How I Saved An Agency $15,000 In Taxes (In 12 Months)

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Mike Jesowshek shares how he saved a small business owner over $15,000 in taxes in just 12 months. Mike breaks down the practical strategies implemented, including changing the business entity structure, maximizing home office and vehicle deductions, strategically categorizing business expenses, and more! 

Learn how these strategies led to over $132,000 in tax savings for Alex's business over five years. 

[00:00 - 03:28] Case Study 

• Alex is a former corporate digital marketer who transitioned from a W2 employee to an entrepreneur in the healthy eating influencer space
• Alex's quick growth, generating about $100,000 profit in the first year as a sole proprietorship
• During tax season Alex got hit with an unexpectedly large tax bill in the first year
• He realized he lacked knowledge of tax-saving strategies 

[03:29 - 06:18] Tax Saving Solutions Implemented

• We changed Alex’s entity type from sole proprietorship to S Corporation
• We implemented home office deduction through an accountable plan
• We utilized a personal vehicle for business and claimed deductions
• We maximized deductions by finding business purposes for existing spending
  • Meals with clients or business discussions
  • Travel combined with business purposes
  • Office equipment and supplies

[06:19 - 12:01] Advanced Tax Saving Strategies

• Set up a board for the business
  • Created opportunities for travel and meal expense deductions
  • Implemented the 14-day home rental rule for board meetings
• Established retirement savings with a solo 401(k)
• Set up a Health Savings Account (HSA)
• Properly deducted self-employed health insurance
• Implemented estimated tax payments to avoid penalties

[12:02 - 19:47] Results and  Key Takeaways

• These strategies saved Alex over $15,000 in taxes in the first year
• Over five years, Alex saved more than $132,000 in taxes
• These strategies are available to most small business owners
• Proper implementation is crucial for realizing tax savings

Direct Quotes 

"Implementation, understanding strategy is one thing you do not see any tax savings until you implement that strategy. And I also want to put in the effort that says implementation is one thing. The correct implementation is the key." – Mike Jesowshek, CPA

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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast

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