2021 Accounting and Tax Guide for Online Coaches and Independent Trainers
By Asnani CPA
What is the Point of Accounting and TaxPlanning?
Avoiding bad surprises with your tax bill
Understanding how your business is performing financially
Using historical concrete data to make decisions for the future
Accounting is BUSINESS DEFENSE
TL;DR – How do I save on taxes as an online coach and independent trainer?
Set your business up to be taxed as an S-Corporation
HUGE reduction in self-employment taxes
Ensure you are taking EVERY legitimate business deductionavailable
Need to have a solid bookkeeping system in place
Contribute to a self employed retirement account (IRA or 401k)
This should coincide with your financial and wealth managementplanning
What are the main tax considerations from 2020?
Biden’s potential tax policies
Tax Changes Under Biden
Increased tax rates for those reporting more than $400,000 in income, and for corporations
37% tax bracket going back to 39.6%
Corporate tax rate likely to go from 21% to 28
Section 199A Deduction phasing out for those reporting over $400,000 inincome
Increased social security taxes for those reporting over $400,000 in income
Advocating for taxing long term capital gains at ordinary income tax rates for those making over $1m
Advocating for a repeal in step-up basis on inherited property
It is unclear if this repeal would cause assets to be taxed at death, or if thebeneficiary receives a carryover basis
A potential “ABC” test for workers classification (similar to California’s AB5)
Economic Injury Disaster Loan (EIDL)
The amount received as an advance is considered a grant and does not have to be paid back
Loan issued to businesses to cover loss of revenue during Covid-19 .Max payback period is 30 years at an interest rate of 3.75%
Paycheck Protection Program (PPP)
Forgivable loan to cover payroll costs, rent and mortgage, and utilities
60% of funds must be used for payroll
Expenses that were covered under PPP will not be counted as abusiness deduction for taxes (assuming these expenses are forgiven)
Apply for forgiveness once your institution has sent you instructions onhow to do so
What we learned from SBA Loans
It pays to have your business, set up like a business
It was likely much easier to receive something like a PPP loanif you were already set up as an S-Corporation and wererunning payroll for yourself as an employee
Having a business bank account and EIN was a necessity if you wanted to receive this support
Can I set my business up in a different state to lower my taxes?
Can I move to a different state to lower my taxes?
Can I deduct my rent under my business?
Can I deduct my miles traveled or my car?
Recap: 2021 Checklist
Do you have a system in place to manage your bookkeeping?
If you run payroll, do you have a system set up to handle payroll compliance?
Is your business being taxed efficiently?
Are you paying your taxes pro-actively through your payroll and estimated payments, or reactively by paying whenever your tax return is filed?