The Augusta Rule is an income tax loophole that allows you to shift your business’s taxable business income to tax-free personal income.
If you’re a golfer, then you know the Masters Tournament is held every year in Augusta, Georgia. Like the Super Bowl or the Olympics, the Masters draws a lot of visitors who are always looking for comfortable lodging close to the action.
Back in the 1970s, wealthy homeowners near the course started renting their homes during the tournament, and they lobbied for that income to be tax-free since their homes weren’t full-time rental properties.
The result? When you rent your personal home for up to 14 days per year, that income is not taxable. This is true even if you rent the home to a business you own.
So next time you need to hold a corporate meeting or a team training, do it in your home rather than at your office and have your business make out a check to you for renting your home.
You can claim the rental expense for your business, as long as you document the business use and confirm that it was a reasonable rate. You can find comparable rates by getting quotes for hotel event spaces or even Airbnb rentals in the area.
And as long as you don’t rent your home for more than 14 days per year, you’ll be able to take the business expense without having to report the money as rental income on your personal tax return.
A tax-deductible write-off for your business and tax-free personal income equals a win/win situation for you. We advise our clients to have one monthly company meeting at their home, which equals a total of 12 rental days.
If you rent your home to your business for $1,000 for each meeting, that’s $12,000 in income that you just shifted from taxable income to tax-free income.
If you’d like to see if this tax strategy will work for you, you can book a FREE consultation to learn more! You could easily save thousands of dollars in federal and state income taxes each and every year with this one simple strategy.
How would you like to make your next family vacation a tax-deductible business expense?
If you’re as busy as most self -employed dentists, finding time for a vacation can be a challenge...
But by planning both business and pleasure time into the same trip, you can turn many of your personal travel expenses into tax-deductible business expenses.
There are a lot of expenses that you can make deductible for tax purposes...
Travel expenses for flights, car rentals, or vehicle expenses can all be deducted. So can lodging and 50% of meal expenses that are related to your business transactions.
However, there are several rules you need to follow to take advantage of this strategy, so it’s best if you plan your travel with your tax strategist.
For example, you need to be conducting business the majority of the time in order to deduct a trip as a business expense. The IRS measures time in days, meaning you’d need to spend at least 4 days out of a one week trip mainly on business if your destination is in the US.
The rules aren’t as strict for international business trips. Business only needs to be 25% of your trip if your destination is outside of the US. That makes a trip to the beach in Mexico sound even better, doesn’t it? :)
Traveling to and from your destination is considered a necessary part of a business trip, so that already gives you two days to use for business purposes.
If you’re in meetings or attending a conference on other days, those days would be considered business as well. And theres's no reason you can't enjoy some R&R after hours.
You can also have days that are just for personal or family adventures. You just can’t deduct any of the expenses you incur on those days.
If you’re bringing the family along on the trip, just make sure your expenses are "necessary and ordinary." You can deduct the cost of a single room, but not the cost of a family-sized suite, for example.
As long as you document what you’re doing, you can go ahead and rent the suite and only deduct the portion that coincides with a single-room rate.
By incorporating business activities into your next family vacation, you could make a significant portion of your family’s travel expenses tax deductible.
Would you like expert help implementing this strategy for your business?
I’ll show you how to plan your next family vacation to where it will give you $5,000-10,000 or more in tax deductions.
William Gonzalez, MBA AFSP
When's the last time your current CPA or accountant called you to check in and ask you about how they can help you grow your business? Every week we offer free Strategy Sessions to businesses who struggle to figure out exactly what they need to do to achieve their financial goals.
The most important lesson I've learned from all of these calls is that to achieve success, you have to ask the right questions. I can tell you from firsthand experience that this is the only thing that separates the successful business owners from those who struggle just to make a living.
So what does this mean for you? It means that you must go through the process of clearly defining your priorities and coming up with clear, repeatable processes that ensure these priorities are met predictably and consistently.
Here are 3 questions you have to ask yourself if you’re serious about growing your business....
Question 1: How Do I Acquire New Clients & Keep Current Ones?
Growth can’t be left to chance. You need to take action to fight obscurity and get your name and company in front of potential clients. This means spending money on marketing. But too often we see Owners waste thousands of dollars on "hope" marketing with dubious results that are impossible to track.
That's why we've developed a simple, proven system to help our clients understand their marketing expenses and see which ads and promotions are driving practice growth. This allows you to double down on what's working and cut out all the waste. It's also important to have processes in place to nurture your relationships with your current patients. Patient retention is one of the most important drivers of overall financial success due to the fact that it's 10x more expensive to acquire a new customer than to retain an existing one.
Question 2: What’s My Strategy To Maximize Production?
You want to maximize the number of patients you see per visit, sericing, etc. There are several ways to incentivize production. One such way is to come up with a Team Bonus Plan. To be successful, the bonus plan will need to be effective at keeping employees motivated over the long term.
It also needs safeguards to prevent certain behaviors. Such as scheduling customers in the next month after the current month’s bonus criteria has been met. Oh, you don't work by appointment? I highly recommend it. My Barber has lived by it for 30 years - and he's NEVER short on customers!
We can help you devise an incentive plan that motivates your employees to work hard to grow your bottom line over the long term.
Question 3: How Do I Track & Control Operating Expenses?
Increasing production can be an unproductive effort if operating expenses are not managed properly. Expenses need to be tracked month by month and year by year so that abnormal variations can be detected and corrected. You need to know how much your company spends on certain things - payroll, supplies, rent - compares to similar industry benchmarks. We give you this data so you can trim the fat and maximize profitability.
Answer those 3 questions and you'll be ahead of 90% of your peers. The problem is, it can be hard to answer these questions without context. If you want to talk strategy with someone who's helped business owners answer these questions in detail, I still have a few openings if you're ready to schedule your no-cost Strategy Session with me.
I want to give you 45 minutes of my time for free to learn about your business and see if the strategies we use for our private clients might work for you. There's no obligation whatsoever!
In fact, I believe so strongly that I can help you that I'll give you a $10 7-11 gift card if you don't find our call valuable. There's no catch. That's my guarantee to you. Be sure to schedule your Strategy Session ASAP before my calendar fills up!
Recently I've been receiving a lot of calls with business owners who I met at a networking event last month. By the way - thank you, #HauppagueIndustrialAssociation!
So today I want to do a bit of a Q&A session. The most common questions I've been getting are:
1. I feel like I'm paying too much in taxes. You say you save firms money on taxes. What can you do to help?
A: Let's examine your business entity structure and tax strategy. We might be able to save you $12,000-30,000 in federal and state income taxes every single year. The tax code is complicated and there are a lot of variables. But that's a good thing for you if you have the right advisor.
2. My business revenue recently plateaued. I'm not really sure what to do to grow my business. How exactly can you help me increase profits & cash flow? What should I do to grow my business?
A: First let's take a look at your P&L and analyze your revenue streams. We'll break down total revenue by each of the services you offer (if there's more than one) so you can understand which are your most profitable and which are costing you when you factor in labor.
Next, we'll analyze your marketing & advertising expenses to show you how to acquire twice as many new patients at half the cost you have now.
3. Honestly I don't really know how much money my business is making and how much I'm supposed to be paying myself. That means my cash flow is uneven. I don't really know how to save for year-end taxes or how to save for retirement in a way that's tax-deductible.
A: There's a big difference between a company's net profits and its cash flow. Which is why so many struggle to figure out how to pay themselves a good salary without putting the business in a bad cash position.
I'll help you reverse engineer your salary and benefits and advise you on tax-deductible retirement plans so you can defer income and save on taxes.
Now you might be thinking, "Wow, that's kinda complicated, there's a lot of different variables here!"
Well, you're right, and that's why you need expert advice from someone who has the right team to make it work for you. The good news is, I can give you clarity into all of this and more in just one 45-minute phone call. If you're ready to take control of your finances and your future.
We'll review your business entity structure, tax strategy, and accounting system so you can have complete peace of mind that your business isn't leaking cash.
If you own a business and are married, there could be big tax incentives for hiring your spouse to work for you - and even pay them TAX FREE!
You see, hiring your spouse on a part-time basis and giving fringe benefits can be both a tax-deductible expense for your business and also a tax-free source of income for your family. Fringe benefits are forms of compensation you provide to employees outside of a stated wage or salary. Common examples of fringe benefits include medical and dental insurance, use of a company car, and educational assistance.
The key here is to realize that some types of fringe benefits are completely exempt from federal income taxes, Social Security taxes, Medicare taxes, and federal unemployment taxes, making those payments or benefits you provide to your spouse entirely nontaxable. For example, you can contribute payments to a medical reimbursement plan in your spouse’s name, and your spouse could then use the money in that account to buy health insurance for your family without having to pay taxes on the income.
A medical reimbursement plan can make up most or all of the reasonable compensation you’re required to pay to your spouse for their work, so you don’t actually have to pay them any salary or wages - just the tax-free contributions to the plan.
These plan contributions are a salary expense for your business and can be used by your spouse to cover out of pocket medical and dental expenses and insurance premiums without paying tax on the money.
This is a strategy that you can use to shift taxable business income to tax-free personal income for your family. You could save $3,000-10,000 or more in federal and state income taxes each and every year using this strategy.
There are a few words of caution. In order to be allowed by the IRS, the medical reimbursement plan needs to be carefully planned out and documented. But this is definitely something that you should consult with your tax strategist on to see how you might be able to pay your spouse a tax-free income.
Want to see if this strategy could work for you?
Click here to book y our free Strategy Session with me.
I’ll see if hiring your spouse to work in your business could save your family thousands of dollars per year in taxes.
The other day I was watching the movie Good Will Hunting and a particular scene really struck a chord with me. If you haven't seen the movie, here's Google's overview of the plot...
"Will Hunting (Matt Damon) has a genius-level IQ but chooses to work as a janitor at MIT. When he solves a difficult graduate-level math problem, his talents are discovered by Professor Gerald Lambeau (Stellan Skarsgard), who decides to help the misguided youth reach his potential. When Will is arrested for attacking a police officer, Professor Lambeau makes a deal to get leniency for him if he will get treatment from therapist Sean Maguire (Robin Williams)."
One of the most interesting scenes in the film is where Sean (Robin Williams) tells Will (Matt Damon) that even though Will is such a mathematical genius, that doesn't mean he's any good at managing his emotions or personal life.
In fact, Will's life is a wreck. He lashes out and alienates everyone in his life because he has no concept of how to interact in close relationships with other people.
But it's not his fault. Will's actions are a result of his treatment as a child and his upbringing.
The breakthrough scene in the movie is where Sean tells Will "It's not your fault" over and over and over until Will finally breaks down crying and realizes that he needs help learning how to deal with people.
The moral is this? Yes, Will has problems...
BUT IT'S NOT HIS FAULT.
What struck me so much about that scene is that I have that exact conversation with business owners all the time.
A lot of the self-employed individuals aren't taking the basic steps they need to secure their financial futures. But it's not their fault. Most of them don't even know what they need to do.
Maybe I’m geeking out on this a bit. But when you’re as immersed as I am into helping entrepreneurs, you just start seeing these little lessons everywhere. Even in popular shows. It's my life mission to help people like you avoid being trapped in a cage by mediocre accounting and tax advice.
If you think I could help you, I'd love to give you 45 minutes of my time to learn about your practice and see if these strategies will work for you.
Click here to book your free Strategy Session with me.
Let me see if I can help you earn more while working less using specialized accounting, tax planning, and retirement strategies.
If you need to use a vehicle for business purposes, you can deduct a wide variety of your vehicle-related expenses. The big decision is whether you’ll track each of those expenses individually (actual expense method) or if you’ll simply multiply the number of business miles driven in the year by the IRS’s predetermined mileage rate (standard mileage rate method).
For example, with the actual expense method, you would track all expenses, including gas, repairs, insurance, and maintenance. You would total up all of these costs you incur throughout the year, and that’s the expense amount you’d be able to claim as a tax deduction.
With the standard mileage rate method, you would only track the number of business miles you drove during the year. You’d then multiply that number of miles by the IRS’s rate, which is 56 cents per mile in 2021. So if you drove 10,000 miles for business, your tax deduction would be $5,600. The standard rate method has always been popular because it’s easier to track, but the Tax Cuts and Jobs Act of 2017 made the actual expense method much more appealing...
This is because the actual expense method allows you to include depreciation on your vehicle, and under the newest tax law update, the limits on vehicle depreciation were greatly increased. Also, bonus depreciation can now be applied to many vehicles. Bonus depreciation allows a business to take additional depreciation expense deduction when a vehicle is first put into use, which could result in huge tax savings.
So if you’re still using the standard mileage rate method instead of the actual mileage rate method, you could be leaving thousands of dollars on the table. Additionally, if you have a more expensive vehicle with higher than average repair and maintenance costs, the actual expense method is likely going to be your best bet.
You should have your tax strategist do this calculation for you to see which expense method will create the biggest tax-deductible expense for your business. Would you like me to personally review your situation to see if any of your vehicle expenses could be tax-deductible?
If so, click here to book your free Strategy Session with me. Let’s see if your vehicle could net you thousands of dollars in tax savings each and every year.