February 27, 2025 • 18 mins
How can LLC owners pay less in taxes in 2025? This podcast breaks down key tax strategies, deductions, and tax savings opportunities for LLCs. Learn how retirement contributions, depreciation, hiring family, and optimizing your business structure can help you legally reduce your taxable income and keep more of your money. We’ll also cover business meal deductions, credit card strategies, and tax-efficient ways to structure your LLC for maximum savings. Understanding these LLC tax planning strategies is crucial for maximizing write-offs and lowering your tax burden. Plus, we’ll discuss how LLC vs. S-Corp election, Section 179 deductions, and bonus depreciation could impact your business. Don’t miss out on these valuable tax-saving tips.
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*Disclaimer This material & presentation content is for informational and educational purposes only. This material and presentation content is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this ...
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Speaker 1 (00:00):
If you've got a profitable LLC, then in 2025,
you can use six tax strategiesto maximize your tax deductions
in your LLC business andmaximize your tax savings.
Now, number one I'm going totalk about how you can use your
(00:25):
business credit card to youradvantage to actually have
tax-free cash and prepayexpenses with your credit card.
The third thing we're going totalk about is how toation
Section 179, a bonusdepreciation for your LLC,
(00:48):
especially now with the changingtax laws coming up with
President Trump, and the bonusdepreciation is going to back to
100%.
So stay tuned, we're going todive deep into that and see
what's best for your business.
The fifth thing we're going totalk about hiring family members
, especially your children.
Such a huge advantage to hirethem from an LLC rather than an
(01:09):
S-corporation.
That is exactly what we'regoing to talk about.
Six but not least, how tooptimize your LLC for an entity
structure to save additional15.3% in taxes.
Now let's dive right into this.
Ready, let's go.
Speaker 2 (01:26):
Welcome to the Tax Reduction Podcast for
money-making entrepreneurs withBoris Mushaev.
Boris has helped entrepreneursacross the United States
collectively save millions ofdollars in taxes with the power
of tax planning and advisory.
The only way you, the businessowner, can save money on taxes
is by using proactive taxstrategies, and this podcast is
(01:46):
all about saving you money ontaxes.
Boris will share with youin-depth and easy to understand
tax reduction strategies thatyou can implement in your
business within 30 days or less.
Let's jump into today's episode.
Speaker 1 (01:59):
Great, awesome.
Now let's talk about maximizingyour meals deduction.
As you probably already know,when you go to your accountant
and you give them your profitand loss or expenses, and let's
say you spent $7,000 on meals,your tax preparer or your
accountant just puts $3,500, 50%of that 7,000.
And you're like wait, I don'tunderstand.
I spent $7,000 on the meals.
(02:20):
Why is only 50% tax deductible?
Unfortunately, that is the law,but not for all types of meals.
You see, when you take out youremployees or your business
contractors, vendors, partnersin the business to discuss your
business, that will benefit thebusiness all the meals are 50%
deductible.
Even when you travel overnight,the meals are 50% deductible.
Or even if you travel at allfor work right, all the meals,
(02:41):
if it's for the business, are50% deductible.
Or even if you travel at allfor work right, all the meals,
if it's for the business, are50% tax deductible.
So when you submit that profitand loss statement to your
accountant to prepare taxes,what they don't know is the
category of each meals.
Because when you throw aholiday party which most
business owners that I knowthrow a holiday party for their
(03:04):
employees I'm talking about allemployees, not just highly
compensated employees oremployees that are also your
family members.
We're talking about allemployees in a restaurant or
even in your home and all thefood that you buy.
That is 100% tax deduction foryour business.
Now, when you submit yourprofit and loss to your
accountant, they don't know thecategory of the meals.
(03:26):
So you want to make sure youtell them.
What about instances where I'vehad tax advisory clients for
whom we do tax advisory, notjust tax preparation, which is
probably what your accountant isdoing?
What about those meals?
You do promotional events,right, you do.
I don't know what.
Is it a meetup or some kind ofan event where you're promoting
your services and you'recatering food there.
(03:48):
All of that is 100% taxdeductible, but your accountant
doesn't know it because all theysee is the name of the
restaurant and name of thecaterer and they put it on your
taxes.
You're too busy to check.
So what I would recommend onyour profit and loss, identify
those two meals.
There's a couple of othercategories where meals could be
a hundred percent tax deductible, but I'm going to leave that to
(04:10):
you to speak to your taxadvisor, because taking a meals
deduction could reallyaccumulate to a lot.
Now let's move on to the secondtax strategy.
One of my favorite ones isusing your business credit card.
Now, if you are a businessowner and you don't have a cash
rewards credit card or milesrewards credit card, you need to
(04:31):
get one right now.
I'm going to put links for thecredit cards that I personally
use.
They give you a huge cash back2% cash back and if you spend it
on a business, it accumulates.
Now why is that important?
If you spend it on a business,it accumulates.
Now why is that important?
Those rewards are tax free toyou, the business owner.
The mistake that you do not wantto do, okay.
The mistake that you do notwant to do is what is that?
(04:54):
Redeem a credit against yourstatement?
Okay, because what happens isthat that reduces down your
expense, which now would havebeen tax deductible.
Instead, you can request acredit card company to give you
cash back mailed to yourpersonal address, and none of
this is taxable.
Now you might say well, boris,am I cheating the IRS over here?
(05:16):
Is it because it's coming to mypersonal name?
No, just credit card rewards.
The cash back rewards are justnot tax deductible.
The cash that you receive fromcredit cards right?
Those rewards for spending acredit card is just not taxable.
Okay, the miles that you usefor travel is not taxable.
One of the biggest mistakes youcan use is use the miles for
(05:38):
business travel because you'renot getting a business deduction
.
What I personally do is that Irack up a lot of miles on my
Amex and I use it for my familytravel with my children, because
none of that is tax deductible.
I don't want to use it forbusiness travel because then I'm
losing out on my deduction.
Now there are some cases wherecredit card rewards are taxable
(06:02):
and those are when you are, forexample, opening an account.
Like they incentivize you toopen an account.
They give you $500.
If you spent like I don't know,$7,000 in three months, that
would be tax deductible and youbet they're going to give you a
1099 for that.
But the credit card rewards aretax-free.
Use it wisely, okay.
Now Another thing that you canuse your credit cards for is
(06:26):
towards the year end.
Let's say you are in the monthof December, your LLC has huge
expenses coming up in Januaryfor which you have to pay.
What I would recommend, if youhave enough cash flow, put that
on a December credit card,because that's going to be due
in 30 days anyways.
But whatever you put on aDecember credit card, even
though you haven't paid cash forit, it becomes a tax deduction.
(06:48):
This is no different thanbuying equipment for your
business, not paying any cashfor it, financing it, and this
becomes a tax deduction for you,okay.
So use your credit card wisely.
Again, use your credit cardwisely.
At the same time, you canactually prepay some of the
expenses up to 12 months in yourbusiness and take a deduction
(07:12):
in December, even though youprepaid it for the next year.
Definitely speak to your taxadvisor.
Hey, I've heard this guy.
Boris said I can prepay some ofthe expenses.
What are those expenses?
There's a number of expensesthat you can actually prepay.
Definitely speak to your taxadvisor.
Not all of them can be prepaid,but a lot of them can be
(07:32):
prepaid.
Moving on Third tax strategyretirement tax strategy there's
so many retirement options foryour LLC.
Speaker 2 (07:41):
Before I get into that just a quick break.
(08:02):
Business owner must know.
In this PDF you can find seventax strategies that you can
start using in your business toinstantly start saving money on
taxes.
Click on the link in thedescription below for a free
download.
Speaker 1 (08:15):
Awesome, thanks so much.
Let's talk about retirement asan LLC.
Whether you are an LLC or LLCtaxed as an S-corporation, you
can really take advantage of oneof the three retirement options
.
Now, there's a lot out there.
Speak to your tax advisor.
That would be best for you.
But generally speaking, theseare the three that benefits most
business owners that I work,that we do tax planning for
(08:37):
Number one SEP IRA.
If you've got an LLC, you haveno employees in your LLC, then
SEP IRA would be the best option.
If you're a single member LLC,you can put away 20% of your
profits up to a limit to a SEPIRA.
The second thing that you canuse the second retirement
(08:58):
strategy again single member LLC, no employees solo 401k allows
you to put away more than SEPIRA.
Another retirement tax strategythat you can use for your
business okay is 401k withemployees.
Now, if you've got an employee,sep IRA is not going to work
(09:18):
for you.
Solo 401k is not going to workfor you, but safe harbor
matching with 401k will stillwork for you.
You can still defer a prettygood amount $23,500, still put
away, but only match 3% for youremployees.
This could be a great taxstrategy for you.
The biggest topic right now isbonus depreciation.
(09:40):
Now that President Trump isback in office, he's looking to
extend 2017 Tax Cuts and JobsAct.
One of those extensions, okay,is bringing back 100% bonus
depreciation.
Now there's a hugemisconception and
misunderstanding among theprofitable business owners
because they're working with atax preparer and not a tax
(10:04):
advisor.
They think, oh my God, we don'thave bonus depreciation.
I cannot take a hundred percenttax deduction yes, you can on
assets that you buy.
Okay, why?
Because we have something thatis called section 179 that
allows you majority of smallbusiness owners will qualify for
that, even though there aresome limits will qualify to take
(10:26):
100% tax deduction on assetsand equipment they buy.
Now, the bonus depreciationwith President Trump, part of
the Tax Cuts and Jobs Act.
What it did is that it enabledthe business owners to take 100%
tax deduction under a vehiclethat is over 6,000 pounds.
Of course, we're assuming thatthe vehicle is 100% used for
(10:48):
business, okay, but just becausewe do not have a bonus
depreciation, majority of assetsthat you buy for your business
equipment and all of that stuffis still subject to 100% Section
179.
Now the planning with your taxadvisor comes in, when, right
(11:08):
before year end or even actuallyafter the year is over.
It could be in two categories.
Let me explain.
If you're buying the assetbefore year end, you are we're
going to assume you need thisasset.
You're not just doing it forthe write-off okay, because if
you're doing it for thewrite-off you're still more
money out of pocket.
But you you're doing it becauseyou need it.
You're going to speak to yourtax advisor, figure out hey, I
(11:31):
do need this asset, but afterthe year is over.
The second category is that doI need to take a 100% deduction
on it?
And you'll be surprised, whenI'm doing planning for a lot of
my clients, we don't always takea 100% tax deduction on the
asset that they buy.
It really depends what bracketare they in this year and what
(11:52):
bracket are they in next year?
And the beautiful thing, what Ilove about Section 179, where it
allows you to get 100%deduction you can actually pick
and choose how much deductionyou want to take this year and
then spread it over the life ofthe asset.
I'll give you an example.
Let's say you bought anequipment for $100,000.
$100,000.
(12:12):
As a matter of fact, you didn'teven pay cash for it.
You financed it.
Okay, you took it on a loan oron a note.
It's a credit.
It's not a car, it's equipmentfor your business.
Okay, $100,000.
The good news is that you canstill take 100% deduction even
though it's if it's financed.
But if you're working with atax advisor and you advise, it
tells you you know what?
I don't think taking a hundredthousand dollar deduction for
(12:36):
last year is going to make sensefor you.
Okay.
And we don't want to use bonusdepreciation because, even
though it gives you a hundredpercent or forty percent or
sixty percent, because what wereally need out of this hundred
thousand dollar deduction to getyou to a perfect spot is, let's
say, seventy thousand dollars.
Can you pick and choose howmuch depreciation you can take
with the section 179?
The answer is you got it.
(12:58):
The answer is yes.
Okay, we've actually done itwith a client that purchased an
airplane.
Okay, then, for their businesslegitimate business expense
we'll look at a deduction.
Said bonus depreciation was toomuch.
We didn't need that muchdeduction, 50% of it, for
example, we also didn't want.
We needed a good sweet spot andI think our sweet spot was
about 65, 70% Amazing taxstrategy.
(13:21):
The rest was carried over tothe next year and depreciated
over the course of the life ofthe asset.
So definitely a great planningopportunity for your LLC.
Planning opportunity for yourLLC.
Now.
The fifth tax strategy that youcan use in your business is
hiring family members.
What I love about single memberLLCs is that when you hire your
(13:42):
children to work in yourbusiness, not only can you pay
them up to $15,000, which is thelimit of the standard deduction
for 2025, which means theydon't pay any federal income tax
on it, but you as a businessowner because you are an owner
of that LLC but also a parent ofthat child you don't pay Social
Security and Medicare taxes onthe wages you pay to your
(14:04):
children, and that child thatreceives money from you also
does not pay Social Security andMedicare taxes on that income.
Now what's really reallyimportant the mistake that I've
seen across business owners isthat what do they do?
They pay their children.
Oh, I can pay my child $15,000.
You know what?
I'll pay them $1,250 per month.
(14:25):
That'll be $15,000 per year.
Just going to write them acheck, put it in their bank
account and call it a day.
Please do not do that.
What you need is to follow therules.
If your child really works foryou, great.
Do not hire your 3-year-oldchild or a 2-year-old child that
is still in diapers, is at homewith a nanny, with a babysitter
(14:45):
, but is getting paid from youfor working in your business
business.
Okay, based on my experience,what I've seen is that a capable
child that's really capable towork help generally all parents
right In any industry.
It's ages 10 and up.
You know there is a legitimatework for them to do in the
office.
You know shredding papers,filing, whatever that may be.
(15:06):
I'm sure you can find them goodwork that they're capable of.
Pay them based on the hours andthe time that they work.
Don't pay them just grossamount because you can take a
deduction.
Okay, I hope that is clear, butdefinitely a great opportunity
for you to explore with your taxadvisor.
Next one, last but not least,optimizing your entity structure
(15:28):
.
Now, if you've got an LLC Idon't know if you know by now,
but having an LLC as a singlemember owner subjects you not
only to federal and state incometaxes but also to Social
Security and Medicare taxes,which is called SE tax
self-employment tax of 15.3%.
(15:50):
That means for every dollar,for every $100 that you earn,
you pay extra $15 on taxes whenyou're a single member LLC, or
even if you have partners.
The best strategy against that,to help you minimize that tax
liability, is converting yourLLC to an S corporation.
Now a lot of business ownersare laid to file for an S
(16:12):
corporation because they're notaware of it.
Right, you have 75 days, whichis by March 15th, for that tax
year that you want to be an Scorporation.
So let's say, right now you'rein a month of I don't know, june
or July, whatever that may be,and you're like oh, I'm late.
You speak to your tax advisorand I'm assuming you've got a
competent tax advisor that saysdon't worry, we can still file a
(16:34):
late election because IRSallows you to file a late
election.
Explain your reason.
Hey, I didn't know, it was amistake.
Now we would like to make alate election.
Under this ref proc rule thatyou IRS allow, you can actually
become an S corporation.
Pay yourself salary, saveyourself 15.3%.
(16:55):
The best thing about anS-corporation is that it is also
a pass-through entity, eventhough if it's an S-corporation
because it is not aC-corporation income gets passed
through to the business owner.
They don't pay distributiontaxes.
They don't pay distributiontaxes.
They don't pay corporate taxes.
They only pay taxes on thepersonal income, taxes on that
(17:15):
profit, and they pay that 15%self-employment tax only on the
salary of the S-corporation.
Now, what I don't want you todo is, right after this, we
close everything and go form anS-corporation.
If you're not, you got to speakto your tax advisor.
You only have to do this withthe help of your tax advisor.
Please do not do this withoutthe help of your tax advisor.
(17:38):
Thank you Until the next time.
Speaker 2 (17:41):
That's it for today's episode.
Be sure to check out thedescription below for some free
tax reduction resources thatBoris put together for you.
If you're ready to work with atax advisor on your tax planning
, be sure to schedule your callby heading over to
wwwtaxplanningcallcom.
That's wwwtaxplanningcallcom.
And be sure to subscribe to ourpodcast to be notified when the
(18:02):
next strategy is released.
If you've got a profitable LLC, then in 2025,
you can use six tax strategiesto maximize your tax deductions
in your LLC business andmaximize your tax savings.
Now, number one I'm going totalk about how you can use your
(00:25):
business credit card to youradvantage to actually have
tax-free cash and prepayexpenses with your credit card.
The third thing we're going totalk about is how toation
Section 179, a bonusdepreciation for your LLC,
(00:48):
especially now with the changingtax laws coming up with
President Trump, and the bonusdepreciation is going to back to
100%.
So stay tuned, we're going todive deep into that and see
what's best for your business.
The fifth thing we're going totalk about hiring family members
, especially your children.
Such a huge advantage to hirethem from an LLC rather than an
(01:09):
S-corporation.
That is exactly what we'regoing to talk about.
Six but not least, how tooptimize your LLC for an entity
structure to save additional15.3% in taxes.
Now let's dive right into this.
Ready, let's go.
Speaker 2 (01:26):
Welcome to the Tax Reduction Podcast for
money-making entrepreneurs withBoris Mushaev.
Boris has helped entrepreneursacross the United States
collectively save millions ofdollars in taxes with the power
of tax planning and advisory.
The only way you, the businessowner, can save money on taxes
is by using proactive taxstrategies, and this podcast is
(01:46):
all about saving you money ontaxes.
Boris will share with youin-depth and easy to understand
tax reduction strategies thatyou can implement in your
business within 30 days or less.
Let's jump into today's episode.
Speaker 1 (01:59):
Great, awesome.
Now let's talk about maximizingyour meals deduction.
As you probably already know,when you go to your accountant
and you give them your profitand loss or expenses, and let's
say you spent $7,000 on meals,your tax preparer or your
accountant just puts $3,500, 50%of that 7,000.
And you're like wait, I don'tunderstand.
I spent $7,000 on the meals.
(02:20):
Why is only 50% tax deductible?
Unfortunately, that is the law,but not for all types of meals.
You see, when you take out youremployees or your business
contractors, vendors, partnersin the business to discuss your
business, that will benefit thebusiness all the meals are 50%
deductible.
Even when you travel overnight,the meals are 50% deductible.
Or even if you travel at allfor work right, all the meals,
(02:41):
if it's for the business, are50% deductible.
Or even if you travel at allfor work right, all the meals,
if it's for the business, are50% tax deductible.
So when you submit that profitand loss statement to your
accountant to prepare taxes,what they don't know is the
category of each meals.
Because when you throw aholiday party which most
business owners that I knowthrow a holiday party for their
(03:04):
employees I'm talking about allemployees, not just highly
compensated employees oremployees that are also your
family members.
We're talking about allemployees in a restaurant or
even in your home and all thefood that you buy.
That is 100% tax deduction foryour business.
Now, when you submit yourprofit and loss to your
accountant, they don't know thecategory of the meals.
(03:26):
So you want to make sure youtell them.
What about instances where I'vehad tax advisory clients for
whom we do tax advisory, notjust tax preparation, which is
probably what your accountant isdoing?
What about those meals?
You do promotional events,right, you do.
I don't know what.
Is it a meetup or some kind ofan event where you're promoting
your services and you'recatering food there.
(03:48):
All of that is 100% taxdeductible, but your accountant
doesn't know it because all theysee is the name of the
restaurant and name of thecaterer and they put it on your
taxes.
You're too busy to check.
So what I would recommend onyour profit and loss, identify
those two meals.
There's a couple of othercategories where meals could be
a hundred percent tax deductible, but I'm going to leave that to
(04:10):
you to speak to your taxadvisor, because taking a meals
deduction could reallyaccumulate to a lot.
Now let's move on to the secondtax strategy.
One of my favorite ones isusing your business credit card.
Now, if you are a businessowner and you don't have a cash
rewards credit card or milesrewards credit card, you need to
(04:31):
get one right now.
I'm going to put links for thecredit cards that I personally
use.
They give you a huge cash back2% cash back and if you spend it
on a business, it accumulates.
Now why is that important?
If you spend it on a business,it accumulates.
Now why is that important?
Those rewards are tax free toyou, the business owner.
The mistake that you do not wantto do, okay.
The mistake that you do notwant to do is what is that?
(04:54):
Redeem a credit against yourstatement?
Okay, because what happens isthat that reduces down your
expense, which now would havebeen tax deductible.
Instead, you can request acredit card company to give you
cash back mailed to yourpersonal address, and none of
this is taxable.
Now you might say well, boris,am I cheating the IRS over here?
(05:16):
Is it because it's coming to mypersonal name?
No, just credit card rewards.
The cash back rewards are justnot tax deductible.
The cash that you receive fromcredit cards right?
Those rewards for spending acredit card is just not taxable.
Okay, the miles that you usefor travel is not taxable.
One of the biggest mistakes youcan use is use the miles for
(05:38):
business travel because you'renot getting a business deduction
.
What I personally do is that Irack up a lot of miles on my
Amex and I use it for my familytravel with my children, because
none of that is tax deductible.
I don't want to use it forbusiness travel because then I'm
losing out on my deduction.
Now there are some cases wherecredit card rewards are taxable
(06:02):
and those are when you are, forexample, opening an account.
Like they incentivize you toopen an account.
They give you $500.
If you spent like I don't know,$7,000 in three months, that
would be tax deductible and youbet they're going to give you a
1099 for that.
But the credit card rewards aretax-free.
Use it wisely, okay.
Now Another thing that you canuse your credit cards for is
(06:26):
towards the year end.
Let's say you are in the monthof December, your LLC has huge
expenses coming up in Januaryfor which you have to pay.
What I would recommend, if youhave enough cash flow, put that
on a December credit card,because that's going to be due
in 30 days anyways.
But whatever you put on aDecember credit card, even
though you haven't paid cash forit, it becomes a tax deduction.
(06:48):
This is no different thanbuying equipment for your
business, not paying any cashfor it, financing it, and this
becomes a tax deduction for you,okay.
So use your credit card wisely.
Again, use your credit cardwisely.
At the same time, you canactually prepay some of the
expenses up to 12 months in yourbusiness and take a deduction
(07:12):
in December, even though youprepaid it for the next year.
Definitely speak to your taxadvisor.
Hey, I've heard this guy.
Boris said I can prepay some ofthe expenses.
What are those expenses?
There's a number of expensesthat you can actually prepay.
Definitely speak to your taxadvisor.
Not all of them can be prepaid,but a lot of them can be
(07:32):
prepaid.
Moving on Third tax strategyretirement tax strategy there's
so many retirement options foryour LLC.
Speaker 2 (07:41):
Before I get into that just a quick break.
(08:02):
Business owner must know.
In this PDF you can find seventax strategies that you can
start using in your business toinstantly start saving money on
taxes.
Click on the link in thedescription below for a free
download.
Speaker 1 (08:15):
Awesome, thanks so much.
Let's talk about retirement asan LLC.
Whether you are an LLC or LLCtaxed as an S-corporation, you
can really take advantage of oneof the three retirement options
.
Now, there's a lot out there.
Speak to your tax advisor.
That would be best for you.
But generally speaking, theseare the three that benefits most
business owners that I work,that we do tax planning for
(08:37):
Number one SEP IRA.
If you've got an LLC, you haveno employees in your LLC, then
SEP IRA would be the best option.
If you're a single member LLC,you can put away 20% of your
profits up to a limit to a SEPIRA.
The second thing that you canuse the second retirement
(08:58):
strategy again single member LLC, no employees solo 401k allows
you to put away more than SEPIRA.
Another retirement tax strategythat you can use for your
business okay is 401k withemployees.
Now, if you've got an employee,sep IRA is not going to work
(09:18):
for you.
Solo 401k is not going to workfor you, but safe harbor
matching with 401k will stillwork for you.
You can still defer a prettygood amount $23,500, still put
away, but only match 3% for youremployees.
This could be a great taxstrategy for you.
The biggest topic right now isbonus depreciation.
(09:40):
Now that President Trump isback in office, he's looking to
extend 2017 Tax Cuts and JobsAct.
One of those extensions, okay,is bringing back 100% bonus
depreciation.
Now there's a hugemisconception and
misunderstanding among theprofitable business owners
because they're working with atax preparer and not a tax
(10:04):
advisor.
They think, oh my God, we don'thave bonus depreciation.
I cannot take a hundred percenttax deduction yes, you can on
assets that you buy.
Okay, why?
Because we have something thatis called section 179 that
allows you majority of smallbusiness owners will qualify for
that, even though there aresome limits will qualify to take
(10:26):
100% tax deduction on assetsand equipment they buy.
Now, the bonus depreciationwith President Trump, part of
the Tax Cuts and Jobs Act.
What it did is that it enabledthe business owners to take 100%
tax deduction under a vehiclethat is over 6,000 pounds.
Of course, we're assuming thatthe vehicle is 100% used for
(10:48):
business, okay, but just becausewe do not have a bonus
depreciation, majority of assetsthat you buy for your business
equipment and all of that stuffis still subject to 100% Section
179.
Now the planning with your taxadvisor comes in, when, right
(11:08):
before year end or even actuallyafter the year is over.
It could be in two categories.
Let me explain.
If you're buying the assetbefore year end, you are we're
going to assume you need thisasset.
You're not just doing it forthe write-off okay, because if
you're doing it for thewrite-off you're still more
money out of pocket.
But you you're doing it becauseyou need it.
You're going to speak to yourtax advisor, figure out hey, I
(11:31):
do need this asset, but afterthe year is over.
The second category is that doI need to take a 100% deduction
on it?
And you'll be surprised, whenI'm doing planning for a lot of
my clients, we don't always takea 100% tax deduction on the
asset that they buy.
It really depends what bracketare they in this year and what
(11:52):
bracket are they in next year?
And the beautiful thing, what Ilove about Section 179, where it
allows you to get 100%deduction you can actually pick
and choose how much deductionyou want to take this year and
then spread it over the life ofthe asset.
I'll give you an example.
Let's say you bought anequipment for $100,000.
$100,000.
(12:12):
As a matter of fact, you didn'teven pay cash for it.
You financed it.
Okay, you took it on a loan oron a note.
It's a credit.
It's not a car, it's equipmentfor your business.
Okay, $100,000.
The good news is that you canstill take 100% deduction even
though it's if it's financed.
But if you're working with atax advisor and you advise, it
tells you you know what?
I don't think taking a hundredthousand dollar deduction for
(12:36):
last year is going to make sensefor you.
Okay.
And we don't want to use bonusdepreciation because, even
though it gives you a hundredpercent or forty percent or
sixty percent, because what wereally need out of this hundred
thousand dollar deduction to getyou to a perfect spot is, let's
say, seventy thousand dollars.
Can you pick and choose howmuch depreciation you can take
with the section 179?
The answer is you got it.
(12:58):
The answer is yes.
Okay, we've actually done itwith a client that purchased an
airplane.
Okay, then, for their businesslegitimate business expense
we'll look at a deduction.
Said bonus depreciation was toomuch.
We didn't need that muchdeduction, 50% of it, for
example, we also didn't want.
We needed a good sweet spot andI think our sweet spot was
about 65, 70% Amazing taxstrategy.
(13:21):
The rest was carried over tothe next year and depreciated
over the course of the life ofthe asset.
So definitely a great planningopportunity for your LLC.
Planning opportunity for yourLLC.
Now.
The fifth tax strategy that youcan use in your business is
hiring family members.
What I love about single memberLLCs is that when you hire your
(13:42):
children to work in yourbusiness, not only can you pay
them up to $15,000, which is thelimit of the standard deduction
for 2025, which means theydon't pay any federal income tax
on it, but you as a businessowner because you are an owner
of that LLC but also a parent ofthat child you don't pay Social
Security and Medicare taxes onthe wages you pay to your
(14:04):
children, and that child thatreceives money from you also
does not pay Social Security andMedicare taxes on that income.
Now what's really reallyimportant the mistake that I've
seen across business owners isthat what do they do?
They pay their children.
Oh, I can pay my child $15,000.
You know what?
I'll pay them $1,250 per month.
(14:25):
That'll be $15,000 per year.
Just going to write them acheck, put it in their bank
account and call it a day.
Please do not do that.
What you need is to follow therules.
If your child really works foryou, great.
Do not hire your 3-year-oldchild or a 2-year-old child that
is still in diapers, is at homewith a nanny, with a babysitter
(14:45):
, but is getting paid from youfor working in your business
business.
Okay, based on my experience,what I've seen is that a capable
child that's really capable towork help generally all parents
right In any industry.
It's ages 10 and up.
You know there is a legitimatework for them to do in the
office.
You know shredding papers,filing, whatever that may be.
(15:06):
I'm sure you can find them goodwork that they're capable of.
Pay them based on the hours andthe time that they work.
Don't pay them just grossamount because you can take a
deduction.
Okay, I hope that is clear, butdefinitely a great opportunity
for you to explore with your taxadvisor.
Next one, last but not least,optimizing your entity structure
(15:28):
.
Now, if you've got an LLC Idon't know if you know by now,
but having an LLC as a singlemember owner subjects you not
only to federal and state incometaxes but also to Social
Security and Medicare taxes,which is called SE tax
self-employment tax of 15.3%.
(15:50):
That means for every dollar,for every $100 that you earn,
you pay extra $15 on taxes whenyou're a single member LLC, or
even if you have partners.
The best strategy against that,to help you minimize that tax
liability, is converting yourLLC to an S corporation.
Now a lot of business ownersare laid to file for an S
(16:12):
corporation because they're notaware of it.
Right, you have 75 days, whichis by March 15th, for that tax
year that you want to be an Scorporation.
So let's say, right now you'rein a month of I don't know, june
or July, whatever that may be,and you're like oh, I'm late.
You speak to your tax advisorand I'm assuming you've got a
competent tax advisor that saysdon't worry, we can still file a
(16:34):
late election because IRSallows you to file a late
election.
Explain your reason.
Hey, I didn't know, it was amistake.
Now we would like to make alate election.
Under this ref proc rule thatyou IRS allow, you can actually
become an S corporation.
Pay yourself salary, saveyourself 15.3%.
(16:55):
The best thing about anS-corporation is that it is also
a pass-through entity, eventhough if it's an S-corporation
because it is not aC-corporation income gets passed
through to the business owner.
They don't pay distributiontaxes.
They don't pay distributiontaxes.
They don't pay corporate taxes.
They only pay taxes on thepersonal income, taxes on that
(17:15):
profit, and they pay that 15%self-employment tax only on the
salary of the S-corporation.
Now, what I don't want you todo is, right after this, we
close everything and go form anS-corporation.
If you're not, you got to speakto your tax advisor.
You only have to do this withthe help of your tax advisor.
Please do not do this withoutthe help of your tax advisor.
(17:38):
Thank you Until the next time.
Speaker 2 (17:41):
That's it for today's episode.
Be sure to check out thedescription below for some free
tax reduction resources thatBoris put together for you.
If you're ready to work with atax advisor on your tax planning
, be sure to schedule your callby heading over to
wwwtaxplanningcallcom.
That's wwwtaxplanningcallcom.
And be sure to subscribe to ourpodcast to be notified when the
(18:02):
next strategy is released.
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