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hey what's up guys Jonathan here with Florida Turf Pros now as we end the year and approach December 31st you know with that comes tax planning uh you should be having a meeting with your accountant at some time about now uh to discuss you know what your tax situation your tax liability looks like and if you need to maybe unload a little bit of money um to reduce your taxes that's kind of what I want to talk about in this video I want to share with you a few tips um things that have help me in my business to reduce our taxes um while also giving me peace of mind and knowing that we're doing things by the book so if you're new to the lawn care industry or maybe a few years in business and you're kind of unclear on that stuff I think this video is really going to help you out so let's just go ahead and jump into it the first tip that I would give you about um taxes and tax planning that type of thing is that you need to have an accountant okay this is not a bookkeeper or a friend of a friend or or Jackson huitt or or whatever the you need a Bonafide CPA okay somebody who you take your bank statements to okay if you are just taking expenses and receipts um to a bookkeeper or something that end of the year and then trying to get um tax deductions by by trying to remember everything that you spent during the year um and just taking them those receipts like you are not going to get near the amount of tax deductions that you would if you had a certified accountant who will go through your bank statements okay and I'm talking about January February every single month okay they're going to be looking at that stuff providing you with income statements and whatever you want but the main thing I want to get across is that you need to have somebody on your side okay you need somebody on your team and they are going to be worth their weight and gold and the amount of deductions there's just so many things that you're not going to know and there's going to be so many things that you're going to forget about through the course of the Year all those little expenses at Home Depot and all those little lunches out or whatever all that stuff that you forget about like it's there in your bank statements as long as you have been using your business card for it that would be the first tip that I would give you okay um the reason I even say that is because I've seen this um quite a few times um with my friends in the area who get near tax and they're asking you know what what do you do about taxes you know and if you're doing like Turbo Tax man or uh you're just taking your stuff to a bookkeeper like you're I'm I'm this number this tip right here is going to save you thousands in taxes period okay go to an accountant take your bank statement it's going to cost some money if you haven't been doing this throughout the year but it will save you thousands if you have A7 or $8,000 tax bill at the end of the year you're doing something wrong okay if you're not making like Buu bucks okay take your bank statements to an accountant that's tip one okay tax tip number two and I've done a video on this before but uh most of us whenever we start a lawn businesses where either sole Proprietors or single member llc's okay that's just that's just the average that's not true for everybody but but in general like if I was speaking to a to the general um um subscribers out there then you know most of us are going to be single member llc's or S Proprietors I would encourage you to look at taking the S election if you're an LLC and becoming an S corporation okay and I've done a video on this before but but the tax savings um are tremendous if you do this correctly let me quickly explain okay and I'll put a link in the video in the bottom of this of this U description but but if you are a single member LLC basically with with that business structure you are paying your self-employment taxes on the full amount that you earn for your business okay it's the same thing as being a sole proprietor single member LLC in the eyes of the IRS it's the same as a sole proprietor so that means your self-employment taxes your Social Security your um Medicare and stuff all all the earnings of the business if you're a single member LLC or a so proprietor all of the earnings of the business have to pay that portion of taxes they have to pay self-employment and Medicare taxes okay what advantage does the es Corp have the es Corp allows you to pay yourself a a fair market wage um for what you do let's say uh you pay yourself $20,000 um for your position well the only thing that you pay self-employment taxes on is $20,000 all right that's it anything above and beyond that that that your business earns you do not pay self-employment tax on that is huge guys if you make you know $60,000 in profit like and you pay yourself $20,000 of that well only $20,000 you have to pay self-employment tax on the 40,000 above that no self-employment taxes that is huge you guys it's it's a little bit more costly to operate and escort that's why you need to be around the $25,000 to $30,000 uh profit every year to justify doing if you're just starting out it probably doesn't make sense but at some point if you've been around for a little bit um I am going to say um you should probably be an escort by now and you need to look really really hard at that just because the tax advantages are huge talk to your C about that okay okay the next tip that I would give you um regarding taxes is that you need to understand what's best for your business is it better to depreciate an asset purchase or is it better to deduct the full amount of that asset in the calendar year so under Section 179 of the IRS code it basically says that qualifying asset purchases in the calendar year will reduce your taxable income by that amount for the calendar year so let's say you need a a $25,000 truck next year like you know you have to get a new truck well people will buy that truck before December 31st and that $25,000 truck has reduced your taxable income by $25,000 okay and that's huge and the cool thing about $ 179 is that it holds true even if you finance that asset so if you finance a truck for $225,000 even if you don't have to spend your own money on it you finance it for what 25,000 you can still reduce your taxable income buy that amount the problem and the reason that I personally do not deduct the full amount of an asset is because you can put yourself into a vicious cycle year after year and you can ACR debt very quickly at some point you are going to have have to pay taxes and you're going to have to pay the man if your business is profitable paying taxes I'm not going to say it's a good thing but if you're paying taxes it means your business is making money and you're on the right track but if you are financing assets just to have not have a tax bill other than other than operating your business crooked that is the quickest way for you to go out of business okay I promise by overleveraging debt just to reduce your taxes because at some point at some point you can't keep doing that at some point you you are going to have to pay taxes you just are all right you cannot keep leveraging um debt to avoid paying taxes because it will catch up with you not to mention whenever you go to sell that item that you've already written off all of it you have to pay taxes on that okay but if you depreciate an asset over its useful life if you go to sell that asset it's much easier to handle the tax consequences of that than it is if you have already fully depreciated that asset talk with your accountant but most of the time it's going to be best to depreciate the asset over the useful life rather than taking the full deduction okay there are exceptions that's what I'm saying talk with your accountant okay the last tip that I would give you regarding taxes is to make sure that your personal um account and your business account stay totally separate and I get it man in the beginning it it's totally easy to to get those two things mixed up you know maybe your personal checking account is running a little bit low so you swipe the business card for something and look it just creates a lot of mess and unorganization creates a lot of work on your end a lot of work on your accountants end to have to go through all that stuff and it doesn't give you a clear picture of what's going on in your business on a month-to-month basis and furthermore um the advantages of having like a corporation is that it reduces your liability but if you are mixing um your personal and business and basically using your business as like your personal little piggy bank um all your advantage of having limited liability for your corporation goes away okay it's called piercing the corporate veil but without going into that do not do that okay keep your business business person personal personal it just makes everything so much easier and with the timing of this video um I understand that you know a lot of us whenever we're just starting out it's easy to get that messed up but as we move into 2019 we're just right around the corner this is the perfect opportunity to get this right okay start 2019 correct okay only swipe your business card for business expenses and it's really it's really as simple as that okay so let's just recap real quick look at the S corporation that's going to probably going to save you a ton of money taxes if you've been around in business a few years um you need to know whether it's better to depreciate an asset fully or if you should depreciate that asset over its useful life um take your actual bank statements to a certified accountant accountant and not just a bookkeeper uh and then finally just keep your personal and your business expenses completely separate guys those four tax tips right there if you do those things I promise you're going to save a ton of money in taxes and you're going to have a clear picture of what's going on in your business on a day-to-day basis good luck guys God bless I'll be in touch