AVOID OVERPAYING TAXES - With Adjunct Professor of Law & Tax Attorney Isai Cortez | BEHIND THE BRAND

TL;DR

A tax attorney provides valuable advice for small businesses and entrepreneurs, emphasizing the importance of incorporating early, finding reliable professionals for bookkeeping and legal matters, and staying informed about different types of taxes.

Transcript

you know i think it's a good time for me to start to incorporate at this moment right because now it's becoming a little bit more serious but let's say you're just making 400 a month you're just trying and nobody's really signing up if you incorporate at that time and you walk away you cannot walk away anymore now you have to unwind and do all this... Read More

Key Insights

• 👨‍💼 Incorporating a business should be done after experiencing sustainable growth to avoid unnecessary costs.
• 🚕 Different types of taxes, including income tax, payroll tax, state tax, local tax, and sales tax, need to be considered depending on the business structure.
• 👨‍💼 Paying yourself a reasonable salary as an S Corp owner and ensuring proper business expense deductions are important for tax compliance.
• 👨‍💼 Hiring reliable professionals for bookkeeping, legal matters, and tax preparation is crucial for small businesses.
• 😤 Researching and vetting professionals through reviews and referrals can help entrepreneurs find the right team.
• 👨‍💻 Staying informed about tax codes and changes is important, and resources like Google and YouTube can be valuable learning tools.
• 👨‍💼 Starting a business now is a good time, as small business growth is expected to increase, but entrepreneurs must be prepared to handle financial and legal aspects effectively.
• 👨‍💼 QuickBooks and other accounting software options are suitable for most small businesses, as long as the software meets their specific needs.
• 👨‍💼 Entrepreneurs should focus on their strengths and delegate tasks to professionals to ensure smooth business operations.

Questions & Answers

Q: When should entrepreneurs consider incorporating their business?

It's advised to wait until your business shows sustainable growth before incorporating to avoid unnecessary costs if the venture doesn't succeed. Incorporation should be done when the business becomes more serious.

Q: What types of taxes do entrepreneurs often overlook?

Entrepreneurs often forget about income tax, payroll tax, state tax, local tax, and sales tax, depending on their specific business structure.

Q: Is it necessary to pay yourself a reasonable salary as an S Corp owner?

Yes, it is crucial to pay yourself a reasonable salary as an S Corp owner. Leaving money in the business does not exempt you from taxes on that amount. Consult with an accountant to determine what is considered a reasonable salary for your situation.

Q: Can entrepreneurs deduct personal expenses through an LLC?

No, entrepreneurs should be cautious of deducting personal expenses through an LLC. The expenses must be ordinary and necessary business expenses to avoid getting into trouble with the IRS.

Summary & Key Takeaways

• Incorporating a business too early may result in unnecessary costs if the venture doesn't succeed, so entrepreneurs should wait until they see sustainable growth before taking that step.

• Entrepreneurs often overlook different types of taxes they need to pay, such as income tax, payroll tax, state tax, local tax, and sales tax, depending on their business structure.

• Paying yourself a reasonable salary as an S Corp owner and ensuring that your business expenses are ordinary and necessary are crucial to avoid tax problems.