3 Tax Power Moves To Keep More of What You Make | Guest Blog

3 Tax Power Moves to Keep More of What you Make

Most small business owners think that tax season is about survival during April, instead of strategy. They have learned to dread it and avoid it at all cost, when in reality the most impactful tax planning and strategies need to happen throughout the year. The more you understand the possibilities and the importance of tax planning and strategies, the more in control you will feel in your business and life PLUS the more money you will have in your pocket. When you shift from dread and reacting to planning and proactive, you start to make money moves that actually support the business and life you are building.

Power Move #1: Build a Business That Works for You, Not Against You

The key here is to build a business that fits into your life and your goals, instead of comparing yourself to everyone else’s business. When you focus on yourself and what is actually happening in your business and life you can create personalized strategies that keep more money in your pocket. I’m sure you have seen tax tips like moving money to a retirement plan, buying equipment at the end of the year, hiring your kids, or becoming an S Corp. Although these are legit tax strategies, they don’t work for everyone. If not done correctly or at the wrong time, they can actually cause financial harm to your business. 

Don’t forget the most important thing - to pay yourself from your business. Paying yourself helps you to feel more successful and helps you avoid the burnt out feeling of working with no rewards. If you are a DBA or Single Member LLC you can take a draw from your business at any point, you can do this by doing a transfer from your business account to your personal account (note: this is not a tax deduction at this business structure). If you are an S Corp or C Corp you can be and should be on payroll with taxes being withheld with a reasonable salary - this counts as a tax deduction! (Note: there is a lot more compliance and structure along with additional accounting and tax fees that go into the corporation business structures.)

Here are a few tips:

1. Revisit your business structure annually (especially as your income grows for tax law changes, payroll shifts, profit growth, etc.).

2. Understand when it is time to elect S-Corp status (I recommend after you are consistently earning $80,000 in profit AND have solid financial systems in place).

3. Pay yourself intentionally and consistently (this helps build motivation and pushes your forward feeling excited rather than resentful).

Power Move #2: Turn Every Day Expenses Into Strategic Deductions

There are so many possibilities for tax deductions. The biggest things to be mindful of in order for them to be deductible in the eyes of the IRS include:

1. Ordinary and Necessary

2. Documentation must be on record

These may look differently for each industry and ensure you keep your receipts and documentation for at least 3 years from the tax return due date. 

A few expenses to be tracking include:

1. Branding Photoshoots (great opportunity to claim hair styling, nails, and makeup)

2. Professional Development (coaching programs, courses, books)

3. Software and Subscriptions

4. Home Office (a dedicated space in your home for business activities or storage)

5. Business Travel

6. Marketing expenses (social media manager, website, email platforms, etc.)

It’s time to shift the mindset from the IRS and write-offs are scary to your write-offs tell a story of your business and can be strategic with documentation. 

Here are a few tips:

1. Keep a dedicated business bank account (and credit card)

2. Schedule 15 minutes every week for a money date to track income, expenses, review reports, file receipts, celebrate wins, and make decisions.

3. Track personal reimbursements through an Accountable Plan if you’re an S Corp shareholder

4. Receipts kept can be digital in form - as long as they show date, vendor, items purchased, and amounts (and business purpose).

Power Move #3: Plan for Taxes Like a CEO, Not a Survivor

Instead of ignoring taxes and thinking it will go away - because it won’t, it will just continue to get worse the more you ignore it - you need to plan for taxes every month. What this looks like is reviewing your financials every month to find your profit (revenue - expenses = profit) and taking 15-30% of your profit monthly and putting it in a savings account. If you have a loss, you wouldn’t have anything to move. Even better yet, set up a high yield savings account as your tax savings account to hold the funds every month. This allows your money to work more strategically in your benefit.

Next, you will want to review your financials every quarter and pay your quarterly estimated tax payments to the IRS (and remember your state, if applicable). Note that these payments should come from a personal bank account and do not go on your business finances. The good news is that you already have the funds set aside in a high yield savings account (with extra funds available from the growth!). Be mindful that the IRS doesn’t let anything be easy and the quarters are as follows:

1. January-March due April 15th (yes, on tax day!)

2. April-June due July 15th

3. July-September due October 15th

4. October-December due January 15th

My final suggestion is to work with a tax strategist who is aware of your industry and the tax law to be able to find out ways to strategically and legally write off your life!

Tax planning isn’t about loopholes, it is about leadership in your business and life. When you understand your numbers, you gain the freedom to create, hire, and grow without fear. When you are ready to stop being reactive and start leading your finances with strategy, reach out to book a free 15 minute CFO insight call. We will review your financial systems and most recent tax return, provide you with a couple insights about what is working and what isn’t, as well as how much we could potentially save you by working together!

Book your 15 Min CFO Insight Call here: https://tidycal.com/amandastickel/cfoinsightsession

About the Writer

Amanda Stickel is a Fractional CFO, Enrolled Agent, and tax strategist who helps women online creators feel empowered, prepared, and profitable through proactive tax strategies and cash flow clarity through partnership. She’s the founder of Stickel Financial Services, where strategy meets heart-centered financial growth.

Website: www.stickeltax.com