Tax-Free Living

Mini-Book
Carter Cofield C.P.A

[Type
Hey Tax Savers! Are you ready to learn some tax secrets that will change your life? This guide will be
your beginning blueprint to Tax-Free Living! You’ll learn how to structure your business, how to write
off expenses in your business, and so much more! Because you sign up for my list, I want you to have
this free mini-book plus you can get my FULL TAX-FREE LIVING E-BOOK FOR 70% OFF. This E-
book has over 200 tax deductions that will help you save over $20,000 in taxes!

Select the Proper Entity Structure

Most entrepreneurs know that they need to incorporate their business, but they don’t necessarily know
why? The reason you want to incorporate is 3-fold:

• Establish Credibility – you want to give you client reassurance that you take your business
seriously enough to incorporate. If you can’t do this, how will they trust you to provide the
service or product that you promised.
• Asset Protection – as a business owner, litigation is real. If you are sued without an entity in
place someone could sue you for your business and personal assets.
• Tax Reduction – selecting the correct entity structure helps you reduce taxes. However,
selecting the wrong entity structure can result and you paying thousands more in taxes.

So which entity is best for your business and how can you set one up? Great questions! Let’s view the
breakdown:

• LLC (For a walkthrough on how to create an LLC in any state, click here)
o Best entity for entrepreneurs that have net income under $40,000.
o Establishes credibility and gives you asset protection.
o Easy to set up and maintain.
• S-Corp (has some restrictions, read here)
o Best entity for entrepreneurs that have net income over $40,000.
o Establishes credibility, gives you asset protection, and provides tax savings.
o Must do payroll, even if you’re the sole member.
• C-Crop
o Best entity for entrepreneurs that want to sell shares of equity for capital or go public.
o Establishes credibility, gives you asset protection.
o Has double taxation (which is a very bad thing!).

Now that your business is incorporated, you need to register for an Employment Identification Number
(EIN). Your EIN is your business’s social security number, and it allows you to apply for a business
bank account amongst other things. Your EIN is FREE and you can apply online via the IRS EIN
application.

Grab The Full E-book for 70%!!

 HOW TO OPERATE YOUR S-CORPORATION

Now that you have your S-Corp up and running, here are the proper steps you need to ensure
you operate it correctly:

1. Open a business bank account

a. Take your Articles of Incorporation and EIN to your favorite bank and inform
them that you would like to open two business bank accounts (one checking and
one savings).
b. Once these accounts are open, you’ll want to inform your clients and customers
to send all payments to this account.
2. Save for taxes
a. You’ll want to use your business savings account to save for your taxes.
Allocate 30% of all money earned to this account. This should be enough to
cover your taxes owed for the year
3. Run Payroll
a. Now that you have a S-Corp, it is MANDATORY to do payroll. Don’t worry,
it’s really simple and I have a walkthrough video for you below.
b. I recommend using Gusto as your payroll provider. It’s very user friendly and
affordable ($45 per month), plus they handle all of your payroll reports and send
them to the IRS on your behalf!
c. You’ll want to set aside about 25% of the money you earn for payroll. So if you
get a check for $100,000, you’ll want to use $25,000 for payroll. Here’s a video
walkthrough of how to run payroll using Gusto.
4. Keep track of your business expenses and deduct everything!
a. Now that you’re a business owner, a lot of your personal expenses are now
business expenses (aka tax write offs). So, you’ll want to use your business debit
and credit cards for these expenses so that you can keep track of them.
b. There is a list on the next page that explains this further and gives you a robust
list of tax-deductible expenses.
5. Renew your S-Corp annually to keep it in good standing.
a. I recommend you hire someone to do this for you. Use the lawyer on your team
to help you with this or you can reach out to my team member Ariana
(ariana@cofieldadvisors.com). She can complete your renewal for $400, which
is also tax deductible! (this doesn’t include your state fees).

Grab The Full E-book for 70%!!

 Organizing Business Finances

One of the most common issues that I see with entrepreneurs is the lack of organization of their
business finances. Most entrepreneurs have one bank account for both personal and business finances
and it becomes one big mess. This causes two HUGE problems:

1. When you combine personal and business finances you forfeit write offs and business
deductions because the IRS doesn’t know which transactions are business or personal.

2. When facing litigation, the judge can “pierce the veil” which means dissolve your entity and
allow the plaintiff to take your personal assets.

Unfortunately, I’ve witnessed both outcomes and I don’t want it to happen to you! To avoid this, I
recommend you implement a system called Profit First. Profit First is a system that will help you
organize your business finances seamlessly. This process will only require 10 minutes of your time
each month.

I bet you’re wondering how does it work?

Let me explain below:

Step one: Set up five business bank accounts

Then, allocate a portion of your business income to each bank account.

The five accounts are:

• Income – all the money you make comes into this account and then is distributed to the other
four accounts.
• Tax – this account is where you save money is for your estimated tax payments.
• Owners Pay – in this account you deposit your salary.
• Business Expenses – use this account to pay for all business expenses and to reinvestment in
your business.
• Profit – this account is where you save money for leisure and celebrations for your success as
an entrepreneur.

The way the system works is simple. All the money flows into your “income” account and twice a
month (I used the 5th and the 25th) you are going to move the money to each account based on certain
percentages. For example, if you made $10,000 your percentage breakdown could be:

Tax = 30% or $3,000

Owners Pay = 25% or $2,500
Business Expenses = 40% or $4,000
Profit = 5% or $500

You’ve now organized your money in a mere five minutes and can spend more time growing and
developing the business.

Grab The Full E-book for 70%!!

 Business Deductions/Tax Write Offs
As you know, taxes are a HUGE expense for both entrepreneurs and employees. The only difference is,
as entrepreneurs, we can actually do something about it. Fully understanding the items that your
business can write off can save you thousands! I recently had a client who bought a new car for her
business and didn’t realize she could write off Bonus Depreciation. After informing her about this
write-off, she was able to realize an immediate savings of $18,000! To help ensure that you don’t miss
any business deductions, here is a comprehensive list of tax write offs for entrepreneurs. You can also
check out this video for my help!

Now that you have a better understanding of the items that you can deduct in your business, let’s
discuss how to successfully and easily track these expenses throughout the year.

1. Open a business account (we’ll talk about where/how later) and use this account for all
business revenue and expenses.
2. Use Quickbooks Online. QB online the best software out for easily tracking and recording your
business expenses and it’s very easy to set up. All you need to do is purchase the software, link
your business account and credit cards, and review your transactions on a monthly basis.
3. Give your accountant access during tax season and you’re done!

Bonus Tip: There are some business deductions that you will need to track outside of Quickbooks due
to their business nature. For example, your home office and automobile need to be deducted using
specific calculations and measurements. Please notify your accountant about this during tax season.

Grab The Full E-book for 70%!!

 Understanding Taxes as an Entrepreneur

Nothing gives entrepreneurs more anxiety than the thought of a huge tax bill in April. While this is a
legitimate fear, this does not have to become your reality. Now that you know the vast amount of
expenses that you’re allowed to deduct in your business, you should also know how much to set aside
for taxes and when to make tax payments.

Estimated Tax Payment

Estimated tax payments are required for self employed individuals because their income is not taxed
when it is earned. The IRS requires you to make payments of 90% of your current years liability or
100% of prior years tax liability. Thus, in your first year of business you’re generally not required to
make estimated tax payments because you don’t have an estimate of what your earnings will be.
Estimated tax payments are due quarterly and the due dates changes every year. but listed below are
the 2021 deadlines.

When to Make Tax Payments

How to Make Tax Payments

Use form 1040-ES to calculate and pay your estimated taxes. There are a number of ways to pay
estimated taxes, including by check, credit card, and debit card. There are online payment options too,
such as the Electronic Federal Tax Payment System (EFTPS).

Grab The Full E-book for 70%!!

 Check below for other resources and special deals!!!

1. Enjoy 70% off my out my Tax-Free Living E-book!

2. Follow Me on Instagram!

Grab The Full E-book for 70%!!