Did you know that you can save on business taxes? Many business owners spend most of their income on taxes. Having the right expert, strategy, and planning can help you save thousands.

By Q4, a single-member LLC owner reached out to me through LinkedIn. He was looking to reduce his tax bill. His business was doing well, but he was also worried about his future as he didn’t have a retirement plan.

After our complimentary consultation, we found his short and mid-term business goals, strategized the plan of action, and we were able to help him save thousands of dollars.  Let me share with you how we did it.

Our client, a single-member LLC that provides consulting services to government agencies, was expecting to generate $400,000 in net income for 2022. To help him reduce his tax bill, we recommended setting up a SEP retirement account. This allowed him to contribute up to $61,000 towards his retirement savings, which would be a tax deduction for the company and tax-deferred at the personal level until retirement.

This not only reduced the amount of tax due in the current year but also provided the opportunity for investment earnings that would only be taxed in retirement.

In addition to the SEP retirement account, we recommended the election for the state pass-through entity tax. This allowed the company to pay taxes to the state at the entity level, making them a tax deduction for the company, which reduced the net taxable income at the federal level for the owner. These two strategies resulted in our client’s tax savings of nearly $30,000.