Monday, December 29th, 2008

It’s the end of the World as we know it.

I mean Year. It’s the end of the Year!

This year has definitely been a productive one. I hope that everyone had the opportunity to start at least one project (hopefully more!). While everyone gives their end of the year best or worst list, recaps their progress on goals, or tells you to have a good New Years… I instead will tell you this…

Get a good CPA. If you made decent money this year and have an LLC or Inc I hope you have your duckies in a row.  My CPA set me up this year to pay myself minimum wage while giving myself bonuses throughout the year.  This cuts taxes WAY down.  Now I am not a CPA and so I say don’t take my advice until you speak with your CPA about this.

Here is the little trick.  (This is for Texas, you’ll have to check your local tax laws on this.) The IRS needs to see your business grow.  They also need to see that you are paying yourself.  So you pay yourself the least amount possible.  Either minimum wage or a small salary.  While the Government takes out their federal, state, and selfemployment taxes on that money, they cannot take the self employment tax out on bonuses.  Now… I don’t know how this works but my CPA said that I can be saving 50% of my taxes by doing this.

Don’t forget to write off your home, car, phone, electric bill, water bill, Internet bill, any time you go out to eat and mention work… The list goes on.  As an LLC I have some 300 write-offs I can use.  The key is to get as many write-offs as possible, while not going broke doing it.  Just be practical and again… Talk with your CPA.

Now, I don’t know how this completely works.  Again my CPA took care of this for me.  Most people don’t want to form their buisness as an LLC because of the taxes.  What isn’t well know is the fact that you can file to change your tax status as an LLC to file taxes as an S-Corp.  This will lower your taxes considerably from the beginning.  You do have an election period so if you are an LLC and filing as an LLC then let your CPA know that you want to file as an S-Corp for next year.  The form you need is F8832 and can be found on the IRS website.  Again… Talk with your CPA to see if this really is the best option.

Here are 4 little tips for the coming year.

  1. Keeps records of money in and money out.  I’m buying Quick Books for Mac.  Tracking all of your income and expenses is very important so that you can see where you are wasting money and where you can allocate more money to.
  2. is the best resource besides your CPA for tax information.  If you have a business or want to form one soon take some time to learn the IRS website.
  3. Remember the essential write-offs.  Home, car, phone, bills, etc, etc. can all be used as a write-off.  This saves on purchasing actual office space and in the end it just helps your taxes.
  4. Separate your Business funds from your personal funds.  I have two bank accounts.  One business checking account and one joint checking account. If your starting out you don’t need a business account.  Just have two regular checking accounts to separate your funds.  This helps track what your doing and when you do convert to an actual business entity you’ll be ahead of the game.

The most important thing is to remember to have fun.  Don’t take life so seriously.  And go out and push out those ads.

Lets start 2009 off right! Have a good New Years.  It’s my anniversary on the 31st so I’ll see you all next year!

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8 Responses

December 29, 2008

I’m no CPA but I do own an LLC. Form 2553 that you referred to actually changes your business from an LLC to an S-Corp. If you want to keep the LLC but just be taxed like a corporation rather than as a sole proprietor or partnership then you would want form 8832. The downside with that is possible double taxation – I myself haven’t decided if I am going to file 8832 or not.

December 29, 2008

Ahh yeah sorry I made a boo boo. I corrected the doc. Thanks for the catch.

December 29, 2008

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


December 29, 2008

Ah yes I have heard about that form. I’ll have to look into it more.

Have a very Happy New Years!

December 31, 2008

I used quickbooks for mac for a while, it sucks. Try out MYOB, its alot nicer.

January 1, 2009

Yeah I just got quickbooks for mac. I decided it was time I took more control over my finances. This will give me a better grip on where I am wasting money and where I can afford to spend more money.

January 2, 2009

Interesting information about accounts. I am quite a newbie at the internet business so currently do not have need of an accountant, and also I live in Mallorca, Spain. I have no doubt the tax laws are different here, but needless to say, I take on board your comments on taking into consideration putting all expenses against the business. I am working from home so all this applies. Thanks again for the info.

February 17, 2009

Very catchy title. Lol I was like ok? i thought it was going to be another we are a doomed recession post. A good CPA is worth a ton in more ways in one. good post.