Donna Genie (video creator) explains why tax strategy work is different from routine tax preparation, illustrating with a client case study where restructuring and multiple planning moves saved the client substantial taxes. She lists concrete tactics (entity restructuring, employing children, converting a personal vehicle to a business asset, 529 contributions, salary adjustments to increase retirement deferrals) and contrasts ongoing strategic planning with basic monthly tax-prep services, urging viewers to consider proactive tax strategies to reinvest savings into business growth.
Questions this video answers
March 9, 2023
Over $200,000 in tax savings over three years.
About $25,000 off the owners' income each year (each child paid $12,950 tax-free).
Approximately a $60,000 tax deduction (based on fair market value).
About $700 (state deduction only).
Chapters
It's currently tax strategy season in our office, and we are rolling through each of our clients to determine what tax strategies will benefit them. I want to give you a little insight into what my planning process is and let you know why this is so important. I'm going to use an example of one of my clients. I won't tell you who, but one, and there are many more like this, who we are knocking it out of the park, giving them an entirely different perspective on how tax strategies can affect their lives. This is a business owner who came to us with the wrong strategy for their situation. So we have moved them from a partnership into a different structure, allowing us to take advantage of some tax savings. That move was created and accomplished three years ago with an alternative entity added into the mix. So we actually added a new company so that the income would flow properly and be taxed at a more advantageous rate and an advantageous way. That one move now has saved them over $200,000 in the past three years. $200,000 that they didn't pay to the IRS and to their state and never see again. Ask me what they did with that $200,000. They have reinvested it to create even higher income for their business, used it as a mechanism to build their business. They've used the tax savings that they would have otherwise had to lose to grow their business in another way and invest in it. So One move created $200,000. All right, let's move on to some other things. So going through, in the current year, I have a list of over 80 strategies that I check off one by one and see which ones apply. Now, this business owner, of course, has two children. Those two children have been on the payroll for the past three years. Since we made this new entity change. That brings about $25,000 off of their income each year. Currently, they can Pay each child $12,950, 10 tax free and as a tax deduction for their business. Again, another home run. We also take advantage of utilizing a business vehicle. We've taken that personal vehicle. It happens to be a big truck, which is considered to be a piece of equipment. We converted that last year to a business asset. That gave them about a $60,000 tax deduction for moving that truck into the business based on its fair market value. This year, we also took some moves to put money into an educational plan for their children. The state that they live in actually allows you to make 529 contributions and take a state tax deduction for them. Now, this is not A federal deduction, a state one. But hey, every little drop counts. That saved them about $700. I'll take it. One other bigger move that we made for this year was setting up a change in their salary. The owner salary can be adjusted accordingly each year. And by moving the owner's salary up, we were able to defer more money into their 401 plan. Now, when I went through all of these strategies for one year only for 2022, the total tax savings is $171,000. Now, that's not untypical. We see that in a lot of our clients. Now you may say, well, I never paid that big of a tax bill. No, you haven't. But what if you could take that money that you're about to pay the irs, no matter how big or small, and reinvest that into your business so you could double the growth and then you'll have more income to pay taxes on. And we continue this cycle each and every year to help you grow your business to its best benefit, the way you want to do it, or keep that capital and keep that cash back for yourself and not have to spend it with the IRS and your state and probably never see a good return on that investment at all. So it's very important that you take a look at the tax strategies. Another little side note, I was on a conference call for with mostly accountants, but there was an attorney in the mix, and that attorney told me that he paid his accountant each and every month. He paid $250 every month, and his accountant handled all his taxes. So a little over $3,000 a year and his accountant handles all of his taxes. Well, that may sound like a bargain compared to what my prices might be in that same situation. However, we're not comparing apples and apples here. We're comparing tax preparation to tax strategies and savings implementation like I just talked about. So in his case, he may be paying $3,000 instead of 15, but he's probably missing out on these big numbers I'm talking about in Tax Strategies. So if he's not employing Tax Strategies, he may be missing out on $50,000 by paying $3,000. I'll ask you reconsider. Is that really a bargain? I think not. Take a look at what Tax Strategies can do for you and how you can grow your business and keep that money back in your pocket. Please follow us on Facebook and Instagram. Please make sure to check out our blog and our website linked below. Subscribe to our YouTube channel and hit the bell to be notified when we post. You can email me@donnaampgroundaccounting.com.
