528: The Small Business Owner’s Guide to Taxes, LLCs, Deductions, & Audit Risks

BiggerPockets Money Podcast

BiggerPockets

Investing, Education, Business

4.6 • 2.9K Ratings

🗓️ 14 May 2024

⏱️ 59 minutes

🔗️ Recording | iTunes | RSS

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Summary

Starting your first or next business? This episode is for you. Today, we’re bringing you everything you need to know about small business taxes for beginners. Whether you’re a solo entrepreneur, partner, landlord, house flipper, Airbnb host, or something in between, you MUST know about these tax laws before you start making money with your own business because if you get them wrong, you could be paying a MASSIVE penalty come tax time. You could save yourself thousands, or TENS of thousands, just by tuning in! Brandon Hall, CPA, runs a real-estate-focused tax and accounting firm for big and small real estate investors. But, even if you’re not investing in real estate, these tax tips also apply to YOU. In today’s episode, we threw dozens of hard-hitting tax questions at Brandon so you know what to do with your next side hustle or full-blown business. We’ll discuss whether you need an LLC, the real benefits of getting one, and which business entity (LLC, S-corp, C-corp, etc.) makes the most sense for your specific business and tax needs. Making money on your own but NOT paying quarterly taxes? This could cost you BIG, but thankfully, Brandon goes through exactly how much you could owe. And if you want to owe less to the IRS, we’ll give examples of tax deductions plus, which are NOT worth it and could put you at a BIG audit risk. Need a tax professional for your small business? Find one for free with BiggerPockets Tax and Financial Services Finder! In This Episode We Cover Self-employment and small business taxes for beginners Whether or not you need an LLC and why most real estate investors have this all wrong Estimated taxes and the MASSIVE penalty you’ll pay if you forget about this Tax deductions and the audit red flags that the IRS is looking for The different business entities you can start and which has the best tax benefits The three things you NEED to set up an LLC and the most critical one beginners forget “SALT” taxes and why those selling goods in different states could owe even more And So Much More! Links from the Show BiggerPockets Money Facebook Group Network with Other Investors on The Path to FIRE Through the BiggerPockets Forums Finance Review Guest Onboarding Join BiggerPockets for FREE Mindy on BiggerPockets Scott on BiggePockets Listen to All Your Favorite BiggerPockets Podcasts in One Place Apply to Be a Guest on The Money Show Podcast Talent Search! Find an Investor-Friendly Agent in Your Area Find Investor-Friendly Lenders How to Obtain Real Estate Professional Tax Status Hear Past Episodes with Brandon: BiggerPockets Real Estate 196 - LLCs, House Hacking, and Saving on Taxes with Brandon Hall BiggerPockets Real Estate 269 - How the New Tax Code Affects Your Real Estate Investments BiggerPockets Real Estate 934 - How to Pay Less Taxes by Buying Real Estate (1 Write-Off You’re Overlooking) On the Market 96 - The Biggest Real Estate Tax Loophole You’ve (Probably) Never Heard Of On the Market 165 - Year-End Tax Updates, New IRS Interest Rates, and URGENT News for LLCs On the Market 187 - 100% Bonus Depreciation Coming Back? (Do NOT File…Yet) 00:00 Intro 01:42 Do You Need an LLC? 02:01 Different Business Entities 09:29 3 Steps to Set Up an LLC 16:49 KEY Dates to Know 19:14 Estimated Taxes 25:48 The “SALT” Taxes 31:56 Tax Deductions and Audit Red Flags 44:22 Claiming Passive Losses Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/money-528 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:16.3	Many of you have started a small business this year and that's super exciting, but if you're used to working as a full-time employee for somebody else, the transition to business owner can be overwhelming, especially when it comes to keeping track of your taxes. That's right.
0:17.3	So to help ease your way through the transition that can be very unpleasant for a lot of these small
0:21.1	business owners, we have Brandon Hall,
0:23.4	CPA, to real estate investors on the show to walk us through the different
0:27.4	business and tax structures that you have and options that you have and
0:31.0	choices that you can make as a real estate investor, small business professional.
0:34.5	We'll talk about things like estimated taxes, deductions you can and shouldn't take and
0:40.3	then we'll have a fun little lively discussion about rep status and all the landmines there.
0:44.0	And Mindy, before we get into this episode, I do want to remind everybody that if you are struggling with tax strategy,
0:49.4	frameworks, filing, bookkeeping, all of those types of things, and you have any real estate related interests.
0:55.4	We have created a tax finder on BiggerPockets with dozens, hundreds of real estate specific
1:02.1	tax professionals. You can find those at bigger
1:04.4	pockets.com slash tax finder or if that's too hard to remember you can find them at bigger
1:08.0	pockets.com slash tax pros. All right Scott and hello, hello, and welcome to the BiggerPockets Money Podcast.
1:15.7	My name is Mindy Jensen, and with me as always,
1:18.5	is my always pays his taxes, co-host, Scott Chinch.
1:22.3	Thanks, Minnie. Great to be here as always with my counterpart or extension.
1:26.6	Mindy Jen.
1:27.6	Mindy, as always, we're here to make financial independence less scary.
1:30.1	Less just for somebody else to introduce you to every money story and every tax disaster
1:35.0	because we truly believe that financial freedom is attainable for everyone no matter when or where you're starting
1:40.0	and as long as you pay the IRS.
	...

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