? And Ryan, I usually say me. Right, makes sense, but, but, you know, almost to bring a little bit of humor to the idea that, yeah, give me your money, I'll pay the tax on it and I'll keep the 70 cents to your point, right? It's like, let's not spend money just to get a tax deduction. And we've all got somebody on Instagram or TikTok or TikTok is the worst. I get clients that send me Tik Tok videos all the time, Ryan. And they're like, hey. And typically for us, you know, I'm focusing on the Canadian rules, and I usually send people to you to talk about the tax rules, but I know enough now based on our experience working together that, you know, for the most part, I can answer the majority of questions until we get into the nitty gritty and people will send me these Instagram or, sorry, these Tik Tok reels where it's like, oh, you know what you just do? You just buy a motorhome in your business because that's just what you do. And it's $300,000. It wipes out your tax bill. And I'm going, no, that is not what you do unless you're in the business of doing something with a motorhome. You know, just because your neighbor does something doesn't mean it's the right idea. And to Ryan's point, you know, being very, very strategic with how you're spending your money to almost say if we spend it now, we're going to pay more tax in the future, but we can get the short term deduction now. And I always talk about this as well in it that it's strategic timing of when we're investing in these things. You know, if you need it five years from now, don't buy it now. We pay the taxes now or we find other ways to get it down. But if you have to buy something in March, April, May for the season and you're looking now to say how do we help with our tax planning? Well, let's look at what that investment could do for us now or tax savings now because we're going to need it anyway. So Ryan, couldn't agree more. Number four and five would be on my list too. Okay, hit me with number six.

Number six, retirement plans. If you got the cash flow, these are huge and depending on the number of employees is going to depend on the vehicle you choose. But they're huge. And again, this is where if you have to spend the money, spend it there because it's going to pay dividends. Literally.

Literally. That was a bad account joke by both of us. Sorry about that.

Yeah, actually.

Let'S. So, so can you elaborate for me a little bit? So I know there's multiple retirement plans. So can you just give us an idea of what some typical sort of high level registered plans would look like?

Certainly to name them first of all, of course you got the 401k. Those are the most expensive because typically in 401ks you're going to have employees that even if they don't contribute, you still match part of a portion of their salary. So depend there's certain caveats on the plan that you choose where you can opt out of that. But typically 401k plans, again depending on your number of employees or are going to be the most expensive and from an administrative standpoint, they're expensive. Simple plans are for a little bit smaller businesses, typically your regional kind of not Regional, but local mom and pops. A lot of the times, I mean they can be for bigger ones as well. But typically your simple IRA is going to be a good way to incorporate all your employees. Then there's SEPs, Self Employed Iraq and Self Employed Pension IRA and that is going to be for when you don't have that many employees for your smaller, smaller businesses. Those can be lucrative. And of course each one of these has contribution limits. So those, there's those things to keep in mind. Then you have a defined benefit plan, profit sharing plan. A lot of times those two go together. These have huge limits. I'm talking in the 200 mid-200s to 3/00. You can put away a ton of cash. Now those can be expensive from a cash flow standpoint because depending on the number of, of employees that you have, you're going to have a profit sharing agreement with them. But that's, that's the high level. We can get into it some more. But, but those, those are the basic ones.

Yeah, no, and just maybe a couple of clarifying points and I'll pose them as questions for you. Limits are adjusted based on your taxable income as well from year to year.

To correct that is, that's part of it. Correct. So depending on the amount of wages you have, let's say there's a certain percentage you can, it's either the higher, I'm sorry, not the higher of, but 20, the lower of 25% of your wages or 23,000 if I'm not mistaken. This is, this is where it gets foggy for me. They all start running together. I believe that's a simple or it's, I can't remember. But for example, that is one that's based on your salary. Same thing with profit sharing and defined benefit plan. Now if you're an S corp, a lot of times they take in to consideration your profit in the business plus your wages. So there's a bunch of different ways to look at that limit or to, you know, come up to that limit. And a lot of times it's based on, like you said, it's based on the amount that you, that you make perfect.

And then the last sort of clarification question is, I know you mentioned, you know, you can have employee plans, but I just want to clarify for everybody, we don't need to do this for our employees. Like we can just deal with this independently as one individual. Right? Like we can just go make a contribution to our own IRA and help support our business bringing down our taxable income as well. Correct.

Well, that's only on the individual level. Yes, the. Right. That's what you're saying because. Yes, because these, in these vehicles that I just mentioned, not just so. So if you have your traditional IRA or your Roth ira, that's on the individual side. And so, and so the stuff inside the business, typically those don't allow you to be. What's the word? They don't allow you to segregate yourself from your employees. So you all typically always have to incorporate the employees. But on the individual side, yes, there's the Roth ira, which is post tax dollars and the traditional ira, which are pre tax dollars. But again, to your original question, yes, there's still income limits that are going to affect, if you can, what you can contribute to and how 100%.

And I think that's a juicy enough detail for people to look into and just to be aware that you can do it individually, you can do it in the business that you just need to be aware that your contribution limits are going to be different based on your choice of investment retirement vehicle and based on your historical income, specifically your previous years, you know, and we. I. My language is earned income. So some form of taxable income measure that defines the limit or a lower level or a higher level of the limit as well. So perfect. Love that as well. Ryan, what's your next one?

This one is a lot of times number seven, right? Number seven, yes, sir.

Okay, number seven.

Now this one is for a lot of your high wealth individuals. They've maxed out your, they maxed out their 401ks or the retirement plans. They've done whatever they can do and there's nothing left because these higher net worth and higher income clients are far above any threshold to be able to contribute to anything and make a difference tax wise. There's what's called charitable trusts. There's different. That, that's a generic term in this particular case because there's different charitable trusts. Well, there's some charitable trusts that allow you to contribute to these. Plus you get paid for, you get paid dividends. You can get, there's, there's an annuity, a charitable annuity that you can contribute to and you name the beneficiary. There's ways to contribute to get the deduction in the current year and be able to maybe potentially make money on the back end as well. So your money's being contributed plus still working for you. It's, it's, it's a strange concept, but they're allowed.

Interesting. Well, for any of you High net worth individuals. I feel like there's a lot of, you know, let's just say this is one of those areas where there's more advanced tax planning opportunities. And you should definitely consult with Ryan and his team on how that may or may not apply in your situation. But I love that because you know what? One of those, one of those things, aside from, hey, Bob, what do I spend money on? And hey, Bob, what structure should I have that allows me to be the vehicle that I'm taxed the least amount? It's like, what other sort of proactive advanced tax planning techniques do you have for me? And this is where that sort of discussion would come in, which is great. So it's almost when. Not that you've exhausted all other areas, but, but that we want to include this as a plan to say, all right, have we taken advantage of the other deductions that get us a larger sort of return on that deduction? And, you know, how do we look at a charitable trust to fit that into our tax plan as well? Love that.

Sure.

It's great.

All right.

Okay.

Number eight.

Number eight, in no particular order.

Again. Again, yes. So this one is a cash flow. This, this isn't almost like a making sure you're investing properly in your business, but there's also tax, a small tax advantage to it. And what I wrote here is having a loan isn't necessarily a bad thing, meaning financing capital assets isn't necessarily a bad thing. You get the deduction on the depreciation side. You, if you can get a good interest rate. And again, we go back to number four, numbers four and five. If you can get a higher rate of return in your business by reinvesting that money and getting that asset, if you can get a higher rate of return than that interest rate that you're paying, you're ahead of the game. Cash flow plus, you get the depreciation deduction. You also get the interest deduction when you're paying the loan back. So I think there's certain strategies that if you need capital assets, you want to make sure that, hey, if you have the cash for it, great. But it's not always the best thing from a cash flow standpoint. If you can get a higher rate of return, it might be a better thing to look at 100%.

And I love that you brought this into the top 10 US tax tips list as well, because I feel like a lot of people don't talk about this. They more so go, yep, here's the deduction. But they don't talk about the need for cash resources in the business. And they, you know, people give one up in exchange for the other. But if you actually let the banks pay for these assets, we still get the same deduction. And in fact, we might get a little bit more with the interest. Not that we want to pay the banks any interest income, but to Ryan's point, we want to get a good interest rate. We want to make sure that the loan payments are feasible, that we have the cash flow in order to make those payments. But, you know, this would be a question or a comment that I get so consistently when we get, you know, trades, businesses or, or anyone who's looking at buying new capital equipment in their business, they come in at the end of the year and yeah, they might not have a tax bill per se, but they come in and all of a sudden they go, yeah, Bob, you're telling me I made $100,000 this year. Where did all the money go? And then we look and we go, yeah, we got a deduction for the depreciation of the new vehicle. But yeah, you made $100,000, you paid some sales tax, you got the deduction related to it, you gave up all your cash. Now you maybe even have a bit of a tax bill and you have nothing to pay the tax bill. When if you have just gone to the bank and said, hey, will you fund this capital asset, tangible property? The bank would say, yep, that sounds good. And they would fund that for you and you would keep all of the $100,000 for the vehicle. And now you're in a better position to pay the tax bill and reinvest in the growth of your business. So, Ryan, I love that you brought that in. I think it's so very important. Great, great job.

All right, number nine. And this, this goes to back to number one. Always know what your tax liability is going to be at filing at the filing deadline. You've got to know it because if not, you can get into trouble with penalties and interest. And when I say in trouble cash wise, why spend cash when you don't need to? So always know what your tax liability is. I want to throw in a little bonus on this one. And the reason why I said always know what it is, you want to pay it by the tax deadline. That doesn't mean you have to file. Some people think that, hey, if I file an extension, that's an automatic red, red flag for an audit. It's actually the opposite. First of all, the percentage of an audit is extremely low. But once you file an extension that delays the time, they're going to look at everything that was between January and March or January and April 1, and maybe they'll get to the stuff on the, on the back end when you file an extension. So people don't realize that. So there's nothing wrong with filing an extension at the end of the year, but you have to know what your tax liability is so you can pay it.

And so what would some of those deadlines look like, Ryan? So obviously the end of the year is December 31st. Understanding what that, what that tax balance owing is, then when do we have to pay that?

April 15th. And that, that's if you're an individual, if you have flow through entities like partnerships or S Corps and even C Corps are all due April 15th. I said, I said March 15th because that's when the S Corps and partnerships are done. So but there's no tax liability on those. But it's April 15th is when that's due. And again, going back to number one, you have a clean set of books. There's also estimated payments that you have to make. The IRS is going to get you coming and going with penalties if you don't make your estimated tax payments throughout the year. They're not earning their interest on your tax dollars like they should be. So they're going to penalize you at the end of the year for not making estimated payments. Used to, that wasn't a big deal. It was 3%. Well, more than likely you're going to be able to reinvest back in your business and not have to make more than 3%. So who cares if the IRS wants to charge you that? It's not that way anymore. It's almost 8% or right around 8%. So the IRS finally got wise to the game this last year and said, Nope, 8%, no more, no more hoarding on holding on to your money and you guys making the interest. We want to make it fair.

And, and would you say that if, if somebody were to be in a business and, and have some cash shortages or have a heavy capital intensive business and they need that cash, would you have a conversation with people that would say, you know, I would maybe not make that payment, just understand that you have an 8% penalty or what would, what would the guidance be if they.

Don'T have the cash? I typically it's like, okay, well maybe we can plan for next year to make sure you have that. But again, sometimes there's nothing you could do. So what happens? Essentially the U.S. government becomes your bank at 8%. And that's okay. That's okay. Sometimes clients just get in that position. A lot of times it's when they're starting off and they didn't realize they were going to have such a large. Maybe not in the first year. Typically losses happen in the first year, but as they, as they move on in years 2, 3, 4, 5, they're still struggling to make sure they have that proper cash flow. A lot of times it just comes down to organization, which goes back to number one, at least in my experience.

And when are those payments due, Ryan?

Okay, so for, for C Corp's.

Yep.

It's January. I'm sorry, it's April 15th, June 15th, September 15th and December 15th.

Okay, so quarterly.

Quarterly for us individuals, it's April 15, June 15, September 15, January 15th of the next year.

Okay. Interesting. Interesting little shift on that one.

Yeah, I don't quite understand it other than maybe they give you 15 days to make sure that you, you close out the, the third, the last quarter of the year. That's my only assumption. We never know what the government does or why they want to do it.

And, and the 8% penalty right now and just know everybody that that will change depending on the economic climate, interest rates, and all that other stuff as well. So is that. So let's say I don't make a payment on June 15th. Do. Is it a full 8% or is it a prorated amount?

It's an annual 8%. Sorry.

Okay. And. No, no, that's okay. I just want to, I just want to.

Glad you said that because a lot of, a lot of folks. Shoot. A lot of folks, even in that I, that I work with don't even understand that. So.

Yeah, which, which is great too, right, guys? Like, if we don't make a September 15th payment, it's not like you're owing 8% on that. It's a prorated amount that it's really four months at the end of the year. If you make it by, you know, your January 15th, if you catch up on that, it's really only, you know, a small portion of the year, so it's a smaller amount. So just to know. Cash is king. We've, we've talked about that many times in the past. And you know, I definitely don't necessarily need to see the IRS have all of our cash if it's going to cause struggles. So we just need to incorporate some of those costs into our planning and they are deductible or non deductible for tax Purposes, Ryan, they are interested for tax purposes.

So I want to add one little other thing to that. Just, just, just so you know, because typically what happens when you deal with a tax professional, they will give you the coupons for the estimated tax payments and they're equal typically throughout the year. However, depending on your industry, your industry may be seasonal, so you may break even in the first quarter and then you make everything during the summer or late spring, early summer. Well, the IRS allows you to adjust where that income fell so that in other words, if you make, if you don't make a payment in the first quarter because you didn't, you broke even, that's fine. And then you make the payment in the second quarter to make up for the money that was made. The IRS allows you to proportion your income so that you don't get penalized because if, strange thing, let's say you make all your money over Christmas, for whatever reason, you make all your money over Christmas, you didn't make the first three quarters. The IRS is going to penalize you because they don't understand the way your income flows well on the tax return. They allow you to proportion that income to the end of the year so that there is no estimated tax penalty. So there are ways to make sure you're covered. If you don't have the cash in the first quarter because the business wasn't good, don't make the payment. So ways to do that, I just want to clarify that a little bit.

Excellent, love that. Great insights. And the final. I feel like there needs to be a drum roll here with, with number 10 here.

But this, this one's a little self serving, but it's the truth. Have a tax professional, accounting professional on your team, meaning us, if you would.

Right back to whichever one it was where I said invest in me, right, Exactly. That's what you money on. But no, you're right. You know, it's, it's so important and I feel like, well, the reason it's so important is that things are changing all the times and you know, we're looking at an election just happening. We know there's a different administration coming in. The rules are going to substantially change from what I can predict as well. And unless you're dedicated to trying to understand all the nuances related to how those changes are happening, you know, I'm not trying to figure out what lawnmower needs to cut my grass in the best way. You know, I, I let the professionals understand how to do that. And I think it's the same situation Here, this is something that Ryan and I do day in, day out. Our teams do it day in, day out. We pay experts to come in and train our teams on all the little nuances. You know, thinking of that income trust idea of new tax planning concepts, you know, not only are we keeping up with everything, but we're always looking for the next best way to help support you, the business owner. And it's not very often that I can say, you know, the value of what you pay a good tax expert isn't going to save you on the other side. You know, it really is an investment, one, to save tax money, but two, to have the peace of mind that the way that you're filing and everything, the way it's being completed is going to allow you to continue to operate your business and not have any headaches because of misfilings. And unfortunately, you know, Ryan and I are perfect in every way. But there are some professionals that, that aren't up to speed with a lot of the things that we are, because we heavily invest in making sure we're up to speed with the newest ideas, concepts, court cases, everything that substantiates what, what we're able to do and how far we can push the line within the rules to make sure we're getting the best outcomes for our clients. So number 10. Hey, I didn't know it was your number 10, but you're right, I get why you left it to number 10, and it makes a whole lot of sense. And yeah, I strongly agree with you there, Ryan. This has been fantastic. By the way, for anybody who's watching, feel free to drop a comment in. What's your favorite of the top 10 lists? I, you know, biased to number 10, but, you know, I think number three, for me, thinking specifically around the organizational structure and the most efficient is a huge one. And it's something that can allow us to proactively plan as well, which I think is really important. But drop a comment in what. What did you gain from this? What did you learn from this? Get that in there. Ryan, I know we've gone through the top 10 list, and you've given a lot of great insight. If we're thinking of a business owner and staying ahead of the sort of tax planning. Any other guidance that you have, you know, thinking of a business owner right now, what they could be doing to help position themselves to be in a.

Good tax spot, in my, in my opinion, and it kind of harkens back to some of the stuff we've already said. But if you truly Understand where you're at. I just want to beat this one down is what it amounts to. I can't say it enough. Cash flow is highly important in a business, obviously. So being able to manage that cash flow, whether it's from a tax standpoint or from an investment standpoint, meaning in capital assets and stuff like that, just always being aware of where your cash is, not just currently, but where is it going to go in the future, like you said, and it was a great point, if you're going to need something in March, why not do it now? If you've got, if you've got the means to do just. I think knowing where your cash is is always going to save you in the end because it's going to allow you to make the proper decisions for your business, not only tax wise, but operations wise. And you, you kind of said it a second ago. We're not experts necessarily in their business. We don't know what lawnmower to choose to cut a St. Augustine or Bermuda or what do you have in Canada.

All right, so you've, you've gone way beyond my knowledge of grass, sir.

But the point is like, like you, like you were saying is we're here to guide you. Make sure you have someone strong on your team that understands these things so that if you're not sure about something, pick up, pick up a phone, make a call, shoot an email and have that knowledge just like that. It's just knowing where you stand is highly, highly important. And that's why number one is really number two.

Ryan Ross, everybody. Ryan, thank you so much for joining us today, guys. This has been the Wealthy Entrepreneur podcast. This is the top 10 US tax tips for business business owners. And this is something that you can apply in your business all year long. It doesn't have to be the end of the year, it doesn't have to be the start of the year. These are considerations that need to be sort of top of mind all tying into make sure that you have a good financial and tax partner to support you through making some of these, these changes. As you know from listening in the past, we are here to empower business owners with the financial information they need to be confident to make informed decisions and change the world. Entrepreneurs, we have the opportunity to make the greatest impact in making positive change in the world. Keep doing what you do and we're so proud to be able to support you along that journey. Make sure that if you like this episode, give it a, like, give it a comment, make sure you give us a follow we're always coming out with new tips to help support you and your business and to maximize the impact of all the great things that you do. If there's something on here that you feel a business owner could benefit from, make sure you grab this link and you share it out. Again, top 10 tax tips is pretty important. 92% of business owners pay more tax than they legally should have to. These top 10 tax tips will help you understand the structure and the framework of where to look for opportunities so super, super beneficial. I am your host, Bob Govro. It has been an absolute pleasure to have you here today. Once again, Ryan Ross. Thanks for coming in my friend. It's always a pleasure to collaborate. So grateful to have you and your US Expertise on our team. Feel free to reach out. Govrocpa ca we'll drop the links in as well. If you feel like connecting with my team and I or with Ryan would be beneficial. We'll make sure that we get you connected. Thanks everybody and have a great day.