Benefits of Starting an LLC in 2026 - Top Write-Offs for New LLC Owners — Transcript

Full transcript

1. 0:00Starting an LLC comes with more tax
2. 0:01advantages than most people realize. So,
3. 0:03stick with me through this entire video
4. 0:05because I'm breaking down the top seven
5. 0:07write-offs for LLC owners in 2026 and
6. 0:09I'm going to show you how you can
7. 0:10immediately improve your bottom line.
8. 0:13Without further ado, let's dive in.
9. 0:17>> [music]
10. 0:18>> All right, guys, start-up costs. Let's
11. 0:20be honest, almost every business
12. 0:22requires money up front. It takes money
13. 0:24to make money, whether you're launching
14. 0:25a barber shop, even a real estate
15. 0:27company, an online coaching business, or
16. 0:29even a law firm. There are costs
17. 0:30involved before you ever make your first
18. 0:32dollar. These early expenses often catch
19. 0:34new business owners off guard,
20. 0:36especially if they assume they can't
21. 0:38deduct anything until the business is
22. 0:40fully operational or profitable. That
23. 0:43assumption alone can be so costly and
24. 0:46many entrepreneurs delay tracking
25. 0:48expenses because they believe deductions
26. 0:49only apply once a sale begins, which
27. 0:52leads to missed opportunities on your
28. 0:54tax return. But, the good news is that
29. 0:56in 2026, the IRS is still allowing you
30. 0:58to write off certain start-up costs.
31. 1:00Start-up costs are expenses that you
32. 1:02incur before your business is officially
33. 1:03open or begins generating revenue. Here
34. 1:05are examples of start-up costs. This can
35. 1:07include business plan development,
36. 1:09market research, competitive analysis,
37. 1:12site inspection. It can also include
38. 1:14costs like setting up your website,
39. 1:16early administrative expenses that are
40. 1:17directly related to starting your
41. 1:18business. And let's be honest, in your
42. 1:20first year business, you can deduct up
43. 1:21to $5,000 in start-up costs. Any
44. 1:23start-up expenses above that amount will
45. 1:25be amortized or deducted evenly over 15
46. 1:28years. This allows you to benefit from a
47. 1:30larger start-up investment even if the
48. 1:32deduction isn't immediate. So, if your
49. 1:34total start-up costs or organizational
50. 1:36costs are 5,000 or less, you're
51. 1:37deducting the full amount. If they
52. 1:39exceed 5,000, you don't lose the
53. 1:40deduction, you're just spreading it out
54. 1:42over time. But, either way, the IRS
55. 1:43gives you a path to recover those early
56. 1:45investments. Many new business owners
57. 1:48miss this deduction entirely. So, make
58. 1:50sure you track all of your expenses
59. 1:52carefully from the very beginning.
60. 1:53Keeping organized records from day one
61. 1:55puts you in a much stronger tax position
62. 1:57when tax season arrives. Next is home
63. 1:59office expenses. If you are running your
64. 2:01LLC from home, the next deduction can be
65. 2:03extremely powerful. For many new
66. 2:05business owners, the home office is the
67. 2:07first and most practical workspace. If
68. 2:11you have a specific area of your home
69. 2:12that you use regularly and exclusively
70. 2:15for business, you may qualify for the
71. 2:16home office deduction. This will allow
72. 2:19you to deduct a portion of your home
73. 2:20expenses because your home is serving as
74. 2:22your primary business location. Keep
75. 2:25this in mind. The IRS has very strict
76. 2:27rules with the home office. The space
77. 2:29must be exclusively for business, and it
78. 2:32generally must be your principal place
79. 2:34of business. Even occasional personal
80. 2:36use of the space can disqualify the
81. 2:37deduction. So, please be careful to
82. 2:39choose a space that's only for business.
83. 2:41Now, before we move on, here's a quick
84. 2:43reality check for high-income earners.
85. 2:44Many people making at least $300,000 per
86. 2:48year overpay on taxes because their CPA
87. 2:51is primarily focused on tax compliance
88. 2:53and tax filing. They're primarily not
89. 2:55focused on strategic tax reduction.
90. 2:58That's fine at lower income levels, but
91. 3:00if you are making over 300k, it's
92. 3:03expensive for you not to have a tax
93. 3:05plan. [music] Our team helps with
94. 3:07high-income earners to implement
95. 3:08advanced IRS compliance strategies that
96. 3:10can literally reduce your tax liability
97. 3:12by 50 to 100%. If you want to see what
98. 3:15you may have been missing out on, book a
99. 3:16call through the link in the description
100. 3:18below. Now, back to this video. Here's a
101. 3:20quick example to show you how strict the
102. 3:21rules are. If you own a retail store or
103. 3:24a restaurant with a separate office
104. 3:26on-site, but occasionally work from your
105. 3:28spare bedroom at home, you would not
106. 3:31qualify for the home office deduction on
107. 3:33most circumstances. IRS focuses heavily
108. 3:35on where the core business activities
109. 3:37actually take place. But, if you do
110. 3:39qualify, here are some of the expenses
111. 3:40you may be able to deduct. Number one,
112. 3:42your rent. Number two, mortgage
113. 3:44interest. Three, homeowners or renters
114. 3:46insurance. Four, HOA fees. Five,
115. 3:48utilities. Six, property taxes. Seven,
116. 3:52repairs.
117. 3:53>> [music]
118. 3:53>> Eight, maintenance. These are the pretty
119. 3:55common expenses that we see most
120. 3:57business owners taking. Now, there are
121. 3:58two methods for calculating your home
122. 4:00office deduction. You can take the
123. 4:01simplified method or the actual expense
124. 4:04method. With the simplified method in
125. 4:062026, you're deducting $5 per square
126. 4:08foot up to only 300 square feet. That's
127. 4:10a maximum of $1,500.
128. 4:13Boring. This option is straightforward
129. 4:15and requires very minimal documentation.
130. 4:16Now, the actual expense method requires
131. 4:19a bit more work, but it often leads to a
132. 4:21larger deduction. [music] With this
133. 4:22method, you determine what percentage of
134. 4:25your home is used for business, giving
135. 4:27you control. Now, to do this, divide the
136. 4:29square footage of your home office by
137. 4:31the total square footage of your home.
138. 4:33Once you know that percentage, you can
139. 4:35apply it to all qualifying home
140. 4:37expenses. So, if your home office makes
141. 4:39up 10% of your home and you have $30,000
142. 4:42in qualifying home expenses, yeah, you
143. 4:43could deduct $3,000 on your tax return.
144. 4:45Now, over several years, this deduction
145. 4:47can start to add up to significant tax
146. 4:49savings. And many business owners
147. 4:51calculate both methods each year to
148. 4:52determine which one results in a bigger
149. 4:54write-off. For almost all my clients,
150. 4:56the actual expense method is always
151. 4:57better, and many of them are actually
152. 4:59shocked at the difference. They end up
153. 5:00being extremely grateful that we looked
154. 5:03at tracking both before we decided to
155. 5:05choose one. So, please make sure you
156. 5:07don't neglect the comparison because you
157. 5:09could potentially miss out on a
158. 5:10deduction that is thousands of dollars
159. 5:12higher if you do so, depending on the
160. 5:14size of your home office and, of course,
161. 5:15your related expenses. All right, let's
162. 5:17move [music] on. Next is employee and
163. 5:20contractor wages. You see, as a business
164. 5:23grows, you decide to hire help to start
165. 5:26buying back your time. Whether that's
166. 5:27employees or independent contractors,
167. 5:30the wages and fees you pay them are
168. 5:31generally deductible business expenses.
169. 5:34So, hiring support is often a sign that
170. 5:36your business is scaling. As long as the
171. 5:38individuals you hire are performing
172. 5:39legitimate work for your business, the
173. 5:41IRS considers those payments ordinary
174. 5:42necessary expenses in the pursuit of
175. 5:44business income. You see, under Internal
176. 5:46Revenue Code section 162A,
177. 5:49business owners are allowed to deduct
178. 5:51expenses that are ordinary, necessary,
179. 5:53and reasonable in carrying on a trade or
180. 5:56business. This legal framework is what
181. 5:58allows payroll costs to reduce taxable
182. 6:01income. This can include salaries,
183. 6:03hourly wages, contractor payments,
184. 6:05bonuses, certain payroll-related costs,
185. 6:07even benefits like employer-paid payroll
186. 6:09taxes can be deductible. Many first-time
187. 6:11business owners don't realize how
188. 6:13significant this deduction can be, and
189. 6:14then they end up at a loss because they
190. 6:16thought they were profitable before
191. 6:17paying their employees. So, paying for
192. 6:19help doesn't just save you time, it also
193. 6:21reduces your taxable income and free you
194. 6:23up to focus on higher-level tasks. Just
195. 6:25make sure your workers are properly
196. 6:26classified as employees or contractors
197. 6:28because misclassification can become a
198. 6:30nightmare that leads to penalties and
199. 6:32back taxes and interest. All right,
200. 6:35let's jump on to the next one. Vehicle
201. 6:36expenses. If you use a vehicle for
202. 6:39business, you may be eligible for
203. 6:41vehicle-related deductions. This is a
204. 6:43very common deduction for LLC owners,
205. 6:45especially those who travel for
206. 6:46meetings, those who travel for client
207. 6:47visits, or even property inspections or
208. 6:50job sites. If the vehicle is used for
209. 6:52both personal and business, you can only
210. 6:54deduct the business use portion, and
211. 6:57[music] it has to be more than 50%.
212. 6:59Accurate mileage and expense tracking is
213. 7:00essential, so you have two options for
214. 7:03claiming your expense. You could choose
215. 7:04the standard mileage method or the
216. 7:06actual expense method. With the standard
217. 7:08mileage method, you deduct a fixed
218. 7:10amount that the IRS designates per year,
219. 7:13which is 72.5 cents per mile in 2026.
220. 7:16So, if you drive 10,000 business miles,
221. 7:18that's $7,250,
222. 7:21which is quite significant. MileIQ,
223. 7:23QuickBooks are perfect for tracking
224. 7:26this. Now, the actual expense method
225. 7:28involves adding up all of the vehicle's
226. 7:30related costs. This includes fuel,
227. 7:32insurance, maintenance, the repairs,
228. 7:34even the registration fees, and
229. 7:36depreciation. You then multiply these
230. 7:38costs by your business use percentage.
231. 7:41Deducting vehicle expenses this way can
232. 7:43lead to substantial tax savings, and in
233. 7:45certain cases you may also be able to
234. 7:47qualify for code section 179 and bonus
235. 7:49depreciation to write off a larger
236. 7:51portion or even all of the vehicle's
237. 7:53purchase price in the first year. This
238. 7:55can be powerful if you are a new
239. 7:57business owner and you are ready to
240. 7:59offset your tax bill. Remember, 100%
241. 8:01bonus depreciation was updated as a part
242. 8:03of the big beautiful bill. So, if you
243. 8:04bought a vehicle for $30,000 and you use
244. 8:06it 100% for business, you may be able to
245. 8:08deduct the full $30,000 in year one
246. 8:11thanks to bonus depreciation. Make sure
247. 8:13you speak to your tax professional if
248. 8:14you have questions about using section
249. 8:16179 or bonus depreciation to get larger
250. 8:19vehicle write-offs. Now, this is an area
251. 8:21where strategy matters and deductions
252. 8:23can be quite substantial, so it's often
253. 8:25worth getting professional guidance at
254. 8:27this point. Next is professional
255. 8:29services. Running a business often
256. 8:31requires experts, especially in the
257. 8:33early stages when important decisions
258. 8:34can have long-term consequences. So,
259. 8:36during your first year you may pay for
260. 8:38legal, accounting, and tax. These are
261. 8:40all consultants that are helping you
262. 8:41grow and make the right decisions. So,
263. 8:43for example, you might hire an attorney
264. 8:45to review contracts, draft operating
265. 8:47agreements, handle compliance issues.
266. 8:49You may work with an accountant to set
267. 8:50up your bookkeeping system, to choose
268. 8:52the right accounting method, to prepare
269. 8:53your financial statements. You might
270. 8:55work with a tax professional that can
271. 8:56help you be proactive at tax strategy
272. 8:58tailored to your goals and your
273. 9:00situation. All of these professionals
274. 9:02are expenses and they're all generally
275. 9:04deductible business expenses. Even
276. 9:06though they may feel expensive up front,
277. 9:08they often save you money in the long
278. 9:10term and stress in the long term. So,
279. 9:12because these costs can add up quickly,
280. 9:14many business owners are surprised by
281. 9:16how large this deduction can be. So, I
282. 9:18want you to keep detailed records,
283. 9:20invoices, and payment confirmations of
284. 9:22all professional services. Next, [music]
285. 9:25marketing and advertising. This is
286. 9:26essential for business growth,
287. 9:27especially in the early stages when
288. 9:29visibility is low and you're still
289. 9:30building, you know, trust with your
290. 9:32audience. Most LLC owners spend money on
291. 9:34advertising to generate awareness,
292. 9:36leads, sales, authority, And without
293. 9:39marketing, even the best products and
294. 9:40services can struggle to gain traction.
295. 9:41Now, common marketing and advertising
296. 9:43expenses can include Facebook ads,
297. 9:45Google ads, YouTube ads, SEO services,
298. 9:48social media influencer promotions,
299. 9:50email marketing software, radio ads, TV
300. 9:52ads, flyers, and even printed material.
301. 9:54If you pay for marketing or advertising
302. 9:56that promotes your business, those costs
303. 9:58are typically deductible. This applies
304. 10:00whether you're running small test
305. 10:02campaigns or scaling paid ads
306. 10:04aggressively. Even branding-related
307. 10:06expenses like logo design, website
308. 10:08development, photography, and content
309. 10:10creation may qualify as a deductible
310. 10:12marketing cost overall, [music]
311. 10:13helping you reduce your overall tax
312. 10:15bill. And finally, number seven, office
313. 10:17space. Not every business operates out
314. 10:19of a home office. And as your company
315. 10:20grows, you may need a dedicated location
316. 10:22to meet clients, store inventory, or
317. 10:24support employees, giving your business
318. 10:26a more professional presence and helping
319. 10:28it scale efficiently. If your LLC rents
320. 10:31commercial office space outside of your
321. 10:33home, you can generally deduct 100% of
322. 10:35the rent as business expense. So, this
323. 10:37includes office suites, co-working
324. 10:39spaces, studios, retail storefronts, or
325. 10:41even warehouses used for business
326. 10:43operations. In many cases, related costs
327. 10:45such as common area maintenance, parking
328. 10:48fees, security deposits, utilities, are
329. 10:50all included. And certain lease-related
330. 10:52charges may also be deductible.
331. 10:54Depending on your location, the lease
332. 10:55type, and square footage, rent can be
333. 10:57one of the largest deductions your
334. 10:58business takes. So, please don't
335. 10:59overlook it. Over time, properly
336. 11:01deducting your rent can significantly
337. 11:03lower your overall tax bill, improve
338. 11:04cash flow, and free up capital to
339. 11:06reinvest in growth, equipment, or even
340. 11:08marketing initiatives. That's all I've
341. 11:10got for today's video. As always, be
342. 11:13sure to make sure you like, comment, and
343. 11:14subscribe [music] to the channel for
344. 11:15more tax strategy education. That's all
345. 11:17I got for today's video. I'll see you on
346. 11:18the next one. Cheers.