Ways for Biz Owners to Save Money on Taxes

Ways for Biz Owners to Save Money on Taxes

Check out the latest episode below. Mr.Biz Radio provides business owners with the knowledge and insights needed to drive their companies forward.

Mr. Biz Radio: Ways for Biz Owners to Save Money on Taxes

Unedited transcription of the show is included below:


Welcome to Mr. Biz radio BizTalk for biz owners during the next half hour, Mr. Biz, Ken Wentworth, a leading business advisor, and two time bestselling author will cover topics. That'll help business owners run their companies more profitably and more efficiently. If you're ready to stop faking the funk and take your business onward and upward, this show is for you. And now here's Mr. Biz, Ken Wentworth.


All right. Welcome to another episode of Mr. Biz radio with me, Mr. Biz, Ken Wentworth. In this week, we have an absolute expert on a topic that I promise impacts each and every person who's listening right now. And probably in most cases impacts you in ways that you don't like. So you're going to want to listen to this because we're going to talk about some challenges in this area, as well as some ways to, to avert some of those challenges and avoid some of those challenges. And so this week, our guest is none other than Mr. Julio Gonzalez, who is a national tax reform expert is the founder and CEO of Engineered Tax Services. The country's largest specialty tax engineering firms, specializing in federal tax incentives, IRS compliance, and standards and tax issues for all business sizes from small businesses to fortune 500 firms. So Julio has been doing this for a long time. He is an absolute crafty veterans. So without further ado, welcome to the show. So Julio,


Hey, thanks for having me. I really appreciate it.


Yeah, absolutely. So I've been looking forward to this. I'll be honest with you. We doing some, some, you know, looking for guests and looking for new things and different angles to speak about things we ran across your profile, ran across you online, and we're like, oh my gosh, we gotta get Julio on the show. Because again, this is something, you know, the vast majority of our listeners are either business X business owners or entrepreneurs, et cetera. Some of them are wantrepreneurs right in the process, maybe of starting a business or wanting to start a business, but Hey, we're all taxpayers at the end of the day. So that's what I thought. This would be great to have you on the show. I guess let's get started with, tell us a little about your journey, Julio.


Yeah, well you know, started in Miami, Florida, basically. I've been in south Florida all my life and, you know, went to college at University of Colorado and came out of there and went into the big accounting world. And it was there really that I saw that as a big working in a big accounting world that, you know, we did a lot of tax credits and incentives for the fortune 500 public companies. And I realized over two decades there that ultimately the small business owners and the accounting firms that they work with didn't have access to these tax credits and incentives. So in 2001, I started our firm really to be a resource to what today is thousands of accounting firms and CPA firms. And we work with them and we work with our clients to make sure that we mitigate their taxes, preserve their wealth and take advantage of all these tax credits and incentives that most small businesses and most accountants don't have access to.


Yeah. And that's, again, one of the reasons why I wouldn't have you on it and I should tease a little bit guys we're as we always do in a third segment, and we're going to, we're going to pick Julio his brain a little bit, and he's gonna tell us some ways that we can, we can do that. We can save money on taxes and, and protect as much of our wealth as possible, but Julio. So how did you make the transition from, you mentioned, you know, you were in the big accounting. I won't, I won't ask you to tell you, tell me what, how many there were at the time. I know there was the big eight, the big six, the big four. It, it will definitely date you to tell me how many there were at the time, but so how'd you make that transition from being in that world to kind of striking out on your own?


Yeah, so it was the big gate and I was with Arthur Anderson and ultimately the government shut them down. So it was the largest accounting firm in the world. And that time they had that dispute with Enron and ultimately the government shut down the firm. And so that's when I struck out on my own. And I thought that, you know, I'm doing all these tax credits and incentives for these billionaires and their companies and that these are tax credits and incentives that most accounts and small business firms don't have access to. So why not try to create a hub where we could be that provider to the accounting world and ultimately to the small business owners. And that was really the journey that we started back in 2001.


Gotcha. So you know, obviously you've been doing a lot of things you've been involved in your you're on television often, you've been a member of the presidential tax reform round table. How did you get into that?


Well, I was asked by Vice President Pence to join the Tax Roundtable. And so one of eight and you know, that's an eight year commitment, so it's still currently involved in that and working with Congress. So, you know, basically everyone in Congress, not many of them have any tax knowledge, none, most of them haven't owned a business. So they come to us as a resource when they're changing the tax code, which they're often doing and ultimately, you know, we're there to grade it and give them a historic perspective of it and, you know, try to really protect small businesses in any changes to the tax code.


Interesting. So I know that you you're definitely on the conservative side of things you mentioned, there are eight folks on that, that tax reform round table, is it, is it kind of evenly split you know, conservative, liberal, or what's sort of the makeup of that? I'd be curious to hear that because I'm sure that that makes it could make the conversations much more spirited.


Yeah, it definitely is split between conservative and liberals right down the middle and ultimately, you know, it, it, it functions well now listen, Congress doesn't have to listen to us, but it helps to have our perspective because again, if you've never owned a business, if you don't have any background or knowledge and tax, clearly we can give some perspective and we can give historical perspective of the changes. You know, there's not any kind of tax change that hasn't already happened, but when you go back to increasing tax rates and you want to tax people at a much higher tax rate, even businesses, we have to give them the perspective of what happened when we did that back in the Jimmy Carter era and things of that era. And then they have to ultimately make their own decision.


Yeah. So I guess I'm kind of fascinated by that you mentioned it's an eight year commitment. I think that's it's very interesting. I think it's great actually, but I'm, I'm curious to hear, and I know it's early on in this administration, but how much of a change have you seen overall between the administrations between having a Republican president and now having a Democrat president, as well as, you know, the the Senate and the house being Democrat run?


Yeah, well, we had that too. In 2016, we have the you know, obviously a Republican president and the house was fully Republican as well. And that's when you got tax reform done in 2017. So, you know, it's lined up quite the opposite right now, liberal president and liberal house. And so I would imagine that, you know, by the end of the summer, they'll get the infrastructure bill pretty close to being done and voted in September. And I think that'll impact, you know, the tax rates. I think they're going to bring them way up on income tax rates on payroll and payroll taxes, you know, and unrealized gains and gain taxes. I think all of that's going to go up as they try to, you know, fund this infrastructure bill. And so I think that's definitely going to happen. I mean, they have reconciliation, so they don't need a Republican vote. And so it's been a big drastic change from one end to the opposite. And so I think, you know, I think we're going to see, you know, income tax rates going up quite a bit.


Yeah. Yeah. I can't imagine. So I guess I hate to keep going back to it, but amongst the eight of you with a split, as it is, are you guys pretty much just kind of giving your side of things, do you debate things frequently or how does that sort of play out?


Yeah, I think mostly we're giving our side and, you know, there are obviously as some debate, you know, I focus primarily in the real estate sector and we all have our different focuses of our expertise, certainly in small business. But yeah, I think it's a big debate. Ultimately, you know, you have the different foundations out there that from an economic standpoint, score it now, you know, those will be ranged from, it's a horrible thing to a good thing, you know, it's across the spectrum, right. So, you know, they're going to have, they're going to listen to their economic policy directors and the people that score it and, you know, we'll, you know, obviously chime in, but ultimately you know, I think they know what they want to do. I think they have a clear path to what they want to do. And I think, you know, they have an audience of people that will support them.


Yeah. All right guys. Well, this week again, we've been talking with Mr. Julio Gonzalez, who's the CEO of Engineered Tax Services. We're going to take a break here. We'll come back on Mr. Biz radio


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Check out both the Mr. Biz’s national bestselling books, “Pathway to Profits” and “How to Be a Cash Flow Pro” on Amazon. Now, once again, here's Mr. Biz. Sorry about that guys. Well, I was muted. I was talking, I promise I was


Rookie mistake there. Welcome back to the show. It is time for the Mr. Biz tip of the week. And this week's tip is as this is, especially for those out there that are in startup bootstrap mode. This is a common challenge that I see, and that is don't DYI your business to its detriment. Again, and when you're in bootstrap mode, you're trying to do a lot of things you're trying to do as yourself. You're trying to save a penny here, save a dime there hire expertise for big impact, expensive things, such as legal. Don't try to Google legal problems, right. And I know that sounds really silly, but I tell you, it happens all the time. Think of the downstream impacts that could have when you're trying to save a few thousand dollars, maybe of hiring an attorney, that's a specialist in an area that you're trying to figure out on the finance side of things.


And that goes on the tax side, you know, per our guests, even with, with Julio, I'm sure would agree with that as well. You know, hiring someone who is an absolute, not just an accountant, not just a CPA, someone who's an expert on the tax code, the difference that that can make, and maybe it costs you a couple thousand dollars in additional fees to have your taxes done, but think of the savings it could have and protecting some of your wealth. Some of the exact things that Julio does with his company engineered tax services real estate, another area not to DIY really find someone who knows the market can save you a ton of money on leases, as well as purchases, of course, and then marketing. I know marketing is not something that's so obvious. You can probably figure out a lot of those things, but why not have someone who, who lives at breeze, especially if you're any type of, you know, digital marketing Facebook ads, things like that.


Someone who is running ads for hundreds of thousands, if not millions of dollars per month running an agency for their clients, they know exactly what's going on in that space. You may be able to kind of figure it out, or it may take you months and months and months, and they could just really get it down in quickly. They, those types of services and those skills pay for themselves very, very quickly. So again, don't DIY your business to its detriment. So that is a Mr. Biz tip of the week. And so let's get back in and talking to our guests this week, Mr. Julio Gonzalez, as I mentioned, CEO of Engineered Tax Services, you can find out more about all the things they do at engineeredtaxservices.com. That's engineeredtaxservices.com and you can follow Julio on Twitter Tax Reform Expert. And I guess the other thing I'll mention while I'm kind of talking about Julio and some of his resources is he has some free eBooks on his site. So if you can, if you've go to engineeredtaxservices.com, he's got some free eBooks out there to help you navigate some of the common tax issues that we all face on a day-to-day basis. So I guess Julio, tell us a little bit about that. Let's shift gears and move into more of what you're doing now with engineer tax services and how that impacts small business owners.


Yeah. I thought your advice was great. And I agree that, you know, small business owners should invest in a good accountant and not think of it so much as an expense, but a good investment. And what I mean by that is that we engineered tax services. We work with several thousand accounting firms nationwide. We are a resource to them and their business owners for tax credits and incentives for growing employment for starting a business for investing in equipment, investing in R and D and investing in the infrastructure buildings and things like that. Now all that activity comes with tax credits and incentives that we know the Amazons of the world take every day. But again, most accountants aren't equipped to do those types of tax credits for their small businesses. That's why we partner up with them. Now, if you invest in an accountant that knows your industry, has those types of specialists lined up, you know, that fee may come back to you 10 X return because they're going to help you with all those incentives.


Like they're going to help you with all those credits and much, like you said, with legal or marketing, you know, you want to have the best with you, right? And you want to get the best return, but I'm telling you, if you get a good accountant, he's actually going to return his fee 10 times and all these tax incentives that the Amazons, the Uber's, the everyone, the Facebooks of the world, right. They all take advantage of these. And you know, that's why we see in the media that these companies aren't paying taxes, but they're available to all small businesses. And so we just try to help the accountants, bring this to all small business owners that are working so hard to create jobs and do such a great job here in the country.


Yeah. And it's funny, I've mentioned this on the show all the time, Julio, but you know, my, my undergrad's in accounting. But I, I don't do my own taxes. I used to do my own taxes until I became a business owner. And it was just a bit, frankly, it's I don't, I don't really enjoy it. I don't like being that much in the weeds to be honest with you. But the other part of it is I know what I don't know, and I don't want to keep up with the tax code and I don't also don't want to miss out on things that, you know, I just don't know about that I could be taking advantage of. I don't mean it in a nefarious way. I just mean, as you mentioned, that they're available and I'm not, if I'm not aware they're available, I'm going to miss out on protecting some of that wealth.


And so that's why I think it's just absolutely so important. Especially when choosing a CPA and accountant that does your taxes to not just, and again, I don't, I don't mean anything bad about towards accountants or CPAs, but I've seen plenty in my day and I'm sure you have as well, Julio, that they do almost what I call, check the box. Right. We did your taxes. Okay, here we go. And they're not necessarily super well-versed maybe, as you mentioned, Julio in there in that specific industry. So they don't know some of the potential grants or tax credits that are available. So along those ways, I know you're, you're a very much an expert on the government grant side. What are some of the things that you see whether it be tax credits or even government grants that are most overlooked, you think by business owners?


Yeah. On the tax credit side, there's so many credits associated with just keeping employees employed. Right. So we had that during the pandemic, right. And, you know, obviously we had the PPP programs and if you had a good accountant, if you knew your bank owner, you know, or your bank local bank, you probably got to take advantage of that. If you didn't have those resources, you probably missed out on that. But the same thing, if you have an account that knows about these tax credits for keeping people employed, they're called employment retention, tax credits, they're phenomenal 9,000 per employee per quarter, that could be refunded to you. And I mean, those are big tax credits, right. But there's also a work opportunity tax credits.

So if you're employing veterans minorities, there's other incentives associated around that. So obviously those are some of the big ones that people don't take advantage of. And that most accountants don't bring to the table to the, you know, the check, the box accounts that bring to the table. So right. Don't get with the check, the box accountant. I love that term get with the account that obviously knows your industry and is going to be proactive with you. That's not going to wait until the end of the year when it's too late to take advantage of these tax credits, get advice.


Yeah, no. And, and it's because you know, what I do now is I'm a, I'm a fractional CFO. So I work with a lot of business owners and of course, I, again, I don't do taxes. So I, they all have to have their own accountant that does their taxes, but I of course work very closely with them. And I love what you've mentioned towards the latter part there, Julio, in that, you know, not waiting until the end of the end of the year. I mean, we're constantly looking at this. How, how are we thinking things that we're re forecasting? How do we think things are gonna come out for the year? You know, are we ahead of budget? Budget was at X, are we ahead or behind that meaning, do we have more potential wealth that we need to protect? And so we need to start thinking about some of those options and we have the options lined up.


So from my clients, you know, w and I, again, I, I find the check, the box accountants when I work with them and say, you know, I want to, in January, I want to start, I want to know an order of magnitude where we're going to go. When we have additional income, we want to protect what are some additional things that we can do with that money. If we end up with additional money, et cetera. And so I find those people, unfortunately on, gosh, I hate to say that I felt like I'm just trashing accounts. I'm definitely not doing that. But there, there are, every profession has them, right.

And some people were fine with that. And if you're just an individual tax payer, maybe that kind of works maybe that could bite you a little bit, but really on the business ownership side the magnitude of the impact of some of those changes could, it could be just absolutely tens of thousands of not hundreds, maybe even millions, depending, again, we've been talking this week with Mr. Julio Gonzalez, CEO of Engineered Tax Services. You could find out more on their website, engineeredtaxservices.com, and definitely got and follow Julio on Twitter at Tax Reform Expert. We're going to hit the break and he's going to give us some ways to save money on taxes.


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To submit questions to the show, email them to This email address is being protected from spambots. You need JavaScript enabled to view it.. Now, once again, here's Mr. Biz,


Welcome back to the show and we are going to really, really get some good stuff here. I'm sure. So Mr. Gonzalez is going to walk us through, and he had mentioned some things on the tax credit side, as well as some grants, but we're all, I want to talk a little bit further about some ways that, that we can, as business owners, entrepreneurs, we can save money on taxes and maybe some things that get often overlooked. Julio, what are some things you would put in those categories?


Yeah, so I think a lot of business owners own their building, but they depreciate it over 40 years and we work with accounts. We do a cost segregation engineering report that basically breaks apart. What's really structure. And what's really nonstructural components of the building typically is a 50 50 split. Now, whatever we determine is non-structural so say in a $4 million bill, that building 2 million is non-structural, that can be expensed immediately. So if you buy a $4 million building for your business, you're going to get a $2 million write off in year one. And what a great way to lower your taxes, preserve your wealth, why building your wealth by having an investment. So I think those are some of the ways that we work with accounts and their clients is looking at those options. Like you said, like you're, at the end of the year, you have a big tax consequences.


You have to write a check to the IRS. Well, why not just instead of running your building by your building, and now you have, you know, half of that cost is going to be expensive mainly through the cost segregation study. And ultimately you have an appreciating asset that's earning income as well. So those are ways that small business owners can take advantage of this. Now another one research and development tax credit. So if you're doing anything with your employees, that's innovative to your processes. So you're improving a process. You're improving a product that's called research and development, and that's a refundable tax credit of labor costs that you incur with payroll, right? So, you know, a lot of companies don't take advantage of this and why do we have R and D tax credits in our country? We want those jobs here. We want to keep those jobs here.


And we know, but that having these tax credits, those jobs will go over shores. So, and a lot of people, almost all companies have some type of R and D activity, but they don't take the tax credits. So again, this can be a big part and this can apply to any small business. So, you know, those are some of the things we talked about. We talked about the employment tax credits, the Watsi tax credit. There's so many type of employment credits just for keeping employees in the payroll process at the federal state and local areas. And same with the grants the grants are for, you know, doing things new in your business, growing your business in new divisions. Now there's $2 billion that sets up at the department of commerce in DC for small businesses, minority businesses, no one applies for these tax grants, but you don't have to pay that back. That's free equity for your business, right? And it's a matter of just looking at these opportunities. Now, maybe you look at the local chamber, cause maybe they have, you know, some relationship with the department of commerce up there in DC or the United States commerce. So I think that that's some opportunities, some low hanging fruit for all small businesses.


Yeah. And I mean, the first one you mentioned is massive. I mean, guys think about that. So in that example, that Julio walked us through, you're now purchasing that building. So now you have presumably in most cases it obviously depends on the location, things like that, but you have presumably a cash flowing asset into the future while also reducing your tax liability. And that, and that year one with the, in the example, he walked us through that $2 million of tax liability. I mean, so you, you get that payoff instantly a massive payoff in year one, and then you, you're now, you know, you're building equity in that, that cash flowing asset over the long haul, over a longer term. And you know, I, I think you're right. I mean, there's so many things that I hear these stories all the time about credits that are available, grants that are available, I should say that just go unapplied people don't are not aware of them there and then just never get applied for it.


So the money just sits there and it's just kind of a waste, you know, in a lot of situations again, where, again, you don't want that check the box account. And again, I, I, I hate saying that in some ways, but I think it needs to be set in as well. So I guess I don't want to I don't want you to tip your hat too much, and I know, especially with the position you have on, on the round table, but w you know, where do you foresee happening over the next, you know, even not just during this administration, but even beyond that, what do you, what do you see happening with taxes in the United States in that over that term, you know, let's say in the next two to six years,


Well, you know, unfortunately, you know, taxes is not a subject. People like to talk about death and taxes, right. Or the certain day. I think what we're going to see is that, you know, we're going to have an increase in taxes across the board. I think that's not only going to be income taxes. I think they're going to raise payroll taxes. I think they're going to raise capital gain taxes. And I think those all are going to be, you know, assessed across the whole small business community. Now, I think that again, if you don't have the check the box account and you have a great accountant that you've invested in and a great fractional CFO, CFO, I think that you're going to be able to, you know, preserve your wealth and continue to do well, because you'll find deductions that most accountants when fine, because listen, the software that they use is basically pretty automated, but doesn't have automated intelligence.


Right. And it doesn't have artificial intelligence. So it's not going to tell you as you're going through it. Oh, here's the tax credit opportunity, right. You're just putting it in and plugging it in. And so like, this may be the time more than ever when tax rates go up, this is probably the most important time to invest in an actually a CFO and an accountant that really, again, understand your industry, understand the tax code have been around for quite some time and maybe have been exposed to some of these opportunities because we're, there's always going to be in tax increased tax income rights. You know, this is going to be a rollercoaster. There's always going to be some offsets, but finding those offsets is always going to be challenging if you don't have the right accounting team.


Yeah. And I guess along those lines I guess it was kind of taken a little bit of a turn here, but being that you came from the industry obviously you, you are, you are an accountant accounting guru, and we keep talking about this, not getting the, you know, check the box accountant type person. What are, what are maybe a couple of things that as a business owner, that's listening right now that says, oh my gosh, maybe I have one of those accountants. How, what are some of the things that we should look for? And, you know, maybe even just one or two things, do you think that are key to look for and not having a check the box?


Yeah. I mean, the biggest key is are you guys routinely meeting and reviewing the financial statements and projecting year-end tax liabilities and really setting up a plan to reduce those. And I would say that is critical because if you're meeting your accountant after 1231, and just getting your receipts together and giving that to him, and then they're coming up with ever whatever the tax is, it's way too late. You can't have a reactive account. You have to have a proactive account. That's calling you meeting with you on a monthly basis. Even if it's for a few minutes and saying, here's where the financials are. What do we have coming in the last quarter? How are we going to get this tax liability down? I have some ideas. I have some strategies and also can, you know, blend in some tax credits and other investments because listen, I understand that they can only do so much, right?


They can only get your tax liability down to a certain point, but once 1231 comes down, there's nothing else you can do. Now, if they've done all their magic, you can still buy tax credits. So companies can buy tax credits, the big corporations, buy them all the time. Even by historic tax rates, you can buy movie tax credits and you can buy down your tax liabilities for 50 cents on the dollar, right. That's available to everyone. But how many accounts do that as well? I mean, so listen, you gotta have that account. That's proactive and has, you know, resources in the tax credit and incentives program. That's gonna help help you and help you preserve your wealth.


Absolutely. great advice. Great advice. I couldn't agree with you more Julio. So again, as we've been talking with Julio Gonzalez, who's the CEO of Engineered Tax Services. This guy is an absolute accounting rockstar as evidenced by being on the Presidential Tax Reform Roundtable. One of only eight individuals in the United States on there, you don't get asked to be on in rooms like that. If you are not absolutely a rockstar in your, in your area of expertise, you can find out more engineeredtaxservices.com and again, follow him on Twitter at Tax Reform Expert. And as I mentioned earlier in the show, he's got some free eBooks on his site to help you navigate some of those tax issues. So I definitely would encourage you to go out and take advantage of that as well, to find out more Julio, thank you so much for being on the show. I absolutely loved having you on and you shared some great advice.


Thanks for having me and thanks for the education that you get out to all the small business owners. It's vital.


Thank you. Thank you. I appreciate that. Well guys, thanks for listening. Appreciate it very much. Have a great week. And don't forget as always cash flow is king.


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