Tax Planning for Small Business Owners w/Mike Jesowshek

Taxes don’t have to be confusing, scary, or something you only think about in a panic every March.

In this episode of the Powerful Women Rising Podcast, I’m joined by Mike Jesowshek - CPA and founder of TaxElm, to discuss how small business owners can stop reacting to taxes and start making simple, legal moves in advance that lead to more money in their pockets.

We dive into:

• The difference between tax preparation and tax planning (and why it matters)
• When to start tax planning as a new or growing business owner
• Common deductions (like home office, vehicle, phone and internet) made simple
• The money saving power of pre-tax vs. after-tax spending 

Mike provides practical examples that apply to most small business owners and shares tools and resources that will help you keep things simple.

Links & References:

• Come network with us! CLICK HERE to attend your first PWR Connection Network virtual speed networking event at no cost!
• Listen to the Small Business Tax Savings Podcast
• Buy the Small Business Tax Savings Handbook
• Follow Mike on YouTube, Instagram or TikTok

Transcript

Welcome & Show Mission

SPEAKER_01 0:04

Welcome to Powerful Women Rising, the podcast for female entrepreneurs playing by their own rules and growing their businesses their way. Join Business Relationship Strategists and your host, Melissa Snow, as she brings you practical perspectives and candid conversations. Each episode guides you to make smarter decisions and take bold action as you build a business that's both profitable and aligned. Because the world is a better place when powerful women rise together.

Connection Network Invitation

Why Taxes Matter For Owners

Meet Guest Mike Jezuschek

SPEAKER_02 0:36

Hey everyone, welcome back to another episode of the Powerful Woman Rising podcast. I'm your host, Melissa Snow. I'm a business relationship strategist and the founder of Powerful Woman Rising. We do a lot of things over here at Powerful Woman Rising, not just this podcast, which we love and is super fun. But we also have the Powerful Women Rising Connection Network, which is a virtual networking community for female entrepreneurs who maybe don't love traditional networking. Maybe you've tried it before and it feels a little salesy, there's too much small talk, you feel kind of awkward, you're not really into the transactional relationships, you really want to create genuine connections with other people who are not only people that you like and would like want to hang out with on a Friday night, but they're also people who take business seriously, their business and yours. They say your name in rooms that you're not in. They're looking for opportunities for you to advance, to get more visible, to find new clients, and you're doing the same for them. Inside the Powerful Women Rising Connection Network, so many new connections are being built every day. And we would love to have you as a member. Click the link in the show notes and check it out if you're interested. All right, let's dive into today's episode because this might be one of the most important podcast episodes we've ever had here at Powerful Women Rising. This episode might be the thing that changes your life, changes your business, changes your income, changes your lifestyle forever and ever. And I'm not even exaggerating. This interview with Mike Jezuschek is about taxes, which I know doesn't sound exciting, but it's something that we all have to deal with, especially as business owners. And there are ways that we can deal with our taxes that allow us to still feel like we are in control, that we know what we're doing. We're not just handing it off to someone else, and also feel really confident that things are being done correctly and that we are maximizing the amount of money that is coming to us at the end of the day. You know, if I bring a male guest onto the podcast, it's going to be good. It's only happened a few times in the past, but this is no exception. When I got Mike Jezoshek's application to be on the podcast, I knew I had to have him on as a guest. I've listened to his podcast for several months now. And the way that he talks about taxes is really a way that makes sense, that you can understand, that you don't feel like he is mansplaining to you or talking down to you. And it really, really does help you feel empowered in your business. So I was really excited to sit down with him today and talk to him about all things business taxes. Mike Jozechek is a CPA and the founder of Tax Elm, host of the Small Business Tax Saving Podcast, and the author of the Small Business Tax Savings Handbook. He's helped thousands of entrepreneurs legally reduce their tax bills through clear, actionable strategies. And he's on a mission to make tax savings simple, accessible, and stress-free for everyone. Good morning, Mike. Welcome to the Powerful Women Rising Podcast.

SPEAKER_00 3:33

Melissa, thanks for having me.

SPEAKER_02 3:35

Yes, I'm so excited to have you. It's funny because most of our podcast guests have been females. I've been doing this podcast for years now. I think this is episode like 130 something. And I think you're like the third or fourth man to have on here. So we're very excited.

SPEAKER_00 3:50

I was looking at that when I was when I was signing up and I did notice some other males on there. So I'm like, okay, I think I think I can uh I think I could bring some value. So hopefully it's it's good.

SPEAKER_02 3:59

Yeah, no, we're excited to have you. And I'm excited to talk to you about taxes today because this is something that I think most people, especially business owners, don't necessarily find exciting, but it's something that we need to know about and we need to think about. And I think a lot of times we learn these things through trial and error. We get years into our business and someone mentions something to us about tax planning or, you know, something like that. And we're like, what are you talking about? So I think this is a really exciting topic to talk about for people who um for people who are brand new to business and don't really know how to even like set things up, but also people who have been in business for a while and may be able to do things a little bit differently to increase their bottom line. So before we get started, tell everybody a little bit about you and about what you do.

SPEAKER_00 4:47

Yeah. So I've been an entrepreneur since the age of 14. Uh, really kind of got started in the online marketing industry. And so uh was doing all sorts of things within the online marketing industry, but uh eventually went to school in college for accounting. And really that was just my backup plan. I was still running a company at that time and had a partnership with a lot of people, uh, but graduated, got my CPA, and was running the finance part of our company. And we had a company with seven partners at that time, and we were all trying to, we were all really good at what we did, but it was all very different parts of the industry. And so we were trying to pull this company into a bunch of different directions. And at that point in time said, uh, instead of trying to do all that, why don't we go out and and do our own thing? And so uh that is when we split off. And I started a cloud-based accounting firm back in in 2013. And uh, cloud-based accounting like is pretty common now, but in 2013 it really wasn't. But the industry I came from was a lot of younger generation. Everyone at that time was automatic uh already working remotely, and uh that was the industry that would start out in. But you kind of mentioned this idea of uh people not really knowing from a tax standpoint where they kind of fall into it, or they they realize that they need to do tax planning um when it's too late, or or when they've had an experience of like, okay, I don't want to face that bill again. How do I how do I tackle that? That's really how my journey into tax planning went. When I started my accounting firm, I didn't do anything from a tax standpoint. I was strictly accounting, finance, bookkeeping uh was our focus, but saw such a need for small business owners to understand tax strategies available. And I was facing the same thing. And whenever I would reach out to accountants, I just couldn't get a good referral partner for the tax planning piece. It found great tax repairs out there, but just really kind of struggled to um find the piece on the planning side, on the strategy side. And so uh started to build, started to build the tax side of it and started a podcast about eight years ago focusing on teaching these tax strategies to small business owners and just really fell in love with the tax planning piece, ended up selling the majority stake in my firm back in 2021 to go full-time into podcasting, and then also launched a software uh two years ago as well. So that's kind of a a long roundabout way is I'm I'm living out my backup plan for the last uh 13, 14 years now.

SPEAKER_02 6:59

That's awesome. I love that. What a cool story, and amazing that you started when you were 14. I don't even know what I was doing at 14, eating dirt, probably.

SPEAKER_00 7:07

Yeah, no, I I actually say, you know, uh what I what I was doing was was a lot of eBay type stuff. And so my dad started this. He was uh he used to go to auctions, buy stuff, resell it, had an antique store, those types of things. And and I had no interest in that. But when I was like six, I would go to the auctions with him and I would go play pool in the back or you know, do whatever I want to do while while he was at the auction. But he bought at one auction this box of bottle caps, and they were just the caps from it was a soda or a beer, I can't remember what it was, but they were the caps from that. And he spent like 50 bucks on this box of like 1,500 bottle caps, and he made that my project. He said, Okay, we're gonna take 50 of these and put them in a plastic baggie, and then we're gonna go on eBay and we're gonna sell 50, you know, take all the take the 1500, break them out in 50, and resell them. And I think each bag sold for like 30 or 35 bucks. So uh that was kind of like just my intro into this concept of like, whoa, like we just took$50 and turned it into$1,500. And at such a young age, it was just kind of a cool thing. And so when I got started in the online marketing industry, it was a lot of uh that type of work in it.

Tax Planning vs Tax Prep

SPEAKER_02 8:07

Yeah, that's super cool. Okay, so before we really dive into taxes and the the meat of our conversation, I'm gonna tell you what I tell my CPA. You have to explain things to me like I'm in kindergarten. Because as you probably know, because you've been doing this a long time and with your podcast too, the people who are listening to your podcast are probably not CPAs. They're normal people like me. And we want to understand in regular people language what you're talking about. So you said a lot when you were talking in your introduction and things that you do about tax planning. So, what is the difference between like people who are listening and are like, oh yeah, I have a guy he does my taxes, right? Or like, oh yeah, I use turbo tax or whatever it is. What's the difference between what you're talking about with tax planning versus I have a guy who does my taxes?

SPEAKER_00 8:54

Yeah, I and I think that's so important because even with accountants, people have misunderstood, like, oh, what this idea of tax strategy is or tax planning. And so I break it down to tax planning versus tax prep. And so tax prep is what people typically think about when they think of taxes, when they think of working with an accountant. And that is just preparing and filing a tax return and then sending it off to the government, the IRS, or the state agencies. And so tax prep is just saying, here's all the activity that we had last year. Here's the income I had, maybe some interest, maybe some capital gains I had, whatever it might be. Here's all the income I had, and here's some deductions, and here's the amount that I paid in tax throughout the year. Uh, and then we're finding our tax return. We're either getting a refund, which means that we paid the government too much, or we have an amount due, which means that we didn't quite pay the government enough, and we're kind of trueing that up. And so tax prep's important, tax prep's required by law, but all tax prep is it's taking information, telling the government, here's what my life looked like from an income and expense standpoint throughout the year. And that typically happens after the year's over. So we're we're we're looking back at it. We file in January, February, March, April for last year's type of activity. When we look at tax planning, tax planning is saying, what strategies can I implement? What things can I do in my business between January and December before the year is even over, but what things can I do within my business to help lower my tax liability? So it's working about strategy, not just so much sending information up. And I think that's where there's a lot of confusion because a lot of people say, Well, I do tax planning. Like my accountant tells me send in estimated tax payments of this amount. And I said, Well, that's that's tax, that's planning for taxes owed, I guess it is a planning of some sort, but that's not what we're talking about. When we talk about tax planning, we're saying, hey, how do we legally hire your kids in your business and take expenses, money that you pay your kids anyways, or help support them in? How do we make that into a business deduction? Or how do we, you know, you're working in a home office, how do we turn that into a business deduction? Or, you know, you're you're how do we set your entity structure up the right way to make sure that you're paying, you know, protected from a liability standpoint, but also uh paying the least amount of taxes as legally possible. That's the planning piece. And then at the end of the year, that tax prep and filing, that's just taking the information and sending it up to the government. So I don't mean to say that tax prep and filing isn't important. It is, it's it's required by law, but tax planning comes way before that. And it's thinking through what strategies inside my kind of tool bucket can I implement in my scenario to make sure that when I do prepare that tax return, when I do file that tax return, I know that I've done the best I could to pay the least amount of taxes legally possible, doing it the right way.

When Tax Planning Starts

SPEAKER_02 11:28

Yeah, yeah. Is there a point that people need to be more or less concerned about tax planning? Like if I just started a business or I'm thinking about starting a business, or you know, sometimes we hear things like, oh, you should be in the LLC if you're making less than this much a year, or you should transition to S-Corp after you're making six figures, or like, do we need to worry about tax planning if we're only making$25,000 a year? Is there a point that it starts to matter?

Common Tax Mistakes Owners Make

SPEAKER_00 11:54

Yeah, I mean, immediately. And so when we talk about tax strategy, I have what I call core tax strategies and advanced tax strategies. And to move the focus to core strategies, core strategies are strategies that are available to everybody. So whether you're making$5 million a year or you're making$5,000 on a side gig, core tax strategies are available to you. And these are those things like home office, hiring your kids, automobile deductions, maximizing deductions, S Corporation, those are all strategies that we start to explore at even that lower level. And I oftentimes tell somebody that because of the advantages, the government incentivizes people to be a business owner. And when we talk about tax strategy, we're just taking advantage of incentives that the government gives us. So let's use home office as an example. If I'm a W-2 worker working for somebody else and I work out of my home, I have my home office, I get no tax deduction for that because I'm a W-2 worker, I'm working for somebody else. But if I'm a business owner, now I get a deduction for that same exact home office, that same exact thing that I'm working at, I get a deduction as a business owner that I don't get as a W-2 owner. And so what why is that? And it's really because the government wants people to be business owners. They want people to hire employees, they want to build the economy, they want US-made stuff, they want all of that. And so their way of getting people to become business owners is incentivizing them. And that way of incentivizing is through the tax code and gives us those opportunities. And so when we look at being a business owner, uh, even people that start side gigs can easily be producing income from a cash flow standpoint, but really showing a loss from a tax standpoint because they're they're opening up opportunities for a lot of expenses that weren't there traditionally. Now, I wouldn't necessarily say a loss, but let's say you have$5,000 in side gig income, you're not paying taxes on$5,000. There has to be some sort of expense associated with that where you're lowering that to some extent, you know, whether that's close to zero or not, it's all gonna depend on the scenario. But tax planning starts at any level and should start right at the beginning. And I always say, like, as a new business owner, we need to have a solid foundation for our business. So tax planning is going to evolve, you're gonna add more and more strategies, more and more things as your business grows, but you need to have that foundation. You know, what are we building off of from the start? And what are we preparing ourselves for just to make sure that we have the most success from a tax standpoint and a business girl standpoint?

SPEAKER_02 14:13

Yeah, absolutely. You've touched on this a little bit, but one of the things that I really wanted to ask you was what cause some of the common mistakes are that you see small business owners making when it comes to taxes? I mean, obviously, I'm thinking, you know, not planning and doing the things like you're talking about or thinking this is something I need to worry about later on in business. But there is there anything else that we haven't talked about that you see frequently?

SPEAKER_00 14:35

Yeah, I think, you know, some of the big ones are business owners just assuming that their accountant's gonna take care of it for them. Uh, thinking that if they go to their accountant to say, hey, you're gonna file my tax return, you're my tax accountant, that they're just automatically gonna do tax planning. And that's and that's a misconception because a lot of people think that. They're like, well, you're my accountant, shouldn't you be saving this? But they're not necessarily paying them to do that. Like they're paying them a cost and an amount that covers the tax return. And there can be a lot of confusion there because people expect that to be as part of it. So it's don't necessarily expect your accountant to be able to do that. Uh, but also if that's something you're interested, ask them because they might be offered that service. It's gonna be an additional cost, there's gonna be an additional piece to it, but they might do that. Or there's a case where a lot of tax repairs just are not planners, and that's totally normal. That's totally fine as long as you have that expectation going into it. And you know, the second piece, and this is one of the most important parts when we talk about tax planning, is I always talk about we want to learn tax strategy. So dive into materials, dive into podcasts, dive into books about the tax strategy, but you can't just stop there. You have to then go and implement it because you can know every tax strategy out there, but if you don't do anything with it, it provides you no tax savings. And then even a more key part of that implementation piece is correct implementation because that's what guarantees or bullet keeps you bulletproof from an IRS audit. I always tell business owners, I'm not afraid of an audit. The IRS comes knocking at my door, I'm not afraid of it because I know that everything I'm doing is above law and I'm doing it the correct way. I'm down to my eyes and crossing my T's on the implementation piece. If they ask, say, hey, I see you're hiring your kids, how does that work? I have timesheets, I have just job descriptions, I have pay, you know, what am I determining the reasonable play is based on the job they're doing, local localities. I have all this documented to do that. Now, if I'm on the flip side and I'm hiring my kids and just writing them a check for$15,000 a year and having no documentation, now I'm afraid of an audit. So it's all about those are two, both people are utilizing, implementing the strategy. They know a tax strategy hiring your kids, and they're implementing it. One's doing it the right way, one's not doing it the right way. And that correct implementation is that key part. So it's it's more than just saying, oh, I heard a 30-second TikTok video, let me go now, go pay my write a check to my child and my business. It's much more than that. So, you know, that's the dot in your eyes crossing your T's piece that I just highly encourage people. It's not a ton of work, it's it's nothing crazy. It's not like it's gonna take hours and hours of work to do that, but it's what helps you sleep at night. And it's what helps you know when that if you get that dreaded letter from the IRS, it's like not a big deal. Here's my information, here's my documentation, and we move on from that.

SPEAKER_02 17:13

Yeah, that's very smart. Yeah. Because I think there's a lot of things, there's a lot of things in business that we think we can DIY, right? Especially in the beginning. Um, and there's a lot of things that we can DIY, and a lot of times the stakes are not that high, right? Like if I do my own website or I am keeping track of my own calendar or whatever it is, like and I mess something up, okay, fixable, we can do it. But perhaps maybe taxes and finances are something that we want to make sure that we are doing correctly.

How To Implement Strategies Right

SPEAKER_00 17:44

Yeah, you know, and one thing that really caught my eye, and the reason I started our podcast eight years ago is because I was referring out tax work and expecting with these people I refer to to get tax help from them. And let's look at the hired kids because it's it's an easy example to talk through. I would ask some of the accountants that we work with, I'd say, hey, I have a client of ours that wants to hire their kids. You know, can you give me some insight of what what needs to be done? How do we how do we do this the right way? And they'd say, Well, it depends. I need to know this and that, and I need all this information to give you any kind of feedback from that. And as soon as clients hear that, they they'd say, Okay, I'm going the other way. Sounds like way too much work for a little bit of a tax deduction. And as I started to get into this tax side, researching it on my own, implementing it myself, I started to realize that yes, everyone's situation is different, and it does depend. But when we look at a tax strategy, it's the same. 90% of that strategy is the same for everybody. So if we look at hiring your kids, how you do it correctly, what the process is, all of that is the same for everybody, up to 90%. Now, a plumber is gonna hire their kids a little bit differently than uh, you know, a consultant, or someone with an eight-year-old is gonna hire their kids differently than someone with a 15-year-old. And that's that last 10% that you got to tweak for yourself. But that 90% of the strategy is there. And so our my goal and in everything that we do is to say, how do I help small business owners get 90% of the way there? So instead of going to their accountant and saying, How do I hire my kids? It's no, I'm gonna hire my kids. Here's the kind of jobs I'm I have gonna have them doing, here's the amount of hours that they're doing per week. I've already researched some pay rates for the type of work they're doing and their experience on what would be good. Can you help me button this up and just and and finalize the last piece? That accountant's gonna take that and they're probably gonna get them through the finish line versus the hey, how do I hire my kids piece? You know, that's the kind of piece where it's it's letting business owners know that this stuff's out there, it's relatively easy. You just gotta put in a little bit of effort and it could provide some massive, massive tax savings.

SPEAKER_02 19:40

Yeah, absolutely. One of the things that I've heard you talk about on your podcast before is after tax versus pre-tax spending. Can you talk a little bit about what that means?

The 90% Rule For Easy Adoption

SPEAKER_00 19:50

Yeah, so this is a concept that a lot of people, when they hear tax planning, uh, they think estimate taxes, and we've done talked about that too. But another concept that I hear so many people say is, oh yeah, my accountant tells me go buy a piece of equipment at the end of the year. Or, you know, you do need a new vehicle, go buy a new vehicle before 1231 because you get a big tax deduction for that. And while that's true, like if you need a new piece of equipment, yeah, let's take advantage of it when it makes sense. If you need a new vehicle, let's let's take it and find a way to use that to be to its most advantage. But when I talk about maximizing deductions, what I typically say, and there's so many, this is a root strategy that has so many branches leading off to it to different strategies. I talk about this concept of how do we take spending? Spending that you're already doing, but turn it from after tax into pre-tax spending. And so I like to give an example when I talk about this. Is let's say you're a W-2 employee, you're working for somebody else, you get your gross wages, and your employer takes all these taxes out, and then you get your take-home pay. And any spending that you do, you know, you're you're sending your kids to soccer camps, basketball camps, you are uh paying for your home and utilities, your cell phone bill, all that, all of that spending you do is after tax spending. You're using money, your take-home pay that's already been taxed, and you're doing that spending. Now, as a business owner, and this is part of that incentive that the government gets us, we have revenue or sales in our business, and then we have all these expenses that cut against that revenue or sales and give us to a profit number. And that profit is what we're taxed on. So any spending that we do inside of our business is considered pre-tax spending. And so my goal and strategy is to say, how do we turn after tax spending? Things that typically we're gonna have these costs anyways, but how do we turn after tax spending into pre-tax spending? And in a good example of that is a home office deduction. As a W-2 worker, I get no deduction for a home office. As a business owner, I do. I didn't have any added costs in there as a business owner. It's my home costs the same. If I'm renting my rent costs the same, there is no different additional money out of my pocket, but now I'm turning moving money from an after tax into a pre tax. Or if we look at hiring our kids, I'm gonna send my kid to a basketball camp or a baseball camp or a volleyball camp or whatever it might be. Typically, I'm gonna use after tax dollars for that. And here, you go to your camp. Well, what if I could find something that they could do in my business, get a business deduction, they likely pay no income tax on that, and then they go pay for their volleyball camp or they go pay for their basketball camp. And so that's this concept of saying, hey, we're not going and spending more money that we don't need or buying things that we don't need in our business. We're just shifting, finding a business purpose to some of the spending that we're already doing as long as we're doing it within reasons. You can look at cell phone bills and taking a percentage of your cell phone bill and you know, all those different things are all kind of playing that concept of maximizing deductions and moving money, money that we're already spending from after tax into pre-tax spending.

SPEAKER_02 22:34

Yeah, that's brilliant. I know your podcast is a really good resource, and I love how you explain things on your podcast, very similar to what you're doing now in a way that makes sense and makes us feel like, okay, I can maybe try to figure some of this out myself, even if you're like me and I'm like anything that involves math or numbers or anything even remotely close to accounting, I'm like keep it away from me. So your podcast is a very good resource. Are there any other like books or resources that you recommend for people who are just starting out thinking about tax planning?

After-Tax vs Pre-Tax Spending

SPEAKER_00 23:05

Yeah, the biggest thing is I say is just kind of get involved in it. Start to learn, start to hear some of the lingo out there, start to hear some of that. So our podcast is a great, uh, great point. We also have a book on Amazon called the uh Small Business Tax Savings Handbook. Um, a really good kind of desktop guide. It's it's it was written and built uh for something that can continue on. So it's not something that has to be renewed every single year. Most of the concepts can be carried on year to year. But I always say that's a good like once-a-year read to just kind of refresh yourself on these opportunities because a lot of tax saving opportunities, they're around you all year long, every single day. And it's just keeping that mindset tied to it of like, oh, here's a planning opportunity. Oh, I need to do this. Here's a here's a planning opportunity, or oh, we're going on a family vacation. I also have a conference in that place that we're going on family vacation is. Can I tie that together? Is there a way to do that that makes sense or not? But at least we're thinking, we have that mindset that we're changing the way we think a little bit to involve tax planning uh around our everyday decisions inside of our business. So those are kind of the two areas I'd say are really good starting point. Our podcast, a ton of free content. We do YouTube videos, a blog post for every podcast episode, and then our book on Amazon is also a good opportunity.

SPEAKER_02 24:16

Awesome. I will link both of those in the show notes. If people want to connect with you further, if they want to know more about what you do, I'll put the link to your YouTube channel in the show notes as well. But is there any other places that you like to connect with people or website that they can go to?

SPEAKER_00 24:30

Yeah, two main places that they can go to. The first one is taxsavingspodcast.com. That's a good resource that has all of our blogs and all those information. And then we also have a software called Taxome, and that's T-A-X-E-L-M.com. And that's really kind of taking it to that next level. If people say, okay, I got the 90% there. I need help with the last 10%, or I want someone to hold my hand through this, or I want someone to kind of explicitly tell me exactly what strategy I should be focusing on. Uh, that's where our software can come into play. So those two places are really good starting points.

SPEAKER_02 24:57

Awesome. I will link all of that in the show notes so that people can click on that. Thank you so much for coming on the podcast and sharing this information with us. It's really, really helpful. It's so funny because I have the best guests on the podcast, and there's always a point in the conversation where I know I've got the right guests because I start thinking, I probably need to hire this guy. Yeah, I probably need to hire this person. So thank you so much. This was really, really helpful.

SPEAKER_00 25:21

Yeah, Melissa, thanks for having me.

SPEAKER_01 25:23

That's a wrap on this week's episode of Powerful Women Rising. Thanks for hanging out with us. If you're looking for a fun, consistent, low pressure way to meet other women in business and create more visibility, leads, and momentum. Check out the Powerful Women Rising Connection Network. Looking for deeper support, a place to think things through, get honest feedback, and stay focused as you grow. You can learn more about our masterminds through the links in the show notes. If you loved the episode, be sure to subscribe, share, and leave us a review. And until next time, keep rising because building a business your way really is the best way.