EP380: 9 Ways to Reduce Your Taxes for 2022 - End of the Year
10:38AM Dec 15, 2022
We should all feel grateful if we have to pay taxes because that means our business is profitable, right. But at the end of the day, we probably want to pay as little taxes legally as we possibly can. Welcome to thrive by design, the podcast for ambitious, independent jewelry brands, looking to profit from their products, get ready to make more and sell more doing what you love, without spending every single waking minute doing it. Hey, and if you're a creative fashion or product based business, I want to welcome you to the show. I'll be dropping big tips on launching, growing and scaling your business. So you can spend more of your precious time using your creativity to make money. You ready? All right, let's do this. Hey, welcome to the thrive by design Podcast, episode 380. While we are rounding the end of the year, and I thought this was a good enough time as any, to talk about some things that you can do in these next week or so, next couple of days or so, to reduce your taxes for the 2022 year. It's Tracy Matthews, here I am the chief visionary officer of Flourish & Thrive Academy and the host of this podcast and I love talking about saving money and reducing taxes. You know, we should all feel grateful if we have to pay taxes, because that means our business is profitable, right. But at the end of the day, we probably want to pay as little taxes legally as we possibly can. So that we can either keep the money in the business for business assets, or use it for future savings, or our business development and growth. Because if you're going to pay for something in January, you might as well pay for it a couple of weeks early right now, and save some money in taxes for the 2022 year. So obviously, you want to run this by your accountant or financial person to make sure that everything I'm saying is legit. I ran it by my accountant Hunter, and he's like, That's great advice, Tracy, I would definitely share that with your community. So I'm going to dive into a couple of things here momentarily. But before I do, one of the items on my list is business development and investing in yourself. So anything that you buy from a company like flourish and thrive, like a course or a program, if you invest in coaching or consulting with us, or if you join a coaching program like momentum, that is all a legitimate tax write off. And so if you're thinking about working with us, in the new year, I would love to give you an official invite, to just jump on a discovery call with my team to talk about your business and your situation. You can head on over to flourish, thrive academy.com, forward slash discovery call and fill an application right there and chat with Natasha or summer about your business and find out how or if one of our programs will actually help you reach your goals a lot faster. And I say if because even though we can help everyone we really focus on working on those eight players are going to move the needle and invest in themselves and do the work so that they get a result. And so if you consider yourself an A player, and you have big goals and dreams for the new year, then we'd love to work with you. And it's a lot of fun. So I'll have a link in the show notes if you want to jump on a call with someone on my team. And right now I just wanted to talk a little bit more about tax write offs. And the reason why I want to do that is because you still have some time. And every year I feel like it's like my accountant will text me, you know, or this used to happen to my jewelry company, my accountant will text me literally like on December 30 Like, hey, is there anything you can buy today that, you know, we could use as a tax write off to reduce your tax liability? And I'm like, why are you waiting until like the day before the year ends. So I don't have time to do anything, especially if you're on vacation. So hopefully this is hitting you before your vacation starts and all those things. It's right before Christmas, you're probably wrapping up your holiday sales. And you have some time to think through some of these strategies or ideas on things that you can do to help reduce your tax liability. So one thing that my accountants have always said is that at the end of the year, it's a great time to invest in business assets. So if you need any new computers, if you need any new equipment for photography, if you need any unnecessary equipment for making your jewelry or tools, this is a great time to buy those things. Now, inventory doesn't necessarily count for this because if you buy a bunch of inventory and it hasn't sold, it still counts as cash. So that doesn't make sense. You need like hard assets for your company, not more inventory. So I want to be really clear on that like buying a bunch of Gems and Beads right now. Unless you legitimately need them right now is not a good use of your money. I would wait until the new year to do that. The next thing that you might want to consider is if you have bills due in January that you have extra cash flow to pay off is to maybe pay If some of those bills early, like, do you have credit card debt? Do you have loans, or any other bills coming up that you could pay off early because you have the extra cash flow. Now, I don't want you to get into a situation where you spend all your money at the end of the year, and then you don't have the money to actually run your business in January. So take a look at your cash flow projection. And make sure that if you're spending extra money now to get it on the radar for 2022, that you're not putting yourself in a bad situation for January, that sometimes can be a conundrum for a jewelry brand. Because January unless you're in the bridal, or specific specialty niche markets, is not always one of the busiest months. So just take a note of that and be careful and beware. Now one thing that I like to do, because I have a combination of employees and contractors in my company, so anyone who is technically contracted with my company, I pay them a couple of days early. So we'll gather their invoices and pay them like on the 29th or 30th, instead of paying them on the first. And so that's a great way to get those payments that you would make anyway, on the 2022 books and a write off for 2022. Instead of having that go into the 2023 year. Another thing that you want to consider is to make sure that you're tracking all applicable travel expenses or any event expenses that you've had to host maybe jewelry trunk shows, or sipping seas or parties like that, where you can make sure that all that tax deductible travel expense, and or event expense is actually written off. So if you have random receipts that you haven't accounted for in your QuickBooks, or Xero, and they're floating around in your handbag or in a pile on your desk, make sure that those actually get deducted for 2022. And they're organized in a way that you don't forget about them. Especially during the holiday seasons. I know when I had a jewelry company that wasn't custom, and I had inventory to sell, I hosted a ton of events in December. And it will be easy to lose like you know, the FMB bill, the food and beverage bill for that event. Because it was like floating around in handbag getting mixed in with my regular grocery bill, you know what I mean? So get organized, and make sure that you're filing those receipts and you're actually deducting those expenses from your 2022. Roster. Now another great thing to do is to donate to charity. So if you have extra inventory that you're not using, if you have made goods that you can donate for an auction, or if there is any, you could donate funds, actually to a charity. So if you want to do some charitable giving at the end of the year, this is a great time to do it so that it gets written off for the 2022 year. Now, this is an area where you definitely want to consult with an accountant or a financial professional, where they can tell you exactly how to make sure that your charitable donations are accounted for in the right way. Because I know in certain cases that charitable donations are just a personal deduction. And maybe at the end of the day, depending on your business structure, it doesn't matter too much. That if it's a personal deduction, or a business deduction, because at the end of the day, everything flows through you. But once again, make sure that you speak to your financial advisor so that you know exactly how to do this the right way. Now, another thing that I want to talk about is investing in business development, growth, education, anything like that. So December is always a funny time, because in our industry, people are so focused on their sales that they're not thinking about, like the future of growing their business. Now we have a couple of programs starting in January. And we also have consulting and coaching that we open up spots every month too. So if you've been thinking about getting a consultant or coach or working with us in let's say, our momentum program, or joining us for Laying The Foundation are participating in our traffic on fire accelerator, then right now is a good time to actually invest in the program. Now even if you're going to start in a couple of weeks, in a month, or in two months, because that way you get the tax write off for 2022 instead of having it come out of your 2023 taxes and that means when you have to pay taxes in a couple of months, it just reduces your bill. So if you want to hurt hear more about the programs we have and you'd like to chat about your unique situation. I'd love to invite you to book a free discovery call by heading on over to flourish thrive academy.com forward slash discovery call and just jump on the phone with someone on my team and we can discuss your situation and see which program is a good fit for you.
And then finally, another great thing to do right now at the end of the year is to invest in marketing expenses that are going You're going to be using in the new year. Now. So a couple of ideas on that is like if you needed to do a video shoot, for instance, for content for the new year for the spring collection, perhaps you engage or hire your videographer or photographer now. And even if your date to shoot is not till February, by doing that, or you put a deposit down or whatever it looks like, obviously have a solid contract to make sure that you can get your money back if there's no issue. But that way, you basically secured a future date. And now you have that off the books for 2022. Now, obviously be smart about these things, you want to make sure that you're booking with legitimate people who aren't going to run off with your money. Because everyone has a different situation, you know, we just recorded our audio book, which is coming out in a couple of months. And we actually recorded first and then once we like booked the space, like several payments were due along the way instead of paying up front. So everyone's kind of has a different cadence for those things. So make sure that you're being smart about investing in the marketing spend. But think through things that you could spend now that you're going to be using within the next month or two that are going to really support you in reducing your tax spend, but also support you in growing your business at the same time. Now two other things, I want to talk about our health savings contribution. So if you're saving for big health expenses, or anything like that, you can put those in an HSA account, and start saving for future health, expenses and contributions. So if you're not sure what I'm talking about, you can speak with your tax accountant one more time. And then another thing is to take a look at your books and see if you were to max out your retirement savings like your SEP IRA, Roth IRA, or whatever type of retirement that you are saving for, it might be a good idea to stash some cash away into one of those accounts to help reduce your tax spend as well. And you might as well get it out of the bank account right now, you can always do it a little bit later. I know that they allow you a little bit delayed, but it's good to just do it now if you have the extra money so that you aren't putting it off till later and then not making that retirement investment because you spent the cash flow in your business. All right. So I hope that that was helpful, and that you got some good ideas and tips that you can use to reduce your taxes for the new year. And let me run through those again. So you want to invest in any important business assets. So if you need equipment, or new computers or technology or any sort of upgrade, this also would probably apply to software, things like that. Get those hard assets purchased. Once again, this is not to be confused with inventory unless you actually need it to sell within the next couple of weeks, pay bills, loans, credit cards, any of those things a little bit early so that you can get it on the 2022 books. Pay your contractors early and business professionals, this is a great thing to do get them paid by December 30. So it clears your account. And that deduction is for the 2022 year, make sure that you have any travel or event expenses deducted that are legitimate write offs for your business. I know sometimes it's easy to let those things get scattered. So get focused on those. Make a donation to charity. Invest in your business development. You know, we would love to help you there. You can invest in future marketing, spend Health Savings contributions, and max out your retirement savings. Now I'm sure that there's a lot more ways to reduce your taxes. So if you have some ideas, I would love for you to share those with me. And if you found this podcast helpful, please share it with your friends. You can post it in stories, or just direct message it to your friends, whatever you think I would love to support them in saving more money and keeping more money in their pocket at the end of the year as well. Thank you so much for listening to the episode. Today. I am super stoked and honored that you allow me into your earbuds every single week. If you're listening to this show every single week. And if not these, make sure that you're subscribed on your favorite podcast platform and give us a little rating and review. And once again, if you want to get that business write off and get some business consulting, coaching or invest in one of our programs before the end of the year and you've been thinking about it. Now is a great time to reduce your tax spend and also grow your business a lot faster. So if you're wondering which program is the right for you, we help jewelry brands at all stages from zero at the startup phase, all the way up through seven figures so you can head on over to flourish & thrive academy.com forward slash discovery call and apply for discovery call and jump on the phone with someone on my team. We would love to support you. Thanks so much for listening today. This is Tracy Matthews, signing off until next time