How to Avoid Taxes - Legally! EP #340 - Den Lennie

Hey, guys. Welcome to this episode. Now, we are going to be talking about tax time. Now, if you're not in Australia, I appreciate this, not tax time for you. However, we are at the halfway month of 2024, which means we're five months into the year from a calendar perspective. So one of the things you should be doing every month regardless is looking at your numbers. And I know before you start turning off, this is something that I know from own experience I avoided for a very long time. But when you get a good handle on your numbers, it's incredible what it does for you and your business. So I've got some really important tips to share with you today and a special offer for you. Check this out.

Welcome to the Video Business Accelerator Podcast. Each week we uncover the secrets to creating a wildly successful and scalable video production business. With your host, Dan Lenny, discover how the accelerator program is transforming the lives of our@www.videobusinessaccelerator.com. enjoy this episode.

So what you should be doing every month at the end of the month is, and if you're not using 0 for your accounts, you should be, because it's just so simple is if you have inputted your receipts correctly. And I use a product called Receipt bank, or it used to be called Receipt bank, it's now called Dext. Now, these are paid subscriptions, but they make life so easy because as soon as you get a receipt, you photograph it, it pings it up into your Xero account, and then your bookkeeper just needs to reconcile. Now, if you're still in your own, you're on bookkeeping. I strongly recommend you stop and you hire a bookkeeper because it's really important that you have an external pair of eyes looking over what you're doing with your cash in the business, they will reconcile, ask you questions about anything that they don't understand, and more importantly, hold you accountable to how you spend your own money, which is a very important habit to get into in business. The reason I wanted to do today's episode is around this time of year, tax time, I often see a lot of misinformation being shared amongst freelancers, which is things like, hey, it's tax time. So quickly buy some gear to bring your tax down. And while that is a tax minimization strategy, it's only effective if you actually know your liability. So let's just say, for example, you earned $100,000 and $60,000 of that is profit. Now, a lot of people I hear saying, oh, well, I just draw dividends out into the trust or whatever, so, you know, I don't need to worry about it. But in actual fact, if you've got $60,000 of profit, the government wants a slice of that. So regardless if your net profit, meaning the amount of money that's left on paper after expenses have been taken care of is going to be $60,000, then the government wants 25% of that, which is $15,000, which means you've got a $15,000 tax bill on a net profit of $60,000. And it doesn't matter how much money you've taken out, the government still wants its tax on that. And so if you've got $60,000 of net profit and the tax liability that is $15,000, the maximum you're allowed to take out is $45,000. So if you've taken out more than that, you could be in a tax problem. Now, the other thing is, if you're in a position where you've paid yourself and then there's excess profit, then your accountant might say to you, well, look, if, um, and, and honestly, this is something you should be thinking about a couple of months before end of tax time, and whether you're in the UK or Europe or, or, or the US or Canada or, or Asia, you know, your tax times may vary slightly, but the basic principles are the same. And what I want to share with you is questions you should be asking your accountant. The. The most popular misconception around tax time is that if you have a bill, that if you just buy gear, that will write the tax bill off. Now, in Australia, currently the maximum you can claim in one year on one particular item is $20,000. So let's just say.

You had a $60,000.

Tax, you know, liability profit. Sorry, and you went and spent $20,000. Then, yes, you draw your tax liability down from $60,000 to $40,000, which means your tax on $40,000 is only 10,000 and not 15.

So you have reduced your tax liability. However, you have spent $20,000 of cash flow to do that. So whilst you can reduce your tax, you want to be very careful you don't blow your cash flow. Now, one strategy is to use finance. So what you could do is purchase a product and.

You know, finance it over a period of time, you know, 12 months, 24 months, and then that way you can have the receipt for the costs. Let's say it's $20,000 in this financial year, so you get the tax deduction, but you're only paying a monthly payment over the period of the term of the loan. And that's a very efficient way and a smart way of accessing something using finance. Now I know that here in Australia there's a lot of people who've been brought up in a somewhat old fashioned mindset of, you know, don't, don't take on debt, you know, and don't get loans. There's a difference between a personal loan to go and buy a tv, right, or go on a holiday than there is to a business loan that is used to further your business. So it might be that, for example, you know, let's say you wanted to do some coaching. We've just recently taken on working with a partner who can, who can provide finance. So at this time of the year, if coaching something you've ever been thinking about, you know, we now have a facility and it's exclusively in Australia for the time being whereby you can invest in one of our coaching programs. We can have you finance it externally. You can take the full amount of the coaching program and write off against tax. But your liability to pay back the loan is a monthly commitment and it can be as little as a few hundred dollars a month. Now those loans typically are five years. However, and this is why I like this, it's a method for you to access the information in the coaching that could help you double, triple, quadruple your business or more.

And, and not have to pay for it all at once. So what you can do is come and start the coaching program, start getting results. And you know, I've seen people get results in as little as three months. The average is six to eight months to doubling your business. Okay? So if you understand that these things take a bit of time, I'm not gonna bullshit you that there's some kind of magic shortcut that you just plug into and it makes it work. But you would be in an environment where success is happening around you and your net worth is equal to your net worth. So if you hang out in cheap Facebook groups, which are free affiliate people complaining about there's no work and that the rates are terrible, you're gonna get the same thing. If you're hanging out in an environment where people are winning, big projects are talking about the daily struggles, talking about how they're getting things, talking about how they're business and sharing all that, that's a very valuable use of your time. But back to the loan. What's great about this loan product is that it allows you to access the information now that you can apply to your business and generate more than the cost of entry. And then there's an option to pay off that loan at any time without a penalty. So what you're effectively doing is taking advantage of a, of a, of, of a low repayment. All of the interest payments are tax deductible. And so you're using your business as a vehicle. And there's an incredible book called Debt Millionaire and I recommend that you go and read that book. But Debt Millionaire talks about the fact that this is how the super wealthy make their money. The super wealthy do not use their own cash for anything. That's the secret to the super wealthy. They're always using other people's money, or OPM as we say, other people's money. You want to be using other people's money to do things. And so at this time of year, when it's tax time, this is a perfect opportunity if you are in a position where you have a tax liability.

And maybe you've got the cash. You've got the cash, great. But coaching now in this month makes incredible sense if you've got a tax liability because you've got two choices, right? You either pay the taxman the money that you owe him or her, or they, or you invest in coaching and you get to write off that expense in this financial year in its entirety, which allows you to then take advantage of that information, that support, that camaraderie, that community, the training, the opportunities. And therefore you either give the money to the ATO or you invest in yourself. And to me that seems like a no brainer. I was talking to someone the other day who, when I asked him what his return on investment was on the program, it turned out it was 15 times, 15 times what he put in, he got out. Think about that for a second. Where else can you invest hard cash and get a 15 times ROI in 12 months? It's almost unbelievable.

So if you're thinking about coaching, then now is a great time to be jumping in. We're coming to the end of financial year. We are actually also about to increase the cost of our programs on the 1st of July by a couple of thousand dollars. And that's because we've been undercharging and I'd be a terrible business coach if I didn't review our own products and services and look at the true value. So those people that got in now are getting in now or have been in for a little while, have had an incredible deal. And so we're putting the price up by $2,000 on 1 July, no exceptions, because we're seeing people getting such phenomenal results. I've seen people take this exact information and turn 160,000 a year into 2 million in four years. I've seen it happen more than once, a couple of times, taken a business from 300,000 to a million. But for most people, they might be starting out with five grand a month and now they're at 20 grand a month.

The value of this or the journey you want to go on is entirely up to you. But this process works. It's a recipe, it's a proven process. It's a tried and tested process. All you have to do is step into the discomfort of taking action, show up, get support, and grow your business. Because I'll tell you something, doing what you're doing now and continuing to do that may not give you the results you want. And so there's this incredible opportunity right now. Either give the money to the tax man or invest in yourself. So if that's something you're interested in, please reach out to me on my website@denleny.com or videobusinessaccelerator.com, reach out. Let's have a chat, see if it's right for you. But I'm going to be doing a bit of work this month to really make sure you understand the value of investing some of that money. You've got to be, you know, a tax liability on into growing your business next year. So if that sounds interesting to you, please get in touch and I'll see you next week.

You've been listening to the Video Business Accelerator podcast with your host, Den Lenny. If you are a video business owner who is tired of going alone and would benefit from mentorship, support and weekly accountability, then mouse over to www.videobusinessaccelerator.com to learn more about how the accelerator program can help you today. Don't forget to subscribe and rate the show over on itunes, and we'd really appreciate you taking a few minutes to leave a review.

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