taxes – Getentrepreneurial.com: Resources for Small Business Entrepreneurs in 2024

January 2005 was a turning point in my business. It was the month I incorporated my business.

Before then, I had operated as a sole proprietor. I started my business in 1998 as a freelance copywriter.

However, in 2003 I started getting that restless feeling. I knew I was destined for bigger and better things. I started researching how to take my freelance copywriting business to the next level. And part of that research included me looking into how my business was structured.

Even though my local CPA thought it was a waste of time and money for me to incorporate, the rest of my research told me otherwise, so I went ahead with it.

That was the year I finally broke 6 figures. Once I did that I never looked back.

Now, I’m not going to say that was the sole reason why I broke 6 figures nor am I going to claim all you need to do is incorporate and it will happen to you. But what I WILL tell you is when I incorporated, it caused a huge mental shift around how I viewed my business. Suddenly I was a serious business owner, not just a freelancer. And as such I started making decisions from a different place, a place that would ultimately cause my income to significantly jump.

(Also, there is a school of thought that your business will only grow as far as your foundation will take it. In other words, if your business only has the legal, financial, tax and insurance structure for a $50,000 year business, that’s all you’ll end up with. If your business can handle 7-figures and beyond, that’s what you’ll end up with.)

So what about you? If you’re anything like me, you started your business because you were “good” at something and/or you had a big message or dream to change the world. You didn’t start a business because you were in love with owning your own business. You may have been drawn to certain aspects of owning your own business, like being your own boss, calling the shots, working when and where you wanted, etc. But you weren’t driven by the “business” part of it.

The problem with that is it only takes you so far. You may be making money but you probably aren’t doing it very smartly. You don’t know how to plan or map out your finances so you tend to live in a very stressed out money place. You may be paying WAY too much in taxes with how you’re structured (I certainly was). And you may not have protected yourself or your business adequately so there’s always the chance you could lose everything you worked so hard for.

So what do you do? Well, it’s time to take a good hard look at your business and make a decision once and for all how serious you want to be about it. Here are 3 questions to get you started:

1. What are your goals for your business? Both long- and short-term?

2. Is your business currently set up to support your goals? And when I mean set up, I mean more than just your business structure. What about insurance, finances, taxes? Also are you taken care of legally (i.e. you have contracts where you need them)?

3. If the answer is no or you’re not sure, then take a deep breath and see this as an opportunity. Look, unless you ARE a lawyer or CPA, you probably find this as enjoyable as marketing your business. (Hey, I get it. Not everyone is a marketing geek like me.) But you have a chance here to put a solid foundation under your business so it can be supported as you build it.

Take this opportunity to do your own research on what you need. Interview business advisors to see if the ones you’re currently relying on are still the right ones for you or if you need new ones. Put together a plan and then execute that plan. You may be pleasantly surprised on how your business responds.

Tax Deductions: One Way to Minimize Self Employment Taxes

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The US Tax Code can be pretty rough on the self employed. It often seems to be written to favor big corporations over small and solo businesses. The rules are often complex and confusing for the average self employed individual to grasp, even with the help of an accountant. And that first paycheck can be a shock when you realize how much of it is eaten up by self employment taxes!

Even when tax breaks are available, figuring out if you qualify and then having all the right paperwork in place may make those deductions seem like they aren’t worth the hassle! For instance, if you have a home business, i.e. you work out of your house, you may be able to deduct for a ” home office” — but the requirements are strict, and can be a trigger for an unwelcome audit. Mileage reimbursement is a little more straightforward, until you realize you have to write down every trip, its’ length, who you met with and what you talked about! And not many new business owners even remember to keep track of startup expenses, much less understand how depreciation works, without the help of a good accountant.

There is one tax provision, however, that is clearly worth the trouble: a Section 105 Medical Reimbursement Plan. This can save you, quite literally, thousands of dollars a year. You must be married and able to legitimately employ your spouse at least part-time in your business in order to qualify. If you are and you can, read on — your heartburn over outrageous health insurance premiums and skyrocketing medical expenses may be about to go away!

Here’s the bottom line: with the requirements met and the proper paperwork in place, you can:

Deduct 100% of your family health insurance premiums
Deduct 100% uninsured family medical and dental expenses
Save a huge chunk in federal, state, and self employment taxes!

How do you qualify? You must have a properly documented employment agreement with your spouse, and the work performed and salary must be reasonable. Complete records of the premiums and expenses and their reimbursement are required. Ugh, more paperwork…but help is on the way!

I’ve been very impressed with the BizPlan/AgriPlan Section 105 Medical Reimbursement Plan, offered by TASC (Total Administrative Services Corporation). Recommended by a colleague (who saves several thousand dollars every year with this plan), I’ve found TASC to be a very professional company that takes its obligations to its self employed customers very seriously, including offering a tax audit guarantee. And the annual cost is very reasonable, starting at under $200.

Don’t wait — you can only deduct expenses that occur in or after the month you apply for the plan. Consult your accountant, and check out BizPlan today, for maximum tax savings this year!