Three Tax Tricks That Actually Scale With Your Business

The IRS doesn’t care that you’re busy or ignorant of the law

As your business scales, so do the risks. The IRS doesn’t don its “Mr. Nice Guy” hat just because you’re busy growing or you weren’t aware of a compliance issue. That's like telling the cop who pulled you over for speeding that you didn't see the speed limit sign. Do you think they care? They’re just doing their job.

Here are the three tax strategies that actually scale with your business:

1. Clean Up Your Startup Mess

I’m the first to tell business owners that the ones I see who are successful do a fair amount of flying by the seat of their pants at first. The ones who break things because they’re moving quickly, but then go back to fix them, seem to have a much higher success rate than the ones who are afraid to break things and spend too much time on compliance and not enough on sales.

However, there comes a time to put on your grownup business owner pants so you don’t blow up your own business with tax mistakes (we’ve seen it happen and it’s awful to watch). 

Stop doing things like: 

• Paying workers under the table
• Filing taxes late or DIY (business taxes especially are WAY over most people’s heads and it’s too easy to make a mistake
• Writing paper payroll checks and hand-calculating payroll taxes (we see this bite people all the time and it’s not pretty)
• Not keeping an up-to-date, formal set of books including a balance sheet (not only does the IRS want this, but so does any potential lender, investor, or buyer)
• Mixing business and personal expenses and not having documentation (if you can’t substantiate, it’s not deductible)

2. Zoom Out to Look at the Big Picture.

You don’t need to be a tax pro, but you do need to know what’s happening with your numbers. You are ultimately responsible for your filed tax return, especially:

- Where the money’s going: So you understand your deductible expenses and any credit eligibility 

- What your tax return says: So you know what you owe and why

- How your decisions affect cash flow: So you don’t spend cash you can’t afford to lower your tax bill and find yourself in a crunch

Tax is often one of your largest expenses, between payroll tax, income tax, state tax, business personal property tax, sales and use tax….the list goes on. Overpaying blindly is just throwing away profit.

3. Use Strategies That Actually Scale

Not every tax trick is worth it. Some save you a little, but cost you big in time, admin, or investments. 

Smart tax strategies do four things:  

1. Save you money that goes directly to your pocket
2. Protect you from IRS scrutiny because they actually make sense for your situation and are defensible
3. Support your growth instead of distracting from it with crazy documentation requirements
4. Don’t sap your cash stash that you need to fund operations. It’s not worth it to go out of business because you bought that piece of equipment you couldn’t afford, but saved you a big tax bill.

We have our big list of favorite tax strategies, but we’d never just dump them in an article like this and tell you they’re a good fit for you. Because your situation is completely personal, and you many have the cash or appetite for strategies others many not. 

We prefer to sit down with you and get to know you, your business, your goals, your future plans. We develop tax strategy out of that, not 

The Bottom Line

Scaling a business is hard enough without dragging bad tax habits along for the ride. The right strategies grow with you, protect your profit, and keep you focused on what matters most—building your business.

Ready to scale without tax landmines? Book a free strategy session today.