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- [00:00]
Candy Valentino
The Hoover Dam wasn't built in a day and the GMC Sierra lineup wasn't built overnight. Like every American achievement, building the Sierra 1500 heavy duty and EV was the result of dedication. A dedication to mastering the art of engineering. That's what this country has done for 250 years and what GMC has done for over 100. We are professional grade. Visit GMC.com to learn more. Assembled in Flint, Hamtrannock, Michigan and Fort Wayne, Indiana of US and globally sourced.
- [00:30]
Rob
Part Foreign.
- [00:39]
Candy Valentino
Valentino show the podcast for founders, investors and entrepreneurs where we have honest conversations about what it takes to grow your business, build more wealth and create financial freedom.
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Rob
Hey guys, welcome back to another episode of the show. I am so excited for today's because this is our very first official Ask Candy segment. So I've been teasing it out on the show for the last couple weeks that if you have a direct question, just send it in, head over to candy valentino.com ask candy and we are going to be answering your very questions on the show and so many of you already have. Thank you so much. For those of you that already sent in your questions, the team pulled the questions, we were able to review them and I picked the my favorite one to be the first of this segment. So for today's episode we're gonna talk a little bit of tax tips. And for those of you that followed me back in the OG days when I first started on social media, and those of you that have no idea what I'm talking about, let me give you a little behind the scenes or behind the behind the story is it called? I don't even know behind the scenes of what actually happened. So I exited my last company, which was my second exit in 2019. I didn't even have a personal Instagram, I didn't have a personal Instagram page. I didn't have a personal TikTok nothing ever. And literally exited. Moved. Just thought I was gonna make work optional and sit and enjoy the mountains of Arizona and travel. And as you guys know, once you're an entrepreneur, you're always an entrepreneur and that doesn't work so well. So that lasted about three months and someone said just start posting some of your information. Just post what you know and for the younger generations, just give them some business and finance tips. And so I started posting on TikTok. I got my name on Instagram and all the other places for the first time in like 2019 or 2020 and did my first post on TikTok in 2020 and it blew up, went viral and it was on something similar to this question. So I wanted to take it Back to the OG days of TikTok when I posted and talk about this question because it's one of my favorite and I think it's something that applies to a lot of people at different times in their life. And even if it doesn't apply to you specifically, I bet you know someone who this might apply to. So let's jump into our very first segment of Ask Candy. We've got Rob from New York and I'm going to just ask his question directly. It says, my wife and I both work on a 1099 basis as well as a W2 basis. And our tax bills have been increasing over the years. Do you have any tips on how we can save some money on our taxes? Okay, let's get into it. This is literally one of my favorite things to talk about because not only will debt absolutely crush your wealth, but so will overpaying taxes and sending too much money into the irs. And so many people miss this. It actually just reminds me of something. I was just working on a client, two clients actually, at around the same time, a fractional CFO client. And one of them last year made about $280,000 in net income. So meaning after all of their deductions in their business, they ended up with about $280,000 in net positive income. Now, they weren't working with me back then, they just started working with me in 2025 and they had to send in about 80 some thousand dollars in taxes. I think it was 86 to be exact. So they owed an additional $86,000 on top of their estimates. So stick with me here. I won't go into the weeds, but this is important. The other client that I was looking at, at the same time, getting ready for their review, for their quarterly review I was working with in 2024, their net income after everything in their business was 360,000. So client A was 280. Client B, 360. Client B only had to send in total just over $60,000 in tax. So huge difference. They actually, they actually made more money and they paid less in of their tax structure and leveraging different deductions. So it is incredibly important to make sure that who you're working with for your bookkeeping is keeping all of your data accurate. Whoever you're working with on your taxes or your fractional CFO strategy is making sure they're leveraging everything for where you are in your business because there is so many ways. And again, we don't, we don't make these rules. Huge corporations have lobbyists that make these rules. We're just using the rules that already exist. So use them to your advantage. There are lots of ways that you can keep money in your pocket, not send it into the irs. So let's get into Rob's question because it's so important. So you've got two people that both have W2s and both have 1099s. The reason that he's probably overpaying in taxes is because that 1099 income is in his personal name, I would guess. So both he and his wife probably have 1099 income that are in both of their personal names, which means they're paying taxes already out of their check for their W2. And then somebody is handing them a 1099. They may be making estimates in, they may not. Because sometimes it's so confusing to know exactly how much to send in anyways. Maybe they're not sending in enough, but they're getting crushed on what's called self employment tax. Now, I want to get you into the actual numbers. Self employment tax, currently everything added together if you are a sole proprietor, is 15.3%. So let's say you've got two people, 75,000 in a 1099 and 75,000 in a 1099 income. That self employment tax alone is almost $23,000. If you can set up an S corporation, which generally speaking, we always say, if you're making over $60,000, you set up an LLC. You don't have that in your personal name. You then create an ll, you take that LLC and you have it elect to file as an S corporation. And you can Pay instead of $23,000 in self employment tax, you can take that the whole way down to zero self employment tax, and you're just paying tax on your reasonable salary that you take on average, when we're looking at this, we will save about $10,700 a year per person. So without knowing Rob's specific situation, what I would say is one of the easiest things to look at is to talk to your financial person who you're working with for your taxes, your cpa, your enrolled agent, or your fractional cfo, depending on your situation. And you would say, can we set up an LLC? Can I ask my 1099 client, and can my wife ask her 1099 client to, instead of paying it to our individual name, pay it to the llc? And now that LLC has two clients. Rob's client and his wife's client. And then what you do is you take that llc, you make it an S corporation. Rob takes a salary, his wife takes a salary. The other thing that it does in addition to just saving self employment tax is now you are just like a business, like every other multimillion dollar company that it has deductions and is able to get their money, make deductions and then keep what's left. Otherwise when you're a W2, you get your money, the government takes their portion right away and then you have to pay what's left. So the difference is when you now have a business, an LLC that's taxed as an S corporation, you can also max out your retirement accounts, Whether that's a SEP, a Solo 401K, you can max that out and further drive down your tax responsibility. You can take business deduction, your home office, your Internet, your vehicle, travel expenses, gas, health insurance premiums. If you have kids, you can hire your kids and pay them through your business up to $14,600 tax free. And there's a lot of other strategic structuring that you can do if both spouses are also high earners. So lot of information but I'm going to button it all down. If you have 1099 income as a solo single person that is over about $60,000, that's kind of the waterline. If it's over $60,000 and why it's because if it's less than that, it obviously has its additional fees to to file as an S corporation, you're now doing an 1120s, there's now a little bit of additional tax filing fees. So if you're only making 20 or 30,000, it doesn't quite make sense. The water line is once you're over about 50, 60,000, you want to start looking at it. How do I create an llc? How do I become an S corporation so that I can start taking all of the deductions that the huge corporations and companies take so that I can keep more of my money and send less to the irs. Then if you're working with a tax pro, not only do you get to save those self employment taxes right out of the gate, but you're also paying in your taxes every other week when you get paid, just like you're in a W2. So for those of you that don't know what that means, if you're an S corporation, you're getting a paycheck from the company that you just created and you're actually taking deductions out of that check that then are getting sent in on a 941, just like if you had employees. Well, what that's going to do is not give you this big tax bill at the end of the year. So it gives you the ability to make payments. You won't have to likely pay penalties because you're not underpaid. And you're going to be able to really work the system by leveraging the tax deductions that exist by being able to write off a lot of things that you can't write off with your W2 or that you're not probably writing off. If you have 1099 income in your own personal names. This is huge. And if you just implement this rob you probably likely without me knowing exactly how much income you're making from those 1099s, I would think this is at least $10,000 to you in your wife's pocket. And what I would suggest is that you don't spend it. If you have credit card debt, take that savings and dump it straight on it. Get out of credit card debt. If you don't have credit card debt, take that $10,000 and leverage it into a 401k or a SEP that you create and make sure to take that money that you were going to spend anyways and invest it into your future or invest it to get out of debt. Great. Great. First question. If you have a question that you and you want me to answer on the show, head over to candy valentino.com Ask Candy and if you don't have a bookkeeper or a pro that you work with and you want to find out ways that you personally can get a customized plan to reduce your taxes. You can go to candy valentino.compro to look at one of our pros or even potentially work with us as a fractional cfo. All right guys, thanks so much for tuning in and spending this time with me today. If you love this show, send it to someone you care about. Leave us a five star review. Wherever you listen to podcasts or if you are watching us over on YouTube, comment below so that we know to give you more information like this. Thanks again for tuning in with me today. We'll see you next time. Hey guys, thanks for tuning in to this episode and if there was something that you loved or you had a specific takeaway, share it and tag me Andy Valentino. And if you haven't already, grab a copy of my latest book, the 9% Edge Life Changing Secrets to create more revenue for your business and more freedom for yourself. You can pick it up anywhere books are sold, Amazon, Barnes and Noble, or your local independent store. And once you do, head over to 9% edge.com and claim $1500 in pre order bonuses, including a chance to join me on this very show. Thanks so much for tuning in and spending this time with me today guys. We'll see you next time.