Is Business Debt Worth It? Tax Truths You Need to Know

In this episode of How to Lower Your Tax Bill, host Terrance Hutchins and co-host T’mia continue their series on what to do with your business profits—this time diving into the realities of using debt as a business strategy. Whether you're thinking of financing a new vehicle, bidding on a big project, or taking out a loan to expand, this episode unpacks what debt really costs you from a tax and cash flow perspective.

Ideal for business owners navigating decisions about loans, reinvestment, and capital expenses, this conversation helps you think critically about whether the “tax write-off” is actually worth the debt you’re taking on.

Key Discussion Points:

Why debt feels like a tax win—but can drain your cash in year two
The danger of spending $1 to save 40 cents: why tax write-offs aren't always smart
How to evaluate if a project is worth financing and what poor forecasting can cost you
Understanding “cash trapped in the balance sheet” and how delayed payments can trigger tax trouble
What good debt looks like: using loans to buy assets that pay for themselves—and then some

Featured Tax Tip:

Buying a vehicle to reduce your tax bill can backfire—fast. Only the interest on your loan is deductible after year one, not the principal. If your new asset isn’t generating profit, your debt may cost you more than the taxes you saved.

Whether you're a cautious entrepreneur or an ambitious growth-seeker, this episode gives you practical tools to forecast smartly, avoid unnecessary debt, and keep your profits working for you—not your lender.

Subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts — and as always, Keep More of What You Earn.

How To Lower Your Tax Bill Episode 28