Top 5 Strategies to REDUCE Your Tax Bill (with Chika Obih): Episode 308 - Rachel Ngom (2024)

Takeaways

• Chika says that after implementing her plans she saves each of her clients, on average, $75,000!
• When Chika was 26 and in her first business, tax time came around and she ended up with a $12,000 tax bill. She says she was not ready for that, and totally learned her lesson!
• Chika says as entrepreneurs, we’re not getting a W2. It’s up to us to make quarterly tax payments to the IRS.
• The two things that will prevent you from seeing a huge tax bill at the end of the year:
  
  • Making quarterly tax payments
  • Putting away money as you make it
• Having an accountant is so key. You don’t know what you don’t know. So it’s so key to have someone who knows tax law and what goes on as things change. Have someone who you can have conversations with, and has your back.
• As an entrepreneur, you want to go with a CPA. They need to keep licenses up to date so they are always taking continuing education courses. Chika says, with a CPA you find online you can trust that they keep up to date with licenses and know the online space. If not a CPA, Chika suggests finding a EA (Enrolled Agent) who will be even more in line with the IRS.
• Chika says to have a conversation with whomever you’re going to hire before hiring. Depending on their style, you may or may not connect with them. If you can’t have a conversation with them, they might not fully get you.
• Chika says the #1 thing you can do to lower your tax bill is to open a business account, and only use it for business things! As the year goes on, it’s easy to forget things that you purchased with your personal card. So keep them totally separate so you know all your purchases come end of the year to write off.
• Deductions you might be forgetting:
  
  • Home office deduction
  • Auto deduction
• Chika says that there are so many tax credits for hiring. However, if you only have contractors, you can’t claim these credits. So by hiring employees, you are able to get so many tax benefits. All the extra costs of hiring people are tax deductible.
• What can you do towards the end of the year to maximize your savings?
  
  • Make sure your numbers are correct.
  • Gather your receipts and upload them all to Quickbooks.
  • Review profit and loss statements.
  • Put down money on investments to reduce profits.
• Chika says let this be your year. Hire that CPA. The return on your investment will be so worth it.
• Let go of some control. Chika says that boundaries are so important as an entrepreneur. If you spend hours and hours looking at your numbers, you won’t be able to let go and serve your clients the same way. So keep your boundaries and honor them.

Highlights

• (1:31) A little more about Chika and how she helps save her clients thousands of dollars in taxes.
• (2:54) How much of your six figures can you actually keep?
• (4:02) My personal tax return scare…how I learned my lesson.
• (5:10) How Chika suggests we get started in the tax saving plan.
• (7:16) The key to minimizing your tax bill–have an accountant.
• (8:55) Where can you find a good accountant as an online entrepreneur?
• (12:27) Things you can do to lower your tax bill!
• (14:15) Deductions Chika sees people missing that can help you save!
• (15:03) Will you outgrow an LLC?
• (17:28) The benefit of having a team and hiring.
• (20:06) What can you do towards the end of the year to maximize your savings?
• (23:04) Investment strategy as a form of savings.
• (26:07) Don’t avoid hiring a bookkeeper or tax professional!
• (28:51) One book that’s impacted Chika.
• (31:50) What it means to Chika to make an impact.
• (33:17) Where you can connect with Chika.

Quotes

“Boundaries are the key to feeling free.”

“Set your boundaries and honor them.”

More Episodes about Taxes in Business:

Episode 50–Should you be an LLC?

Episode 175–Increasing Profit during covid

Connect with Chika Doster:

Get Chika’s Quarterly Tax Calculator: http://bit.ly/qtcspreadsheet

Chika’s Website: https://www.chikaobihcpa.com/

Chika’s Instagram: @chikaobcpa

Books Mentioned in the episode:

Set Boundaries, Find Peace by Nedra Glover