Jacksonville CPA | Keeping Track Of Dough

Good morning everyone, this is brandon mcelroy and welcome to so last segment of today’s podcast. So far we’ve talked about cashflow management and how is it it’s important and essential if you’re going to run a successful and profitable business, uh, would recommend that you have a system set up for cashflow management and if you don’t have a Jacksonville CPA or accountant to help you then give them a Neva, a call at three, eight, nine, seven slash 11, and we will walk through your business and find out what your goals are and what your needs are and tailor a plan to fit your business to help you achieve your financial goals. So the last item that I want to mention this morning has to do with goals and how most small business owners don’t start out with the end in mind. As Stephen Covey says, we should begin with the end in mind.

So I encourage all my clients in all the listeners to ask yourself, what is the end? What is my end game? Do I want to be in business until I’m 90 years old? If that’s you, that’s fine and I don’t know at Jacksonville CPA that is asking these questions, but they need to be asked, so I know some business owners that their end game is when they’re 50, they want to quit working and they want to travel the world. That’s fine too, but if you don’t know you’re in game, then there’s. It’s very likely the probability is that you will not hit your target and you will not reach your goal. So what does this have to do with accounting and taxes? It has everything to do with taxes and accounting, accounting and taxes. If you don’t, if you are paying for, if you were paying more than legally possible, if you’re paying more taxes than you legally should, then this could totally upset your in game, especially if you have a strict retirement plan and you want to retire early and spend time with the grandkids or travel or whatever it may be. Volunteer. If you’re paying more than your fair share. Thank you, Joe. Biden of taxes. Then this could be potentially hundreds. I said hundreds of thousands of dollars that you’re giving to Uncle Sam instead of having in your own retirement account, so

when it comes to retirement planning and saving, of course you have the the eighth wonder of the world compound interest, compound returns on investments, so I would urge you to get started as quickly as possible and setting something aside. We already discussed you need to be saving at least three percent of your income, of your gross income. Three percent of your gross income, no matter what come hell or hell or high water needs to go into a separate bank account. Out of sight, out of mind. If you have to put open an account at another bank, then do it. This needs to go into a dedicated fund where you can’t touch it, but it needs to be there. If we have another major economic downturn like we did in 2008, all your competitors are out there 30 days from broke and you’re over here with a big slush fund of cash. Who Do you think is going to survive? That’s right you because you did solid financial planning and you had an end in mind and you actually thought about what you were doing. As I find most of this world does not, so a little bit off subject, but we’re talking about tax planning now.

If you have a Jacksonville CPA, then he may be doing tax planning for you, but I’ve found that the majority of accountants are very reactive and not proactive. Yeah, so what I would recommend is at a minimum, you need to be doing quarterly tax planning. First off, have many clients saying, oh, what can I do to keep from paying this, keep from paying all this tax? Well, what you have to consider first is that the amount that you’re paying, Uncle Sam is one of the best indicators, both how financially successful you are. I’ve seen this come as a huge shock to many people who are not prepared

and they. They’re just totally blown away by the amount of taxes when they are going from, let’s say, earning $50,000 a year and they really kick it into high gear and they earn, let’s say 150,000 going from that going, putting that extra $100,000 on top of their income. They’re just blown away by the amount of taxes that they’re having to pay. Well, you know, having taxes as part of life. It’s one of those certain things, death and taxes, and it keeps many Jacksonville, CPAS and business. It’s job security, so but there are many ways you can mitigate the amount of tax that you pay. Number one is entity selection. You need to make sure that you have are using the right entity that your corporation or LLC is set up and most advantageous way when it comes to taxes. I have saved small business owners in the hundreds of thousands of dollars by changing the way they are structured. So many small business owners start out as an LLC, and I’ve seen more than one Jacksonville CPA recommend this setup, which is not a bad setup as an llc, as a single member LLC.

You report all of your income and expenses on a separate schedule on your tax return, on your 10:40 tax return. If you were an employee prior, you would report your employer would give you a w two and you will report all of that income online. Seven, I believe it is. Wages on your tax return. Your employer would take out social security tax. They would take out Medicare tax, they would pay a portion, they would pay half and you would pay half seven point six, five percent to be precise as what they would pay. And seven point six, five percent is what you would pay. And as you know when you get your paycheck, if you make $20 an hour and you worked hours, that would be $800 gross. And you know you’re not getting $800 in your paycheck. That is because they’re withholding social security and Medicare tax as well as federal income tax. Many people get this confused when they go into business. You’re paying more than one type of tax. Another term synonymous with social security and Medicare tax is self employment tax. So when you go from being an employee and you’re paying seven point six five and your employer is paying seven point six, five percent to being a self employed person,

you are paying all of the social security and Medicare or self employment tax. So you’re paying seven point six, five percent plus seven point six, five percent or 15 point three percent. That’s before you even get to your federal income tax. So I’ve seen so many clients come from a different Jacksonville CPA that has or has not taken into consideration the tax benefits of an s corporation when it comes to a self employed person. So I would recommend because like we’re at a time for today, but I would recommend that you give them and Neva a call so that we could help you properly structure your corporate entities to make sure that you are paying the least amount of tax possible. Thank you for listening and we’ll get more into this tomorrow.