On this episode, sponsored by First Horizon, YFP Director of Tax, Sean Richards CPA, EA, summarizes a tax checklist for pharmacy entrepreneurs and other small business owners.
Episode Summary
Too many of us are caught in the trap of only looking at taxes during tax season. As a small business owner, missing the tax mark can have significant consequences in the form of surprise payments due, missed deductions and credits, and constantly wondering if there is something else you should be doing. So whether you are a seasoned business owner or just starting, on this week’s episode, sponsored by First Horizon, YFP Director of Tax, Sean Richards, CPA, EA walks us through a small business owner tax checklist including eight key areas that demand your attention. He touches on the fundamentals of bookkeeping, qualified deductible expenses, the benefits of financial projections to make estimated payments, the significance of S Corp status, insights on determining your owner’s compensation, and much more.
Key Points From the Episode
- A warm welcome back to the show to YFP’s Director of Tax and CPA, Sean Richards.
- Why record keeping is vital for a smooth tax season.
- The separation of church and state when it comes to personal business.
- Why you shouldn’t fear registering your business as an LLC.
- When to consider working with a professional and what to expect from the relationship.
- Understanding the basics of bookkeeping.
- Defining deductible expenses and why it’s important to understand this term.
- The difference between tax planning and tax preparation.
- Projections and estimated payments: making sure that you’re setting the right money aside.
- How to determine if the S-Corp is the right fit for you.
- Discussing payroll and how to establish your salary as a business owner.
- Diving deeper into Section 179 deductibles.
Episode Highlights
“Working with a professional will not solve any challenges or problems you have with disorganization.” — Tim Ulbrich [0:16:01]
“Having a strong understanding of how your business is doing financially is one of the best things that you can do as a business owner.” — Sean Richards [0:17:44]
“Paying yourself an equitable salary is not only the right thing to do by the eyes of the IRS, but it also really helps you think about where the business going and growing.” — Tim Ulbrich [0:45:48]
Links Mentioned in Today’s Episode
Episode Transcript
[INTRODUCTION]
[0:00:00.8] TU: Hey everyone, I’m Tim Ulbrick, and I want to express my gratitude for you tuning in this week to the YFP Podcast. Each and every week, we’re dedicated to providing inspiration and support on your journey towards achieving financial freedom.
On this week’s episode, we have a special guest joining us, that’s YFP’s director of tax and CPA, Sean Richards, here to dive into a crucial topic, a tax checklist for small business owners. Whether you’re a seasoned business owner or just starting out, we’ll explore eight key areas that demand your attention. We’ll touch on the fundamentals of bookkeeping, qualified deductible expenses, the benefits of financial projections for estimated payments, the significance of S-Corp status, insights on determining your owner’s compensation, and much more.
Before we dive into this insightful conversation, let’s take a moment to thank today’s sponsor, First Horizon. Afterward, we’re jumping to my conversation with Sean Richards.
[SPONSOR MESSAGE]
[0:00:53.6] TU: Does saving 20% for a down payment on a home feel like an uphill battle? It’s no secret that pharmacists have a lot of competing financial priorities, including high student loan debt, meeting that saving 20% for a down payment on a home may take years.
We’ve been on a hunt for a solution for pharmacists that are ready to purchase a home loan with a lower down payment and are happy to have found that option with First Horizon. First Horizon offers a professional home loan option, AKA, doctor or pharmacist home loan, that requires a 3% down payment for a single-family home or townhome for first-time home buyers, has no PMI, and offers a 30-year fixed rate mortgage on home loans up to USD 726,200.
The pharmacist home loan is available in all states except Alaska and Hawaii and can be used to purchase condos as well. However, rates may be higher and a condo review has to be completed. To check out the requirements for First Horizon’s Pharmacist Home Loan, and to start the pre-approval process, visit yourfinancialpharmacist.com/home-loan. Again, that’s yourfinancialpharmacist.com/home-loan.
[INTERVIEW]
[0:02:04.9] TU: Sean, welcome back to the show.
[0:02:06.5] SR: Thanks. Thanks for having me, yeah. Feels good, we’re through all the extension deadlines, business and individual and now we can hundred percent focus on next year.
[0:02:14.2] TU: Hard to believe, right? We’re already talking about next tax season. You just had a webinar this week kicking off the beginnings of at least thinking about tax season. I know, many of our listeners, really, this comes to life in January, February, we’re trying to get people to think a little bit earlier, more year-round, and today, we’re focusing on really small business owner tax considerations and what are some things that people will be thinking about, planning about.
Essentially, a checklist of sorts, and whether people are just getting started with a business or maybe they’ve been at it for a while and they can go back and see, “All right, maybe there’s some holes in the crack in the foundation that they need to go back and fill in.” We really hope that this can be an episode that people will come back and reference into the future as well of something they need to be thinking about as a small business owner as it relates to their taxes.
And Sean, we’re going to talk here and weave in some of our own personal experiences of how these things became obvious that we need to be doing as we’re growing the business but also, Sean, in the work that you’re doing and advising and working with other small business owners as well.
[0:03:15.2] SR: Yeah, there will be anecdotes from real life, with our own accounting of our own businesses and some of the people that we worked with and everything, yeah. There’s a lot in this one, I think it will be a good one to reference back to, I agree.
[0:03:25.9] TU: I know pharmacists like checklists and I know they like to know where we’re going. So, we’re going to cover eight different areas, we’ll go through these one by one and they’re really going to flow into one another, and so I think we’re going to start, maybe a little bit broader, Sean, and then we’ll get more narrow of considerations that folks should be thinking about.
Sean, number one on our list is record keeping. I think that anyone who has been in a business for any time or even if they’ve been thinking about starting, they’re being advised, maybe that’s – some advice have been given is, “Hey, you have to keep records,” But that can get lost, right? You’ve got an idea, you’re running things, it can be busy, tell us about record keeping, why it’s so important, and what people should be thinking about here.
[0:04:02.5] SR: Yeah, like you said, these will kind of flow into each other, and honestly, it’s – you kind of can’t have one of these items without what’s before it, and it all comes back to record keeping, really, at the end of the day. And that makes sense if you’re thinking about taxes and accounting just the way that they are. It’s generally, it’s the nature or say, looking back at something, it’s a historical look.
So, you’re going to need to have references of the things that you did to be able to do something like that, but there’s just so many things that go into just being able to make decisions about your business when you’re filing taxes at the end of the year, when you’re doing tax planning, which I’ll get into a little bit later about the differences between tax planning and tax preparation.
It all comes down to having good data, and having good data goes back to having good sourced data and inputs and everything. So just saving down everything that you can, related to the business, and I don’t mean that in the sense of just holding receipts and throwing it in the shoe box and just keeping all of the junk, but just making sure that if you’re doing financial transactions, you’re keeping them in a bank related to your business, you’re running down reports at the end of the month.
Hopefully, you’re using some kind of ledger system like a QuickBooks or even Excel or something like that but even if not, just being able to say, “Hey, this is the money that I made this year, this is the money I paid this year.” And then even some of the ins and outs that you might not think or something that will directly relate to your taxes or business but might, if you ask your accountant about it, right?
So, things like loan agreements and any type of employment agreements you have with folks. So, things like that. Just really, anything that you think at any point in time, “Hey, would my accountant ever possibly ask me about this?” or “May this possibly come into play when I’m doing my taxes in the future?” Bear to error on the set of caution, just keep everything.
That being said, there’s actually some rules in some areas. So, generally speaking, I’d hold on to everything for at least three years. Some states have even longer record retention requirements but generally speaking, hold on to things for at least three years. Just get some cloud storage or a hard drive or something like that so you don’t have to take a physical space and just keep an eye on everything.
[0:06:08.1] TU: Yeah. And we use, at YFP, we use Google Drive for everything. So that becomes our system of – as you mentioned Sean, it’s not just receipts, right? It’s going to be the financial statements, whether someone’s producing those for you or you’re working on that yourself, and it might be a very basic Excel template that you’re starting with and then that will evolve over time.
But it’s not just the receipts or the financials, it’s also the contracts, right? Things that you’re – you know, W9. I mean, just the – a lot of things that you’re going to be building over time.
[0:06:37.0] SR: Right, and even things that you might not think about. So, like, say you or you have an office space at home that you’re working out of. You can take a deduction for that and there’s a simplified way to do that with a square footage. But there’s also a way you can take actual expenses and generally, you’re going to want to do whatever is the most beneficial.
So, now we’re talking about, okay, mortgage interest and utilities and stuff but even on top of that, depreciations. So now we’re saying, “Hey, how much did you pay for your house 10 years ago?” or something. That might not be something that’s top of mind for folks but if it’s, again, even if it’s tangentially related to the business, there’s a chance you’re going to be able to possibly get a tax savings for it.
Better to just hold onto it and ask somebody about it, “Hey, can I get a deduction for this? Is it worth me keeping this data, these records here?” And then just have someone tell you, “No, you don’t need that anymore.” And then you can get rid of it.
[0:07:26.2] TU: Yeah, perhaps I should have said this at the beginning, Sean, but I know we’re going to have some people that are listening that maybe have been at this for a while and they’re kind of realizing as we’re going through these eight things like, “Oh, my gosh, like, this is a hot mess” right?
[0:07:35.9] SR: Right.
[0:07:36.6] TU: And that’s normal. You joked about the receipts in the shoe box but there’s a fine line here between, “You can’t predict everything you don’t know yet.” And the system’s going to evolve over time. You don’t want to become paralyzed by all these things but also, you want to be thinking ahead as much as you possibly can, or working with someone that can help you anticipate, that has experience working with others as well.
[0:07:56.6] SR: Exactly.
[0:07:57.4] TU: And I think an important part of that record-keeping, Sean, has been moved to number two on our checklist is this concept of comingling personal and business and really wanting to separate these out and ideally, we’re doing this from jump street, right? So we can have clean records and again, this isn’t always done, whether someone’s anticipating where they’re going to go or maybe they’re confused about how to incorporate or do they need to set up an LLC.
Lots of things to consider here, but talk to us about the importance of separation of church and state when it comes to personal business.
[0:08:29.5] SR: I was going to say the separation of church and state but I wasn’t sure if that was alright. So, I’ve used it before but I held off for a minute. Yeah, I mean, that again, it’s going back to the record-keeping thing, and being able to produce data and produce useful information about your business. So, if you need to say to yourself, “All right, how much money did I make this year or how much did I make, how much did I spend in expenses to my vendors?”
If you have to then go and start pouring through and combing through bank accounts and picking out, “All right, well, this was related to my kid’s school stuff but this was related to the business trip that I went on” and everything, just the notion of even having to do that from the beginning is – it’s just stressful to even think about. There were legal sides to it too. I mean, if you have an LLC and you set up a separate business, it’s always kind of there to keep things separate.
[0:09:15.8] TU: Yeah.
[0:09:16.0] SR: Then it begins to become something where, like you said, you might not know at first, “Hey, I’m starting something out, it’s just a little side project, I’ll use my regular account for now and kind of keep track of things on paper.” Then all of a sudden, things expand and get bigger and hey, maybe you’re incorporating or bringing on partners and stuff, and then you start getting into things, which I won’t really go too deep into because I’ll put the audience to sleep.
But you start talking about your basis in a partnership interest or something like that or your basis as a shareholder in a corporation, and if you’re sharing funds or borrowing things from here and putting it in this pocket and using your personal home equity line of credit to fund the line of business that you’re doing, it just, it muddies the waters too much from the beginning.
So, to any extent, you can keep that stuff separate. That’s the recommendation. That being said, number one is, if you’ve already done some things where, “Hey, I’ve put a couple of expenses on this card” it’s not the end of the world, it’s just being able to identify those things. So, if you can go back now and start to be able to put a report together where you’re chipping away the personal stuff and you have the business stuff ready now or towards the end of the year and not in April or March actually, if we’re talking about business returns.
But the other thing is that you don’t have to necessarily hold yourself to that a million percent. And I know this is offering up not a best practice but there will be times when I have people come to me and say, “Hey, if I go put this big credit card or this big flight on my personal card that I just opened up, I’m going to get myself a huge refund back from my credit or big reward, then I’ll be able to put back in the business” or something like that.
Those things will happen and it makes sense, you have to do it. It just goes back to the record-keeping thing. Let your accountant know or keep track yourself. “Hey, this was a loan from me as a business owner to the business and now, I’m going to actually pay myself back that amount from my business account.” Just keep track of it that way. Don’t completely handcuff yourself but make sure you try to keep things as separate as you possibly can.
[0:11:19.3] TU: Yeah, that’s great stuff. I think too, there’s – you mentioned some of the legal piece, which again, we’re not lawyers but that’s an important consideration of keeping things separate and where the liability protection ends. I think the other thing I see here, Sean, often, is the idea of starting, setting up a business, registering with the state, getting your employer identification number, opening a bank account.
That seems big and scary, which I think can be intimidating to people that are on the front of it but it’s really not that difficult nor is it that expensive. And so I think, as early as you possibly can, once you’ve got that bank account and the business’s name that’s really going to help you with the record-keeping being separate. The other thing I would just say is from a visibility and a cleanliness as an owner to understanding where your business is at.
Like, we don’t want to muddy those waters as you talked about, right? So, I want to be able to quickly see, how’s the revenue, how’s the expenses, where are we at? And obviously as you grow, you’re going to look at this period versus another period and what’s the growth or not the growth. What do we need to change?
So, I think really having good insight into what’s the health of the business, the separation helps. And then the other thing I would add, which is a little bit more in the mindset side of things is sometimes when we are just starting, we have some of that resistance and devastation of like, “Well, this is just kind of small and I’m not sure where it’s going to go and so, I’m just going to do it with my personal.”
Like, believe in yourself, right? Where are we going? And worst-case scenario as we dissolve the business, we shut down the banking account and we move on, but I think really establishing the goals that you have for the business as well.
[0:12:49.4] SR: Right, and we’ll talk about it in a little bit more later but the LLC thing, again, neither of us are lawyers but a lot of people get scared by that because they think, “Oh, it’s a new entity, it’s going to open up this whole separate tax thing.” But most of the time, if you’re a sole proprietorship and you open an LLC, it’s just going to land on your personal tax return like kind of a regular side business anyways. So don’t let that notion of things scare you too much.
[0:13:12.1] TU: All right, number three on our list, Sean. Number three is working with a professional. You’ve alluded to this a couple of different times. Some people, as it gets started, they may work with a professional right away, they may wait, and that could either be an accountant, bookkeeper, both, we’ll talk about bookkeeping basics here in a little bit.
This was one of the first areas, Sean, that we actually outsourced at YFP, as we were looking at growing the business. We had times where that perspective was very helpful and times where we’re like, maybe not. So, I think this is a challenge where, “You know what? I’m going to hire someone that can really understand my business and advise me.” And I often had this feeling of, “I don’t know what I don’t know”, right?
So, I’m looking for someone to kind of guide me, rather than just being there when I have questions. So, talk to us about the working with the professional. Maybe the “When”, as well as, what are we looking for in that relationship?
[0:14:01.8] SR: Yeah, and like you mentioned, we’re going to go into bookkeeping basics, but I think having this n your checklist of where you’re in the end of the year, and really any point in the business year is trying to make that determination, “Hey, am I going to do this or not?” You don’t even necessarily have to go down the path of understanding all of the ins and outs of the bookkeeping if you’re going to decide off the bat, “Hey, I’m going to pay somebody to do that for me.”
Not that you shouldn’t get the basics and stuff, but if you’re going to say, “Hey, I want to outsource this now and have somebody run that whole show”, you don’t necessarily even have to get yourself in the weeds from the beginning. But I think it’s just one of those things that you have to decide, like you were saying, where do you want to be spending your time and your energy and where are your strengths and your weaknesses, right?
So, if maybe you have a finance background and you say, “I can put a couple of hours towards this and it’s not a big deal, I got a pretty good handle on things and I can run it myself.” That’s perfectly fine but you might be saying to yourself, “Hey, I know a lot of people who just absolutely hate everything to do with numbers” and that’s okay too. If number scare you and you hate numbers, that’s fine but they’re not going to go away.
So, ignoring them or trying to just say, “Hey, we’ll get there at the end of the year and figure it out then.” I mean, that is one way to do it but it’s certainly not the best way to do it. So, I think it’s just something where you have to really think about where you’re at, what your strengths and weaknesses are, and also what do you want to do when it comes to tax season, right?
If you’re talking about a sole proprietorship then that’s going to land on your personal return, that’s probably something that you can handle. But if you’re getting into partnerships and corporations, now you’re filing different returns and they’re a little bit more than a regular person’s probably used to with HNR block or whatever. So, that’ might begin to necessitate having a tax professional just sheerly out of expertise.
So, there’s a lot of different things. I always use the accountant cop-out answer that Tim Baker uses of, “It depends.” But it really does depend. But I think having that decision early on in your process will help plan out the rest of everything else that we’re going to talk about in a minute.
[0:15:57.6] TU: And this is worth saying, and maybe saying again and saying again, which is working with a professional will not solve any challenges or problems you have with disorganization, right?
[0:16:07.7] SR: Correct.
[0:16:08.6] TU: They can advise, they can help, they can – we talked about things like record keeping, but they’re not there from an organization standpoint. I think this is something, again, no judgment, right? People that are just getting started in the business, you’re focusing on the business, you’re growing things, you may not be thinking about organization and records and all that, but at some point, that’s got to become a priority. And if they’re working with someone the first time, that may not be something that is top of mind, so.
[0:16:32.7] SR: Yeah, but a professional though also can, on the flip side and again, it’s not going to be – it’s not going to solve disorganization problems but can definitely help advise with, “Hey, you’ve been struggling keeping track of all these things. Why don’t you get a QuickBooks subscription, we’ll connect all your bank accounts and then I can handle things from there and keep track of things as they come in.”
And now, all of a sudden, you’re not panicking every month or every year with the thousand transactions. You have a bookkeeper who is going in every week or every month and categorizing things and sending you reports, so.
[0:17:01.9] TU: Yeah.
[0:17:02.1] SR: Again, it might not solve your problems with a wave of a magic wand but they can definitely get you there.
[0:17:08.7] TU: So, let’s go to number four on our small business owner tax checklist, and Sean, that’s bookkeeping. We’ve danced around this here a couple of times so far but whether or not someone is working with a bookkeeper, there are things they have to be ready for and make sure that they’re tracking. So, talk to us about those items that they have to be ready to report on, whether they’re doing it themselves or whether they’re working with someone that they hire.
[0:17:30.5] SR: Yup, like you said, and like I was just saying before too, even if you have somebody who is doing this for you, reporting on it, and kind of explaining it all to you, you still have to generally be able to understand what they’re talking about, right? I mean, you can only break things down in layman’s terms so much, and having a strong understanding of how your business is doing financially is obviously, one of the best things that you can do as a business owner, I think.
So, if you take a look at – and I’ll talk about the entity types in a little bit – but if you look at the three main, or at least in my mind, tax returns that you’ll have for small businesses typically is a schedule C on your 1040. That’s just your regular kind of sole proprietorship. It can be an LLC, cannot, but just a regular person side gig kind of thing, and then you have a 1065 which is a partnership.
So that’s the default if you have an LLC and you have more than one person, and then S-Corp, I’m sure a lot of people have heard of that say, 1120-s. Those are the three main forms that you typically see for filing business returns at the end of the year. If you look at the three of those, the main front of the forms, they’re all basically the same thing. You have your revenues, your, “Hey, what were my sales, what was my service income if I had any other kind of income, and what were my expenses?”
And you’ll see that all three of them have generally the same categories for expenses. Like advertising and travel and mortgage interest and things like that. So, it’s pretty similar across the board and you’re going to really have to be able to report on that stuff, no matter what kind of business you run, you’re going to have to know what your revenues are and you’re going to have to know what your expenses are.
Revenues, I’m not really going to spend a whole heck of a lot of time on. I mean, I think people generally kind of have a feel for that, it’s cash in the door. The one thing I would say there is if you’re doing service revenue, it might be a little bit harder to track when you’re actually performing a service and getting paid versus actually selling a good. So, a little bit more keep eye on there but honestly, again, people typically have a good feel for that.
It’s more the expense side that I think things can kind of trip people up on. You typically think, “Hey, whenever I’m spending cash out the door that’s going to be an expense for the business and I can probably deduct it.” And generally, that’s true, but there’s a lot of things that come in that can mix that up a little bit. I mean, property is one thing. I was mentioning before, depreciation, right?
So, you probably think, “Hey, I’m paying for this office space and I have a mortgage on it. My mortgage, I should be able to write that off, right?” Mortgage interest you can but the mortgage principle, you don’t. You get that back via depreciation but again, that’s something you might not be thinking about or might not really have insight into, or vehicles for example. You can have a billion different ways to write off vehicle expenses.
Whether you’re taking actual expenses or like a standard mileage rate. It all depends on how much you’re using the vehicle for business purposes, there’s all sorts of depreciation rules and stuff. There’s just a lot when it comes to expenses. So, that’s probably the biggest area on the PNL at least, the profit and loss statement to really have a good handle on when it comes to basic bookkeeping stuff.
[0:20:25.4] TU: Sean, as you’re talking, it’s reminding me of – sorry to interrupt you, it’s reminding me of Schitt’s Creek episode where Johnny Rose –
[0:20:33.4] SR: Yeah. I already know where this is going.
[0:20:35.0] TU: You can’t just buy things for yourself and deduct them as an expense.
[0:20:39.8] SR: It’s a write-off, it’s just a write-off, exactly.
[0:20:42.1] TU: It’s a write-off, just a write-off.
[0:20:43.4] SR: And hey, a lot of times, and we’ll talk about what’s a deductible business expense. A lot of times, if you’re spending money on a business, it is but you’re correct, you can’t just be like David Rose and just go buy everything.
[0:20:54.3] TU: Oh my gosh.
[0:20:55.7] SR: From the blouse barn. So, that’s the PNL. The balance sheet is kind of – I don’t want to say, it’s the ugly stepchild of the financial statements but it’s the one that people generally have an actually have a pretty good understanding of it without even really knowing what a balance sheet is just because of the nature of two of the biggest components of it. So, your balance sheet is going to be your assets, it’s kind of one-half of the calculation and then the other half is liabilities and equity.
So, assets are pretty much what you think. If you look up the book definition of an asset, it’s kind of what it is for a business. It’s kind of what it is for a business. It’s basically something that’s expected to generate money for you, it’s a positive sort of resource that you have so cash, receivables, things like that, property, equipment. Again, things that people probably have a pretty good handle on.
“Hey, I have this much cash in the bank, Johnny owes me this much money and I own all these cars” right? Liabilities is the other side, on the other side. So, that’s the opposite of the asset basically. It’s like, “Hey, loans, do I have debt, do I have credit cards, do I have a mortgage? Do I owe my vendors?” Things like that.
So again, people typically have a pretty good handle of that, whether they’re really thinking about it or not, you usually know, “Hey, what are my credit card balances, what’s my line of credit balance?” whatever. Equity is the piece that is sort of – it always just ends up being the plug piece but it’s really important when it comes to taxes. So, if you think about – I was alluding to before, you were in a partnership.
You have a basis in that partnership and again, if you’re not an accountant, you might be thinking like, “What in the world is that?” It’s something that, I don’t want to say it gets overlooked but if you’re not really thinking about it from the beginning and again, getting back to commingling funds and stuff, basis is something that really matters a lot in the tax calculation. But can get muddied very quickly if you don’t have a handle on things.
And that really comes into play, equity is really where that kind of lands and I’ll caution that, if you look on the balance sheet, you look at equity, that doesn’t mean that that’s your basis or if you have multiple partners and stuff, it doesn’t necessarily equal that. But being able to have a handle on what your equity is, it really is a value of your company if you think about it. It’s your assets minus your liabilities. If everything right now came due and you had to pay off all of your vendors and everything, what do you have left?
That’s the value for your business. So, like I said, it’s the one that’s overlooked a little bit and it’s not as easy to maintain. Typically you don’t have to report a balance sheet if you have a small business and you’re doing like sole proprietorship or something, but it’s something that if you can get somebody to keep those books for you and be able to have a handle on it.
[0:23:28.2] TU: So, as you mentioned, assets equals liabilities plus equity or we could change the equation around assets minus liabilities equals equity, right?
[0:23:35.6] SR: Again, exactly right.
[0:23:36.6] TU: So, is my high school math still good?
[0:23:38.4] SR: Yes, that would be algebra. Very, very good.
[0:23:41.2] TU: So, let’s talk more within the bookkeeping basics here. Let’s talk more about the deductible expenses, right? This is probably one of the most common questions that we get you alluded to before that – especially early on the journey, people may have this perception of, “Hey, I can buy anything for the businesses and it’s a deductible expense.” So, define that term just a little bit further and why that’s important, and then some of the most common areas or deductible expenses that small business owners should be thinking about.
[0:24:06.8] SR: Yup. Sure. So, deductibility, it really comes down to the main things. So, is it ordinary and necessary? So, that basically means, if I have a business, is that expense something that actually makes sense in the course of a business? So, if you own a financial education company and you’re buying courses for your employees to take to learn about education and finance and stuff, that’s probably an ordinary expense.
If you’re buying tickets to – I was going to say, the Phillies in the World Series but they’re not really there, I guess. So, if you’re buying tickets to a baseball game or something, that’s probably not an ordinary expense, right? So, sorry for the low blow. I actually was rooting for the Phillies this year, that wasn’t meant to be, it just popped in my head first thing. So, ordinary necessaries, number one. Reasonable, which is in the same kind of vein but similar sort of thing.
So right, if we go back to that example I was just giving in, your employees are purchasing education, financial education courses, right? If those courses cost USD 500, a thousand dollars or something, it’s probably reasonable. If those courses cost USD 250,000 each, that’s starting to be, “Hey, you know, what’s going on there?” In fact, it’s probably not started to be, it’s definitely unreasonable but I think you get what I’m saying.
[0:25:19.3] TU: Yeah.
[0:25:19.3] SR: And then the third piece is paid during the year or if you’re on the accrual basis incurred during the year. But generally speaking paid but as the case is with everything, there is a lot of exceptions to these rules and with expenses in particular, those exceptions come out quite a bit. So, when we think common deductible expenses, cost of goods sold is going to be the most common or easy to identify if you’re a retail business or you’re selling goods.
And then the flip side of that, of the analogy I guess is if you have a service business, it’s not as easy to say, “What’s my cost of goods sold?” because you’re not selling a good but being able to determine, “Hey, what are my direct expenses directly related to the services that I’m providing?” So, it’s typically labor, contract labor, things like that. Compensation, so that’s one that is usually is a deductible expense.
However, it very often is not something that’s a deductible expense if it’s for an owner-employee of whatever this is. So, and you know, I’ll get into a little bit of specifics in a bit with some of these different entity types but if you’re a sole proprietorship and you are paying yourself and it is a little bit contradictory to what I was saying before where you want to be able to kind of keep good books and keep records of everything.
So, you’re probably saying, “All right, I’m working 40 hours a week on my business. I am paying myself 50 grand a year” whatever it is, that’s a salary expense to me, and then you write that off. But as an owner of a sole proprietorship, that’s not something that’s a deductible expense and that comes into play if you’re S-Corp. Some of those, some of the compensation that you’re getting.
If it is a salary expense, that will be deductible but then if you’re taking profit distributions, it’s not. So, there is a lot when it comes into compensation. If you’re paying contractors, separate contractors that aren’t yours generally speaking, that will be deductible but more just trying to give the caution flag here of, “Hey, if you are paying anybody particularly yourself, keep an eye on that.”
[0:27:15.7] TU: That’s really good, Sean. I think that can evolve, right? So, somebody may start as a sole proprietor, they may then have partners or not, they may or may not become an S-Corp. So, this topic of owner’s compensation and a deductible expense is one that may be ongoing.
[0:27:30.3] SR: Oh, absolutely. It’s something – and we’ll talk about the S-Corp thing in a little bit – but exactly right. And that’s not something that is going to be set in stone and even something like not necessarily related to deductible expenses, but even something like setting aside money for taxes. I mean, you might have a rate in your head that, “Hey, I’m going to put aside 15, 20%” that can change drastically year to year depending on what things are happening with your business or your personal.
[0:27:52.9] TU: Yeah.
[0:27:53.3] SR: So just another thing that as with everything else, a lot of these rules and things to keep in mind aren’t necessarily set in stone for any particular point in time. On the subject of compensation, health insurance is another big one. So, that’s one that again, you got to really want to be careful about. I can’t get into all the rules now but the big thing there is really if your spouse is eligible for health insurance through whatever company they work for.
If it’s unrelated to your small business that usually makes it nondeductible on your side, so just something to keep in mind in there. Again, I won’t go into everything but there is a lot of rules around health insurance. Travel, a lot of rules around that. So, if you’re going on business and you are spending time overnight and the primary purpose is for business, most of those expenses generally speaking will be deductible.
But if it’s for leisure, probably not and the big one with transportation and travel is commuting to and from your office is never deductible. That’s the big one there that people will say, “Well, what if I work from home sometimes but then I have an office space that I go to?” If that’s a primary office location, probably not going to be a deductible expense, so that’s a big one to keep in mind.
And that’s huge too when you’re thinking about, if I am buying a vehicle and I’m taking these depreciation deductions and stuff, the mileage that you’re commuting to and from your office does not count towards business mileage, so very important to keep in mind.
[0:29:14.6] TU: You’ve reminded me of that many times, which is good.
[0:29:17.5] SR: Yeah, yeah, probably in a good way, right?
[0:29:20.2] TU: Yes, yeah.
[0:29:20.9] SR: And then you’re rolling your eyes at me kind of way.
[0:29:22.5] TU: Yeah.
[0:29:23.2] SR: So, one item I’ll mention as far as the exceptions to the rules I was talking about with being paid during the year is rent. So, I know a lot of people will say, “Oh, perfect. December, I’ll prepay next year’s rent and just be able to take a nice deduction this year for it.” IRS caught onto that one pretty quickly, so rent they actually specifically say, “Hey, if you prepay it, you can only take deductions for the time that it applies to.”
And then a big one that I mentioned before is the business use of home. So, if you are using a home office space and you’re – it’s dedicated and you’re using that for your business, you usually can’t take a deduction for that and there’s two methods, a simplified, “Hey, what’s my square footage?” and you’re taking five bucks a square foot or you’re taking a percentage of your actual expenses for your home.
The big thing there though is that I think that I kind of alluded to, it has to be strictly dedicated to that business. So, not like a half office half bedroom kind of situation. It needs to be fully for the business and really –
[0:30:20.4] TU: Which is important with work-at-home transitions. I’m thinking about where people have bedroom office type of set up, so.
[0:30:28.0] SR: Yeah and I mean, really, I mean I hit a couple of the big ones there as far as the expenses that are nondeductible that people often think might be. It’s really just; think of the opposite of what I just said, right? So, if you are you’re on and it’s for personal purposes, if you’re driving to and from your office, you’re going to baseball games, entertainment expenses aren’t deductible.
Federal income tax too, that’s another big one that people think, “Hey, it’s a tax.” Alot of taxes are deductible, property taxes, estate taxes, but the Federal one itself it’s – that would be a circular reference.
[0:31:00.3] TU: Yes, they were in.
[0:31:00.8] SR: That they were able to, right? So, if you get that one, then your math’s definitely working nice.
[0:31:05.0] TU: Yeah. Well, I think this is an area and obviously, I’m biased, Sean, we’ve got a team that does this, and your expertise on our team knows how to do small business accounting and bookkeeping and fractional CFO and TAx 4. Obviously, I’m biased there but I think you have to ask yourself as a business owner like this is just a lot to have on your mind, right?
So, could you learn all this, could you DIY this, could you record keep, could you bookkeep? Like technically the answer is yes.
[0:31:31.8] SR: Right and it’s possible.
[0:31:33.2] TU: But as you think about your capacity of attention and where you need to be focusing your energy, there is a point where there’s just so many nuances and here we’re really talking more on the side of let’s make sure we’re not calling something deductible that’s nondeductible. I think really the next level is more of the, what can we be doing strategically to optimize our tax situation? And that’s a huge value of having someone in your corner.
I do want to pause for a moment, I will be remised Sean, if I didn’t explain the Phillies reference to our listeners.
[0:32:05.6] SR: Okay, all right, that’s fair.
[0:32:06.8] TU: So, if our listeners don’t know, Sean’s in New Hampshire but he’s a huge Boston sports guy, and just in the past week, Tim Baker’s Phillies were eliminated from the NLCS and I assume as a Red Sox fan, that’s just beaming with joy, right? You’re a Red Sox fan.
[0:32:23.6] SR: You know, I am a Red Sox fan but honestly, with the Phillies this year, I kind of thought it was a team of destiny sort of thing, I’ll root against a Philadelphia team if they’re going up against the Boston team because I mean it’s the in-law sort of thing. And you know if it’s the 76ers, I don’t like because they’re in conference and stuff but the Phillies, it’s NLAL, I actually was pulling for them. So, I was rooting for them by that one but at the same time, it’s a little bit of win-win.
[0:32:50.4] TU: But the other thing why Sean is having a good week is I think the listeners know me, I’m a huge Buffalo Bill’s fan, and the New England Patriots miraculously beat the Buffalo Bills this week so.
[0:32:58.8] SR: Yes, which the term miraculous wouldn’t really have made sense for the last 20 or so years but now, it definitely does. So yeah, it’s been a good week but I think I’ll be crashing back down to reality this weekend, so we’ll see.
[0:33:09.5] TU: Only the Buffalo Bills hand, Bill Belichick a milestone win, so I’m going to leave at that. All right, number five on our list is projections, estimated payments, making sure we’re setting money aside. I’m guessing if we have listeners that have been at this for a while, they’ll probably remember maybe an early part of their journey where it’s like, “Oh, I didn’t think about that” right?
Didn’t know how to make estimate payments, didn’t think about how much I should set aside, and how I should project that. So, who needs to be making quarterly payments and talk to us about the process of determining that and then setting aside those dollars in planning?
[0:33:43.8] SR: Yep, so I mean doing a projection, it all kind of comes back to what I was talking about way the beginning of this saying the difference between tax planning and tax preparation. So tax preparation, I actually always use the same analogy, I’ll use it again but I always think of tax planning as being like a film director who can sort of see things as they’re going with the actors and change course and say, “Hey, cut, re-film that, do this over.”
And then tax preparation is the film editor who gets all the stuff and still plays an important role, works their magic, makes it all look nice. But it’s all stuff that’s already been done and you can’t turn back time and re-film any of those things, right? So, all of the kinds of theme of this entire conversation has been the idea of tax planning and actually being able to project what you think your liability is going to be at the end of the year.
And that’s where you start to get into what you’re just talking about, now we’re not talking about, “Hey, what is and what isn’t deductible” but now it can look at, “Hey, where do we have opportunities to take advantage of tax code and make a purchase and take advantage of accelerated depreciation or change our entity classification or something?” But in order to do that, you need to be able to do a projection.
In order to be able to do a projection, you need to have books and in order to have books, you have records. So, you see how it all kind of works itself up, right?
[0:35:00.9] TU: Yeah.
[0:35:01.4] SR: But yeah, I mean, a projection, I think the biggest thing there, so it all comes down to what your tax classification is. So, if it’s Schedule C, you’re kind of looking at what you expect your profit and loss to be at the end of the year and you’re building that into your 1040 and then similarly, if you’re a chair holder of even an S-Corp or partnership or something, you’re going to get your distributed share of that income on a K1 at the end of the year.
That’s going to come into your tax return, so it’s a little bit of – most of the time it’s thinking more about the tax on your personal side and less so on the business side. A lot of small businesses actually are passed through entities, where the business itself was not paying the tax, it’s actually the owners or the shareholders. So, when I say tax planning for your business, it actually is really a little bit more tax explaining on the personal side.
But how does my business play into that and the biggest piece there is that usually small businesses will be subject to self-employment income, number one. And number two is that almost always business income won’t have any withholdings associated.
[0:36:00.4] TU: Yeah.
[0:36:00.8] SR: So, that’s when you need to start thinking about, “Do I have to make estimated payments? Should I be setting money aside at the end of the year?” So, there’s ways to do that, I mean again, doing a projection and really kind of you know, projection is kind of what it sounds like, you’re basically building a tax return now just with what you think it’s going to end at the end of the year.
So doing that is good and then that will get you, “Hey, this is what I think my tax bill is going to be and this is what I think my withholdings are going to be” and everything and if you think you’re going to owe more than a thousand dollars, you should be making estimated payments, that’s the general rule. There’s something called the safe harbor, so the easy calc there, the easiest way to do it and being ultra-conservative as accountants tend to is take last year’s tax liability and multiply it by 110%, 1.1.
And as long as you pay that in by the end of the year through withholdings and/or estimated payments or some kind of combination, then you won’t have any penalties. You can also do that with this year’s 90% of this year’s tax. But if you can – what I’m getting out with that, that’s not a known number, your last year’s tax liability is on your –
[0:37:04.6] TU: More conservative, yeah.
[0:37:05.5] SR: This year’s tax liability, you probably have a good handle on it but it could change, right?
[0:37:09.8] TU: Especially if you’re growing or there – just thinking about variability and this is another example, just a peak behind the curtain, Sean, of, you advising us here at YFP, this is something we’re looking at you know evolving into the future. So, you know we’re big believers in the Profit First methodology. We’ve talked about that before on the show, great book, great resource.
There is a recommendation there for X percent of all revenue should go into a tax account. But what we found for us is that wasn’t a perfect number, because of just our personal situation as well as some of the tax benefits of being in the great State of Ohio, you know?
[0:37:09.8] SR: Right.
[0:37:43.5] TU: And then, so there’s – that’s one example where things are unique, and then we kind of evolve to our own calculation, which I would say is probably closer to maybe the general rule of thumb that’s out there of, “Hey, take 25%, set it aside” and then we realize, “Hey, that’s got some holes because tax situations are different.” You know, how many kids you have, what’s the total household income, all of these variables, right?
So, I think the projection piece along with what you’re suggesting on the safe harbor is so important, right? As you’re planning for the business because you want to find yourself in that situation where you don’t want a bunch of money sitting in an account that as a growing business, if you didn’t have to make that much in tax payments you could have utilize to grow the business.
There is an opportunity cost there but we also don’t want to be surprised and put a stress on the cash flow of our business that we go to file in April and we’ve got this big tax bill due.
[0:38:33.9] SR: Exactly, it’s a push-and-pull kind of thing.
[0:38:35.6] TU: Yeah.
[0:38:35.9] SR: So, being able to – at any extent that you’re able to nail that down as close as you can, like you’re saying, it’s better that way, right? You don’t want to loan the government any more money than you have to but you also don’t want to end up owing a ton of money that you may or may not have or on top of that, have any penalties where I think is associated with it too, so yeah.
[0:38:52.8] TU: Number six on our checklist, Sean, relate to the S-Corp status, I would pursue maybe outside of, “Hey Sean, can I deduct this expense?” maybe the second most common question or pretty close to the top is, “Should I be a S-Corp?” It’s one of those things that people just throw out there of, “Hey, there’s tax benefits of being an S-Corp status.” Tell us more about what that means and when people may be asking or should be asking that question.
[0:39:14.8] SR: Yeah, and I mean again, the theme of the whole thing is that you’re kind of looking at these things and at least at one point in the year, hopefully around now, but actually more ongoing, but at least at one point in the year saying, “What is my tax classification now and is that what it’s going to be next year or does that make the most sense next year?” So, before I even do S-Corp I’ll give the three like I had mentioned earlier in the call.
The three most common ones that I would think of small businesses as a sole proprietorship, one person that’s what you see on your schedule, see they call it, and if you – and the biggest thing with this is that for all of these different classifications, LLCs can be any one of these. That’s the thing, if people will say, “Oh, I’m an LLC” any one of these, an LLC is a legal entity distinction versus these are tax classifications.
You can be an LLC and classify in any one of these, as long as you fit the right requirements. So, that’s one thing to keep in mind. Again, people hear that, they think it means something different or, “Hey, my taxes are going to be different.” It doesn’t necessarily mean the case. So, sole proprietorships are the most common. If you file an LLC for a single person, that’s the default.
The biggest thing there is that, that is subject to self-employment tax, and then again, that does not have – there’s no withholding. So, you’d want to make sure that you’re keeping track of any estimated payments and stuff. Partnerships is the default for an LLC with two plus people. So, if you and your friend or you and your sibling or something go start a business and you start an LLC, the default for that one is a partnership and that actually is a different tax return and everything.
So that’s where again, it begins to become a little bit more than just, “Hey, I’m starting this little business.” Your share of ownership income from a partnership is subject to self-employment taxes. So, when you get your K1 at the end of the year from your partnership, that is subject to self-employment tax, which basically is just the employer portion of FICA that you don’t have because you don’t have an employer, it’s you.
S-Corps is the more kind of exciting piece. So that is, you can have any number of owners but that is where you’re actually incorporating your business and you’re basically – it’s being taxed like a corporation now. And the biggest thing with that is that you don’t have the self-employment tax portion for what you get on your K1. So, if you were in a partnership today and you and your partners each got a K1 and reported that income, there’s self-employment tax on it.
And then you become an S-Corp tomorrow, effectively that same stuff that’s on that K1, that same income is not subject to self-employment tax. Now, you’re probably thinking to yourself, “Wow, that sounds too good to be true.” It’s not that it is, it’s just that there are catches associated with it and the biggest catch is that when you make that jump to S-Corp, you have to be able to pay yourself as an owner a reasonable W2 salary with the FICA withholdings and everything, AKA, self-employment tax on top of any profit distributions that you’re going to be making, and that right there is the deciding point.
Well, what people will probably say is, “Okay, well, what’s a reasonable salary and when can I make that?” and there comes my cop-out accountant answer of, “It depends” and it really does depend because you can think about a million different things. “All right, hey, I am starting a small business and I am going to be the CEO and I’m a pharmacist who is going to be providing advisory on pharmacy things.”
Okay, is your salary a CEO salary? Because I’m sure if I Google CEO salary, the average is probably 10 million dollars or something. Is it pharmacist’s salary? Is that, I mean, are you doing mostly pharmacy-related things? Well, you’re probably will also going to be doing some bookkeeping and administrative stuff too, right? So, is it kind of an admin salary? Figuring out what that is, there really is no science to it.
It is more of an art than a science. You have to be able to say, “Hey, this is a job that I’m doing, you know, these are comparable salaries of people that are making” and you have to be able to pay yourself, “Hey, this is what I feel and I truly believe isn’t a reasonable wage per my industry per the work that I’m doing and everything”, and you need to be able to do that again before you make that jump to S-Corp.
And in order, once again, to determine if you can do that, you need to be able to say, “Hey, where am I in the books? Where do I expect my profit to be this year? Do I think I’m going to have a ton of profit on my K1 or I’m going to have a lot of self-employment tax? I don’t want to pay that self-employment tax, so now can I switch to S-Corp?” Well, let’s see. Do I have enough room in my profits from last year to cut myself a salary that the IRS will think is reasonable compared to other entrepreneurs that are doing the same sort of thing?
I don’t know. I mean, I really would have to look at your finances and we’d have to talk about a lot of things. It’s a very, very long conversation but it’s a very important one because it can save you a lot of money in taxes. But it all kind of comes down to – my questions back to you will be, “What’s your expected profit and loss look? What have you been taking as distributions so far?”
And if you can’t answer those questions, then we can’t even have this conversation. So it’s a lot of it depends but it all once again comes back to being able to have the numbers to even start to have that conversation to begin with. So, if anybody is still awake, I hope that kind of explains that.
[0:44:27.8] TU: It’s good.
[0:44:28.1] SR: I’m sure that put quite a few folks to sleep.
[0:44:30.6] TU: No, it was good because this comes up so much, right? We’ve talked about this internally a lot of what’s the right amount of paying ourselves and how do we determine that and it’s so subjective, right? And number seven on our list was going to be payroll and paying yourself enough. So, you did a nice job of covering on both of those in one.
[0:44:45.2] SR: Yep, exactly.
[0:44:46.0] TU: And you know, just for some insights and how we have handled this, not to say this is advice in any way, shape, or form, and I would reference people. There’s a book called, Simple Numbers, Straight Talk, Big Profits! that is written by Greg Crabtree that I think does a nice job of addressing this issue.
[0:45:01.6] SR: Yes.
[0:45:02.1] TU: Not just from a, “Hey, the IRS is going to be concerned” if you’re kind of applying like a stockless salary, but also I think what’s important about this is, are you thinking about your salary in the context of what the business is and potentially is worth? So, what I mean by that is let’s say Tim Baker and I decided that at some point we want to wake up and sell our business.
Well, if somebody buys it, they may not want to operate it necessarily. Maybe they do but if they don’t, they’re going to be asking themselves, “Hey, what does it cost to replace Tim or what does it cost to replace Tim?” And so if that answer is X and we’re paying ourselves a lot less than that – because then you could argue, are we really giving ourselves a true look at the profitability, the actual profitability of the business?
And I think paying yourself an equitable salary is not only is the right thing to do by the eyes of the IRS but it also really helps you think about where is the business going and growing. Now, there is a balance there, right? If you don’t have to pay yourself USD 200,000, you can save on taxes and argue you’re paying yourself a reasonable salary, then obviously you want to do that.
So, good resource and reference I think about with that book I mentioned. Sean, number eight on our list, which is our last item on the small business owner checklist, is seeing about some of the big purchases. We talked about deductible expenses but specifically want to dig a little bit deeper around Section 179 deductible expenses. Tell us more there.
[0:46:26.1] SR: Yeah, that’s so – that’s really when you think about deductible expenses, the IRS basically says, “Hey, nothing is deductible unless we tell you that it is pretty much.” And when they start to incentivize larger purchases it’s because that’s what they want people to invest in. So, Section 179 is effectively the government’s way of saying, “Hey, typically you have these big things like vehicles and other equipment type purchases that you’d have to pay for upfront now but then only be able to take a little bit into depreciation every year.”
“That’s not fair to small businesses, we want to encourage folks to put money to the business. So, we’re going to let you if you buy things that fit these bills, take that money on the first year.” Which is awesome to be able to do, especially if you have to make these purchases and it makes sense for your business. But the biggest thing by far that I would say and once again, it rolls back into everything is you really want to make sure like, “Hey, do I have to make these purchases at some point now or in the near future or am I just doing this so I can get a deduction this year?”
Because yeah, it’s great to get a tax deduction but that’s really only a percentage. It’s not a credit, it’s not a dollar-for-dollar savings, it’s really only a percentage of a savings. So, if it’s something that you have to spend, “Hey, I’m going to have to buy a car next year anyway and I have all this profit this year and I can take that depreciation and offset those profits,” cool, but you need to be able to figure that out and if you don’t have good numbers, you can’t do it.
[0:47:43.5] TU: Yeah.
[0:47:43.5] SR: And if you look at your numbers and saying, “Hey, I’m going to break even right now and I don’t need a car,” then you probably shouldn’t be going out there and trying to take advantage of the Section 179 file.
[0:47:51.0] TU: Yeah, great stuff. We’ve covered a lot, Sean, on this and we’re going to come back to these topics in the future on the show but we want to have this one episode that we could point back to and say, “Hey, small business owner” again, whether you’ve been established and you want to go back and look at some of these things or you’re just getting started wanting to build a strong foundation, we wanted this episode to be that resource.
So, looking forward to building upon this in the future as well. If folks want to learn more about the tax and accounting services that we offer, that Sean and his team offer at YFP Tax, you can go to yfptax.com. We’ll link to that in the show notes as well. You can book a free discovery call to learn more about those services, we’ll learn more about you to determine whether or not there’s a good fit there.
For business owners, we offer everything from business tax filing, bookkeeping, all the way up to fractional CFO services, payroll, so depending on where you’re at in the journey, it might be, “Hey, we need all of that” or “We just need a portion of that” and we could grow together over time. So, Sean, thanks so much again for your time.
[0:48:47.3] SR: Thank you, Tim, have a good one.
[END OF INTERVIEW]
[0:48:48.9] TU: Before we wrap up today’s show, I want to again thank this week’s sponsor of the Your Financial Pharmacists Podcast, First Horizon. We’re glad to have found a solution for pharmacists that are unable to save 20% for a down payment on a home. A lot of pharmacists on the YFP community have taken advantage of First Horizon’s Pharmacist Home Loan, which requires a 3% down payment for a single-family home or townhome for first-time home buyers, has no PMI on a 30-year fixed rate mortgage.
To learn more about the requirements for First Horizon’s Pharmacist Home Loan and to get started with the preapproval process, you can visit yourfinancialpharmacist.com/home-loan. Again, that’s yourfinancialpharmacist.com/home-loan.
[DISCLAIMER]
[0:49:33.4] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information on the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.
Furthermore, the information contained in our archived newsletters, blog posts, and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of Your Financial Pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.
Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.
[END]
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| | | | YFP Gives accepts advertising compensation from companies that appear on this site, which impacts the location and order in which brands (and/or their products) are presented, and also impacts the score that is assigned to it. Company lists on this page DO NOT imply endorsement. We do not feature all providers on the market. |
| Loans ≥150K = $750* ≥50K-150k = $300 |
Fixed: 4.89%+ APR (with autopay) | A marketplace that compares multiple lenders that are credit unions and local banks | |
| | Variable: 4.99%+ (with autopay)* Fixed: 4.96%+ (with autopay)** Read rates and terms at SplashFinancial.com | Splash is a marketplace with loans available from an exclusive network of credit unions and banks as well as U-Fi, Laurenl Road, and PenFed | |
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