How Much Profit Should You Keep in Your Business?

For business owners wondering how to manage profits wisely, this episode is essential listening. Host Terrance Hutchins and co-host T’mia explore the strategic decision-making process behind retaining money in your business, explaining how much to keep, why it matters, and how it all ties into taxes.

Building on previous episodes about where profit goes—like taxes, debt, and reinvestment—this conversation centers on the crucial (and often overlooked) topic of retained earnings. Whether you're a seasoned entrepreneur or a new S-corp owner, you’ll walk away with a clearer understanding of financial planning inside your business.

What You’ll Learn in This Episode:

• Why retaining profit is essential for long-term business stability and growth
• The difference between C-corporations and pass-through entities when it comes to taxes
• How to calculate and set up a proper rainy day fund for your business
• Strategic reasons to retain money beyond emergency savings—like hiring or equipment replacement
• A breakdown of how to allocate business profits (taxes, reinvestment, savings, distributions)
• Why understanding distributions is key—and what most people get wrong

Featured Tax Tip:

Retaining profit doesn’t change your tax liability in an S Corp—the IRS still taxes you on what your business earns, not what you take out. Just like your kids ordering dinner doesn’t mean they’re paying the bill, your S Corp passes the check to you. Plan accordingly.

If you’re building a business, don’t just focus on making money—focus on allocating it wisely. Learn how to prepare for surprises, fund your future, and structure your finances with tax-smart strategy.

Subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts. Keep More of What You Earn.

In this episode of How to Lower Your Tax Bill, host Terrance Hutchins and co-host T’mia continue their series on managing profits for small business owners. This time, the spotlight is on reinvesting profits back into your business—and how to do it in a way that actually builds long-term value.

Whether you're new to entrepreneurship or scaling an established business, this conversation will help you rethink what profit really is, why some owners are unknowingly devaluing their businesses, and how reinvesting strategically can save you thousands in taxes while setting up future growth.

Key Discussion Points:

• Why your business profits aren’t really profit if you’re underpaying yourself
• The four areas where reinvestment makes the biggest impact: people, systems, processes, and marketing
• How to set a baseline return on investment before reinvesting a dollar
• What “return on invested capital” is—and how it tells you if your business is healthy
• Why a big tax write-off now can mean lower taxes today and lower capital gains later

Featured Tax Tip:

Reinvesting in your business reduces taxable profit today—and if that increases your business’s value, you’ll pay a lower capital gains tax rate (capped at 20%) when you sell, instead of ordinary income tax rates (which can be over 30%). That's a strategic win.

If you’ve ever wondered where your profit goes—or how to turn it into more revenue instead of just expenses—this episode is your roadmap.

Subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts — and as always, Keep More of What You Earn.

Is Business Debt Worth It? Tax Truths You Need to Know

In this episode of How to Lower Your Tax Bill, host Terrance Hutchins and co-host T’mia continue their series on what to do with your business profits—this time diving into the realities of using debt as a business strategy. Whether you're thinking of financing a new vehicle, bidding on a big project, or taking out a loan to expand, this episode unpacks what debt really costs you from a tax and cash flow perspective.

Ideal for business owners navigating decisions about loans, reinvestment, and capital expenses, this conversation helps you think critically about whether the “tax write-off” is actually worth the debt you’re taking on.

Key Discussion Points:

• Why debt feels like a tax win—but can drain your cash in year two
• The danger of spending $1 to save 40 cents: why tax write-offs aren't always smart
• How to evaluate if a project is worth financing and what poor forecasting can cost you
• Understanding “cash trapped in the balance sheet” and how delayed payments can trigger tax trouble
• What good debt looks like: using loans to buy assets that pay for themselves—and then some

Featured Tax Tip:

Buying a vehicle to reduce your tax bill can backfire—fast. Only the interest on your loan is deductible after year one, not the principal. If your new asset isn’t generating profit, your debt may cost you more than the taxes you saved.

Whether you're a cautious entrepreneur or an ambitious growth-seeker, this episode gives you practical tools to forecast smartly, avoid unnecessary debt, and keep your profits working for you—not your lender.

Subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts — and as always, Keep More of What You Earn.

One Big Beautiful Bill, Part 2: Advanced Opportunities & Loopholes for Savvy Taxpayers

Host Terrence Hutchins and returning guest David Stevens shift from “what changed” to “how to exploit it.” This follow-on conversation mines the fine print of the “One Big Beautiful Bill,” surfacing planning angles that tipped employees, high-income coastal professionals, and growth-minded business owners can act on right now.

Key takeaways

1. SALT cap relief—finally a workaround Deduct up to $40 k of state & local taxes (phasing out above $500 k AGI) through 2030; pair it with strategic charitable giving to stack deductions.
2. Tip & overtime exclusions First $25 k in combined tips/overtime ($12.5 k single) is off-limits to the IRS for earners under $300 k AGI—only 2025-2028, so document every dollar.
3. New “personal perks” bucket Car-loan interest on U.S.-assembled vehicles (max $10 k), “Trump Accounts” for newborns, and supersized 529 uses for tutoring & therapy up to $20 k—each with sunset dates readers should diary.
4. Charitable & family credits rebooted A resurrected $2 k above-the-line charity deduction, refundable $5 k adoption credit, plus HSA compatibility for bronze plans—great news for gig-economy families.
5. Business-owner bonanza 100 % bonus depreciation on manufacturing/refining buildings (four-year window), immediate R&D expensing, tighter but more lucrative corporate-giving thresholds, and beefed-up Qualified Opportunity Zone and QSBS incentives.
6. Farmer-friendly gain spreading Capital gains from farm sales can be recognized over four years when property stays in long-term agricultural use—easing cash-flow hits and succession plans.

Featured Tax Tip Waiting tables or bartending in 2025? Track tips daily with a simple phone spreadsheet—the first $25 k you record could be 100 % tax-free under the new exclusion.

Stay tuned! Subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts — and as always, Keep More of What You Earn.

Episode 26 – “Decoding the ‘One Big Beautiful Bill’: How the New Tax Law Impacts Families & Businesses (Part 1)”

In this webinar-style episode, host Terrence Hutchins teams up with tax partner David Stevens to unpack the sweeping “One Big Beautiful Bill.” If you’re an individual taxpayer, parent, real-estate investor, or small-business owner wondering what stays, what changes, and where new savings may hide, this conversation is for you.

Key Takeaways

1. 2018 rate brackets made permanent – the top rate holds at 37 %, averting a scheduled jump back to 39.6 % and sparing most filers an automatic tax hike
2. Higher, inflation-indexed child tax credit – boosted from $2,000 to $2,200 per qualifying child and set to rise with the CPI
3. Standard deduction locked in – roughly the first $31,500 of married-filing-joint income remains tax-free, keeping itemizing optional for ~70 % of households
4. Estate & gift exemption climbs to $15 million per person, giving high-net-worth families fresh breathing room for legacy planning
5. Business-friendly perks – 100 % bonus depreciation and an expanded $2.5 million §179 expensing limit become permanent, super-charging upfront deductions on equipment and cost-seg studies
6. Paperwork relief – 1099-MISC/K reporting kicks in at $2,000 (up from $600), reducing the form flood for contractors and platforms

Featured Tax Tip

Considering a major equipment purchase or a cost-segregation study? Lock it in while 100 % bonus depreciation and the beefed-up §179 limits are available—front-loading those deductions can offset other active or passive income this year.

Subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts and, as always, Keep More of What You Earn.

Episode 25: What To Do With Business Profits — And How They Affect Your Taxes

If you’re a small business owner or aspiring entrepreneur wondering what happens after you make a profit, this episode is for you. Host Terrance Hutchins and guest Tamia break down how to think about your business income strategically, plan for taxes, and avoid common mistakes that lead to IRS trouble. Learn how to shift your mindset from just “owning a job” to building a profitable, sustainable company that pays you and funds future growth.

Key Discussion Points:

• Why paying yourself a fair market salary is crucial to measuring true profit
• The “two hats” every owner wears: employee and shareholder — and how each is taxed
• Five smart ways to use profits: paying taxes, paying off debt, retaining as reserves, reinvesting in the business, and taking owner distributions
• How to plan ahead for quarterly tax payments to avoid penalties and stress
• Practical examples of overlooked deductions like the Augusta Rule, home office, mileage, and kids on payroll

Featured Tax Tip: Always treat taxes as a business expense — factor them in like rent or payroll. Look at your prior tax returns (line 24 divided by line 11) to estimate your tax percentage, then set aside that portion of every dollar you make to stay ahead of the IRS.

Planning for taxes is just as important as planning your next client pitch or hiring decision. Build tax savings into your cash flow now so you don’t get stuck paying penalties later. Subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts — and Keep More of What You Earn.

From Laid Off to Launched — A Real Talk on Starting Your Business and Managing Taxes.

Thinking about starting your own business? In this episode, host Terrence Hutchins sits down with co-host Tamia Kelly for an honest, behind-the-scenes conversation about her journey from corporate layoff to launching her own insurance agency. If you’ve wondered what really goes into starting a business — and how to handle the tax side — this episode is for you.

Key Highlights:

• Why Tamia decided to start her insurance agency after being laid off — and how she knew it couldn’t just be a side hustle.
• The unexpected costs and overlooked expenses every new business owner should plan for.
• How the IRS treats start-up and operational expenses — and why forecasting matters.
• The pitfalls of self-funding vs. taking a business loan — and how each affects your taxes.
• A practical breakdown of sweat equity, capital investment, and how to plan for ROI.

Featured Tax Tip: Did you know the IRS lets you deduct up to $5,000 of qualifying start-up expenses — but only if you plan and track them correctly? Good forecasting and clear separation of business vs. personal funds can help you maximize this deduction and avoid surprises at tax time.

If you’re dreaming of starting your own business — or already in the middle of it — Tamia’s lessons learned will help you do it wisely, stay tax-smart, and avoid rookie mistakes.

Subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts. Keep More of What You Earn.

Is Starting a Business Worth It? A Financial Reality Check

Thinking of launching a business to save on taxes? In this episode, Terrence Hutchins and co-host T’mia break down what many aspiring entrepreneurs overlook: the true financial costs of starting a business—and whether it's worth your time. This is the first of a three-part series unpacking the mindset, math, and tax implications behind the decision to become a business owner.

Perfect for side hustlers, freelancers, or anyone evaluating whether entrepreneurship is the right path, this episode walks through a practical framework to help you decide with clarity and confidence.

Key Takeaways:

• Profit vs. Passion: Why business should be about making money, not just saving on taxes or chasing passion alone.
• Know Your Worth: How to calculate your hourly rate and determine if your business idea can exceed that value.
• Startup vs. Operating Costs: Learn the difference between upfront and ongoing expenses—and why many new business owners underestimate both.
• Minimum Revenue Math: Use this formula to reverse-engineer how much income you need to make entrepreneurship viable.
• Value-Based Pricing: Six reasons people will pay you—and how to communicate that value without underselling yourself.

Featured Tax Tip:

Startup Write-Offs: The IRS allows up to $5,000 in organizational expenses and $5,000 in startup expenses to be deducted in your first year of business—if you have a genuine profit motive. Don't mistake a hobby for a company, or you'll lose this powerful benefit.

Leaping into entrepreneurship can offer freedom, but it’s not free. Listen in to learn how to value your time, price your services, and plan for taxes before you dive in.

Subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts.

Keep More of What You Earn.

Before You Form an LLC: What Every New Business Owner Needs to Know

Thinking about starting a business? This episode is for entrepreneurs and aspiring business owners ready to take their first step—but unsure what comes first: pricing, systems, or an LLC. Host Terrance Hutchins and co-host T’mia Kelly dive into the practical and financial considerations that can make or break a new venture. From setting up the right structure to avoiding common (and costly) tax mistakes, this conversation is a must-listen for anyone wanting to start smart.

Key Topics Covered:

• Pricing and Profitability: Why competing on price is usually a losing game—and how to define a value proposition that actually pays.
• Core Business Systems: The four essential systems every startup needs: attracting, converting, servicing, and retaining customers.
• Business Expenses vs. Business Value: A powerful mindset shift for evaluating every dollar spent through a lens of long-term business value.
• The Truth About LLCs and S Corps: Clarifying what LLCs do (and don’t do) for taxes—and when an S corporation makes sense (hint: not at the beginning).
• Good Habits From Day One: How monthly “board meetings,” separate bank accounts, and record-keeping can set the foundation for compliance and future deductions.

Featured Tax Tip:

Use the Augusta Rule to pay yourself tax-free. If you hold legitimate board meetings (even solo) at your home, your corporation can rent the space—allowing you to move money from your business to yourself with no tax hit, up to 14 times per year.

Subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts. Keep More of What You Earn.

Let me know when you're ready for Episode 24 or if you'd like me to add this one to the catalog next.

Why Small Business Owners Owe the IRS—and How to Avoid It

In this episode of How to Lower Your Tax Bill, host Terrance Hutchins is joined by co-host T’Mia Kelly to explore the top five tax mistakes small business owners make—and how to avoid them. If tax season caught you off guard this year, this episode is packed with real-world insights and practical strategies to help you stay ahead of the IRS, avoid penalties, and better plan your business finances.

Whether you're new to entrepreneurship or a seasoned business owner, understanding these pitfalls can save you thousands.

Key Topics Covered:

• Why underpaying estimated taxes can trigger costly IRS penalties
• The “Safe Harbor” and “Pay-As-You-Go” methods for managing estimated payments
• Why paying in cash doesn't exempt you from reporting income
• The dangers of commingling business and personal expenses
• The true cost of buying things "just to save on taxes"
• Why taking advice from TikTok or social media can get you in trouble with the IRS

Featured Tax Case: In Trinidad v. United States (1977), the court denied a nightclub owner’s attempt to deduct the living expenses of his live-in girlfriend, even though he claimed her presence helped him stay “relaxed and happy” for work. The IRS ruled that personal relationships—even morale-boosting ones—aren’t legitimate business deductions.

Pro Tip: Avoid tax trouble by setting up proper systems early on—like separating your business and personal finances, issuing 1099s to contractors, and seeking professional advice before making big purchases or financial moves.

For more strategies to reduce your tax bill, subscribe to How to Lower Your Tax Bill on Spotify, Apple Podcasts, or your favorite platform.

And remember: Keep More of What You Earn.