Dec. 29, 2025

Tax Code Secrets

Tax Code Secrets
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Season 1

Tax code benefits and deductions are provisions that allow eligible taxpayers to reduce their taxable income or tax liability. They come in two main forms: deductions, which reduce the amount of income subject to tax, and benefits, which can include credits or specific exclusions. Tax code benefits and deductions are provisions that allow eligible taxpayers to reduce their taxable income or tax liability. Type of business entity you choose can play a significant role in your tax liability.

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This program is designed to provide general information with regards

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to the subject matters covered. This information is given with

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the understanding that neither the hosts, guests, sponsors, or station

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are engaged in rendering any specific and personal medical, financial,

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legal counseling, professional service, or any advice. You should seek

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the services of competent professionals before applying or trying any

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suggested ideas.

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Hello, and thank you for tuning in to a Sharp

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Outlook on pay for HD radio and talk or TV.

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I am Angela Sharp, your host. Our arm chair discussions

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with industry experts will give you the steps, tools and

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information to be successful in business and to prepare you

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to be your best self. Hello, I'm Angela Sharp, and

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thank you for joining us at a Sharp Outlook. We're

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going to have a conversation one on one today about

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something I know you're excited to know about tax codes.

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Tax code secrets. They're not really secrets. What they are

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are tax codes that unless you are aware of them,

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you don't get an opportunity to take advantage of the benefits.

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So I want to go through some of those benefits

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that are there and give you some information. But I

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want you to know this is not complete, because there's

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probably hundreds and hundreds. In fact, there are hundreds and

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hundreds and hundreds of tax codes out there, and you're

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just getting just enough to hopefully peque your interest to

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look further or contact expert advice from tax consultants. Tax

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Code benefits and deductions are provisions that allow eligible taxpayers

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to reduce their taxable income or tax liability. They come

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into forms deductions, which reduce the amount of income tax

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subject to taxing, and benefits, which include credits and specific exclusions.

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The differing interests of the tax code versus the irs

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is pretty vast. The cost of not acting on those

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differing interest is huge, and what you don't know can

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hurt you. That is really important. If you're leaving thousands

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on the table, seek the advice of professional tax consultants

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and keep your money in your pocket. It's not free service,

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but I guarantee you it's definitely going to cost you

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less than what you're having to pay in taxes, and

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so you'll you'll want to go and look and seek

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that advice. The type of business entity you choose could

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play a significant role in determining your tax liability. So

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I'm going to try to break this down for you.

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The differing structures offer varied benefits and implications regarding tax liability,

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so here are few to consider. Your business is it

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set up as a sole proprietorship. As a sole owner,

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you report your business income and expenses on your personal

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tax return using a schedule see. You pay tax at

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the individual rate and also pay self employment taxes to

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cover for Social Security and Medicare. But if you're a partnership,

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income losses or credits are passed through directly to the

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owners report them on personal tax returns like the sole proprietor,

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and the partners also pay self employment taxes. A corporation

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we call it a c corp. These are separate tax

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entities from their owners. Corporations kind of suffer from double taxation. First,

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the corporation pays tax at the corporate level and their

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shareholders pay tax on dividends received at the individual level.

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And then there's the escorp. The es corp helps you

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avoid the double taxation by passing corporate income losses and

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deductions and credits to the shareholders who include this information

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on their personal tax returns. Then there's the limited the LLC.

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The limited liability company and LLC can choose how it

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wants to be tax as a sole proprietorship, a partnership, escorp,

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a sea corp, and this flexibility can be advantageous for

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tax planning, but changing your tax entity can sometimes be

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an effective way to minimize tax liability. For instance, converting

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from the sea corp to an escorp allows the avoidance

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of double taxation. However, keep these things in mind. Ownership restriction.

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Escorps have limitations such as maximum of one hundred shareholders

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and one class of stock. Evaluate if that aligns with

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your business strategy. Employment tax saving In an ESCORP entity,

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only the salary paid to the owner employee is subject

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to employment tax. The remaining income distributed as dividends. It's

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not subject to employment tax state taxes. While es corp

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can provide federal tax benefits, some states do not recognize

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the es CORP status and can tax businesses as a

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regular C corporation. So when you're looking at thinking about

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changing entities, you also need to research what are the

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state laws, what are the state tax laws? What are

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you liable for in that particular state? Do they charge

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state at local taxes? There are some states that do

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not have a state in local taxes that are deducted

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or are have to be paid, but generally their sales

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tax is pretty high. But you do save some money

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because in that particular state, there's no state tax that

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has to be paid or local tax that has to

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be paid on your earnings. So that's something to consider.

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Ownership restrictions. The escorp has limitations such as as I mentioned,

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one hundred shareholders and one class of stock. It just

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depends on how what your strategy is and do you

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plan on growing and to what size do you plan

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on growing. The employment tax savings in an escorp, as

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I mentioned, is not subject and also the state tax.

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But there are some other examples of tax deductions and

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benefits for regular taxpayers. Most people take the standard deduction,

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and that's a fixed amount that shows up on your

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form or you see it in the instructions when you're

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preparing your tax return, and it does reduce the amount

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of your gross income, your adjusted gross income, I'll call

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it AGI. Most taxpayers take the standard deduction rather than itemizing,

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which is probably simpler and often more advantageous, but you

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should at least do the analysis and find out exactly

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what items that you can possibly deduct, and then compare

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the two to find out which one is going to

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be more advantageous. Keep in mind, you have to be

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keeping receipts. You have to be logging these because you're

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going to have to identify each one of those particular

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deductions and you're going to have to have receipts for

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those deductions. But in some cases, there are deductions that

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you probably are not taking advantage of because you see

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the amount of the standard deduction and you say, oh, well,

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this is simple. And even some of your tax preparers

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are probably doing the same thing, or you're using one

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of those tax preparation software, it'll probably advise you to

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just take the standard deduction. But if you know that

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you've had additional expenses throughout the year or something unusual,

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maybe you invested in a stock, and it would you

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know the wrong direction for you. That would be something

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that you would be able to deduct because that was

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an investment that you lost on, But you cannot get

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that benefit if you're taking this standard deduction. And so

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there are a lot of different deductions. I'm going to

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try to go through and hit some of the key ones,

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but that's something to consider at least compare the two

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to find out which one is the best direction to go.

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Itemized deductions, the you know instead of the stand reduction

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can itemize certain expenses and it's on shows up on

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your tax return. It's a different schedule and it will

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reduce your AGI if the total is greater than the

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standard deduction. Here are some deductions. Retirement contributions contributions to

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retirement plan your four one K your IR are often

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tax deductible or tax deferred, meaning they reduce your current

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taxable income so you're able to deduct that. And then

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when you do get to retirement, when you generally have

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a lower tax liability rate than as you are pulling

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from your four oh one K, then it becomes a

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taxable amount. But you may even have very you know,

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strong deductible items at that time also, so it will

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reduce your liability. This will result in significant tax savings

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and help build your future security. Educator expenses eligible educators, teachers,

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counselors principles can deduct a limited amount of unreimburse expenses

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for classroom supplies, books, and computer equipment. So if you

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have one of those professions, please keep track of the expenses,

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because I hear all the time that teachers are having

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to pay for supplies or pay for different things for

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their class because there's not enough budget or it's not

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part of the curriculum, or they're wanting to take a

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trip or something like that. They try to raise money,

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they fall short. Your using your own personal financial then

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you're able to deduct this as if you are itemizing

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as I said before, if you are itemizing these expenses,

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you're able to deduct that, and that can result in

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significant tax savings. Individuals who use a portion of their

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home exclusively and regularly for business purposes may be able

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to deduct associated expenses such as percentage of mortgage interests, rent, utilities, repairs,

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different things like that. And it's based on a square footage.

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It's something that a lot of people have taken advantage

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for specific irs. Rules apply to eligibility and the calculation,

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So you will want to do some research on that

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particular deduction to find out, you know, if it will

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benefit you based on the calculation, is it really going

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to be enough. You just can't go in there and say, oh,

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I'm just going to put this them out down there

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and think you can deduct. There are rules. You have

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to know the rules and check that out. Business expenses

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self employed individuals can deduct a wide range of business expenses,

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including advertising, utilities, health insurance premiums, business travel, and interest

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on business loans. You need proper documentation, though it is required.

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Charitable contributions donations to qualified charitable organizations can be deducted

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from the taxable income. And during these days and times

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when there's so many in need, I know many are

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contributing to non profit organizations that are helping to provide food,

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helping to prevent homelessness, and helping to help those that

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are disabled, those that are veterans, different things like that.

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If you're making contributions, you should have some type of

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schedule that shows how much that you have contributed, how

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much you have paid. A lot of these organizations that

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you send to they will send you a report at

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the end of the year as to how much your

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contribution was. But just in case they don't keep track

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of that information and whether it's a check or however

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you contributed, have those receipts so that you have documentation

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for that medical expense, you may be able to deduct

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unreimbursed medical and dental expenses that exceed a certain percentage

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of your adjusted gross income. This is an itemized in deduction,

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and there's a threshold that you need to meet to

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make sure that you're able to deduct those expenses. So

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it doesn't happen automatically. There is a calculation that helps

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you determine whether or not that is deductible for you.

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Dependent care benefits tax benefits are available for expenses related

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to the care of dependence, such as a child or

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dependent adult. To allow taxpayers to work or look for

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work often takes form of a tax credit, which directly

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reduces your tax liability. There are a lot of tax

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deductions that are available, and you want to be able

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to take advantage of all of those. Some of the

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other ways of reducing your liability is to have the

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opportunity to take advantage of some of the tax credits.

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The tax credits that are out there, for instance, one

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hundred percent bonus depreciation. Those that have a business where

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you have assets and you have equipment and things like that,

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being able to qualify for deductions for depreciation, they say

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for twenty twenty five is being made permanent for qualified

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property placed in service after January nineteenth of twenty twenty five,

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and can be used on both new and use equipment.

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So if you're a sole proprietor and you have an office,

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or you have your c corps or a partnership, or

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you have a outside office and you have office equipment,

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and you have computer equipment, and you have machinery equipment

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and things like that, you'll get the actual cost of

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that item itself, and you look for the depreciation schedule

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and the irs to find out exactly at what rates

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you can depreciate those items. You can't make them up.

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They do. There are schedules that let you know exactly

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you know how long a computer lasts, and that's how

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many years you're able to depreciate it. So you divide

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up in months, and this is how many You know,

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how much you get to depreciate for those particular items

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that you have purchased, and so using that as a

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deduction or a credit for your tax liability is very beneficial.

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I believe most companies out there are utilizing the depreciation

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schedules and taking depreciation instead of expensing the full amount.

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Expensing the full amount is going to really have a

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detrimental effect on your revenue. And not only that when

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the IRS sees this, they're also going to see that

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this particular item should have been depreciated over time. So

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00:18:30.119 --> 00:18:33.480
you can't just expense things just to lower your tax

227
00:18:33.519 --> 00:18:37.039
liability and think that it's going to be acceptable. The

228
00:18:37.119 --> 00:18:42.039
laws the rules are set that you have to depreciate

229
00:18:42.119 --> 00:18:45.680
these items over a period of time, but it does

230
00:18:46.960 --> 00:18:53.119
create a benefit and lowest your tax expense. Section one

231
00:18:53.279 --> 00:18:57.880
seventy nine expensing. The maximum deduction has increased to two

232
00:18:57.960 --> 00:19:01.240
point five million for twenty two five, with a phase

233
00:19:01.240 --> 00:19:08.880
out threshold a four million for qualified equipment purchases. Qualified

234
00:19:08.960 --> 00:19:14.839
business income QBI deduction. The twenty percent deduction for eligible

235
00:19:14.920 --> 00:19:18.039
pass through businesses has been made permanent.

236
00:19:19.079 --> 00:19:19.319
Yay.

237
00:19:20.480 --> 00:19:25.240
Phase out thresholds were also expanded with an added minimum

238
00:19:25.240 --> 00:19:29.359
deduction of four hundred for those with at least one

239
00:19:29.440 --> 00:19:35.480
thousand dollars in qualified business income. So that's a new

240
00:19:35.559 --> 00:19:38.559
law that's there, and it's something that you can take

241
00:19:38.559 --> 00:19:48.480
advantage of. Research and experimental expenditures domestic r and costs

242
00:19:48.519 --> 00:19:52.599
for twenty twenty four and beyond are now immediately deductible

243
00:19:52.720 --> 00:19:57.880
instead of being amortized. That is a huge benefit to

244
00:19:57.920 --> 00:20:02.519
you and those that have been doing research or experimental

245
00:20:03.519 --> 00:20:07.440
spending money for experimental things. I notice a lot of

246
00:20:07.519 --> 00:20:11.240
new entrepreneurs are out there. They're creating, you know, these

247
00:20:11.559 --> 00:20:15.240
AI tools they're creating, you know, a lot of other

248
00:20:16.319 --> 00:20:21.880
tools that are out there. The equipment, the research, the expenses.

249
00:20:22.519 --> 00:20:27.160
Instead of it being depreciated over time, you are now

250
00:20:27.279 --> 00:20:32.559
able to immediately deduct all of it instead of advertizing.

251
00:20:32.720 --> 00:20:36.599
Amortization is just like depreciation. You it has a set

252
00:20:36.640 --> 00:20:39.480
period of time that you can expense it off. But

253
00:20:39.640 --> 00:20:43.440
now you were able to expense your research and development

254
00:20:43.640 --> 00:20:50.440
and experimental things, you can deduct that. So keep track

255
00:20:50.480 --> 00:20:54.000
of those expenses, keep track of that time that's being

256
00:20:54.039 --> 00:20:57.920
spent and all these different things, because those are deductible

257
00:20:58.000 --> 00:21:03.880
expenses in full and will reduce your tax liability significantly.

258
00:21:04.359 --> 00:21:06.279
And so you want to take advantage of that, and

259
00:21:06.319 --> 00:21:10.279
it's something that you definitely want to do. Work Opportunity

260
00:21:10.599 --> 00:21:16.400
tax credit Businesses that hire employees from certain target groups,

261
00:21:16.599 --> 00:21:22.200
such as veterans or long term unemployed individuals, can receive

262
00:21:22.319 --> 00:21:26.039
a tax credit of up to ninety six hundred dollars

263
00:21:26.079 --> 00:21:32.599
per qualified employee. So if you are an organization a business,

264
00:21:32.640 --> 00:21:37.240
a company, a sober pritorship, a partnership, whatever, and you

265
00:21:38.000 --> 00:21:41.519
are hiring people that have been unemployed for a long

266
00:21:41.559 --> 00:21:45.880
period of time, or they're veterans that have returned and

267
00:21:46.920 --> 00:21:51.480
they're looking for work, or someone that is disabled and

268
00:21:51.519 --> 00:21:54.559
they're looking for work. When you hire them, you not

269
00:21:54.720 --> 00:22:02.599
only you get an opportunity to deduct an extra ninety

270
00:22:02.640 --> 00:22:08.079
six hundred dollars per qualified employee. So not only are

271
00:22:08.079 --> 00:22:10.359
you getting a good worker, but you are getting a

272
00:22:10.440 --> 00:22:16.240
tax benefit for that worker, and you're also helping to

273
00:22:16.279 --> 00:22:20.599
build up their life, giving them purpose, giving them opportunity

274
00:22:20.960 --> 00:22:23.799
to get back on their feet. So keep this in

275
00:22:23.880 --> 00:22:27.359
mind when you're thinking about hiring. If you haven't done

276
00:22:27.400 --> 00:22:31.000
it in twenty twenty five, twenty twenty six is a

277
00:22:31.039 --> 00:22:34.240
new year. There are a lot of people that are

278
00:22:34.599 --> 00:22:38.480
unemployed at this time. If you're thinking about hiring, and

279
00:22:38.559 --> 00:22:41.880
you're thinking about even seniors are coming out of retirement

280
00:22:41.920 --> 00:22:46.759
and going back to work, you're thinking about hiring someone,

281
00:22:46.960 --> 00:22:50.799
consider those that might be in one of these specific groups,

282
00:22:51.400 --> 00:22:54.480
and you will not only have a good worker, but

283
00:22:54.599 --> 00:22:57.759
you also have that tax benefit. So that's something to

284
00:22:57.799 --> 00:23:03.279
consider when you're thinking about lowering your taxable rate Small

285
00:23:03.359 --> 00:23:09.400
Business Healthcare tax Credit. Eligible small employers that pay at

286
00:23:09.480 --> 00:23:13.200
least fifty percent of employees health insurance premiums may qualify

287
00:23:13.240 --> 00:23:16.279
for a credit out of up to fifty percent of

288
00:23:16.319 --> 00:23:23.759
those premiums. That's another benefit that's happening, and it's great

289
00:23:24.599 --> 00:23:27.319
if you're able to if you're large enough or you've

290
00:23:27.319 --> 00:23:30.599
come to the point where you are able to offer

291
00:23:31.440 --> 00:23:37.279
them healthcare health benefits, you're able to deduct that expense

292
00:23:37.319 --> 00:23:42.279
and lower your taxable income for your organization, for your

293
00:23:42.319 --> 00:23:48.559
company by providing healthcare for your employees and getting up

294
00:23:48.559 --> 00:23:54.440
to fifty percent of that premium deducted. A credit for

295
00:23:54.599 --> 00:23:59.720
employer provided childcare, Now, that is a benefit that would

296
00:24:00.079 --> 00:24:03.799
really be great for a lot of people who want

297
00:24:03.880 --> 00:24:07.680
to work, but it's difficult for them to work because

298
00:24:07.720 --> 00:24:12.799
of the cost of childcare. A credit for employer provided childcare,

299
00:24:12.920 --> 00:24:16.400
a tax credit is available for businesses that provide childcare

300
00:24:16.519 --> 00:24:21.519
services for their employees. So you're going to get a credit,

301
00:24:22.279 --> 00:24:31.160
a deduction from your taxable income for providing payment, or

302
00:24:31.559 --> 00:24:39.240
providing services, or providing reimbursement or whatever for your employee.

303
00:24:39.440 --> 00:24:45.720
Ease childcare and a lot of a lot of single

304
00:24:45.799 --> 00:24:48.920
parents out there it's very difficult for them, especially if

305
00:24:48.960 --> 00:24:52.559
they're not living near home, or they're not living near

306
00:24:53.559 --> 00:24:57.160
a friend or something like that, and they can't afford

307
00:24:57.559 --> 00:25:01.279
they're just now starting back to work, they can't afford

308
00:25:01.640 --> 00:25:05.759
the childcare, so many of them are still at home.

309
00:25:06.359 --> 00:25:09.799
You may be doing small jobs, odd jobs, but not

310
00:25:09.960 --> 00:25:13.200
being able to actually get into a career or establish

311
00:25:13.240 --> 00:25:18.799
themselves because of the cost of childcare. So this will

312
00:25:18.880 --> 00:25:22.240
be a way of helping some of the people that

313
00:25:22.279 --> 00:25:25.640
are unemployed that are wanting to come to work or

314
00:25:26.440 --> 00:25:31.160
needing to come to work or to meet qualifications for

315
00:25:31.319 --> 00:25:37.079
their snap and they need to be able to get childcare.

316
00:25:37.599 --> 00:25:44.119
If you're able to provide childcare services for them, or

317
00:25:44.160 --> 00:25:48.079
you're paying those premiums for them or whatever, then that

318
00:25:48.400 --> 00:25:51.920
is a credit that gets deducted from your taxable income.

319
00:25:53.119 --> 00:26:00.039
Energy efficiency incentives. Businesses making eco friendly upgrades such a

320
00:26:00.039 --> 00:26:07.519
as insulation or HVAC systems may qualify for credits extended

321
00:26:07.680 --> 00:26:12.079
by the Inflation Reduction Act. So if you're involved in

322
00:26:12.559 --> 00:26:19.000
energy efficiency in whatever manner, you're going to get a

323
00:26:19.279 --> 00:26:23.480
deduction for the type of business that you're in and

324
00:26:23.519 --> 00:26:27.920
the type of work that you are involved. And here

325
00:26:27.960 --> 00:26:32.640
are some other common deductible business expenses. Of course we

326
00:26:32.680 --> 00:26:35.160
should know all of these, but I'm going to go

327
00:26:35.279 --> 00:26:39.480
through them just in case you aren't aware. So your

328
00:26:39.519 --> 00:26:43.559
common business deductions, and most of them, if you're using

329
00:26:43.599 --> 00:26:48.079
a business software, they show up as an expense on

330
00:26:48.160 --> 00:26:55.119
your financial system, and most of those expenses are deductible

331
00:26:55.400 --> 00:26:58.559
on your taxes. But let's go through them to make

332
00:26:58.599 --> 00:27:03.440
sure you understand. Salaries and wages. The cost of paying

333
00:27:03.440 --> 00:27:10.279
your employees, including salaries, wages, bonuses, and benefits, is fully

334
00:27:10.319 --> 00:27:17.680
completely deductible as an expense, lowering the profit, lowering the

335
00:27:17.759 --> 00:27:25.359
taxable income for your organization. Rent payments for business property

336
00:27:25.880 --> 00:27:33.640
including office space storage units is one tax deductible. And

337
00:27:33.720 --> 00:27:39.079
there's even if you are leasing. You're leasing a building,

338
00:27:39.400 --> 00:27:45.240
maybe you have a warehouse that you use and for

339
00:27:45.400 --> 00:27:49.680
the supply chain, and you have food or different items

340
00:27:49.720 --> 00:27:54.119
delivered and it stays in that warehouse until it is

341
00:27:54.160 --> 00:27:58.319
actually picked up and delivered or sent out. Well, that

342
00:27:59.119 --> 00:28:02.839
lease or that rent that is deductible. There are a

343
00:28:02.880 --> 00:28:05.160
lot of different types of rents that are out there.

344
00:28:05.519 --> 00:28:09.319
Check your business, find out if you are paying any

345
00:28:09.359 --> 00:28:15.720
rents for anything, and know that those are one deductible

346
00:28:17.359 --> 00:28:23.119
utilities expenses for your electricity, your gas, your water, the internet,

347
00:28:23.759 --> 00:28:29.000
the phone, telecommunications are deductible with deductions even for a

348
00:28:29.200 --> 00:28:34.319
home office s based usage. So if you have an

349
00:28:34.359 --> 00:28:39.079
office at home, you're a sole proprietor, you're working from home,

350
00:28:40.119 --> 00:28:43.000
keep track of your utilities, keep track of all of

351
00:28:43.039 --> 00:28:46.559
those expenses that you're paying now, because they are deductible

352
00:28:47.359 --> 00:28:50.240
based on your square footage of your office space, not

353
00:28:50.400 --> 00:28:54.960
one percent if you are a sole proprietor and you

354
00:28:55.039 --> 00:28:58.960
have a home base office. Other than that, it's one

355
00:28:59.039 --> 00:29:04.440
hundred percent deduction for other companies that are outside of

356
00:29:04.480 --> 00:29:08.319
the home and in a building or what office space

357
00:29:08.400 --> 00:29:14.000
or whatever. Insurance premiums for most types of business insurance,

358
00:29:14.039 --> 00:29:19.640
such as liability insurance, which is protecting against someone falling

359
00:29:19.799 --> 00:29:23.920
or protecting against you know, you have a consulting firm,

360
00:29:24.039 --> 00:29:30.000
protecting against you know, someone you know may maybe airrors

361
00:29:30.000 --> 00:29:35.400
and omission things like that. So these premiums are business

362
00:29:35.440 --> 00:29:41.799
insurance such as liability, property and professional insurance is one

363
00:29:41.839 --> 00:29:47.359
hundred percent deductible, So don't be afraid to provide or

364
00:29:47.400 --> 00:29:50.960
get your insurances or make sure that your business is covered,

365
00:29:52.000 --> 00:29:59.599
covered from liabilities, covered from potential harm, covered from potential

366
00:29:59.680 --> 00:30:06.880
loss lawsuits. Make sure your business is protected by some

367
00:30:06.960 --> 00:30:14.319
type of liability insurance. Travel and meals. Business travel expenses

368
00:30:14.440 --> 00:30:19.440
are one hundred percent deductible, while meals are generally fifty

369
00:30:19.480 --> 00:30:23.920
percent deductible. So and then you really need to make

370
00:30:23.920 --> 00:30:27.920
sure you're keeping the receipts on those because if you

371
00:30:27.920 --> 00:30:31.839
are audited, you're you're needing to prove that you did travel,

372
00:30:32.440 --> 00:30:36.519
you did spend meals, you it was for you. You're

373
00:30:36.559 --> 00:30:41.960
not paying for your friends showing up along the beach,

374
00:30:43.319 --> 00:30:47.640
but you you actually have a business travel where you

375
00:30:47.720 --> 00:30:51.519
conducted business, document the type of business. And I'm not

376
00:30:51.599 --> 00:30:53.799
saying you can't go to the beach. You can have

377
00:30:53.880 --> 00:30:57.680
a meeting, you know, at the beach somewhere, at a

378
00:30:57.720 --> 00:31:01.599
resort somewhere, but you need to die what you've discussed

379
00:31:02.079 --> 00:31:06.000
as business so that it does not end up getting

380
00:31:06.720 --> 00:31:18.039
reversed from your tax return. Marketing and advertising costs for campaigns, flyers, sponsorships,

381
00:31:18.319 --> 00:31:25.079
and other promotional activities are fully deductible. So if you're

382
00:31:25.119 --> 00:31:32.039
hesitating in marketing or advertising, everyone's out there, they're shopping,

383
00:31:32.319 --> 00:31:34.559
but they're not maybe going into the brick and mortar

384
00:31:34.599 --> 00:31:37.880
so much anymore but they are online. You need to

385
00:31:37.920 --> 00:31:42.440
make yourself available. You need to make yourself so that

386
00:31:43.039 --> 00:31:50.279
you're visible, and that might require some help from a

387
00:31:50.319 --> 00:31:58.240
company that provides marketing, digital marketing, digital advertising so that

388
00:31:58.920 --> 00:32:03.000
your product can be seen, your product can appear in

389
00:32:03.079 --> 00:32:08.720
a very nice ways so that it actually attracts and

390
00:32:08.799 --> 00:32:14.079
draws that potential customer in gives them that feeling that

391
00:32:14.160 --> 00:32:17.680
they have to have that particular product. And you got

392
00:32:17.680 --> 00:32:21.160
to keep in mind you're competing with millions now because

393
00:32:21.200 --> 00:32:24.279
everybody is online. So you need to make sure that

394
00:32:24.480 --> 00:32:28.440
you have your marketing advertising. And if you're thinking about

395
00:32:28.480 --> 00:32:30.920
the costs, think about that that cost is going to

396
00:32:30.960 --> 00:32:34.960
be deductible, and if that cost is bringing you business,

397
00:32:35.119 --> 00:32:39.680
it's worth the expense. And that expense is deductible, you

398
00:32:39.759 --> 00:32:43.839
really have been benefited a lot. Legal and professional fees.

399
00:32:44.160 --> 00:32:50.440
Necessary fees for legal and accounting services are deductible one

400
00:32:50.519 --> 00:32:54.039
hundred percent. And if I never say anything else, I

401
00:32:54.160 --> 00:32:57.759
always will say you need to talk with a professional

402
00:32:58.440 --> 00:33:05.279
about legal issues and your accounting. Seek out those professional services.

403
00:33:05.640 --> 00:33:09.000
If you do not have someone in your organization already hired,

404
00:33:09.400 --> 00:33:12.519
because their job is to make sure that you're protected,

405
00:33:13.240 --> 00:33:16.759
that you're meeting all of the rules and regulations, that

406
00:33:16.839 --> 00:33:22.119
you are in compliance with all the laws, especially in

407
00:33:22.160 --> 00:33:25.240
your accounting. You want to make sure you're compliant with

408
00:33:25.400 --> 00:33:30.559
all the regulatory requirements with gap generally accepted accounting principles,

409
00:33:31.039 --> 00:33:34.920
that you're aware of any new laws that have come

410
00:33:34.960 --> 00:33:39.920
in that will affect your business, affect your employees. So

411
00:33:40.000 --> 00:33:42.440
you want to have those services. You want to be

412
00:33:42.519 --> 00:33:47.960
able to have services that understand your industry, understand your business,

413
00:33:48.480 --> 00:33:55.559
understand your forecast. Because you did a budget, right, they

414
00:33:55.640 --> 00:33:58.039
understand where you're going and so they're going to advise

415
00:33:58.079 --> 00:34:02.319
you the best way possible. And also there's a lot

416
00:34:02.440 --> 00:34:05.720
because of maybe AI and different things, there's a lot

417
00:34:05.799 --> 00:34:10.000
of infringement that's taking place. You may want to have

418
00:34:10.320 --> 00:34:14.239
legal counsel there to advise you of how to protect

419
00:34:14.679 --> 00:34:18.559
your particular product, your particular advertising of your product, making

420
00:34:18.599 --> 00:34:22.880
sure that someone is not creating your product and out

421
00:34:22.960 --> 00:34:26.159
selling it and you're not aware of it. So you

422
00:34:26.320 --> 00:34:30.320
going to have that legal and professional services out there.

423
00:34:30.320 --> 00:34:35.519
But they are deductible interests on your loans, interests paid

424
00:34:35.559 --> 00:34:39.599
on business loans or credit cards. It's seductible subject to

425
00:34:39.639 --> 00:34:42.880
limits for certain businesses. So it's going to require some

426
00:34:42.960 --> 00:34:49.119
research as to what types of loans the interest is deductible,

427
00:34:49.559 --> 00:34:53.599
and what kind of cards. How these cards are being used.

428
00:34:54.119 --> 00:34:58.159
Is in a business cards only solely, then it's not

429
00:34:58.199 --> 00:35:00.639
going to be a problem. But when you start mixing

430
00:35:00.920 --> 00:35:06.199
that card with a personal card, and I highly recommend

431
00:35:06.280 --> 00:35:09.760
that if you're going to be deducting the interest on

432
00:35:09.920 --> 00:35:14.199
those cards, you need to have a separate business credit

433
00:35:14.239 --> 00:35:18.360
card that is used only for business transactions and no

434
00:35:18.599 --> 00:35:22.800
other type of spending than you would be safe your

435
00:35:22.840 --> 00:35:28.360
home office deduction. For most using a dedicated home office,

436
00:35:28.800 --> 00:35:32.639
a deduction can be calculated using a simplified method by

437
00:35:32.679 --> 00:35:36.920
tracking actual expenses, and you're going to want, Like I said,

438
00:35:37.239 --> 00:35:41.840
not only are you going to want those expenses that

439
00:35:42.000 --> 00:35:45.239
you're tracking, but you're going to want to have hard

440
00:35:45.400 --> 00:35:52.719
copies of that information just in case you do get audited.

441
00:35:53.920 --> 00:35:57.159
So one other thing is changing your business entity can

442
00:35:57.199 --> 00:36:02.920
provide significant tax benefits, but it's equally crucial to understand

443
00:36:03.000 --> 00:36:08.679
future implications. Each structure has its pros and its cons

444
00:36:09.119 --> 00:36:12.760
and what works for one business may not work for another.

445
00:36:13.519 --> 00:36:15.760
So all of these things that I've mentioned, and there's

446
00:36:15.840 --> 00:36:18.800
so much more. Like I said, there's so much more

447
00:36:19.320 --> 00:36:21.760
that's out there, and you need to talk with a

448
00:36:21.880 --> 00:36:25.760
tax professional, but you need to understand just because this

449
00:36:25.880 --> 00:36:29.880
company functions this way, it is not a one size

450
00:36:29.920 --> 00:36:34.440
fits all. There may be some idiosyncrasies that you are

451
00:36:34.519 --> 00:36:38.239
not aware of that you need to make yourself aware of,

452
00:36:38.800 --> 00:36:43.039
or your accountant needs to be aware of. Specifically, a

453
00:36:43.079 --> 00:36:48.880
tax accountant. Every accountant does not necessarily understand all of

454
00:36:48.920 --> 00:36:52.840
the tax laws. Because accounting is a profession where it

455
00:36:52.880 --> 00:36:57.079
has so many vast areas that you work in, you

456
00:36:57.199 --> 00:37:03.639
don't necessarily and have the opportunity to be involved in tax.

457
00:37:03.880 --> 00:37:09.800
So you have a tax department. Most companies do, and

458
00:37:09.920 --> 00:37:16.199
that's the only thing they concentrate on is tax and

459
00:37:16.239 --> 00:37:20.480
making sure they can reduce the tax liability. They're constantly

460
00:37:20.599 --> 00:37:24.639
we're researching for new changes in the laws, looking for

461
00:37:24.760 --> 00:37:28.920
new benefits, new ways to be able to reduce the liability.

462
00:37:29.239 --> 00:37:33.599
So they're they're constantly doing nothing but research. And like

463
00:37:33.639 --> 00:37:37.639
I said, there's hundreds and hundreds and hundreds of codes

464
00:37:37.719 --> 00:37:42.079
that are out there and searching through them, understanding them

465
00:37:43.360 --> 00:37:46.920
is a totally different situation. So just because you go

466
00:37:46.960 --> 00:37:50.480
and read them, you might read them, but you don't

467
00:37:50.559 --> 00:37:54.920
understand how to use it because it's connected to other

468
00:37:55.000 --> 00:38:01.280
information that it is not so easily reconnizable when you're

469
00:38:01.320 --> 00:38:05.559
reading that particular code. So I would definitely advise you

470
00:38:05.639 --> 00:38:10.400
to always always be looking for a tax professional. I'm

471
00:38:10.440 --> 00:38:13.360
not trying to give you financial advice. What I'm trying

472
00:38:13.360 --> 00:38:17.400
to do is trigger your mind enough that you become

473
00:38:17.559 --> 00:38:21.840
curious to find out am I getting the best that

474
00:38:21.920 --> 00:38:27.880
I need for my corporation, for my escorp, for my partnership,

475
00:38:28.039 --> 00:38:32.760
for my LLC, for my sole proprietorship. Are the right

476
00:38:32.880 --> 00:38:37.840
questions being asked to be to see if I am

477
00:38:38.440 --> 00:38:41.519
taking advantage of all of the different codes that are

478
00:38:41.559 --> 00:38:43.679
out there. Like I said, there's so many other codes

479
00:38:44.039 --> 00:38:47.320
that are out there, but your tax account that needs

480
00:38:47.360 --> 00:38:50.599
to be informed, needs to be on top of it.

481
00:38:51.320 --> 00:38:54.480
And what you need to do is maybe ask the question,

482
00:38:55.079 --> 00:38:58.440
am I getting all of the benefits that I can

483
00:38:58.480 --> 00:39:02.800
take at this time? If not, can you research and

484
00:39:02.880 --> 00:39:06.960
find out what other benefits are available to me? You

485
00:39:07.000 --> 00:39:10.280
know the one thing I want to say, I'll say

486
00:39:10.320 --> 00:39:14.360
it now because I don't want to forget. I'm not

487
00:39:14.400 --> 00:39:16.599
trying to give you financial advice, but I'm trying to

488
00:39:16.599 --> 00:39:22.480
give you enough information to make you go and take

489
00:39:22.519 --> 00:39:27.960
a step like changing your legal entity status is a

490
00:39:28.000 --> 00:39:33.639
big decision and should not be based solely on tax considerations.

491
00:39:34.440 --> 00:39:38.360
It can impact your business in many ways, including liability

492
00:39:38.519 --> 00:39:44.079
control and ability to raise funds. You must consult a

493
00:39:44.159 --> 00:39:51.440
license advisor or tax professional before making such decisions. In fact,

494
00:39:51.480 --> 00:39:57.679
you should always be talking to a tax professional, someone

495
00:39:57.880 --> 00:40:02.079
that that is their background, who is very knowledgeable about

496
00:40:02.360 --> 00:40:04.800
all of the tax code and all of the benefits

497
00:40:05.079 --> 00:40:08.480
and all of the credits and all of the deductions,

498
00:40:08.960 --> 00:40:12.559
and also all of the pros and cons and pitfalls,

499
00:40:13.000 --> 00:40:16.360
because as I said, all of them differ. They're not

500
00:40:16.480 --> 00:40:19.599
as the same. It's not a one size fits all.

501
00:40:20.280 --> 00:40:23.639
Every tax code out there does not apply to every

502
00:40:23.800 --> 00:40:28.440
business or organization, and so you need to know how

503
00:40:28.480 --> 00:40:33.079
they are divided, how they're broken down, so that your

504
00:40:33.159 --> 00:40:37.320
particular entity, however you set your organization up, you get

505
00:40:37.360 --> 00:40:43.239
the complete benefits for you at that particular status. But

506
00:40:44.719 --> 00:40:48.360
what would it look like if you change from a

507
00:40:48.400 --> 00:40:53.159
sole proprietorship to an LLC? What would it look like

508
00:40:53.800 --> 00:40:59.039
if you became a partnership and collaborated with someone else,

509
00:40:59.320 --> 00:41:04.199
What would it look like if you incorporated, if you're

510
00:41:04.239 --> 00:41:09.039
at the point or the size or your dreams to expand,

511
00:41:09.320 --> 00:41:13.360
or at the point where you need to become a corporation,

512
00:41:13.920 --> 00:41:18.360
because maybe not making some of those decisions, not making

513
00:41:18.400 --> 00:41:25.079
those moves are taking far more from you than what

514
00:41:25.239 --> 00:41:30.960
you actually realize. And so I know tax isn't on

515
00:41:31.239 --> 00:41:33.960
a pretty conversation or is even something you want to

516
00:41:34.000 --> 00:41:38.199
hear about until April, but it's something that you have

517
00:41:38.280 --> 00:41:41.800
to know about before then, because you have to prepare.

518
00:41:42.639 --> 00:41:45.960
You have to get the documentation some things. If you're

519
00:41:46.079 --> 00:41:50.119
changing entity, you've got a file to change that entity,

520
00:41:50.199 --> 00:41:54.559
and it takes a little while to get that filing

521
00:41:54.639 --> 00:41:59.679
done and then to get the confirmation from the IRS

522
00:42:00.360 --> 00:42:04.239
that you have changed your status. If you're going to

523
00:42:04.320 --> 00:42:08.239
change your status, I would say you do it at

524
00:42:08.239 --> 00:42:10.559
the beginning of a year, not in the middle of

525
00:42:10.599 --> 00:42:15.239
the year, because now you've got two types of taxing

526
00:42:15.440 --> 00:42:18.480
entities there that you need to file, and it can

527
00:42:18.639 --> 00:42:21.320
end up causing confusion as to what you need to

528
00:42:21.360 --> 00:42:23.599
do and what you need to be breaking out and

529
00:42:23.639 --> 00:42:27.400
what kinds of things that you need to be concentrating on.

530
00:42:27.719 --> 00:42:31.760
So it's really important to think through this and it's

531
00:42:31.760 --> 00:42:34.360
something you need to plan for you. Just don't jump

532
00:42:34.440 --> 00:42:36.800
up and say, oop, it's almost tax time, let me

533
00:42:36.840 --> 00:42:41.280
go start doing all these changes. No, you shouldn't because

534
00:42:41.480 --> 00:42:45.360
you need to be thinking through. Yes, the tax liability

535
00:42:45.639 --> 00:42:49.599
might be high, but there's consequences in not doing it

536
00:42:49.639 --> 00:42:53.760
at the right time. This is why I'm emphasizing talk

537
00:42:53.880 --> 00:42:58.519
to a tax professional. Find one in your area, meet

538
00:42:58.559 --> 00:43:02.840
with them, search and make sure that they really are

539
00:43:03.599 --> 00:43:07.719
and their reputation is that they are successful in helping

540
00:43:07.760 --> 00:43:15.480
you to reduce your tax liability. Research, get references, talk

541
00:43:15.559 --> 00:43:19.519
to clients that they've had to make sure that they

542
00:43:20.719 --> 00:43:23.559
are legitimate, that there's someone that you can trust, there's

543
00:43:23.559 --> 00:43:28.159
someone that you can depend on their advice. But it

544
00:43:28.280 --> 00:43:35.400
is something that I would recommend that you consider looking

545
00:43:35.440 --> 00:43:39.599
at as you go into the beginning of twenty twenty six.

546
00:43:41.199 --> 00:43:44.239
You may be pretty late to be thinking about making

547
00:43:44.280 --> 00:43:47.239
some changes in twenty twenty five, but I will be

548
00:43:47.280 --> 00:43:51.840
four twenty twenty five. Look to see what particular deductions

549
00:43:51.880 --> 00:43:56.559
are permanent and you can take one hundred percent and

550
00:43:56.639 --> 00:44:00.920
take advantage of those particular laws because you you are

551
00:44:01.079 --> 00:44:06.880
entitled for twenty twenty five, but for twenty twenty six.

552
00:44:07.199 --> 00:44:09.719
I think it's a good time to start thinking about

553
00:44:10.000 --> 00:44:13.280
how can I stop leaving money on the table, How

554
00:44:13.320 --> 00:44:17.239
can I stop giving away so much money, you know

555
00:44:18.199 --> 00:44:23.079
for taxes. Surely there is a benefit to me getting

556
00:44:23.119 --> 00:44:26.239
this business and keeping more money in my pocket. But

557
00:44:26.440 --> 00:44:30.400
talk with your tax professionals. Like I said, find one

558
00:44:30.480 --> 00:44:36.119
that is reputable in your area and that can sit

559
00:44:36.199 --> 00:44:42.199
down with you, and please do some research to make

560
00:44:42.280 --> 00:44:46.719
sure that the person handing you this business card has

561
00:44:46.960 --> 00:44:56.800
the references and the professionalism and the ability to be

562
00:44:56.920 --> 00:45:00.400
able to look at your particular business. One of the

563
00:45:00.400 --> 00:45:03.400
things I've always want to, you know, coster you on

564
00:45:04.079 --> 00:45:08.199
for those that you are thinking about looking for a

565
00:45:08.239 --> 00:45:14.800
tax professional. Just like there's different industries, there are different

566
00:45:14.840 --> 00:45:18.760
types of tax professionals. If you were in manufacturing, you

567
00:45:18.840 --> 00:45:25.400
don't want someone who their customers are probably in the

568
00:45:25.440 --> 00:45:32.199
food industry, or they're in garment where or different things

569
00:45:32.280 --> 00:45:36.679
like that. You're going to want someone who understands manufacturing,

570
00:45:37.320 --> 00:45:43.239
understands the manufacturing site, understands the plant, understands the equipment

571
00:45:43.360 --> 00:45:48.559
in the plant, understands the processes, understands the timing understands.

572
00:45:48.920 --> 00:45:52.079
You know, all of the different things in the different ways.

573
00:45:52.199 --> 00:45:55.119
The least, the least the buybacks and all of these

574
00:45:55.119 --> 00:45:59.519
different things. You're going to want someone who is informed

575
00:45:59.840 --> 00:46:03.400
in in your particular industry. It may take a little

576
00:46:03.440 --> 00:46:07.599
while to research that, but I would research that. Just

577
00:46:07.639 --> 00:46:11.039
because they say they're a tax professional and does not

578
00:46:11.199 --> 00:46:13.679
mean they're going to understand everything, because they need to

579
00:46:13.760 --> 00:46:18.679
understand your business first. They need to understand your industry first.

580
00:46:19.199 --> 00:46:22.679
They need to understand your goals and like I said,

581
00:46:22.679 --> 00:46:26.199
your forecast where you're trying to go, because we're not

582
00:46:26.840 --> 00:46:30.199
dealing with what's in the past, we're dealing with what's

583
00:46:30.280 --> 00:46:33.840
going to be in the future. But since I said that,

584
00:46:34.719 --> 00:46:38.039
you may want to even have them look at opportunities

585
00:46:38.360 --> 00:46:41.800
you have up to five years. You may want to

586
00:46:42.159 --> 00:46:46.119
have them checked to see that you have received all

587
00:46:46.199 --> 00:46:50.840
of the benefits and they were on your preparation of

588
00:46:50.920 --> 00:46:55.360
your tax return, and so that you are not leaving

589
00:46:55.559 --> 00:46:59.119
money on the table. You may have an opportunity to

590
00:46:59.519 --> 00:47:03.599
do a revise return and be able to take care

591
00:47:03.639 --> 00:47:08.760
of benefits that were never considered in the previous filings

592
00:47:08.800 --> 00:47:15.320
and get that money back. So I'm saying this to

593
00:47:15.840 --> 00:47:22.800
just advise you to consider the professionalism of the tax consultant,

594
00:47:23.199 --> 00:47:26.079
but make sure they're in the industry that you work in,

595
00:47:26.599 --> 00:47:30.960
so that you're talking the same language when you are

596
00:47:31.199 --> 00:47:34.719
talking about your business and what your business is doing,

597
00:47:35.440 --> 00:47:38.800
and the kind of expenses your business has and the

598
00:47:38.880 --> 00:47:43.480
kind of expenses you plan on incurring because you're expanding,

599
00:47:44.760 --> 00:47:48.559
or you've spent a lot of time during research and

600
00:47:48.719 --> 00:47:53.199
experimental things on your new product, or you know, whatever

601
00:47:53.280 --> 00:47:59.039
the things are, You're going to be prepared and understand

602
00:47:59.159 --> 00:48:05.199
exactly what going on, So seek them out and look

603
00:48:05.239 --> 00:48:09.320
for them. I would just begin by looking for tax professionals,

604
00:48:09.960 --> 00:48:15.519
and then from there I would start considering then looking

605
00:48:15.599 --> 00:48:18.679
for and tell them I would like to have some

606
00:48:18.760 --> 00:48:23.519
references so that you can actually contact those people. And

607
00:48:23.559 --> 00:48:29.239
then there's a lot of information out there in the

608
00:48:29.320 --> 00:48:34.400
data oh zone, and you can get any one of

609
00:48:34.440 --> 00:48:40.000
those research tools out there, Gemini, Chat, g GBT, there's

610
00:48:40.039 --> 00:48:42.159
a lot of them out there. Get one of them

611
00:48:42.199 --> 00:48:47.280
and begin to research and find out. You can look,

612
00:48:47.400 --> 00:48:50.480
like I said, ask for a customer list of those

613
00:48:50.559 --> 00:48:54.400
they've done business with. If they're hesitant, you may want

614
00:48:54.440 --> 00:49:00.000
to keep moving because if they've done business for them,

615
00:49:00.079 --> 00:49:06.280
they should have a reputation of being excellent. And if so,

616
00:49:06.840 --> 00:49:11.079
then that someone that you want to be able to

617
00:49:11.119 --> 00:49:18.400
depend on making sure you have the right tax set up,

618
00:49:18.679 --> 00:49:24.400
entity and everything. I hope you've enjoyed the conversation is

619
00:49:24.440 --> 00:49:28.760
just sitting down chatting with you and just hopefully triggering

620
00:49:29.400 --> 00:49:33.400
your next step, and that is getting help so that

621
00:49:33.519 --> 00:49:37.519
you are not paying as much as you have been

622
00:49:38.079 --> 00:49:42.199
and you find out what these secret codes are that

623
00:49:42.280 --> 00:49:46.920
can benefit you. I thank you for joining A Sharp Outlook.

624
00:49:47.719 --> 00:49:52.920
We're here every Monday at eleven am Eastern Time in

625
00:49:53.239 --> 00:49:58.360
eight am Pacific time. I enjoy talking with you and

626
00:49:58.400 --> 00:50:02.159
sharing knowledge with you, and I hope you enjoy receiving it.

627
00:50:02.800 --> 00:50:06.639
Until next time, Stay informed.

628
00:50:10.599 --> 00:50:12.719
I want to thank you for joining us on a

629
00:50:12.840 --> 00:50:16.599
Sharp Outlook. We have been informed and energized to take

630
00:50:16.599 --> 00:50:20.280
the next steps. We have posted links to websites and

631
00:50:20.400 --> 00:50:24.199
videos to learn more on today's topic. Please join us

632
00:50:24.239 --> 00:50:28.559
again next week for another thought provoking conversation right here

633
00:50:28.960 --> 00:50:31.559
on key for HD radio and.

634
00:50:31.519 --> 00:50:32.519
Talk for TV.

635
00:50:33.440 --> 00:50:37.599
Listen to the podcast on all the podcast apps, and

636
00:50:37.719 --> 00:50:40.280
until next week, stay informed,