I Owed $100,000 in Taxes, Then I Found This Business Hack Nobody Talks About

31 thoughts on “I Owed $100,000 in Taxes, Then I Found This Business Hack Nobody Talks About”

1. Duuuude, IRS agents come armed, these days. Watch yourself, J!

   1. thankfully that was years ago!

   2. @HighResponseMarketing oh good, 😅 Inwasn’t sure if I should give you the sus side eye. 😂 🤣 😂 Clearly, you learned from it and have moved on from that valuable business lesson! Thanks for the tips! 🎉

2. Thank You ❤️

   1. glad it helps!

3. It sounds like this is good if you don’t need access to all your “profit” because in order to avoid the self employment tax on any amount, then you are not paying yourself that amount. So that makes me think you can’t use that money (except for business things which you could use to reduce taxes as a non incorporated entity anyway).

   And on that payroll , you are paying the same as the self employment tax but just half is coming from the business and half out our your paycheck.

   Add in payroll costs, incorporation costs and annual filings (which I am not familiar with), and how ahead do you come out?

   Assuming I need all my profits to live and so not doing 401k and don’t need health insurance from this business, does this make sense to still look into?

   disclaimer…I am also not a tax professional and am just going by what I have read over the years as I went through lots of thinking about taxes. I could be wrong and I am willing to listen.

   1. no, this is good discussion. The self employment tax savings is very real once you start making upwards of 50k/year – basically since you’ll have profits in excess of wages. Jasmine dilucci says it well in that most cpa’s like to say to start doing it earlier but that added admin burden like you mentioned, outweighs any savings, until you’re making probably 50k or more.

      Only a professional and your own due diligence will be able to tell you if it’s right for you, but the thing that I mention which gets glossed over by everyone, is that simply paying yourself via payroll keeps you out of owing all that tax you *should* have been saving up for through the year.

      When you take money out of your business, a lot of small owners don’t think about how much tax they also should be setting aside that they’ll have to pay later on that. So they just take out money and get surprised later.

      Paying yourself via paycheck, with taxes already calculated and withheld, was the most obvious and simple way for me to not get surprised. I mean really, if you can’t afford to take money out of your business while keeping some withheld for taxes, you shouldn’t be taking out money. So payroll makes sense (to me).

   2. It’s made complicated purposely.

4. Open a non- discretionary, irrevocable, trust( there are several names for this type of trusts). Have any “salary” or “profits” paid into said trust. The trust exists to provide any living costs to the “beneficiary”. This type of trust has NO REPORTING legally to ANY government agency- including the IRS. Keep All of your money legally. No income taxes, no social security taxes, no payroll taxes of any kind. The rich have been using these since the country was formed.

   1. my understanding is that strategy could be considered tax evasion, and I’m not ’bout to get locked up for that!

   2. ​@HighResponseMarketingbottom line is that trusts have been around waaaay before S corps, C corps, or LLC’s.
      I can get you more info on it if you really want to know.
      Just a note on this- when Ted Kennedy killed that girl in the Chapaquidick river he got sued and lost but never paid out a dime because the Kennedy family has all their wealth in trusts.
      “Own nothing. Control everything” famous quote by Rockerfeller( trusts are how you do this)!

5. Yes, awesome advice. Most people will set this up where they retain their legal entity as an LLC, but then the IRS allows you to choose to be treated as an S-Corporation for tax purposes. It’s called an S-Corp election, and listening to Jasmine DiLucci talk about is the best advice because she is a true expert and explains things very clearly.

   You are also right that this only makes sense when your business is making a good amount of profit, generally people make the shift when their business is reliably generating between $50k-$100k in annual profit. That’s when the tax benefits generally start to outweigh the administrative costs from the extra tax filings and payroll provider fees, depending on your specific situation. You’ll need to choose a reasonable salary amount with market research documentation to defend it to the IRS. And if your business has significant debt, make sure a knowledgeable accountant helps you because making an S-Corp election with improperly structured debt can trigger a huge tax bill.

   Great content, Jake!

6. So many entrepreneurs talk about the skills their service package require or train for those. Those are the easiest part! Which is a great start. To get fhe skills. The Canva, the design eye, the copywriting, the prompting AI… The marketing… branding…The low hanging fruit. Not as many talk about tax savings or keeping contracts or documentation requirements for reporting as they grow.

   But we gotta clock that the government has grown. And that beurocracy can steal your whole biz or shop! In legal fees. If you don’t prioritize.

   New York?!?! Oh, that is bad!!! Might even be worse than CA! Wow. No wonder you moved. Good deal.

   ❤ the advice about S corp! To employ myself. The LLCs seem lame. In my state the name had to include LLC. It felt stlilting. And icky. Like the IRS owned or branded the name, not me. 😂

7. So S Corps are only good if you have a certain type of income. Once you generate a certain level of income, you want to shift to C Corp.

   1. that would definitely be a discussion to have with a professional – if not a few of them. C corp is often used for when you want to keep money retained in the company rather than have it flow through you. Different industries and different situations would come into play, that is not a light decision!

   2. ​@HighResponseMarketingnot necessarily. They can be used for that but there are a few tax strategies within a C Corp to reduce your tax liability significantly once you hit a certain revenue amount. There does come a point when the S Corp is useless once your revenue starts to increase.

8. Yeah you just admitted to having a 401(k) plan that is not in compliance with the law. You probably have some serious tax penalties for that plan. You cannot have a 401(k) plan that is not available to all employees.

   1. ​​@HighResponseMarketingthat is not what you said, in the video. That would be a problem if it were true that you were the only one with access to that employee benefit. You may not have meant what you said, but the way you worded it it sounded like it was an exclusive benefit for owners which becomes a problem. I mean there are some limits you can place in eligibity, but they are very few.

   2. @jeremyleonbarlow i do understand it could be taken as “just you”. imagine setting up that plan lol.

   3. @jeremyleonbarlow what i meant was that even if it’s just you in your business you can have one. most small business owners have no clue that its possible for them to have a 401k plan etc and that’s the point i was trying to make. trust me by the time they set one up they’ll be aware that most all their current or potential employees would be eligible too, there’s a lot of docs to sign and report on. I use human interest for ours (13 employees and 9 are on it with 2 minors ineligible and 2 not wanting it. It’s one of the things I’m most proud of to offer).

   4. @jeremyleonbarlow i do understnd what you’re saying, now that I hear myself back, it could be taken as “just you and not anyone else”. imagine setting up that plan lol.

9. How do I join the Facebook group and get the special pricing?

   1. https://highresponsemarketing.com/elite-membership come join!

   2. @HighResponseMarketing The sign me up button at the bottom isnt working

   3. @gabrielallen2307 email me i’ll send it! jake@printing4supercheap.com

10. Scuze me, but the IRS is well familiar with this strategy. The IRS attempts to reclassify. distributions as wages.

    1. I literally am talking about the OPPOSITE. Paying wages instead. Personally i think taking more wages and less distributions makes it easier to not have to pay as much tax at the end of the year.

    2. ​@HighResponseMarketingpayroll taxes on wages are 15.3% in addition to the income tax. This is why a professional accountant is necessary, to avoid misconceptions like this. How about discussing passive income treatment,?

    3. @saintbees2088 way beyond my expertise. Do you understand the point i’m making in the video though?

11. Wife? Where is your wedding ring? 💍

    1. 20 years together just not technically married

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