Thread by @ankurnagpal

The single best thing you can do to save money on taxes in America is starting a business

It could be a small side hustle or a massive venture-backed company

Here are 5+ tax benefits for business owners that have recently gotten even more generous with the new tax bill:

1 - Pay zero taxes when you sell your startup

If you hold shares in a qualifying C-Corporation (most tech startups would count) for 5 years, you can now pay no taxes on $15M when you sell your shares

No federal taxes & in 40+ states, no state taxes as well

$15M tax free!

If a $15M deduction wasn't enough, you can do smart estate planning to multiply that to $15M, $30M or even $45M

If you don't hold shares for the full 5 years, you can "roll over" the pre-tax amount into another company & have the 5-year clock keep ticking

Unmatched by size!

2 - Deducting business expenses

If your tax rate is 30%, you get an effective 30% discount on anything you need to run your business

Any expense you incur specifically to run your business is fully deductible

And, you can also deduct things that W-2 employees cannot!

An example: a business owner can deduct their home office from their rent or mortgage

A W-2 employee using the same home office cannot take that deduction!

You can also pro rata apply that to cleaning, utilities, Internet, phone bills and other expenses you would incur

3 - Massive retirement plan tax deduction

It's your business so you can pick the best benefits for yourself

If you have no employees, you get access to maybe the most powerful retirement plan in America - a Solo 401k

Get a $70K tax deduction ($140K if you hire your spouse)

If you are earning mid 6-figures a year, you can combine a Solo 401k with a cash balance plan

These two plans can combine together to get you a tax deduction of literally hundreds of thousands a year

And can invest them however you like!

4 - Qualified Business Income (QBI) deduction

The new tax bill made a tax deduction of up to 20% for most business owners called QBI permanent

Applies to most LLCs and S-Corps

If you are a high earner, there are additional requirements to get the full 20%, check with your CPA

W-2 earners also have a cap on how much they can deduct for paying state and local taxes (SALT) from their federal tax return

But business owners have a workaround!

They can pay an optional state tax from their business (PTET) and work around this limitation

5 - Owning property and business losses

You can own physical property with your business like real estate or a vehicle attached to the business

As this property loses value over time (called depreciation), you can deduct this from your profit or income as a business owner

The new tax bill makes 100% bonus depreciation permanent

This means some property with a quicker depreciation schedule can be written off entirely upfront!

This gives you more dollars back, though you need to watch out for recapture whenever you sell the property

6 - Other things

I'm running out of space in this thread, so I'll quickly list some other business owner tax savings to think about:

- Using credit card points from your business for yourself

- Hiring family members from the business including kids + setting up a Roth IRA

- From next year, you can make tax-free contributions to your kids "Trump accounts"

- Rent your house to your business for up to 14 days a year & pay no taxes

- Using an S-Corp and paying yourself a salary to save on self-employment taxes

America is built for business owners