Hey everyone. Welcome to another great episode of The Smooth Business Growth podcast, where we share 15 minutes of fast paced, pure marketing strategies proven to move the needle in your business.
So I’m your host, Captain Lindsey Phillips. I am the founder of Smooth Sailing Business Growth, where we help busy entrepreneurs attract and apply our customers faster through powerful and consistent content marketing.
So today we’re going to be chatting with Craig Cody, CPA, Certified Tax Coach and author of Secrets of a Tax-Free Life. He’s going to share with us the biggest tax mistakes that business owners make, which of course we all want to save money, so let’s set sail.
So welcome aboard, Craig.
Thank you very much for having me. I’m very psyched to be here.
Awesome. So as entrepreneur the name of the game is to make more money, and of course part of that is to spend less money and of course not give all our money away to the tax man.
Just keep more of what you make.
I know. Exactly. I think is really an area that’s often an oversight. Right?
So what are some of the biggest mistakes that you see small business owners making in regards to taxes?
Well, the biggest mistake is the failure to plan. So people are going to buy a vehicle. They search online. They do all this research and stuff like that. Comes to tax time, what do people do? They don’t do anything all year round. They don’t talk to their CPA, their tax professional. And then they drop a bomb on them in March or April when the guy’s probably as busy as he’s going to be all year. So there’s no time for planning. People need to take the time. Reach out their professional and say, “What can we do? What can we do to make my taxes more efficient and so I can keep more of what I make?”
I know. It’s such a weird thing. We all hate tax time and we all hate giving our money away, but then we never plan.
And we’re all guilty.
So you need to just take the time you need to work with somebody who when you communicate with them, they will communicate back with you. And you need to do it all year round. All right? Because if you don’t talk to them, they can’t help you. And you don’t know what you don’t know.
Oh, I was just going to say in talking to your CPA, A, how often should you be talking to them? And what kind of information should you be giving them where they can pick up on stuff to help you strategize?
Well, I mean you should definitely be sharing your PL, profit and loss. We like to see … What we typically do is we set a WebEx or a zoom meeting once a month with our clients.
And we go over the P and L, and really what that does is you learn about things that they’re doing. So it’s not so much that you’re focusing on the P and L, but okay, yeah, I’m thinking of buying this, or I’m thinking about expanding here or doing this, and maybe there’s a way to do it more efficiently.
So if you know about it, you can help them. It’s like the doctor doesn’t call you up and say, “You’re sick.” You go to the doctor when you’re sick. So you need to communicate. That’s what the purpose of those calls are. To see what’s going on and to give you the guidance that you need.
And I guess, too, in speaking with your CPA more regularly, you’d be able to tap into so many different opportunities. Are there certain opportunities that you find a lot of entrepreneurs miss?
Well, they miss all the planning opportunities. If you didn’t speak with the person all year round and then you start talking to them in January and you’re ready to buy a big piece of equipment that maybe you could have bought in December and you had a really great year. Stuff like that. Or what are the different types of planning you could have done?
So it’s just important to have that communication so they can give you the guidance. That’s what they do. And typically, you know what? You make your money doing what you do. Have a professional. It’s like you don’t stuff envelopes. Right? If you’re making 100 dollars an hour, you shouldn’t be stuffing envelopes. So there’s certain things you shouldn’t be spending your time on.
And then reviewing your P and L, you see where money’s going. Maybe you’re spending money in places where you should not be spending money. Okay. So that’s all important and that’s the reason why you want to communicate and look at those numbers.
So how far ahead do we need to plan? What is proactive tax planning and how can it really affect your bottom line when it comes to your taxes?
Well, you can plan very far ahead when you’re in the beginning stages and you’re forming your entity. What is the game plan? If my game plan is to grow this business and sell it, if it’s a certain type of entity am I better off if I sell down the road? I can get tax benefits? So those are all things that … so you can plan out many, many years for the eventual end game. You should definitely be planning for what’s going on in this year. And then as the year goes on you’re looking more to what’s going to happen next year. Do you want to start paying for stuff now? Does it make sense?
So it’s a constant thing and I wouldn’t say you don’t want to talk about what’s going to happen in three years, but if you’re selling your business you want to make sure all your systems are correct and stuff like that. So why not start today? The earlier you start, the better you’re going to be.
YOU SHOULD REVIEW THE THE NEW TAX LAW CHANGES WITH YOUR CPA BEFORE IMPLEMENTING ANY TAX PLANNING STRATEGIES.
Get your copy of my book the 10 Biggest Tax Mistakes That Cost Business Owners Thousands HERE!
Listen to the full podcast here.