What are the things you need to change about your taxes this year? Are you sure you have the right accountant on your team to get you the most tax savings? Sadly, most business owners will overpay their taxes this year, as they do every year. This needs to stop!
Cash Flow Expert, Chris Miles, teaches the questions you should be asking your accountant. As well as the perspective they need to have to get YOU the best results. Tune in now!
Chris Miles Bio:
Chris Miles, the “Cash Flow Expert,” is a leading authority on how to quickly free up and create cash flow for thousands of his clients, entrepreneurs, and others internationally! He’s an author, speaker, and radio host featured in US News, CNN Money, Bankrate, and Entrepreneur on Fire, and he has spoken to thousands getting them fast financial results.
Chris consistently teaches audiences how to do what no other financial advisers can or will – achieve financial prosperity, NOW AND IN THE FUTURE, while spending time doing what they love most!
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Listen to the podcast here
Tax Saving Tips You Need To Know Now!
If you’ve got questions, concerns, or something you want on the show brought up and taught, shoot me an email at Chris@MoneyRipples.com. I would love to be able to give you great new content and great new shows as well. I want to talk about something that I did a webinar on. I want to bring it up because I know it’s needed. We’re almost to the end of the year. What happens every single year is that people let the year go by and overpay on taxes again. I see this happen over and over.
I want to stop that. I want to do a quick episode on some of the ways you can know how to save taxes in your situation. This is going to be especially applicable to those of you that are business owners. If you’re not a business owner, what I recommend is that you get a business of some sort, a side business, a hobby business, or whatever it might be. It could be network marketing or direct sales. I don’t care.
Do something that you feel like you could love regardless of the money because the tax advantages of being a business owner are fantastic. It’s way better than if you’re an employee because if you’re an employee, the best tax advantage you can hope for is writing off the mortgage. Every financial planner is telling you to pay off your mortgage. That would be out the door.
You could have more children. That’s an okay strategy. I’ve got a lot of them myself but it doesn’t necessarily mean that’s your strategy to do. You can start donating things. As much as you love to donate money, I’m sure you also like to save money instead. You don’t have a whole lot of tax advantages being someone who’s just an employee. However, if you have a business, the whole world opens up to the possibilities of things you can write off that you normally can’t.
We will talk about a few of the strategies. Before I get into those, let me talk about having the right accountant. First and foremost, I am not an accountant. I’m not a CPA nor do I ever desire to be one. I don’t like dealing with paperwork and those kinds of numbers. I have a different life. This is what I choose. I’m grateful for those that do those kinds of things.
In the last few years that I’ve been in business now, I’ve seen a lot of people and a lot of different philosophies. I’ve met a lot of accountants and interviewed a ton of them. Many of them wanted me to send them business. Most of them never pass the test. Almost all of them are in that category. There are a few that I ever do recommend. Those are the people I refer my clients to.
You want to have an accountant who thinks like a business owner, not an accountant. Click To TweetHere’s how I screen them through. First and foremost, a lot of this comes from experience and knowing what to ask and the questions you could ask a potential accountant or even your accountant. The first one I would ask them is, “Should I invest in an IRA or a 401(k)?” Ask them, “Should I invest in these kinds of retirement plans?” If they say yes, they should be fired, especially if you’re a business owner. If not, I could see why they might recommend it to somebody.
They can say, “Here’s something you could do.” You’re saying, “Should I invest in an IRA or a 401(k)?” If they say, “Yes, you should,” especially if they tell you there are tax advantages to them, you should run because there are no tax advantages to having an IRA or a 401(k). They’re not tax-advantaged. You might get them tax-deferred, meaning that you don’t get taxed on them now but there is zero tax advantage.
If you look at reality, you would realize that you’re probably going to get taxed more in the future than you are now because what’s the likelihood our tax is going to go up or down? They’re probably going to go up in the future. We can’t guarantee anything in the future but if you’re a betting person, I’m sure you would probably say, “Going up is a pretty likely scenario,” especially when historically, over 100 years now since we have had the federal income tax rates, this is still one of the lowest periods of times that we have ever had. If you look at history, this is pretty darn low. It could go a lot higher.
If you have somebody that’s telling you, “You should get a 401(k) or an IRA,” they might tell you a Roth IRA but the same thing happens. You never know. Most accountants don’t talk about Roth IRAs because there’s no tax advantage with those because you pay with after-tax dollars. From their perspective and standpoint, you question it. That comes to the next question, which is their perspective.
How do they think? You shouldn’t just find out what the rates are and get them as a referral from somebody good. You should understand the perspective. What’s our philosophy on life and taxes? How about their business or business in general? As a business owner, you want to have an accountant that thinks like a business owner, not like an accountant. Let them do the work of an accountant but do not go with someone who thinks like an accountant.
That’s why they will recommend the 401(k)s or IRAs and tell you, “You should put money in here because you will get a tax deduction from it.” The problem with that is that there’s no tax deduction. You get a tax deduction or an income deferment but you don’t get a tax benefit. Accountants know this. Here’s the only reason they usually recommend you do these things. They recommend, “Here’s another problem.”
If they ever tell you to buy something before the end of the year even if you don’t need it but they’re telling you to buy it, that’s somebody you should also not hire or fire because if they’re trying to tell you simple strategies to write the money off and pay the least amount of taxes possible, what I can guarantee is they’re doing this out of fear. They’re fearing that you might go to somebody else who will recommend those things and tell you that you will pay less in taxes, fire them, and go with the other person.
I’ve had accountants tell me this over and over when we have talked in conversations. You do not want an accountant like this. You want somebody who’s not going to recommend those kinds of things. I would recommend you get somebody who’s proactive or somebody who teaches and trains you ways to free up taxes, not someone who does what every other passive accountant does, which is almost all accountants. They say, “What are your numbers for the year? Send me your numbers. Here’s your tax bill or your tax refund.” That’s all they do.
If you have an accountant like that, you don’t want that either. You do not want a passive accountant that’s only taking your numbers. You want somebody who’s proactively teaching you what you can do year after year, new strategies, and new things you can do in your personal situation to maximize the tax benefits that you have, not evade taxes. We’re not about tax evasion. We’re talking about the best ways to do that. Are they being creative? Are they doing things that allow you to have better results on your taxes?
When I did the webinar a few weeks ago, it was sad how many people will tell me, “Chris, I’ve learned more from you in the last few minutes than I’ve learned in years with my accountant.” That’s sad. I get it. These accountants are nice people. It’s not like they’re bad. They’re not trying to defraud you or anything like that. What’s happening is that they’re simply not being proactive. They’re saying, “I’ve got a lot of clients to deal with. I don’t have the time to teach you or train you.”
A lot of them don’t have the best of personalities. Sometimes they aren’t the best teachers. They may not feel comfortable teaching. They may be better behind the computer doing the numbers. We get it. That’s great. More power to them but it’s not what’s right for you, especially if you’re looking to play a bigger and more prosperous game. Think about this. As your wealth and income increase, do you want people on your team that hold you back and hold you down?
The only way you can uplevel your wealth is also by upleveling the relationships around you, the advisors, the mentors around you, and the people that help you and serve you. You’ve got to keep upleveling. Even if you think you have, I guarantee there’s a whole other level. I’m sure you understand this, too. There’s a whole other level you can get to. This is why you need to have the best people on your team.
The only way you could uplevel your wealth is by up leveling the relationships around you, advisors, mentors, and people who help and serve you. Click To TweetI had an old client. Her accountant was the same one as a very famous Hollywood actor and many other Hollywood actors. She said, “I’ve got the best account money can buy. This person is amazing.” She paid him a pretty top dollar. A little while later, she met with one of our accountants and found out she was overpaying by more than $100,000 that she had overpaid in taxes. We ended up amending her returns and getting her money back. Isn’t that crazy?
It doesn’t matter who is the accountant. I’ve had people say, “This is the accountant for this network marketing or direct sales company.” Congratulations. I still find stuff. That happened with one of my other clients who is in a direct sales company. There was one strategy we taught her about hiring her kids. It was able to save her over $13,000 a year by paying herself no less money. She’s still paying herself the same amount by paying less.
That was just one strategy. There were some other strategies we did. In total, she probably saved herself $18,000 that year. Tell me that’s not insane. That was from using the guy that was recommended by the entire company. She was still missing out on some of the best things. She had already missed out on previous years. Some of you reading this might have missed out on the tax savings in 2015. I recommend you don’t do that.
For example, the CPA that I refer my clients to taught a strategy at one of my events. At the beginning of 2013, he taught a strategy about how to use your home as a place your corporation could rent from you but do it in a way where it comes tax-free, which would save anybody that makes an income between $3,000 and $6,000 a year. That’s why I tell people, “If you’re profitable in business, at a minimum, we will find at least $3,000 to $5,000 a year if not over $10,000 a year.” That’s what we find all the time.
When you’re interviewing accountants or looking for the right accountant, ask them, “What do you think? Should I invest in IRAs or 401(k)s?” If they say yes, they’re not for you. If they’re telling you to buy equipment, a truck, a car, or something like that at the end of the year even though you don’t need one, you shouldn’t have them as an accountant. If they’re passive and they’re not teaching you and training you even in the middle of the year on what to do before it comes tax time and teaching you creative strategies, you should get rid of them.
If they don’t think like a business owner and they think more like an accountant, you should not use them. You want somebody who says, “You should make a profit in your business, not just do things to reduce your tax bill.” They want you to pay more taxes but then maximize the tax benefits when you do that. A small percentage of accountants will ever be in this place. You’ve got to hunt down and look.
This is what I spent years doing to find the right one. The previous company I used to work with was using a decent accountant. He was great. I remember the first day after I left and launched Money Ripples. I went right to the CPA I used and said, “I’ve been waiting to use you for years because 1.) I know you’re awesome, and 2.) You’re always looking for new and creative strategies to help your clients. 3.) You at least teach my clients something. 4.) I know you’re out of the box. I know that you’re not going to recommend people to do IRAs, 401(k)s, and things like that.”
I even had to work with him on some of the perspectives on things that I taught. For example, I remember he almost freaked out when we were talking about cashing out a 401(k) to then pay off some loans, especially some credit cards and things like that. He thought, “Chris, I hope you know what you’re doing.” I told him, “Look at this.” Even if this guy has to cash out $120,000 total to then have enough money to pay off these specific loans in which we were able to free up over $40,000 a year, he could then see that makes sense.
Even if you have to cash out $120,000 to make a guaranteed return of $40,000 a year, that’s a 33% rate of return on your money every year. No financial advisor can guarantee that. He said, “Chris, that seems crazy because normally, my accounting brain would say no but that makes total sense. Go for it. It looks great. I’ll support you in that.” He was the one that gave the advice, “I can see how this would work. Here’s your tax problem.”
Our investment advisor got involved because he was the one that said, “This would be right or wrong.” We had a whole team that said, “Here’s how to make it happen.” I cannot emphasize enough that you have to make sure you’re using the right strategies and you have to have the right person on your team. The last point I’ll bring up here is this. The time to act is now. This is the end of the year. This is it. There might be some changes you need to make that might take weeks if not months to do.
I remember we had a client in New York. It took us six months to get a corporation set up to then save them thousands upon thousands of dollars a year in tax savings. You do not want to waste time, wait until December 25th, and say, “I should probably worry about my taxes.” That is not the time to do it. November is a great time to do it. The beginning of December is the urgent time to do it. You’ve got to do it. I recommend you do so.
If you’re curious about your situation, you say, “Chris, I want to know if I’m overpaying taxes or if I should be doing something.” I’m not an accountant but I can connect you for sure. Shoot me an email at Chris@MoneyRipples.com. We will see if we can get you set up with an analysis. I appreciate your time. The time to act is now. It’s one thing to have cashflow create freedom but when you take action quickly, you create more cashflow quicker. Take the action. Let’s get going. We will talk to you later.