Blog

The Entrepreneurs Tax Smart Investment Account Hierarchy

As a high-earning entrepreneur, building a sound investment strategy includes choosing the right type of accounts to invest in that can maximize your money and minimize taxes. The good news is that there are various investment accounts that can help you accomplish this. However, it's essential to recognize that not all accounts are created equally and have different tax treatments. To navigate this, I want to help you think through an investment account hierarchy based on the tax preference of each account.

Real Estate in an IRA? Think Twice

Buying real estate in an IRA can be appealing. But when you dig a little deeper, there isn't much much benefit to putting real estate in an IRA. This blog post breaks down 8 reasons why you should think twice before buying real estate in your IRA.

Mid Year Financial Checklist for Entrepreneurs

As a small business owner, it's easy to get caught up in the day-to-day operations of your business and overlook your personal finances. However, the mid-way point of the year presents an excellent opportunity to conduct a financial checkup for your business and personal financial strategy. Here is a checklist of things you can consider at the mid-way point of the year to improve your financial situation!

The Real Uses of Life Insurance for Small Business Owners

As a small business owner, incorporating life insurance into your financial plan is essential. However, life insurance often carries a negative connotation, leaving business owners unsure how to utilize it effectively. Life insurance plays a crucial role in protecting the financial interests of small business owners. In this post, we highlight the actual use cases and types of life insurance that small business owners need to be aware of.

The Impact of Small Business Retirement Plans on QBI

The qualified business income deduction (QBI) can be a mystery to many small business owners and entrepreneurs. In a nutshell, this is a 20% deduction on qualified business income for self-employed professionals, S Corp owners, partnerships, and business owners. ‍Something that many folks miss is that retirement plan contributions can significantly influence this deduction. This is why for many entrepreneurs, it can be important to maximize this deduction in alignment with your personal financial strategy, particularly when considering retirement contributions.

4 Steps to Calculating Estimated Taxes

For self-employed professionals or those who recieve income as a 1099 independent contractor, estimated taxes payments are a method to pay taxes throughout the year. However, it’s up to the taxpayer to calculate and pay their tax. Therefore, understanding how to calculate these taxes is essential to maximize your money!

LLC or S Corp for My Business?

There’s a common question to address working with entrepreneurs and small business owners: Should I be an LLC or make an S corp election for my business to reduce taxes? We’re going to walk through the framework of this decision with real-life examples, so you can understand if it’s worth pursuing.

Optimizing QBI With the 2/7 Rule

QBI is a 20% deduction for pass-through entities. For a basic refresher and how to use this deduction, here is what to know about QBI. The qualified business income deduction may be phased out entirely for higher-earning business owners. The phase-out creates tax planning snags for businesses owners needing to maximize deductions. In short, there is no QBI deduction for those businesses that fall under a specified service trade or business (SSTB) when taxable income is above the top income threshold of $440,100 (Married Filing Joint) and $220,050 (Single).

What to Know About the QBI Deduction

While the beginning of a new year is when taxes are top of mind, tax planning is a year-round event, especially for those who want to minimize their lifetime tax bill, not just the current year. Part of having a proactive tax planning strategy is knowing what deductions apply and how to qualify for them. A deduction that every business owner needs to be aware of is the qualified business income deduction (QBI)—also known as the 199A deduction.

Cash Flow Management For Solopreneurs

60% of small businesses have experienced a cash flow issue at some point, according to Quickbooks. As a result, cash flow management for solopreneurs and small business owners is a common pain point. However, with a cash flow system in place, it drives the ability to make proactive business decisions, creates opportunities, and allows your business to run at peak performance.

Self Employed? An Intro to the Solo 401k

When you think of a 401k plan, you likely think of a retirement plan offered by large corporations. But did you know as a self-employed person, you can have your own 401k plan? A Solo 401k, also referred to as a Uni k, Solo k, one participant 401k, and an individual 401k can be a valuable wealth-building tool for the self-employed.

Business Formations for the Self Employed

What business formations are best for the self-employed or small business? What do the different formations mean? How do I choose a business formation? Whether you’re just starting your self-employment journey or having owned a small business for years, choosing a formation that fits your business is important. The answer will vary depending on your particular business — things like your business goals, legal protections, risk tolerance, and revenue.

The Fundamentals of Self-Employed Retirement Plans

Think of a self-employed retirement plan as a ”work optional” plan. You may never want to retire, or maybe it’s something you haven’t planned for, or maybe it’s too far down the road to think about. Either way, optionality is key.

What To Know About Estimated Taxes

The United States is a pay-as-you-go tax system. In other words, when you make money, Uncle Sam wants his cut.This is where quarterly tax payments come in. As you make money throughout the year, taxes are due each quarter. So if you expect to owe $1,000 or more in taxes, you need to make quarterly payments. Not only do you have to pay income tax, but self-employment taxes are also part of estimated tax payments.

7 Tax Deductions For The Self Employed

Whether you are a sole proprietor, single-member LLC, partnership, independent contractor, or freelancer, you’re running a business. That means you wear multiple hats and have daily tasks outside of doing that thing you love.A commonality with all self-employed folks? They don’t want to pay more tax than they need to. Period.As a self-employed person, you deserve all the tax deductions you are entitled to. There are several valuable tax deductions to be aware of.

7 Strategies to Lower Your Tax Bill from Restricted Stock Units

You're getting killed in taxes becuase of your Restricted Srock Units. What can you do to lower your tax bill? This is a common question I get. A good tax strategy can help you keep more money in your pocket and create a more successful financial plan. To help you get a head start, here are seven tax strategies you can consider if you have RSUs.

Own Alot of Company Stock? Consider this...

You've been accumulating company stock over the years. Now, it takes up a substantial amount of your investment portfolio. What do you do, and where do you start managing this? This is what we help folks like you accomplish. In this blog post, I cover four questions that can help you make good decisions with your company stock.

Double Taxed on Restricted Stock Units? Here’s how to avoid it

If you recieve Restricted Stock Units (RSUs) from your employer, your stock sales could result in double taxation if not reported correctly. This mistake is relatively common with RSUs and causes professionals to overpay Uncle Sam without even knowing it. This blog post will help you avoid this mistake with RSUs and understand what to look for in previous years to see if you can put some money back in your pocket!

How to Avoid a Tax Surprise from Restricted Stock Units (With example!)

Getting killed in taxes from your Restricted Stock Units? The first thing to do is understand how RSUs are taxed so you can become tax-aware. This blog post explains how RSUs (Restricted Stock Units) can unexpectedly increase your tax bill. We break down a real-life example of a couple to show how adding RSU income pushes them into a higher tax bracket and creates a potential tax shortfall if not planned for.

Maxing Out Your 401(k) Could Cost You Thousands

Maxing out your 401(k) could cost you thousands if your employer's 401(k) plan doesn't include a "true up" feature. Without this feature, you may miss out on free matching contributions from your employer. Almost half of employers don't offer true-up provisions. In such cases, it's important to plan ahead and maximize your employer match to avoid missing out on free money.

4 Steps to Calculating Estimated Taxes

How Incentive Stock Options Can Trigger AMT

Because incentive stock options come with favorable tax rules, they can become subject to the mysterious AMT in the year of exercise. This creates “phantom income” that factors into the calculation for the alternative minimum tax. Therefore, you may be subject to AMT in the year of exercise unless you exercise and sell the ISOs in the same calendar year. Nevertheless, you’ll want to familiarize yourself with how AMT can impact your financial planning decisions so you can create a proactive equity compensation strategy.

Restricted Stock Units vs. Restricted Stock Awards

Restricted stock is one of the more popular forms of employee stock compensation. These two forms of restricted stock you’ll see are restricted stock units and restricted stock awards. Both are used in addition to cash compensation to reward and hang on to employees through a vesting schedule.While the names of these types of restricted stock are similar, there are important distinctions to know. If you want the TLDR version, here is an infographic comparison for you.

5 Ways To Use Your ESPP

You’re probably used to contributing to your employee stock purchase plan (ESPP) and accumulating stock in your company. Or you may wonder if you should even contribute to your ESPP along with your 401k and other forms of equity compensation. An employee stock purchase plan can be a valuable tool and used in many ways to increase your financial flexibility.

A Look At Taxes On Nonqualified Stock Options

Stock options are a popular form of equity compensation and a powerful tool for building wealth. Companies can offer two types of stock options — non-qualified stock options (NSO) and incentive stock options (ISO). The taxes on nonqualified stock options are fairly easy to understand and don’t carry the complexities of incentive stock options. While they offer simplicity, it’s important to understand the tax implications for your financial plan.

Should You Make An 83b Election?

An 83b election lets the IRS know you want to pre-pay tax when the restricted stock is granted rather than the vesting date. If you expect the stock to be much higher when it vests, this can be a lucrative deal — paying taxes on a much smaller amount. This can also maximize the capital gains treatment, which is typically more favorable than ordinary income tax. However, while 83b might seem like a great deal, it does come with drawbacks.

ESPP Taxes Explained

Employee stock purchase plans are one of the better perks within an equity compensation plan. They can be fairly straightforward on the surface, but there are unexpected tax complexities when you open up the hood. Spending time to understand the tax implications that can occur when you sell ESPP shares can better prepare you for surprises from Uncle Sam.

How Are My Incentive Stock Options Taxed?

Incentive stock options are a form of equity compensation granted to employees of public and private companies. Unlike non-qualified stock options, restricted stock units (RSUs), and employee stock purchase plans (ESPP), incentive stock options carry a few more complexities. However, in exchange for these complexities is the ability to participate in the future growth of your company, generate wealth, and receive preferential tax treatment.

Your Guide To Equity Compensation

Equity compensation comes in many different forms. From those that work in the oil & energy industry to tech companies and beyond, equity compensation is a valuable form of non-cash pay. Because of the complexities involved, it’s important to know the mechanics and especially the impact of taxes.

5 Restricted Stock Unit Strategies

Restricted stock units (RSUs) are straightforward compared to other forms of equity compensation. But don’t let the simplicity of RSUs cause you to look past savings opportunities. For a basic refresher on restricted stock units, start here. RSUs are gaining popularity as a form of stock compensation, which raises the importance of planning for them.

An Intro to Employee Stock Purchase Plans (ESPP)

Everyone loves free money and buying things at a discount. This is how an Employee Stock Purchase Plan (ESPP) works. It’s essentially free money. Like how a 401k match is referred to as free money (well, actually part of your compensation, but free sounds better), the stock discount in an ESPP is like free money. An ESPP is one of the better benefits of a compensation plan.

What You Need to Know About Restricted Stock Units (RSU)

From an employer’s view, restricted stock units are a future promise. It’s a way to retain key employees, keep them motivated and ultimately stay with the company. This can be a win-win for both the employer and the employee. The employer is promising a future benefit in return for the employee to help the company grow. On the flip side, if the employee leaves before vesting, the stock is forfeited.

Net Unrealized Appreciation (NUA) For Company Stock

Don’t elect for NUA treatment simply because of taxes. Give priority to what’s best for your financial goals. Align your asset allocation to your risk preference and capacity. Then determine the best course of action from a tax planning standpoint.

Own Alot of Company Stock? Consider this...

Maxing Out Your 401(k) Could Cost You Thousands

The Entrepreneurs Tax Smart Investment Account Hierarchy

Real Estate in an IRA? Think Twice

Mega Backdoor Roth: The Supercharged Roth

The mega backdoor Roth is a tool that can allow you to put savings into overdrive. This is a potential strategy if you are looking for ways to optimize your long-term savings strategy and create additional tax diversification. Advanced planning strategies, such as the mega backdoor Roth have many moving pieces and tax implications if done incorrectly.

Financial Planning Basics For Real Estate Investors

Financial planning for real estate investors is anything but a passive activity. The income (for most investors) might be considered passive in the eyes of the IRS, but it’s active within a financial plan. Real estate offers investors benefits such as cash flow, equity, appreciation, and tax efficiency. These benefits can be optimized when planned and managed appropriately.

9 [More] Big Investing Mistakes: Part Two

Charlie Munger once said, “the first rule of compounding is to never interrupt it unnecessarily.” Compounding your money year after year is a key to growing wealth. To benefit from compounding without interruption, you’ll want to reduce the big investing mistakes.

9 Big Investing Mistakes: Part One

Everyone makes mistakes. That’s part of being human. However, limiting big investing mistakes starts with awareness of what to avoid when it comes to your hard-earned money. If you can sidestep these investing mistakes, your path to financial success will be an easier journey.Every mistake made can be a setback and compound against you. Your goal is to keep mistakes to a minimum so assets can compound for you over time. In other words, make money work for you most efficiently.

The Breakdown On Capital Gains & Taxes

In general, when you make money, Uncle Sam wants a cut. Therefore, taxes are, for the most part, unavoidable. This means only to pay your fair share of taxes and nothing more. Understanding the mechanics of taxes is crucial in maximizing your money. This guide will break down capital gains and cover strategies to reduce taxes.

Strategies For Large Stock Positions

A common rule of thumb says that 15-20% in one investment is a large or concentrated position. The problem with this rule of thumb is that it’s a generalized idea that doesn’t apply to everyone. Large stock positions can be the quickest way to wealth creation and the quickest way to wealth destruction. This begs the importance of planning around large positions to create wealth and limit the chance of wealth destruction.

Triple (Tax) Play HSA: Health Savings Account

Think of it as an extra savings account, but for qualified health expenses. To be eligible for an HSA, you must be enrolled in a High Deductible Health Plan (HDHP). Not only do these plans offer a triple play tax benefit, but they also serve as an extra tool for retirement planning. In a nutshell, these accounts offer a win-win-win situation by balancing today’s savings and planning for the future.

9 Things to Avoid on Your Path to Financial Freedom

Money is simply a tool that can allow time to be freed up to do more of the things you enjoy. Along the route to financial freedom, you’ll be forced to make many decisions that can change the outcome of your plan. While you won’t be able to avoid every setback, becoming aware of what to avoid is key. I’ve created a shortlist of things to avoid (or try to avoid) on your path to financial freedom.

The Kinetix Blog