Built Online - Episode 99: "Tax-Savvy Startup Secrets: From Profit to Protection with Eric & Melissa Broughton"

Release Date: May 5, 2025

Hosts:

• Cody McGuffey – Host of Built Online
• Melissa Broughton – Co-founder of Busy Bee Advisors
• Eric Broughton – Co-founder of Busy Bee Advisors

1. Introduction to Tax Management for Small Businesses

In this episode of Built Online, host Cody McGuffey engages in an insightful discussion with Eric and Melissa Broughton, the founders of Busy Bee Advisors. The conversation centers around effective tax management strategies for small business owners navigating the complexities of taxes and bookkeeping.

2. Establishing a Tax Savings Account

Melissa emphasizes the foundational step every small business owner should take: establishing a dedicated savings account for taxes. She states:

"One of the very, very, very first things that I think every small business owner should do is make sure that they have a savings account for taxes."
[00:00]

Eric adds a practical approach to this advice:

"If you make a hundred dollars and you spent 50 to get that $100, that means you have $50 in profit. You take 20%, you put it into the account."
[00:11]

Cody echoes this sentiment, simplifying it further:

"So 20% of the profit, put that into the account."
[23:07]

This strategy ensures that business owners set aside a portion of their earnings specifically for tax obligations, mitigating the fear and uncertainty often associated with tax payments.

3. Choosing the Right Business Structure

A significant portion of the discussion revolves around selecting an appropriate business structure to optimize tax liabilities. Eric outlines the importance of aligning the business entity with projected revenue:

"If you are a low cost to generate revenue business... you might want to look at doing an S corp."
[17:46]

For businesses anticipating higher revenues with lower costs, such as consulting or digital products (e.g., Cody selling T-shirts via print-on-demand), adopting an S Corporation structure can provide tax advantages by allowing profits to pass through to the owners’ personal tax returns, thereby avoiding double taxation.

4. Common Tax Mistakes and How to Avoid Them

Melissa and Eric discuss prevalent tax-related misconceptions and mistakes made by new business owners, such as misunderstanding quarterly tax obligations and the pitfalls of self-reporting without professional guidance.

Melissa highlights the pervasive fear of taxes:

"There's this looming bad guy. It's like the monster that hides under the bed, that's taxes."
[02:45]

They emphasize the chaos that can ensue from neglecting tax responsibilities, including hefty tax bills and potential legal consequences:

"They risked... losing their businesses."
[28:15]

To avoid these outcomes, they advocate for proactive tax planning and regular consultations with tax professionals.

5. The Role of Bookkeeping and Tax Professionals

The conversation delves into the critical role of bookkeeping in managing business finances and taxes. Melissa explains how Busy Bee Advisors assists clients by handling their bookkeeping needs:

"Our bookkeeping is all based upon the number of accounts that somebody has that work..."
[40:33]

Cody shares his personal experience with bookkeeping challenges:

"I wish I would have just probably paid someone to do that for me."
[43:18]

They advocate for outsourcing bookkeeping to professionals to ensure accurate financial tracking and to free up business owners to focus on revenue-generating activities.

6. Proactive Tax Planning Strategies

Melissa underscores the importance of ongoing tax planning rather than reactive measures:

"There's never a bad time to have a conversation with your tax professional."
[15:22]

Eric recommends regular financial reviews:

"Take a piece of paper and a trusty pen and write down everything that goes into you making money."
[30:41]

By maintaining detailed records and engaging in continuous dialogue with tax advisors, business owners can optimize deductions, plan for tax liabilities, and avoid unexpected financial burdens.

7. Rapid Fire Q&A Highlights

In the episode’s rapid-fire segment, Eric and Melissa share personal insights and recommendations:

• Favorite Business Books:

  • Melissa: Blue Ocean Strategy
  • Eric: How to Pay Zero on Taxes

• One Thing They Wish They Knew Before Starting:

  • Melissa: "Sometimes you just have to pull the trigger and start."
    [49:24]
  • Eric: "I wish I would have been like, I don't have to do it all myself."
    [50:05]

• Traits Highlighted by Family and Friends:

  • Melissa: "We have helped them to have financial clarity in their business."
    [51:58]
  • Eric: "I am loud, I am gregarious. I am very open."
    [52:18]

These responses provide a personal touch, illustrating the founders' passion and commitment to helping others achieve financial clarity and success in their businesses.

8. Conclusion and Final Thoughts

Cody wraps up the episode by reinforcing the importance of proactive tax management and the value of professional bookkeeping and tax advisory services. He highlights the detrimental effects of neglecting tax obligations and the peace of mind that comes with proper financial planning.

Melissa and Eric encourage listeners to engage with tax professionals early and often to ensure their businesses remain compliant and financially healthy.

Notable Quote:

"If you make $100,000 in profit, the government sees that that $80,000 in profit is your wage and they tax you on it."
[09:17]

This concise exchange underscores the significant impact of business structure on tax liabilities and the necessity of strategic planning.

Key Takeaways:

1. Set Up a Tax Savings Account: Allocate 10-20% of profits to a dedicated tax account to prepare for tax obligations.
2. Choose the Right Business Structure: Evaluate whether a sole proprietorship, LLC, or S Corporation best aligns with your revenue and business model to optimize tax benefits.
3. Avoid Common Mistakes: Stay informed about tax responsibilities, such as quarterly taxes, to prevent unexpected financial strains.
4. Outsource Bookkeeping: Engage professional bookkeepers to maintain accurate financial records, allowing you to focus on business growth.
5. Engage in Proactive Tax Planning: Regularly consult with tax professionals to maximize deductions and plan for future tax liabilities.

For more insights and personalized tax strategies, visit BusyBeeAdvisors.com.

This summary encapsulates the core discussions and advice shared in Episode 99 of Built Online, providing valuable tax management strategies for aspiring and current small business owners.