528: The Small Business Owner’s Guide to Taxes, LLCs, Deductions, & Audit Risks

Starting your first or next business? This episode is for you. Today, we’re bringing you everything you need to know about small business taxes for beginners. Whether you’re a solo entrepreneur, partner, landlord, house flipper, Airbnb host, or something in between, you MUST know about these tax laws before you start making money with your own business because if you get them wrong, you could be paying a MASSIVE penalty come tax time. You could save yourself thousands, or TENS of thousands, just by tuning in!

Brandon Hall, CPA, runs a real-estate-focused tax and accounting firm for big and small real estate investors. But, even if you’re not investing in real estate, these tax tips also apply to YOU. In today’s episode, we threw dozens of hard-hitting tax questions at Brandon so you know what to do with your next side hustle or full-blown business.

We’ll discuss whether you need an LLC, the real benefits of getting one, and which business entity (LLC, S-corp, C-corp, etc.) makes the most sense for your specific business and tax needs. Making money on your own but NOT paying quarterly taxes? This could cost you BIG, but thankfully, Brandon goes through exactly how much you could owe. And if you want to owe less to the IRS, we’ll give examples of tax deductions plus, which are NOT worth it and could put you at a BIG audit risk.

Need a tax professional for your small business? Find one for free with BiggerPockets Tax and Financial Services Finder!

In This Episode We Cover

Self-employment and small business taxes for beginners

Whether or not you need an LLC and why most real estate investors have this all wrong

Estimated taxes and the MASSIVE penalty you’ll pay if you forget about this

Tax deductions and the audit red flags that the IRS is looking for

The different business entities you can start and which has the best tax benefits

The three things you NEED to set up an LLC and the most critical one beginners forget

“SALT” taxes and why those selling goods in different states could owe even more

And So Much More!

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How to Obtain Real Estate Professional Tax Status

Hear Past Episodes with Brandon:

BiggerPockets Real Estate 196 - LLCs, House Hacking, and Saving on Taxes with Brandon Hall

BiggerPockets Real Estate 269 - How the New Tax Code Affects Your Real Estate Investments

BiggerPockets Real Estate 934 - How to Pay Less Taxes by Buying Real Estate (1 Write-Off You’re Overlooking)

On the Market 96 - The Biggest Real Estate Tax Loophole You’ve (Probably) Never Heard Of

On the Market 165 - Year-End Tax Updates, New IRS Interest Rates, and URGENT News for LLCs

On the Market 187 - 100% Bonus Depreciation Coming Back? (Do NOT File…Yet)

00:00 Intro

01:42 Do You Need an LLC?

02:01 Different Business Entities

09:29 3 Steps to Set Up an LLC

16:49 KEY Dates to Know

19:14 Estimated Taxes

25:48 The “SALT” Taxes

31:56 Tax Deductions and Audit Red Flags

44:22 Claiming Passive Losses

Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/money-528

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