Do you want to keep more of the profits from your business? If so, you got to join us for this edition of the Inside BS Show. Hey now, I'm Dave Lorenzo. I'm the godfather of growth.

And today is another mentor moment. And here with us is Harry Sandrowski. Nobody knows more about taxes and saving you money on your taxes, especially if you've got a lot of money.

Nobody knows more about saving you money on your taxes than Harry. Good afternoon, Harry. How are you today? I'm doing great, Dave.

The first question I have for you, Harry, because you see a lot, what are some of the most common mistakes business owners make when it comes to their taxes? So I would say, you know, first of all, when people are starting their businesses up, the big mistakes they make are they see what a friend's doing, they copy it. They go to a brother-in-law and he doesn't know what their business is. They don't look at their industry to see how other people are set up.

They don't do any homework. So that's the big downfall. And then they go to someone because they're cheap, not because you're going to be looking at things for the long run.

So those are the common ways that people get off to a really, really bad start. And the problem with that is the cure is a lot more expensive than the medicine, you know, up front. So that's just a huge mistake.

And we see it repeated over and over and over again. I'll ask clients, how did you get set up like this? I don't know. We were having coffee and somebody said something.

So that's what we did. I guess I just started laughing. You can't take advice from people who are not experts on something as important as tax strategy.

So if you're looking for an advisor to handle your taxes, I mean, the top three qualities that people should look for in an advisor. Well, first of all, you want to make sure that they understand your industry and not just give it short shrift. I mean, how many other clients do you have in whatever industry it is? And then asking them what type of structures that they have recommended, which ones worked, which ones didn't.

You know, the tax laws change from time to time. And sometimes, you know, people will switch from one type of entity, let's say from a C Corp to an S Corp or whatever, and just ask them, why would you have changed things over time? And the other question would be is, you know, for the clients that you set up 10 years ago, would you give them the same advice today? Or has the tax law changed? Has structuring changed? And they say nothing's changed, and I would run because a lot of things have changed in 10 years, five years, whatever the case may be. So you want someone who's just not going to rinse, repeat, rinse, repeat, and get the same damn bad advice over and over again.

We're talking with Harry Sendrowski of Sendrowski Corporate Advisors. Harry, how should business owners decide between structuring their business as an LLC, an S Corp, or a C Corp? How do you make that decision? So I think, so first of all, what you want to do is you want to say, what is my, what do I think my long-term horizon is for this entity? And then from there, you have your accountant, and you work on projections to say, where am I going to pay the least amount of tax? How am I going to be able to accumulate working capital? And what scenarios are going to be the most likely for me down the road? And then in addition to that, do I, you know, should I be an LLC first, taxed as a partnership, and then switch over to a C Corp? So you should do some scenario planning on that. And the reason you do the scenario planning too, is you've got to look at potentially, anytime you start a business, you want to say, how am I going to exit this business? So you might want to think about, would I be exiting to a strategic? You could be set up one way.

Am I going to exit maybe to private equity or venture capital? It could be another way. So you really need to think through all that up front, and you can make changes down the road, but how you do it originally will have a large impact on what you have. I mean, today's tax world, for example, you don't need a calculator for this.

You know, corporations are paying 21% tax, and federally you're paying 37% tax, and that's before state tax considerations. You don't need a calculator to say that you're going to accumulate more working capital for your business. And let's face it, most new entities need working capital.

So that's an easier way and a cheaper way to accumulate it. Harry, how can business owners maximize deductions to legally reduce their tax burden? So this question, I specifically wrote this question down after watching a Seinfeld episode where Seinfeld and Kramer are talking about write-offs. And Kramer says, well, you just write it off, Jerry.

And Jerry says to Kramer, you don't even know what a write-off is. I find, Harry, that most people have no idea what a deduction is and how a deduction helps them. So how can business owners maximize deductions to legally reduce their taxes? Yeah, Dave, there are several different ways depending on what type of business you're in, but a simple way would be a profit sharing plan or a 401k plan for your employees because what it allows you to do is, as an employer, you'll get a tax deduction for the amount you contribute, but you can make that payment up to, let's say, September 15th after the year end, even if you're a cash basis taxpayer.

So you have flexibility in doing that for a deduction for the prior year. Two would be to potentially maximize your bonus depreciation or any other type of what we call cost segregation, where you break apart your real estate from personal property. There are a lot of legal ways to do that, but one of the other ways to save is to look at, you know, what your accounting methods are going to be initially because, you know, at first you would say maybe not being an accrual basis, and any would be good, but if you, depending on your type of business and what you're doing, you know, accrual basis could actually be better than cash in some cases.

So I think you need to really think through all that and, you know, look at the structure that you're going to need in order to preserve as much cash, you know, inside your business. So Harry, you mentioned depreciation there. Can you explain to the people who are with us today what depreciation is and how they can maximize the opportunity that depreciation gives them? Sure.

So what depreciation is, the tax law allows you to take a tax deduction for a certain percentage of the cost of your assets. So if you bought a car or a truck for the business, you bought equipment for the business, any of those type of tangible personal property, you're allowed to write that off over a specified time period. Now, in some cases, recently the government has allowed you to take up to 100% of that cost, which was called bonus depreciation, in any given year.

So we've had clients who own franchises for food who have done very well as they expand because a lot of their equipment gets fully written off in the first year or a major portion of it does. That allows them to keep more cash to go out and get another franchise and expand. If you have a lot of heavy equipment that you're buying or you're buying a lot of trucks, there's a good way to, you know, take accelerated depreciation or bonus depreciation that helps you fund your payments to the bank because then you've got less in taxes to pay.

So that's what depreciation is in a nutshell. Okay, great. Harry, let's talk about some recent changes in the tax law that people should be aware of.

You can also, if you want, highlight what you think is coming down the road. What should we know about and how can we stay compliant and minimize our tax exposure? So a couple of things that have changed. The bonus depreciation used to be 100%.

I believe this year we're down now to 60%. But in my understanding under the Trump, what he wants to get in the tax law is you're going to get back to 100%. Also going to be in a situation where they're not going to tax overtime money, tips, social security benefits, you know, things of this nature.

So that could be coming down the road. Those are going to be pretty big ticket, you know, items. But there are certain things as it relates to research and development that could be coming back.

And there's also the estate planning. So there's a lot of what they call extenders, that if they're extended again, will be a big boom for the, you know, a lot of different businesses, not all businesses. But I think what you really want to do is you just want to stay on top of what those are.

So if they do happen, you can take advantage of them, you know, appropriately at that time. But obviously, you still have a business to run. So if you still need new trucks, you need new trucks.

And you're just going to have to deliver that wherever the case may be. But I think the big thing on the minimizing is making sure that you understand your industry, make sure you understand what could be best for you and what's going on in the industry. And that's where too, I think you need to, you know, even though there's competition out there, I think you need to be friends with people.

And to find out what other people are doing in your industry and your trade groups. You know, you just can't, it doesn't, all this doesn't happen in a vacuum. Everyone doesn't always have 100% of the ideas, I don't have 100% of the ideas.

So it's the same type of thing, you know, you surround yourself with other people that are knowledgeable. So your business can take advantage of whatever area it's in, and maximize those deductions. So a lot of people now are still going over to like ESOPs, because that can be very, you know, profitable, because an ESOP done correctly, that, you know, they don't pay any taxes.

And that money then can be used, you know, in other ways for the business. So it's, you know, there's a lot of different ways to slice stuff, you just got to look at it. And nothing is stagnant, it's going to be changing from time to time.

That's just the way the law works. All right, Harry, if a business owner could do just one thing today to reduce their tax bill, what should it be? Okay, so I will, I'll answer that a couple different ways, actually. One is, I would make sure that I have a 401k or a profit sharing plan in place.

Two is, I would look at the ESOPs. And three, I would look at, you know, the qualified small business stock to see if that's going to help me down the road. Again, when I, when you talk about taxes today, I look at taxes today, and let's say over the next five years, because everything's not immediate.

It's like your business, you plan for the future, you just don't plan for today. You have to plan today to get you to the future. But you got to look at it from a longer term aspect than just today.

But those are easy ones for you to implement. And they have very, very good long term benefits. Wow, that's great advice.

Thank you so much, Harry, for that. And folks, if you want to reach out to Harry, I'm going to give you his phone number right now. You can call Harry at 866-717-1607.

That's 866-717-1607. That's Harry's toll free number. You can reach him there.

If you have questions, you have concerns, you want to talk to him about how to save money on your taxes. Sandrowski Corporate Advisors is a CPA firm with a different perspective. And now they have national reach through their partnership with Prosperity Partners.

So be sure and reach out to Harry and his team 866-717-1607. They'll be happy to take care of you and your tax needs. I mean, why would you pay more when you don't have to? Give Harry a call today.