Owning a small business is the best tax deal in America.

Whether it's a $10K side hustle or $10MM business, earning business income opens up amazing opportunities for tax savings and wealth creation.

Let’s walk through how it works
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One of the best parts of owning a small business is the tax write offs that become available to you.

You can effectively earn less, but come out ahead through tax savings.

Here are a few of my favorites:

Business Expenses -

Business income opens up an opportunity that W-2 employees do not enjoy - bonafide business expenses.

Of course direct costs incurred are deductible, but many expenses exist in your life already.

When you have business income you get to buy before tax.

Most employees have a home office they can't deduct.

Biz owners claim phone bills, home office utilities, dues, travel, education and legal that would be spent regardless.

The other deduction opportunity is business use of your personal assets including auto and home use.

Employment taxes -

Employment taxes are 15.3% - Save by opening up an S-Corp and paying yourself a reasonable salary

Taxpayers are given the ability to bifurcate their employment from their ownership and pay themselves salary, often times saving thousands in employment taxes.

Benefits -

SMB owners are able to provide benefits for themselves including medical and retirement. Even better when the business is a solo enterprise.

Medical reimbursement plans, SEPs, 401ks, DB Pensions offer potentially hundreds of thousands in tax savings & deferrals.

Business Assets -

There is also the opportunity to own your own real estate in your business or alongside (see my pinned tweet for more..)

Owning your RE direct in your business allows the expenses to be deductible and/or qualify for 199A

Business automobiles also qualify!

Succession -

Business owners have the ability to set up succession plans and sell at tax favorable capital gains rates.

There's a break on Medicare tax on certain sales.

Installment notes stretch out income recognition and create a retirement annuity.

QSBS is also great!

Other -

Many other ways to save are out there.

- Choosing your entity type, year end, accounting methods
- R&D credits
- Qualified Business Income Deduction
- Hiring your spouse/kids to work in your business

Just to name a few.

Qualification -

This is only a brief overview of some the concepts.

The rules are complex, but greatly beneficial to taxpayers when properly applied. Dangerous when misapplied.

Seek qualified and experienced counsel in applying the principals, and enjoy the savings.

There you have it - tax savings is one of the best parts of being an SMB owner

Make tax advantaged income your entire career through write offs and tax credit opportunities.

Sell your business at a lower tax rate.

Use leverage and large assets to defer taxes along the way.

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Also what did I miss? What are your favorite tax advantages of being an SMB owner?

I have a few exciting announcements over the next couple of months.

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