The Importance of Entrepreneurship and How to Deduct Everything

[Music] [Music] greetings everyone we are super excited to be here hello hello an outstanding show for you guys planned with this episode man i think that one of the things that we're walking away from this current situation is you need more than one way to get some income into your home and for a lot of people that's going to come in the form of starting their own business for some people they already are in business but maybe they aren't handling their finances to the maximum meaning that they may be missing out on some ways by which they can save some money due to the fact that they are actually entrepreneurs and in business so we're going to tackle both sides of the coin today the importance of entrepreneurship and how to save some money because you are an entrepreneur make sure that you get your questions ready because we are going to be pulling some of the questions from the power players um to ask our expert on tonight pardon us for the little delay we are typically on time but a lot of you guys um we wanted to make sure that we gave you guys access you all were requesting to join the private group so we wanted to prove you guys in and get as many of you guys in that we can for those of you who probably made it in after this this will stay up in the group so you can watch the replay at your own convenience all right so today's special guest is no stranger to the show he's been on a couple times and he's dropped value every single time and we know that that is going to happen once again so today we're going to be talking with carter cofield he is a certified financial planner and uh cpa man he's got a well-rounded resume when it comes to this money stuff when it comes to this entrepreneurship stuff so carter welcome to well i should say back to his and her money show welcome thank you so much for having me back you all show is amazing and anytime i can come back and add value on top of the tremendous value that you all already had on a daily basis um it's always my honor so yes awesome well we're glad to have you back last time you you came you just went straight into the advice right so we want to give opportunity for people to know you how you how you got to where you are today you're not just here by happenstance or accident but there was a path and a journey that you went on on your entrepreneurial uh journey as well so break it down for us some people are being introduced to you for the very first time they didn't see your last appearance so introduce yourself to them let them know what you're all about and how did you get started as an entrepreneur yourself that's uh thank you for the for the chance to explain my story because i don't think we have talked about it before um and it's uh not the most straightforward story it's actually pretty unique so um just taking you back so my parents passed when i was younger it's like i was 14 and 16 years old and so what that did for me is i was not i didn't like risk because i already had enough risk in my life i want a straight narrow path to a career so like around away it was the recession and i was in high school and i looked up what's the job with the lowest unemployment rate and it was cpa it's like that's what i'm doing i need a job i don't have a backup plan so i did the whole it straight narrow arrow career path went to college i got my undergraduate degree in accounting master's degree in accounting went to work at big four like planning on working at 30 years and then retiring like the safe bet um and then one day i'll never forget the day that my life like mentally changed forever um i was i was living with my cousin and i was getting dressed for work and he uh came into my room and said uh hey cuz uh what's today and i'm like what he's like what day of the week is it i'm like it's it's wednesday he's like oh my bad i thought it was saturday i'm like how how don't you know what day of the week it is and his response was because i love to i love what i do every day so the days of the week don't really matter to me and that really floored me because he was an entrepreneur his birth tattoo artist music artist whatever and so that really shifted my mind for the first time like maybe there is something bigger than just going to work monday through friday and looking forward to the weekend and um from that point on i ended up leaving my job a few months after that and started my own business and uh here we are wow now that's incredible for a few reasons because on one hand you did what we're told to do we're told that school is the answer to a promising future so you you had these circumstances that uh most people wouldn't have been able to bounce back from you lost both parents as a teenager and you still had the resiliency to push forward in life and go down a path a quote-unquote right path to get to the quote-unquote american dream you went to school undergrad masters um in accounting and started working for one of the big uh cpa firms which isn't easy you know just because you have account degrees doesn't mean you're going to get into uh one of these companies to work so you did all the right things and still didn't end up in the right destination for you for some people listening right now they're wondering am i in the right destination for me i did all the right things i went to school just like i was told i got the great career just like i was told to pursue but i'm not sure if i'm at the right destination for me so when you had that conversation with your cousin it's one thing to um to hear that it's another thing to say that i need to do something different that's not the case for everybody everybody isn't called to entrepreneurship in the full-time way some part-time some got hustles but for you you felt a call to do this thing flat out you said you quit not too long after that how did you process that conversation from your cousin to apply it to your life in the way that nope i need to be a full-time entrepreneur a great question great question so i'm big on environment right and and you know i believe you can't beat what you can't see and so you know seeing him do it every day gave me the biggest thought which is knowing that it's possible right if you don't know if you don't think that it's possible nothing's going to work so um after i thought that conversation and i knew that it was possible i started reaching out to my friends entrepreneurs reaching out to some mentors i knew and just picking everybody's brain on this whole entrepreneurship thing and you know within a few months i think i could quit three months after that conversation um i had you know i was already a good saver so i had like a year's worth of expenses put this aside um and i started building a business plan and then once that business plan was done i quit my job because i feel like at least me i know i perform best with my backs against the wall not when i'm dabbling in something and i think when it comes to entrepreneurship whether that's starting the side biz and then growing it to where you can quit or just quitting flat out i don't think there's a right or wrong answer i think you have to know yourself and for me um i'm a person that performs the best when my back is against the wall when i'm fully committed to something so i feel like i owe myself that uh right to try it at least at least one time and it was what ended up being one of the best decisions of my life to this point something that you said that i thought was pretty interesting you said that um entrepreneurship gives you more security than employment talk about that yeah so that's contrary to popular belief right the most kickback i get from people that my friends that are still working is like how can you do this and give up the security of this job right like i get a steady paycheck every two to four weeks and uh for me i always thought that entrepreneurship was more you know gave me more freedom especially income wise you could set up multiple streams of income or have income coming from multiple clients one client fires you you still got more you know you could have not driven to one person and honestly i think recent activities you know with uh kovit with quarantine with people losing their jobs i think like unemployment was 15 million people got unemployed just last month unemployment rate is close to 15 i think that now people are starting to see that the security of job security that we were promised isn't as secure as we once thought so for me always entrepreneurship gave me control of my income in my life what you said is accurate that is absolutely positively contrary to popular belief right we are told that the security is in the nine to five that you believe that at one point in your life that's why you you said let me google the uh the career that has the lowest unemployment because i want the safe route and now you're here trying to convince us that the safe route actually is not the safe route that there's more safety in what they told us is the unsafe route aka entrepreneurship are you sure are you sure i am positive i mean look at you all you are a spitting image of that right you all have so much going on not not to dive to deepening income sources but you have podcasts courses membership platforms get paid to speak right like you are doing all these amazing things and if one piece like getting paid to speak gets cut off you know you still have all these other resources that you can use to provide food for yourself your family and for the future so i think that you know once you take control of your life and your income it gives you the freedom financially to do you know to do more things and the freedom you know non-financially like you know being at home with your kids a lot more you know for me seeing my family members a lot more i was working 8 a.m to 1 a.m in big four you know like i didn't see my family that much and um you know traveling like i didn't travel before now i take two one-month trips a year to a different country because i have the freedom to move around in so many different aspects of life okay so now let's give them the whole picture okay because i'm sure that you didn't just take that leap three months after you had this conversation i don't think that this script was written you know tyler perry didn't give you the perfect uh uh path from there to here so people that are on the fence because a lot of people are on the fence especially because of everything that's going on in the world about doing their own thing talk about some of the things that didn't go perfectly according to plan when you decided that you were going to strike out on your own and what did you do to not give up to because it's easy to default and say you know if this this entrepreneurship stuff is not for me let me yeah i got all these degrees i got all these certifications i can go get a another quote-unquote safe uh accounting job at one of these firms how come you didn't go back when you ran up against these obstacles and how did you stay the course despite any setbacks that you had to overcome absolutely and before i even talk about setbacks i want to talk about setting yourself up to win before the setbacks come right um before i quit i saved up like literally 12 to 13 months of expenses and so i knew if i didn't make a dollar in my business for 13 months then i had to go back to work so that took a lot of pressure off my back and set the platform to win but um it was so much tougher than i thought um first and foremost i didn't make my first dollar for like three months into my business right so i went like three literal months of zero income and i'll never forget my mentor who was a harvard business school grad you know he told me like hey when you get to this entrepreneurship thing you know you might go a few months without making money like he said he said he didn't go he didn't make his first dollar for four months so if you make a dollar earlier than that you're doing better than harvard business school grad so that kind of gave me just mental stability on getting through but um one of the roadblocks was like again i didn't make money for like the first three and a half months in my business um two i probably ran up you know a couple maybe ten thousand dollars in credit card debt because i didn't want to use my liquid cash and like and like getting this thing off the ground and um it was it was tough a lot of long nights a lot of anxiety a lot of imposter syndrome um but i you know i stayed strong because i loved what i did every day and i knew that once i tasted this feeling i could never go back to work now knowing what doing what i love and making an actual difference felt like so that this knowing those things really kept me kept me guided and i think surrounding yourself with other entrepreneurs right like that's so huge like knowing that other people that you're doing this with is going through it too so you're not just alone in this in this uh and in this race to build a business so uh you know those factors that many more helped me get through so now you just said that in the race to build this business these businesses you help a lot of people get their businesses up and running make sure that they are doing what they need to do to stay to keep their doors open for budding entrepreneurs entrepreneurs that are getting started entrepreneurs that are working their way to getting started what are some of the things that you see people doing incorrectly that's costing them um the business that they have been working and strategizing to build okay some very very common mistakes i see with starting out business owners um when they're spending major time on minor things right they're spending a lot of time on little intricate parts of their business and not spending majority of the time on things that generate revenue so i see them spend a major time on minor things too they're not treating their business separate from themselves right a lot of starting entrepreneurs are like having everything come out of their uh personal account have all the expenses come out of the personal account have all the income will come out of the personal account and it's really messy and it really it's really hard for them to track how their business is actually doing you know if they if all the numbers are skewed um another thing is not incorporating right a lot of people are putting themselves up into huge liability by not incorporating their business properly um to separate themselves from the business which is just pivotal to do um as a business owner and um and then one of the last things is just as a business owner not understanding the expenses that you get to deduct tax wise to save you a lot of money on taxes going forward because one of the best things about being a budding entrepreneur is that you get a lot of tax breaks so i think those are some common mistakes that we see with with starting out entrepreneurs yeah that was going to be my next question how the tax code is set up to actually benefit entrepreneurs um and i want you to talk about that talk about the importance of tax deductions and how those who are listening right now some of them run their own home at home business or maybe they have a side hustle that they're turning into a business talk about the importance of deducting expenses absolutely so i just want to shift people's minds to understand like why this is a thing so the tax code is is all it is is an incentive system uh for entrepreneurs and business owners it if you do what the tax code tells you to do they'll benefit they'll benefit you so when you're an entrepreneur or business owner you're stimulating the economy by starting a business and potentially giving new jobs out so and or since you're doing that the tax code is going to give you a lot of breaks since you're helping the economy and one of those things they allow you to do is to deduct a lot of expenses that you're already incurring as business expenses so number one one of the main things one you know the first thing i sell starting at entrepreneurs is that the day that you start your business and make your first dollar in your business you can now deduct so many personal expenses that you're already incurring as a business expense so for instance if you're using your cell phone right and kind of calling you on your cell phone you're now able to deduct your cell phone bill on your tax return and you already have that bill beforehand so now you're getting a free a free deduction for something that you already had same thing for car expenses same thing for traveling you have all these deductions and the the sad part is like 95 percent of business owners this is the real statistics they don't they don't understand how much they can deduct and therefore they're overpaying taxes by tens of thousands of dollars so so my question is uh i don't know this is an assumption maybe you can answer this a lot of business owners entrepreneurs they hire accountants and a lot of times we trust our accountant to kind of tell us what we can and cannot deduct so talk about the importance of us of we knowing or we we have the knowledge we should have knowledge when it comes to the tax deduction because not all accountants always will give us the best advice so talk about that like is it our fault or is it our accountant's fault should we be look what should we be looking at at when it comes to an accountant how should we pick them out what are some questions that we should ask some things like that great question todd great question so there let's just talk about the difference right there's a difference between a tax preparer and an actual cpa or accountant right a tax preparer somebody that's going to do your taxes when it's tax time give you the bill say i'll see you next year now we have one of those and we were like no i think we got to hire somebody else because we were doing a majority of the work up front and they were just in putting the numbers and getting a check it's like wait a minute what so yeah so talk about that that's a very good point exactly and these are not accountants they're simply tax repairs and it's not their fault but that's all they want to do with prepare taxes and the unfortunate thing is by the time it's tax time it's too late for us to do anything about the previous year right everything needs to be done before 12 31 of that following year so you need somebody working proactively and that's where you find you a good cpa or accountant and this person should be not only helping you but they should be working proactively in your favor assuming that you don't know anything right i'll you know you want to have an account that's saying hey guys do you know about this if you do that's great if you don't then let's talk about it right you want somebody that's proactively working in your favor to help lower your tax liability and i tell people all the time it's really easy to get your account to work for free if you have a good accountant or cpa they're going to save you more money than they ever cost you so you're really getting them to work for free so you need to be looking out for those people that are working with you around that are proactive sending you emails and not being reactive but again instead they're being proactive now how do you uh find that person and this is the the basis of our of the question because as ty said we once had somebody who was more of a tax preparer than a cpa so we went into full you know interview mode talking you know getting a bunch of referrals from people talking to you know cpas doing um consultation with them to see if they were a good fit and um some people sound good in interviews but then when the rubber meets the road and you start asking questions you know what about this and what about that then either the knowledge level isn't there the customer service level isn't there um it just doesn't always work out give us some advice on what to look out for as entrepreneurs especially new ones right because you just shared an incredible stat that 95 percent of entrepreneurs are overpaying in taxes meaning that they're not doing their deductions properly so that means a lot of us are getting it wrong when it comes to finding the right cpa who can guide us into deducting things properly do you have any advice for finding a good fit for our cpa yeah absolutely one um find somebody that is excited about what they're doing right because if it's just a person that's just doing their job um i don't think that that's good enough i think he wants to buy you that you know essentially kind of owns their own business because they're invested like you're invested right so i think that's like that's like one of the one of the top things i want you to look out for but two you want to find somebody that's that knows your industry right accounting and tax deductions are the deductions are industry specific so if somebody works in construction you know i hate how i'm accounting i work with people in construction they might not be the best fit for you because they don't understand your business right the better they understand your business the better they understand your deductions and are able to say hey we only work with clients that have a social media space or that service based entrepreneurs right so we know that you're probably going to have a home office because you don't have a physical office we know that you're probably going to be traveling a lot and speaking so are you writing off your airplane tickets right they need to be masters in your industry and if they are they know the deductions like the back of their hand so they're able to give you things or help you with problems that they've seen thousands of times so by the time you sit with them they should be not only answering your questions but giving you things to think about that you haven't even thought about yet if that's happening in the initial meeting if they're bringing up things that you haven't even mentioned i think that you're on the right track and and lastly i think the biggest reason that a lot of accounting cpas aren't doing that but are doing this type of work outside of them just being kind of lazy is they haven't found a way to price for that service right if i'm not getting paid to answer your questions or work with you then of course i'm not going to want to respond to your emails or or be proactive um which is why you know our clients pay us on an annual retainer i mean they pay us an annual fee so i'm incentivized to be looking out for things because you were paying me to work with you for a year so i want to ensure that you're getting all the value that's paid for yeah so tell us how should we be documenting our expenses so again a lot of us that are watching we have our power players in the room um and we're familiar with some of them and some of their businesses and things like that how should they be tracking their deductions what should they be tracking so what are some of your favorite tax deductions that maybe we're not aware of i mean you mentioned the whole cell phone thing i think that we definitely need to make sure that we're tracking that um what are some other things maybe around our home that we should also be taking into fact okay so i'll break that up i'll give you the ways to track um the best way to track your expenses things around your home that you should be looking to deduct and then i'll give you my favorite one so we can kind of keep it keep it clean here um so starting out as a uh your new entrepreneur or business owner you can simply record your expenses in excel because i don't want you i don't want people get overwhelmed i think there's a lot to do if you're starting out you can start with an excel file all you need to do is have the date of purchase what was purchased and how much was it um and then have your statements at the end of the year so if you like have a few transactions if you're just starting out tracking in excel is fine now once you become an actual business owner you need to let that method go and get quickbooks and i'm not sponsored by quickbooks i don't care if you get quickbooks freshbooks whatever get an accounting software that's going to track your expenses because it's going to make your life easy all you do is link your card to the software you swipe the software gets the notification and it helps categorize it as an expense for you um and i recommend having another bookkeeper go and review your expenses and you don't do that yourself because it's going to be painstakingly enough to go every month and review those expenses so that's the best way to track start with excel once you get to that point get quickbooks like 15 to 20 a month is gonna save your life um two some common household expenses that you should be looking to the ducks there there are a few so one is your home office right you get you you deduct um your home office and everything in the room that you spent to run your business um so you definitely want to be looking at home office deductions um number two is any other items that you use in your house that are used for business so we talked about like kind of how cell phones are uh let me think what was something else that i use um so i have this um this this lamp that helps me record videos um so i'm writing that off as well i'm writing off any any expense around the house that i use to run my business that those are expenses that i'm that i'm looking to deduct the microphones that you have right those are tax deductible as well so anything in your house is ordinary and necessary for you to run your business you get to deduct that makes sense 100 okay cool so now my favorite deductions are left two is that okay all right give it to us we're gonna help yeah so the first one is a way to turn all of your personal vacations into business deductions and it's really simple to do this so if you're in your family or taking a trip or you know you're your spouse and taking a trip y'all working the same business if you're going somewhere for the weekend as long as you can find business activity that friday and that monday you get to deduct all expenses over the weekend as well so let's say instead of going there saturday morning you get there friday evening take a client out to lunch and take a potential client after lunch do the same thing on monday now the flight the hotel the lodging the meals and entertainment all that stuff is tax deductible just because you have business activity on friday and business activity on monday it's called wrapping a weekend i like now is that only for the weekend so say what if the trip was monday tuesday through fridays is it is it as long as the activity was bef on the days or is this strictly a weekend wrap so this is strictly a weekend rap so like if you go out at the state of country whatever for business it don't matter what day of the week it is it's it's deductible but if you're going for personal like let's say you do tuesday business wednesday thursday personal and then friday business you don't get to the duck wednesday thursday the only reason you get to deduct on the weekend is because they're assuming that you have to stay there for monday's meeting you know so they they allow you to wrap the weekend so many business owners are going out friday can't meet again until monday and they have to stay over the weekend and so they're allowing them to deduct those expenses pretty good what's number two um number two uh what was number two um oh yes how to get the irs to pay for your next car so there's there's something called the 179 deduction and all you need to know is that it's an 18 000 tax deduction the first year you buy the car so the car does not need to be bought in your business name it can be by your personal name it just has to be used for at least 50 business use so let's say you know uh ty you have a car and let's say tyler you're thinking about um getting another car if you get the other car and you use that car for 50 business use you can you get to get an 18 000 tax deduction that first year for getting that car you might only put two thousand dollars down and have a note but you get to deduct eighteen thousand dollars worth of expenses for that car the first day for the first year you you use it [Music] imagine a life where your money isn't strangled by mortgage payments imagine what you could do when you don't have to send them money that you worked so hard for come get simple powerful and real solutions to eliminating monthly mortgage payments forever america's number one money couple presents crush my mortgage in this exclusive course you will be equipped with strategies to help you move faster toward the promised land of owning your house free and clear learn strategies to help you in the areas of pavement acceleration extra income generation and wealth creation all to help you crush your mortgage visit crush mymortgage.com and get started today join us on the path to power freedom and legacy that's crush mymortgage.com so let's um rewind back to the whole vacation thing we have a power players asking a question should we keep a log to track the purpose of these travel expenses absolutely i should have said that my first i should have said that initially that is a great great um uh a note there you you always want to keep some type of uh tracking of what was going on now you might not need it you only need it unless you get audited but it's good to have it so if they ever came say hey like you know this trip you went to florida for a friday to tuesday what happened you could say like hey i went to lunch with jim smith you can reconcile my quickbooks to see if that dinner was 75.27 i also on monday went to lunch with um christina and that was another 125 for lunch these were both potential client or current client meetings and i had to have i had to go to both so that therefore the weekend is included as well so you definitely want to keep not you know malicious tracking just some type of notes documents that show you know what you're doing who you are with so talk about the importance of receipts so i know in business either receipts are digital now or physical receipts should we be scanning those should we be keeping them or is a software like quickbooks is that enough um in case of an audit and they can just see the transactions or do we actually need proof via receipts great question great question tyso receipts are not for taxes receipts are for audits so you only need receipts if you get audited and you won't know you need the receipts until you get audited so like it's best to just keep them just in case um so i recommend keeping receipts for any transactions over a hundred dollars right because those are the big ones that they're gonna be looking at and the best way to to to track them and keep them uh nice and order and orderly fashion is to use one of these software's like quickbooks expensify something like that because once you get the receipt you can simply take a picture of it and then it automatically uploads it to a portal the hardest thing about tracking receipts is going home filing and putting organizing exactly so as soon as you have the receipt you get the receipt from the teller take a picture of it stand it can be done and organized before you get to the car because the ink fades now i'm noticing these receipts aren't even keeping color and it's like wait a minute it's so it's so it's annoying you're not going to be able to find the one you're looking for yeah so and it becomes a habit just like anything else just like um any other habit you have a business owner when you get that receipt take a picture of it boom done gone and then it's and then quickbooks or and specify whatever you use has this portal of all your receipts so when an audit comes you just give them a file and say you just find whatever things you're looking for you know yeah that's something that we just recently learned iphones if you all have iphones i had no idea that you can scan documents in like pdf form right in your notes section your notes app so i'm like okay so you can scan your receipts there so for some of you who may not have quickbooks and things like that maybe your software is not um able or capable of doing that find other ways and i know the iphone for sure can definitely scan your receipts too so that's good to know all right so i didn't even know that yeah we didn't know that either we went to a uh apple class we're like wait we're spending these money on these products we about to know how this works and it blew my mind you better be deducted as well they're free they were free they're free oh okay but if they weren't you're right we deducted our apple pen our apple ipad things like that we're making sure we do that yeah apple watch yes yes all right so one of the power players is asking this question if you want to be a power player go to powercouplesuniversity.com you're missing out if you're not there yeah stop playing powercouplesuniversity.com so their question is this has to do with the tip that you gave about the deducting the 18 000 credit in regards to a car and the question is what if we purchased a car prior to starting our business but it's the same year can we still qualify for the tax deduction good question amazing question and i talk about this in depth in in my tax course we'll talk about that later but um it doesn't need to be the year that you purchase the car it needs to be it only has to be the first year that the car was placed into the business use so in their case if they bought it in february and they started their business in november they're good same thing even if they started even if they bought the car in you know uh november of 2019 but there's not the business to may of 2020 and you know they still get to deduct it because it's the first year that the car is put into business use not just the first year that you buy the car so this is a very very important distinction to understand so in the power players case they're absolutely good they can go through the 179 deductions for their car but even if it was the next year right if you don't do it for the first year the car is placed into business it's good to know so we have another question from our power player yeah is there a certain um is there a certain amount amount of time you have to have the vehicle for the deduction they are currently leasing on a truck and trying to decide on the next vehicle it's up in december the truck is used for business oh yes so he has a lawn he has a lawn escaping business so he has a truck for you know going around cutting grass and things like that and they're about to get a new one got it one thing i want to make clear and i should have made clear at the beginning for a leasing vehicle like financing and leasing is two different things as you all know financing is when you put money down you pay big payments in in in hopes to own it one day if you're financing a car you get to have the 179 deduction right if you're leasing a car mini you're having it for 12 months and plan to give it back you can you can't take the 179 deduction but you can deduct every single lease payment so if your lease payment is 600 a month you get to deduct 7 200 for lease payments that year as well as insurance as well as repairs as well as all that stuff so it still adds up but if you're not planning to own the vehicle they're not going to let you depreciate it with all the 179 deduction is it's a deduction for the depreciation of an asset that you're planning to own so if you're not planning to own it they don't allow you to have that deduction okay oh i got so many things going on in my head right now like i feel like this is a personal session but i'm going to ask this because talent and i we are not big on leasing vehicles whatsoever we tell people they need to buy it buying cash however however um what you're teaching us is that the deduction if they were to finance it or buy it is eighteen thousand right thousand plus that's just the 179 deduction they can also deduct the insurance the right stuff that all that stops okay the 18 000 is just one piece just one piece but if it's a lease um and they deduct can they deduct for let's say they have the lease for three years are they able to take the lease payment which will eventually exceed that eighteen thousand or is it just one every year single year so you guys we may be uh i don't know let's do a little work on that one that wow about to get us at least wait a minute well i'm thinking in the case of like um at quantum they have a lawn so it makes sense for somebody like who's like because you said we don't we only need to have been using it for 50 business stuff but somebody with a business like that is like using it for 100 business so it might make sense to keep a fresh vehicle through the lease because of the deduction that you get uh for the lease and it's not too much you know this this is an amazing conversation and sitting asking your accountant to do this calculation for you should be a part of their job yeah hey think about the lease here's the price of the vehicle here the interest rate i'm thinking of owning the same vehicle here's interest rate can you run uh analysis a tax saving analysis so let me know which purchase to make yeah like that should be a part of their job description if they're saying that i'm your year-round cpa yeah that's very good that's something that we don't do now if we're going to be making a large purchase or if it's something with the business and we don't know if it can be a write-off for the business we're making a phone call first before we do that so yeah i think that that's a very very um uh that's good advice so let me ask you this question we got one more question from another power player talk about the uh the definition when it comes to deduction because it just doesn't mean money back in your pocket right it doesn't mean if i have a hundred dollar deduction that equals a hundred dollars back in my equivalent to that yeah help us to have a sound understanding of what it means to get x amount of dollars in a deduction what does that really mean for us as a business owner okay so it basically means 40 of every dollar you save is every dollar every deduction is gonna be your actual dollar for dollar savings and the way that is calculated is it all depends on your tax rate as a business owner between self-employment state and federal taxes we're probably paying around 45 in taxes you know on any all the income that we make so if you take if it's so if it's a dollar deduction you're getting a like a 45 direct lowering of your tax bill right so um if it's you know if it's 18 000 deduction take that times 0.4 or 0.45 depending on how much money you make obviously the more money you make the more tax you're going to pay um take that times your tax rate that's how much you're actually saving if that makes sense so sometimes and i get business owners that get really greedy they get caught up and buying things you don't need i was going to say that deduction and you're spending a dollar to save 45 so right exactly it's like what are you what are you doing so you know you don't want to get excessive with it you want to buy things that you actually need make sure that you're going in the future to grow your business you're gonna you're not saving anything you're losing 50 or 60 cents because you're not saving the actual dollar so that's that's a great point yeah i'm happy that you said that because i've had uh people friends family that would say that oh my gosh i gotta just go buy because i get to go ahead and save the money anyway well it doesn't make sense if you need it for your business buy it so one particular year oh gosh i think was maybe november no it's december we knew that we had to buy new computers anyway um so we were like let's just buy it before the end of the year because we're going to buy it anyway at the top of the year so in that case it made sense but we would not have went out and just go buy it just because we're like oh we need a deduction so that's where talking with your accountant is really good as well too exactly and thinking before you purchase yeah amazing i couldn't have said that better myself that's such a perfect way to put it and here's something else that you stumbled upon november this in december is tax planning time so at the end of the year you need to be looking at things that you might not need until the next year but why not purchase it this year if you purchase it this year you're going to save literally like direct money within three months so november december you need to be sitting down with your spouse your accountant or your business partner like hey what do we need within the next four months of next year that we can afford to buy right now it's gonna like literally lower our tax bill in the next two months yeah so great point absolutely it's like a tight rope though you know what i mean especially when you are a small business owner because you know uh the the uh four quadrants the b the i uh is where you want to be and the employee and the s you can't just drop that and people don't know what you're talking about talking about the cash flow quadrant google the cash flow quadrant is four boxes on the left side you have the e which stands for employee at the bottom left you have s which stands for specialist or small business owner on the right side you're at the top you got the b which is business owner at the bottom on the right you got i which is investor and the goal is to get to the right side of the quadrant because that's where the wealth is built a lot of us that are entrepreneurs are on the left lower because we are small business owners the difference is between a s and a b is like 500 employees or more or something like that so but the problem with being a small business owner according to this cash flow quadrant is that not employees but small business owners pay the most in taxes because as you alluded to earlier you pay taxes as a business owner and then you pay taxes as an employee of the business and so you're always walking that tightrope between going after a deduction or sending too much off in taxes uh what's your advice you started alluding to it right there at the end you know you said be smart wait till november december strategize but like you don't want to be in that 95 percent that you gave us earlier that's over paying taxes but you also don't want to be unwise with buying stuff even if you might need it you still want to use wisdom yeah in pursuit of deductions and in pursuit of tax efficiency help us how do we walk that type role i mean it's it's tough for a lot of business owners especially they don't have the support of accountant helping helping them walk through that so one thing that we do with our clients in november december we run a tax projection so we say hey this is how much you're going to owe if you have to pay taxes right now this is how much we have saved in your tax account when we have our clients put money away into a tax savings account we have a gap of this this amount of money so we can actually use this money to buy to make purchases that you're going to need and it's going to lower your tax liability again the next year so what we do is we give them a tax projection before before 12 31 so they can see but for those people that that don't have that um i recommend that they first of all should be setting money aside into a tax account 20 to 20 to 30 percent in the tax account and if they have more liquidity in their business like come this come december they can use some of that money to make year-end purchases you can use a business credit card doesn't have to be like liquid cash right um and then that way when you file in march or april depending on what entity you are um you can file like hey okay i'm gonna pay this taxes i have this in my list um but i think that in in december if you have a decent amount of money in your tax account and you're saving well you have money in your actual business account that gives you the wherewithal to know hey i have extra ten thousand i don't need right now what can i buy who can i pay what contractor can i pay annually so i have to pay the monthly next you know a lot of things like that are good ways to think about it if that if that helps yeah i think that's so important put money aside for your taxes um you can actually yeah i'm serious um you can ask your tax accountant um but find out whatever that number is and if they can't get that number i like what you said at least put 20 to 30 to the side is that 20 to 30 of every dollar made or is that 20 to 30 of profit talk about that the breakdown how should we be saving the money yeah so it's i recommend 20 to 30 of whatever that comes into the business because most business owners don't even know what their profit partners is they're not doing their bookkeeping correctly that's the only way you can know what your net profit is on a quarterly basis obviously the clients we work with are different because we're doing that stuff for them but um i say 20 30 uh gross because like worse kept here's the two scenarios you're gonna have you didn't save enough yeah you say too much you know so like it depends on what side of the equation you're about to be on um so i recommend 20 to 30 percent um of every dollar made um saving and then and then uh when you file taxes if there's money left over like that's a present to you in march like now i have extra money in my business to use so yeah and i want to tell people this i can't stress this enough you may not have formally created a business but if you have a side hustle you're bringing you're up you're doing something um outside of something that's w-9 from your employer or w-2 i'm sorry you need to be putting money to the side you need to be saving uh for taxes and you should be um accounting for that that's so important um i want to back up just a little bit to answer this one question from a power player she said is it and when talking about the car that 18 000 deduction is it an automatic eighteen thousand dollar deduction or only the amount you've paid out that year no so you don't have to have paid for the car at all but you you don't even have to have made a down payment at all you're paying to own the car and that begins the process of depreciation which is again is all the 179 deduction is this irs saying like hey this car is going to be worth less in value over time so i'm going to give you a deduction credit for that and it just so happens that the the limit for cars under six thousand pounds is eighteen thousand dollars cars over six thousand do way more so um to answer her question you don't have to have substantial money into the vehicle um to get that deduction okay yeah now fortunately for the world we don't have to figure all this out on our own because you took the time because people kept asking you beating up your dms in your inbox with the same questions about hey can i deduct this can i deduct that and before you talk about the course i want you to talk about a conversation you have because conversations seem to be uh propelling things for you and you i don't know if it was your cousin again or if it was a friend but you had a conversation and you asked them or they said something to the fact like i'm trying to make sure that my whole life is a write-off and that changed something for you so i want you to talk about that story powerful yeah and then i want you to tell us about your course the course for everybody that's listening can be found at his and hermony.com deduct and if you're watching this you you'll see it on the screen but i want you to talk about that story and how you're helping people to get to what you were told yeah i forgot about that story yeah so my colleague jeff badu he uh he owns value tax services his uh his firm he specializes with helping real estate investors save a lot of money and we you know we were talking in the early stages like he had started his business maybe a year and a half before me and we're talking he was like man what's one of your goals this year he said literally he said i want to make every dollar i spend this year cash deductible i want to every dollar i spend i want to make it to be i want i want to turn into a write-off and this is before i had all the knowledge like what do you mean and he's got to listen off things like how to how to spend this how to spend that how to spend this and make it a tax write-off and he literally before he spent the dollar everywhere he went he asked himself the question of okay you know can i make this a deduction and if so how can i make it a deduction so like it became contagious so every time i spent money now i was like can i make a deduction no i don't want it can i make that a deduction i probably don't want it like he wants to make his whole life tax deductible and it becomes fun right it becomes fun because you're you're playing the game of taxes it's a game if you know the rules you can really really get through some creative strategies so again you know he studied the tax code for years he's a cpa i studied his tax code for years i'm a cpa business owner start business to do what they love not to do this type of tax understanding work so due to honesty will do the quarantine i had so many people asking me these questions and i had time to sit down and make this course just dumping all the knowledge i had into into this course called deduct everything your blueprint to tax free living and the goal of this course is teach everybody that all the strategies i learned on how to make my life um basically tax-free so this course gives you everything we talked about and so much more and i wanted to know because everybody can afford me right like you know everybody can afford me to be there as their accountant all the time but i know everybody can afford this course so they could have that cpa in their back pocket and they can always replay it always go back rewind it save notes make notes and they're going to have that kind of personal cpa in their pocket if that makes sense yeah that's so important and he's not lying it's yeah ridiculously affordable yeah money.com deduct i'm gonna leave it there i'm like you you got that price kind of low brother that's so important about knowing this information yourself so to be able to have you dump all this information behind the scenes and we don't necessarily have to be a client of yours i think is a really really good thing it's huge because we've had to take some things to our account and say hey what about this what about that and it was like oh yeah well let me look into it i took the course i took your course i was like dad i ain't know that and i'll be reading about you deducted your apple watch or something like that that's the reason he's like i think i want to go look for apple watch i'm like hold up now yeah yeah so it was like a court case that really recently just approved apple watches to be tax deductible but but that was the point i want to make it affordable because like you know when people reach out to me and say ask me these questions i can just say here's the course if you look at over 97 bucks or 197 which is the actual price but i have a 50 off for a promotional period at the time i think i'm gonna change that to 197 back on july 1st but regardless if you don't have you know as a business owner you get to deduct the money you pay for the course you get the literally yeah to learn how to deduct everything else right so it's like it's it's a compounding effect and i just i'm happy when somebody dms me or reaches out to me and say like i do like you you saved me x million dollars this year and i didn't have to move a finger right so i was like it's a win-win for me as well so uh it's been one of the best things i've created this year and i'm super excited about it yep education and training is definitely deduction that's one thing that we do we always pour back into ourselves every single year um yep we spend money in areas to learn more about how to grow business how to stay in business how to save on taxes so go to his or her money dot com forward slash deduct that's d-e-d-u-c-t now we're gonna add uh actually one more question from one of the power players um this person wants to know at what point should a small business owner an llc um i'm assuming that's what she is consider paying themselves as an employee versus taking draws out of the business who is this person to ask a question she she's one of our power players okay now she's this is probably the best question that somebody has asked because this is how this strategy is how i save clients like literally 20 to 30 thousand dollars a day you start working together wow so so what she's asking about is when should she go from being an llc to being an llc tax as an s corp and start to pay herself a salary instead of taking our owner straw yeah now i won't get into the semantics of of of how to do it and what it does but i will say this when your business starts making more than 40 000 net income meaning income after expenses you need to immediately convert from an llc to s corporation and start paying yourself a salary instead of taking on this draw now literally this strategy saves people anywhere from you know 3 000 all the way to you know 30 or 40 000 depending on how much money they make because the more money they make the more they save because um there's something called self-employment tax that's another fifteen point three percent that we pay on that income so as corp helps you lower that substantially so what she's asking is when and the answer is when you're making uh more than forty thousand dollars in net income can i just say this we have not shared this um but we're going to share to our power couples power players up in here so we may delete this by the time this goes out in a few months we learned the hard way so um we always knew from jump that we wanted to kind of protect ourselves right and so we went into being an llc but we were not a s corp llc at the time and so we knew i knew all of that stuff i knew that okay once you hit that 40 000 mark you better go see somebody or do it yourself and become an s corp well the particular year that we crossed over we crossed over so fast that it didn't even dawn on us until oh wait it's time to do taxes and we had a tax preparer at the time and not an accountant so it's a difference where we had an accountant they would have told us a tie-in talent before december 31st um and and then too i think that there's something that you can do where you can file for the x corp as long as you foul i forgot you know like by march 15th or something yeah but we had a tax preparer and not a tax accountant didn't tell us that we had to spend over 25 000 in taxes was i mad or was i mad okay and that was when we were like no from this day forward we're gonna make sure that we have somebody on our team that is a partner that can tell you these things because we were just in the business of taking care of our kids building a business and it just you're busy busy you're busy you're busy and we would have saved twenty five thousand dollars so this is so important if y'all don't do nothing else please once you all hit that threshold make sure that you convert over to an s corp turn your llc into an escort and make it legit so thank you for mentioning this this is huge because this is where business people get it wrong it's when it comes to their deductions 95 of business owners are getting this wrong and just getting this right could mean the opening or the shutting of your doors carter has made this ridiculously affordable mm-hmm so is it 50 off now so like our power play is going to take advantage normally 197 so i dropped this about 50 off like the first couple weeks of the launch is going to go back up to the 197 after july okay well our power players can take advantage of this now because it's available even at 197 for everybody else you will still save way more listen we have taken the course we're not we're not speculating he dropped jewels in there that will save you more than the 197 price tag and plus the 197 price tag is deductible isn't isn't hermony.com i don't know what else to say but this is great it's important if you're a business owner it's not just about having a great product or good marketing or you have charisma listen you can't just make money you got to keep money hello it's not just about making money you want to stay in business long term you got to learn this game too so any closing remarks that you want to make that you want to make sure that you get out um let me see closing remarks um i mean just just know that you know the reason four out of five businesses go out of business for the first year so like lack of capital like and what would you all what could you have done with twenty five thousand more dollars in your pocket right let's not go back okay okay okay but yeah i mean it's just like it's one of those things that man if you can make money and save on taxes like that's generating real wealth and and i'll i'll i'll leave you with a a a sentiment that i just realized a couple a couple a couple months ago when i was doing some numbers i have a colleague that made the same amount of money that and his employee job as i made as a business owner and he paid 65 000 more in taxes than i paid because of the way we made our money and that is not fair because like now i have 65 or more thousand dollars to invest and continue whether it's my business rental property stock market now i can build wealth when the government's just taking his so it's so important and if i can't stress that enough so very good very good yes for all the power players this will be definite this will definitely stay um within the group we'll make sure that we tag it um in the entrepreneurship tag um so just make sure that you go ahead and check it out and you can definitely watch the replay all right cars in addition to them going to pick up your course they may want to stay in touch with you on the internet how do they find you where are you sir well i am pretty much everywhere um coachfield underscore advisor is my tap my tag for all my social media instagram twitter cofield underscore advisor or they go to my website www.cofieldadvisors.com um yeah those are the main places i'm at and uh this again has been literally amazing i love doing interviews with you all giving your your audience this crazy crazy good education so i appreciate the time absolutely listen you came you dropped knowledge again yes you did it's great it gave us a whole lot to think about again and so we really appreciate you taking time again to come back here and give us all this free game today sir thank you thank you thank you thank you well you all learned something new that's how i know i did my job but you know you all learned something new that's why i know i did good so yeah that's right thank you

Channel: His And Her Money

Views: 20,021

Keywords: marriage, money and marriage, how to save money, how to make money, side hustles, his and her money, how to get out of debt, debt free, how to budget, personal finance, tax deductions, tax deductions explained, tax deductions for small business, small business, how to save money on taxes, self employment, small business taxes, carter cofield, tax deductions for home based business, tax write offs, tax deductions 2020, tax write offs for small business

Id: t02hhOaj_N0

Length: 56min 59sec (3419 seconds)

Published: Sat Sep 19 2020