How to Save $430,000 as a Franchisee | By: John Mollica, CPA, CISA
When starting a franchise, every decision you make is critical. Why? Because every decision you make will ripple through your entire franchise term, which is typically ten years.
One very important topic I want to discuss today is that of taxes. When you first start your franchise, you’re charged with a flurry of tasks like managing your loan process, and deciding where to open shop. But a little attended to topic by new businesses is the tax topic.
What if I told you that decisions you make today could add $430,000 into your pocket over your 10 year franchise term?
Would you want to know the right decisions to make? Of course you would.
Any good business person would want to take advantage of these opportunity. I am going to tell you here exactly what you need to do to add $430,000 into your pocket directly. That’s not sales, that’s dollars after all expenses and after taxes.
The only way to ensure you save this money is to have a tax plan.
What’s a tax plan?
A tax plan is a plan that details certain actions you will take during the year to:
- Reduce your tax liability; and
- Increase your non-taxable cash flows
Implementing a tax plan can result in huge gains, as you saw above.
So how do you get a tax plan together?
The key is to identify all the strategies available to you that can reduce you tax liability. The issue here is there are 60,000+ pages of IRS tax code that describe all your options to save money on taxes.
Successful businesses go to an expert CPA in their industry to obtain a tax plan. For example, if you can find a professional tax planner in the franchise industry, they can help you with targeted strategies that can reduce your tax liability and increase your non-taxable cash flow.
This is exactly what we do. This is ALL we do. We help franchisees save tens of thousands of dollars on their annual tax bill. In fact, the $430,000 example we gave is an actual client of ours who will enjoy these savings over the 10-year term of his franchise. The plan consists of just four strategies and the savings are this high.
We have over 100 strategies in our inventory that are geared toward franchisees. With these strategies, we can save you tens of thousands of dollars annually on your tax bill.
The opportunity to save money changes every year, so your tax plan needs to be updated annually. For example, if your marital status or real estate investment situation changes, new opportunities may arise to save money. Also, depending on the franchise you own, there are advanced niche strategies available to you. For example, there are strategies that only work for construction-type businesses and others that exist only for service-based businesses.
If you do not obtain a tax plan for your franchise, you are leaving literally hundreds of thousands of dollars on the table.
What could you do with $430,000 over ten years?
- Buy a new house
- Take many vacations
- Pay for a few of your children’s college educations
- Fund the wedding and honeymoon of a lifetime
- Open up a second unit of your franchise
- Invest the funds to grow them even more
How to Qualify for a Tax Plan
There are a few requirements to qualify for a Tax Plan. These include:
- Have actual or estimate current-year taxable income of at least $15,000;
- Have clean, accurate and up-to-date accounting records (We can help you with this. If your records are not up to date, e-mail us immediately.)
- Be a fan of money…seriously
If you are just starting out and you don’t yet know what your income will be in year one, that’s ok too. We help startups to estimate their year-one income with them. And if you’re starting a franchise, this is information that is typically provided to you.