Think tax planning is boring? Think again.

Because the difference between winging it and planning it could mean $30,000 in unexpected taxes (true story from this episode).

In this solo episode of The Unsexy Entrepreneur, Charles Harris (CPA and small business owner) walks you through the exact playbook he uses with his clients to reduce tax bills, avoid nasty surprises, and make smart, long-term moves before year-end.

If you’re a solopreneur, freelancer, or small business owner, this episode will help you stop procrastinating and start preparing.

💡 You’ll Learn:

• What “tax planning season” really means—and why now is the time
• The actual process Charles uses with clients to estimate tax bills
• Why waiting until April is too late to do anything useful
• The #1 mistake people make with S-Corp elections (and how to avoid it)
• Why “go buy a truck” isn’t a smart tax strategy
• The real cost of being an S-Corp (hint: it’s not just taxes)
• The difference between saving money and spending money
• The best long-term way to reduce your tax bill (spoiler: retirement accounts)
• Why accurate bookkeeping NOW could save you thousands later
• How to use your tax rate as a “discount rate” when making business purchases
• Why peace of mind is the best return on investment you’ll get from tax planning

Whether you owe $3K or $30K, this episode will help you take control of your business finances—so you can walk into tax season with clarity and confidence.

Hi y'all and welcome to the Unsexy Entrepreneurship podcast. I am one of your co-hosts, Charles Harris. I'm not joined by Seth this week. He's a little under the weather, so we're gonna have to forgive him for that. But today I wanted to talk a little bit about tax planning. It's tax planning season for accountants. This usually starts October 16th. That's after the extension deadline and goes till about December 31st. Obviously I always hope to be, to not have to any work around the holidays. So.

earlier the better, November's kind of the big month for it. So what is tax planning? Tax planning is really just coming up with and preparing our tax return ahead of time. Because if we wait till April 15th, it's gonna be too late to do any changes. This is the season where we can actually get it done. So I just wanted to talk a little bit about some of the strategies involved and really what I'm doing with my clients. So for instance,

I just met with a client yesterday and we were chatting. They came into a fair bit of money and an inheritance. And so they were going to owe an extra $30,000 in taxes, which sounds terrifying. They definitely got more money in the bank because of this. And so it's still a net positive. But it's still one of those things that it can be a little frightening and people are a little unsure of how much does this money mean that I'm going to pay, right? And this is why we do it. This is why it's important, I think.

And then also we want to use this time to really think about our long-term vision, our long-term future, because one of the best ways to save on taxes is to do retirement accounts. This is your SEP or Solo 401k or even a traditional. These are all great ways to save money. And so we want to talk about those things, make sure that we're on track to be able to retire one day or be comfortable financially. And then overall, this can just give us a lot of peace of mind.

Right, this is really why we do it. We just want to know what's going to happen before it happens so we can prep, we can start saving money if needed. Because I talked to a client who didn't have a huge bill, was, I think it was going to be about $3,000, but they weren't saving up for this tax bill, right? And so it's still a really scary point in time. And we still just want to make sure we're aware and we know what's going on because we want to cover ourselves and be prepared. And $3,000 is enough.

time between now and April 15th to save that money to make sure that we have it so that we can pay accordingly and not go into debt with the IRS which is never what we want to do. usually now is the time we start talking about business entity too so the age-old question should you be an S corp will usually come up around now please talk to a financial professional before making that decision and I shouldn't even say financial

professional, I should say CPA before you make that decision because I've seen too often people will jump the gun on their S-corp and then what ends up happening is they don't realize all the extra costs that are involved and then at the end of the year when I say okay this is what your costs are they look at me like I'm crazy and it's because they took advice from someone else. Yeah so last year I had someone reach out who said

I was in, an S-Corp, how much of the tax is gonna be? And I had to come in and say, hey look, minimum is gonna be like $24,000 or $2,400, right? 2,400 minimum. And usually I charge more than that for an S-Corp filing. And she was floored, taken aback, scared, right? As rightfully so, that's a big bill. And just didn't feel like it was reasonable. I sent her.

cost comparisons at TurboTax and they're filing it for almost as much and honestly it's significantly worse service in my opinion. And so sometimes the S-Corp can increase our costs and we don't realize it's happening and unless we're really saving a lot of money based on that it's probably not worth it and I usually say we want to be saving five to ten grand at minimum.

after all the extra expenses. So after my increased tax preparation fee, after payroll costs, everything like that. So just my little two cents on as corporations, don't do it without talking to someone. We also want to spend this time to make sure that our records are correct. So again, I talked to someone two days ago, maybe three days ago. Three days ago would have been on the weekend. So it must have been yesterday even. But we were going through the numbers.

and we brought up a lot of good questions, home office deduction, phone bill, things like this that a lot of business owners just aren't sure on. And we talked about it and we changed all of our numbers, right? So this is gonna change the end result of our taxes. And again, it's not gonna be huge and different, but we wanna use this time to make sure that our bookkeeping is up to date, that everything is correct and ready for the tax, for tax preparation.

What I don't want to have happen is for you to come to me March 15th and say, I need my taxes done. I've got all these receipts in a shoe box, right? I will tell you no, and I'll say good luck. Because we want to do is prepare ahead of time. We want to be doing the bookkeeping throughout the year is the ideal, but now is kind of the, I procrastinated time.

Let's get something done now. And then we kind of already talked about, but we want to start setting money aside for taxes. And so again, another good reason to do tax planning. We should be paying our quarterly estimates. And I think I've talked about that before. But even after our quarterly estimates, we want to make sure that we have enough money set aside for taxes. And so now is the time to do that. And then hopefully,

you know, January, February, we can file almost immediately. If you can have a refund, you can get a refund. If not, we can push back when we file till April 15th so that you can pay your money at the latest possible date.

So what does my tax planning process look like? So what I'll do is we'll take the financials, we'll take your net income and your expenses, we'll take a look at your previous year return. So we'll go through and say, hey, last year you had interest income from this bank and this bank, and you had dividends and capital gains from this investment. And then here's your W-2, and then here is your business, right? And so then we can kind of...

Synthesize what information we need and then we can estimate what it's going to be this year Obviously, it's not perfect because we haven't had November December yet But we can make a pretty good guess 10 out of 12 months gives us a pretty good annualization of monthly income and expenses So then once we do that, we'll estimate your Tax bill and again, we're gonna be off five to ten percent probably and it could be more if we're missing things or

big changes happen in your business. I'm not gonna say we're perfect. Then usually what we'll do is we'll say, hey, is this doable? Is this what you were expecting? What can we do to decrease your tax bill? So we'll talk about retirement funds, anything like that. And then the other big thing I kinda wanna talk about too, because this happens a lot, is people say, well, just go buy that new diesel truck, go make huge investments into your business. And I just wanna...

push back on that a little bit. Anything you spend for your business is really your own money. But what the tax rate does is it gives you a discount on that. depending on your tax rate, so it could be 10 to 20 percent or even up to 30 percent, right? That's the discount on the goods that you're buying. If it's an expense for your business. So what I don't want you to do is go out and buy a truck that you don't need.

just to save a few hundred bucks in taxes because you won't end up saving a ton of extra money. And so I just want to make sure that that's known. I think I've talked about that before, but I really view your tax rate as your discount rate for business expenses. And it is not something you just want to go out and buy things just to decrease your tax bill. Retirement planning is a much better tool that we want to.

So once this is all done, we have your tax plan. We can make sure that we know what you're be paying in your taxes next year. And we can move forward with confidence that we know what's going on. This isn't an impossible process. It just takes time and understanding.