Six Tax Truths Every Business Owner Should Know
By Gretchen Roberts
Here’s the problem: most of them don’t even understand their own situation, much less yours. Did you know the tax code is somewhere between 7,000 and 75,000 pages, depending on what you include? In other words, it’s complicated.
1. Real strategies aren’t secret.
It’s all in that 75K-page tax code we referenced earlier. If a deduction or strategy is legal, it’s available for anyone to use—not just “the wealthy” or those “in the know.” The real questions are: Is the strategy applicable to you? Do you have the time and potentially the cash to invest in planning and executing the strategy?
2. The tax tail shouldn’t wag the dog.
You’ll never hear us recommending that you set up a complex, expensive 401(k) plan if no one in your industry does it, just so you can save a few tax bucks along with saving for retirement. We won’t recommend that you buy equipment at the end of the year that you don’t really need so you can carve a little off your tax bill. Instead, we ask, “Will this investment/tax strategy directly or indirectly produce ROI for your business, and do you have the time/cash to execute?” If so, it’s a green light. If not, let’s discuss.
3. Growth first, then tax strategy
Wealthy people don’t get rich by finding hidden deductions. They build profitable businesses first, then optimize their taxes.
If you’re operating at a loss or you’re starting out and trying to conserve cash, it may make you feel good about not paying much in taxes, but you’ll be much better off by realizing at least an industry-standard profit—if not well above—and tax planning around that.
4. “Grey areas” usually aren’t.
Tax law has decades of rulings and case law behind it. Most “grey areas” have been tested before. The key is knowing what’s been decided, qualifying, and following the proper documentation.
5. Get the basics down.
Our tax resolution team spends most of their time dealing with the fundamentals: People and businesses that didn’t file on time or at all; that missed payments; that tripped a flag in the system and got audited; that messed up their payroll taxes (pro tip, we’re an accounting partner with Gusto payroll and recommend them for the simplicity and payroll taxes automation features). It’s important to understand your existing tax situation and have at least a basic knowledge of what’s happening before you try to layer in a bunch of new strategies.
6. The IRS is an underfunded, understaffed, under technology-resourced government agency (same with your state).
Even simple matters can drag on for months because of bureaucracy. That’s why experience and persistence matter more than trying to wing it yourself. Our experienced team of tax resolution specialists have been there, done that with the IRS and state taxing authorities and have hundreds of substantial wins to prove it.
The Bottom Line
Don’t gamble your peace of mind on TikTok tax strategies, but of course, if you have a question about something you’ve seen online, we’re happy to advise you based on your actual situation. Book your free strategy session with Red Bike Advisors and nail your tax savings strategy down.
Gretchen Roberts
Gretchen Roberts is CEO of Red Bike Advisors LLC. As a business owner herself, Gretchen has a deep understanding of the problems, questions, and financial pain points that business owners experience on a daily basis, and how strategic financial and tax planning is the key to "breakaway" business growth and success.