Cosmos: 

Welcome back to the show, my fellow extraordinary Americans. For today’s guest, we have Mike Jesoshek. Mike is the founder of Tax Elm, host of the Small Business Tax Savings podcast, and author of the Small Business Tax Savings Handbook. He’s helped thousands of entrepreneurs legally reduce their tax bills through clear, actionable strategies and is on a mission to make tax savings simple, accessible, and stress-free. Mike is a true expert in making tax savings simple for small business owners. 

As an entrepreneur, speaker, author, and podcast host, he’s all about breaking down the complex world of taxes into easy-to-understand strategies. Having educated thousands of entrepreneurs nationwide, Mike’s expertise makes navigating tax savings accessible, empowering business owners to take critical steps towards business growth and enhance wealth. He’s an extraordinary American, and I’m glad to have him on the show. Mike, thank you so much for taking the time to be here.

Mike Jesoshek: 

Yeah, thanks for having me. Super excited.

Cosmos: 

Mike, so can you tell me, the audience, a little bit more about yourself, your background, and how you got started?

Mike Jesoshek: 

Yeah, absolutely. So, have a unique background, have been an entrepreneur since the age of 14, and really started my career and businesses in the online marketing space. Ended up going to school for accounting. In that, going to school for accounting was really just kind of like my backup plan to say, you know, as a typical entrepreneur, my fear was like, everything’s going to fall apart one day, and then what, what am I going to do? 

And so I went to school to be an accountant—backup plan. Eventually, great, went through school, graduated, became a CPA, and was a partner in this online marketing firm. And there were seven of us as partners, and we were all trying to pull one firm in multiple, multiple different directions. 

And so back in 2013, I decided to break off from that and start a cloud-based accounting firm. So now it’s very common for you to know cloud-based accounting firms. But back in 2013, it wasn’t as common to have a cloud-based accounting firm. And so built a cloud-based accounting firm and didn’t do tax right away. We’d refer to our tax. And what I realized is that so many business owners were not getting the tax planning advice that they needed. You know, they were getting hit with these massive bills. They’d come to me and ask for help. I’d say, well, go, let me talk to your tax accountant. And even I couldn’t really get much from their tax accountant. 

And so it led me to say, okay, if I can’t find somebody who can do this for them, I’m going to have to start doing it myself. And so I started learning and really fell in love with this idea of tax planning. 

And so that’s really where my journey took off, and I started a podcast about eight years ago focusing on small-business tax strategies. And really, what my goal is to say is, okay, when we look at a tax strategy, how do we make this as easy to understand and easy to implement? 

Because there are so many opportunities out there for business owners to save on taxes the right way, the legal way, and it’s just how do we get that in their hands and make it EAS for them to understand? I fell in love with this idea of tax planning, started a podcast that took off, eventually sold the majority stake in my firm back in 2021, went full-time on podcasting, started a software to help business owners through this process of understanding tax strategies and then implementing them, and then recently launched a book this year. 

So my journey now is, what do we do? We provide a lot of free content about tax strategies. What you need to know: how do you implement it? We have software that helps small business owners understand which strategy-specific options are available to them and how to implement them. In just trying to get the idea across, I hope that, through our content and resources, every business owner can pay the least legally possible tax.

Cosmos: 

This is amazing, Mike.

So one of the questions I have, though, is: what are some mistakes small business owners make when it comes to saving money on taxes?

Mike Jesoshek: 

Like the cost? Yeah, you know, there are a lot of different things. One is just not even looking for or learning the opportunity. So many people think that one tax strategy is only for the rich. 

So like, you’ve got to be making millions of dollars to do any type of tax planning. So that’s one thing people think. The second piece is that people think it’s really hard to do because when they ask their accountant for help, they get all these like, ” Hey, I want to hire my kids in my business. How do I do that? And their account says, “Well, I need to know this; I need to know that.” And the business owner is like, ” Okay, sounds like a lot of work. I’m just going to walk the other way because I don’t think the benefit is there for me. 

So they think that the tax strategy is too tough. And then the third mistake, and this is the one that can be really detrimental, is that business owners will just learn from their friends. So their friend will say, “Oh yeah, I hire my kids in my business.” I pay them $10,000 a year. 

And so this business owner says, ” Okay, I’m just going to write a check to my kid for $10,000 a year because that’s what they think they need. What that friend didn’t tell them is that they were doing all these things correctly. They were actually doing work in their business, paying a reasonable wage, and doing all these different things. 

But that didn’t get relayed to the person who just heard it from a friend of a friend about hiring your kids for your business. And so, they take advice but don’t really fully and correctly implement these strategies, which, if the IRS comes knocking, could obviously cause a problem. So those are kind of the three areas I think most small business owners stumble into. And really, it is the reason so many business owners are paying way more tax than they need to.

Cosmos: 

I mean, like, we’ve heard about deductions and everything. But some accountants just help save more taxes than others. What do you think the great accountants do that the other accountants would not do?

Mike Jesoshek: 

Yeah, I think the thing is, when we talk about tax strategy, I break it into kind of two pieces. We have what I call core tax strategies. These strategies are available to anyone, regardless of size or location. As a business owner, you have access to these strategies. And then I have what I call advanced tax strategies. Advanced tax strategies start to open the door when we see business owners with household incomes of $300,000 or more. 

And so my concept is, let’s always touch on the core tax strategies first. These are things like whether to use an S corp for your business, but making sure you have entity optimization set up. You know, whether we’re taking advantage of home, office, auto, travel expenses, whether we’re looking at hiring your kids and setting up a board for your business, and funding your retirement account. Those are the core tax strategies I call. If you’re making $10,000 a year, you can do those strategies. If you’re making $10 million a year, you also can do and should be doing those strategies. It’s just understanding what strategies are available to you and how to implement them. 

And so I think when to go back to your question on what some accountants, what do the good accountants do? Right. And what are the accountants that aren’t as good or not as good as planned at planning? Because that’s the other thing. Some accounts plan; some accountants don’t. But let’s say it’s an accountant who’s not as good at planning. What is the main difference there? 

And I think it’s really understanding what that client needs, what that business owner needs? What strategy is relevant to you? You know, if you don’t have kids, why am I going to talk to you about hiring kids for your business? That doesn’t make sense. Right. 

And so it’s about understanding what strategies are available to that person, then helping them through the implementation process and correctly implementing those strategies so you’re bulletproof. From an IRS call, the IRS comes knocking. Here are a couple of files. They go walking away because we provided them with everything they need to do, and we’re doing it the right way. 

And so I think sometimes, in this implementation process, accountants are so busy they’re always. They’re doing all these tax returns, doing all this tax prep. They don’t have time to sit down and walk someone through this implementation process. It’s not hard. It’s just some steps that need to be done to do it right. 

And so I think the biggest indicator is that an accountant might say, “Yes, go hire your kids,” and then they stop there. And so, yes, that is a good tax strategy, but a business owner can’t do anything with that. You know, if I tell you, go hire your kids, you say, okay, I’ll hire my kid. How do I do that? What do I need to do correctly? What documents do I need to put in place? You don’t know where to go. 

And so that’s where a lot of that stops: an accountant might give great advice, but there’s not enough guidance, and there’s not enough Runway for them to take that advice and actually put it into practice.

Cosmos: 

No, Mike. Yeah, the reason I’m asking is that, like, a lot of the time, the people complain about the wealthy saving so much money, like, they barely pay any taxes, and stuff like that. 

But in reality, like this, it’s just a good strategy for saving and all that. So, for the sake of the audience, Mike, what do you think the wealthy know about? About tax saving strategies that the middle class or people with low incomes would not know?

Mike Jesoshek:

 I think it’s understanding what a tax strategy is, because I get business owners that haven’t done any type of strategy before, they just pay their taxes, they get eaten alive by taxes, but they just pay their taxes and move on. 

And then we start introducing the strategy to them, and they feel like they’re cheating the government. Right? Because last year I sent the government $100,000 in taxes, this year I am sending them 30. I feel like I’m kind of cheating the government. And that’s the mindset that they have. And I tried to flip the switch on that, saying we’re not cheating the government. The things you’re doing in a tax strategy are the things the government wants you to use; it put them in place. It is in law for a reason. And oftentimes it’s an incentive. So if we look at the different incentives that the government wants. The government wants more people to be business owners. Why? Because they hire employees, they boost the economy. The government loves small businesses. 

So, what they do to encourage people to become business owners is they offer incentives. They offer them tax breaks. They offer them the home office deduction. Because if you’re a W2 employee, you don’t get a home office deduction. You’re a business owner working from home. You do. Why? Because the government wants to incentivize people to do different things. If we look at solar, it’s kind of going away with the one big beautiful bill, but we look at solar: for example, there were a lot of tax credits out there for solar-related projects. 

Why? Because the government wanted more investment in solar. The government likes oil and gas. So there are tax advantages to investing in oil and gas. Why? Because the government wants people to invest in that. If you’re a landlord or you’re building properties, including affordable housing, the government incentivizes you with tax breaks to be a rental property owner. Because the government, we don’t want the government doing these things. We don’t want the government to build affordable housing for our country. 

And the government doesn’t want to do that either. But they still need affordable housing in this country. Right. And so how do they do it? They provide tax breaks. So when we look at tax strategy, this isn’t cheating the government. If you’re cheating the government, you’re doing tax strategy wrong. And that’s tax fraud. That’s not what tax strategy is. Tax strategy is understanding what incentives are available to me as a business owner or real estate investor, whatever my role, and how I can take Advantage of them as much as possible.

Cosmos: 

No, for sure, Mike. The fact that small business owners can save taxes, which actually boosts the economy, because they can hire more employees. But a lot of people, like, they don’t understand that.  They say, ” Oh, you’ve got to pay your taxes. But no, if you pay less in taxes, you can employ more people. 

But Mike, during all of your years doing tax strategy and tax planning, what was the best tax strategy you think is being employed by the wealthy?

Mike Jesoshek: 

Yeah, that’s a good question. You know, I think that when I talk about tax strategy, it’s, it’s first off a mindset. And this is the mindset that leads to multiple different strategies. But it’s this concept of after-tax versus pre-tax spending. 

And so the best way to describe this is, let’s say you’re a W2 employee, you’re not a business owner, you’re a W2 employee. You get gross wages from your employer; the employer takes out all these taxes, and then you get your take-home pay. And that take-home pay is what you use to spend money to buy your house, to buy your kids, and things to do. All these different things you use take up a large portion of your take-home pay. Now, take-home pay is considered after tax money. It’s money that’s already been taxed. Right. 

Because your government taxes your gross wages, and it’s what’s left over after the taxes. As a business owner, we have sales or revenue, and then we have all these expenses that go into it. We then get to the bottom line, which is our profit, and we are taxed on that profit. So any spending we do inside our business is considered pre-tax spending. It’s spending that’s done before it’s taxed. 

And so a lot of the concepts we talk about when we talk about tax strategy are: how do we move spending from an after-tax bucket into a pre-tax bucket? How do we take spending that we’re going to do anyway, but move from after-tax spending to pre-tax spending? An example of that is a home office deduction. W2 employee. All of those expenses are after-tax expenses. Business owner, some of your rent, your mortgage, interest, whatever it might be, your utilities portion of that is going to be pre-tax expenses if you’re utilizing that strategy correctly. If we look at hiring your kids in your business, that basketball camp, those amusement parks are going to be with friends, all those things that we do to support our kids, typically using after-tax dollars for that. But what if we can find something our kids can do in our business and pay them for it? We can get a business deduction, and they potentially pay no income taxes on it. They pay for that amusement park, they pay for that basketball camp. Well, now we just moved after tax spending into pre-tax spending. So that is a concept that leads to so many different strategies. I think it’s just a mindset shift that business owners need first: understanding that they have the potential to do that. 

When I say “let’s maximize deductions,” I’m not saying go buy a truck before the end of the year that you don’t need, or buy a piece of equipment you really don’t need. That’s not tax planning. That’s just getting a discount on something that you don’t need. Tax planning is about saying, “How do I take money I’m going to spend anyway, but instead of paying taxes on it, how do I turn it into pre-tax dollars?”

Cosmos: 

When people are starting businesses, a lot of times they decide what entity structure they want to do, you know, like an LLC or an S Corp. So from your perspective, what is the best entity structure for tax savings, and why?

Mike Jesoshek: 

Yeah, so the first thing I always say is once you’re starting a business, get an entity set up. And typically, I’d say, let’s do an LLC; obviously, talk to an attorney and find out what the best fit is. But even if you are just getting started, set up an entity structure. Not only can an attorney talk to you about this, but if you get the Liability Protection 2, you now have an entity structure that you could potentially use for tax advantages down the road. Now, let’s say I’m starting a business and I just started as a sole proprietorship, no llc, no nothing. So I missed the legal part of it, you know, the protection piece. But now, if I want to go down the road to an S corporation, I can’t take that sole proprietorship and turn it into an S corporation. But if I have an LLC now, when my business reaches a size that makes sense, I can have that LLC taxed as an S corporation. 

So the first thing I always say is once you are operating a business, and this isn’t just like an idea, like, oh, I think I want to do something, this is where we actually have a business that we’re starting, get an Entity structure set up. Oftentimes, most small businesses I work with are set up as an LLC. Then, once they start operating and see a profit of, say, roughly $60,000 or more, that’s when we’ll start exploring an S corporation. An S corporation is simply a tax election. It’s not an entity structure type or anything like that. It’s simply an attack on the election. And the reason we would set up an S corporation is that if we’re set up as an LLC, a single-member LLC, or a sole proprietorship, we pay self-employment taxes on 100% of our income. 

So we pay our normal income tax rate, plus self-employment taxes of 15% on that income. So if we make $80,000 a year, we’re paying our regular income tax rate, whatever it might be, plus 15% on that $80,000 in self-employment taxes. But if we take that same entity and elect to be taxed as an S corporation, we’re operating as an S corporation, and we need to pay ourselves a reasonable salary or a reasonable payroll W-2 as the owners of the company. That’s one of the requirements of an S corporation. We need to pay ourselves W2 payroll. So now that we’re an S corporation, we need to pay ourselves W2 payroll. But you don’t have to do it for the full amount; we just have to pay whatever is reasonable. 

So whatever makes sense for the type of work you’re doing and the number of hours you’re putting in. We pay ourselves a reasonable wage. And so let’s say our profit was $80,000 before, and let’s just say a reasonable salary is $40,000. We’re still going to pay self-employment taxes on that $40,000. Now, it’s not technically called self-employment tax; it’s called FIC. But the same 15% amount we’re paying on that reasonable salary we received from our S corporation. But we’re going to avoid self-employment taxes and anything beyond our reasonable salary. So again, let’s say we took $80,000 in profit. 

Typically, in a sole proprietorship or single-member LLC, we pay self-employment tax on 100% of the $80,000, as with an S corporation. And let’s say we say a reasonable salary is $40,000. That means we’re going to take a $40,000 reasonable salary and have $40,000 in distributions, not salary. We just cut our self-employment tax bill in half. And so, if you’re looking at that from a cost perspective, you’re looking at $ 5,000 to $6,000 in tax savings just from that simple move. And so, typically, we say S Corp starts to make sense. 

We want to start exploring it. Once we hit a profit of around 50, $60,000 or more, that’s when we start to explore it. The reason is that within an S Corporation, we now have to run W2 payroll for ourselves. There are some costs associated with that, and filing it’s a bit complex. And so there will be additional tax preparation costs when filing because it’s an S corporation rather than a single-member LLC. And so those costs will eat into the tax savings a little bit. And that’s always $ 50,000 or $60,000. You’re well above that mark. You’re well into the way tax savings will far outweigh the additional few costs you have.

Cosmos: 

With the NAS Corp., wow, this is interesting stuff, Mike.

And as a continuation of this, right, so let’s say somebody in the audience, they just start, they just want to start a business, right? They’ve been doing a job, want our own business, and are doing five-year planning. So, how would you advise such a person on structuring their business and on a tax-saving strategy?

Mike Jesoshek: 

Yeah, first thing I would say is, at the beginning, once you have an actual business, and in my book, the Small Business Tax Savings Handbook, I can kind of give an example of somebody that says I want to build this, the greatest golf tool that ever existed. And that’s what, that’s m my business. I want to build the greatest golf tool that ever existed. Look, there’s not really a business there. We don’t have a prototype. We don’t even know what that tool will do. We just have a general idea of what we want to do in business. 

Yeah, we don’t need to worry about anything yet. But let’s flip the switch and say we have an engineer who says, ” Hey, I got a golf ball that will float, can’t be broken, can do everything perfectly, has GPS in. If I hit the woods, I can find it, and I have a prototype. 

Well, that person is much further along on the journey to becoming a business owner and actually having a business. So I say open up an llc. Once you’re in that stage, where you’re actually looking to start a business, and it’s not just some idea, do your business as a sole proprietor. But once you start generating, once you actually have a real business, start that LLC and keep it as an LLC. LLC versus sole prop will be taxed the same way; there are no tax benefits. But what the LLC does is when you get to a point in your business where you start to hit that profit mark, 50, 60,000 hours or more. 

Now, with an LLC, you can elect S corporation status. You can’t do that with a sole proprietorship. So that’s the power we kind of use. That LC is what I call an insurance policy. Something that we can, when we’re m. When we’re ready in our business, when we hit those income numbers, we can lean back on it and do that S corp election. So that’s kind of the timeframe for entity structure. Now, if you’re in multiple businesses, so let’s say you are a partner in three different businesses, and you’re kind of assisting in those, we’re going to have a different entity structure look like for that. Or let’s say you’re in a partnership with three different partners, all in one business. We’re going to have a slightly different entity structure: typically, we’re not going to say, “let’s not do an S corporation at the partnership level; let’s do an S corporation at the individual level.” 

So each owner in that partnership would have their own S corporation. And there are different planning opportunities, techniques, and reasons behind that. But that’s going to be the only thing that changes that. So if you’re just a solo person, LLC, eventually looking to an S corp, more than likely in this instance, where it doesn’t make sense if you’re in a partnership or you’re in multiple businesses. We’re going to take a step back and make sure we want to do that entity optimization a little more, fine-tuning it so the structure flows correctly. It’s from a tax-savings standpoint that it’s just starting to educate yourself. You don’t have to be a tax expert. You don’t have to know everything about tax, but you need to know what’s available to you out there and when it starts to try to pull those levers, saying, “Oh, oh, this opens up a door for a tax strategy.” Oh, this opens the door to a tax strategy. Start educating yourself on the strategies available to you so you can see and understand them, and develop a mindset that says, “Hey, I’m a business owner, but I can also save on taxes, too.”

And that’s the power behind being a business owner. That’s one of the incentives the IRS gives us as business owners: the ability to take advantage of tax strategies that aren’t available to W-2 earners. And so education, I think, is the first step. But don’t, don’t beat yourself up over it. You don’t have to be a tax expert. Just start to learn what’s available to you out there slowly.

Cosmos: 

This is amazing stuff, Mike. And I’m so appreciative that you’re talking and educating people about taxes, and I wanted to get your thoughts on this. Right. 

You have Florida and Texas, where they have, like, no state income tax and no city taxes. And then you have California and New York, where you have state and city taxes. So, on a personal level, like, what do you feel about, like, the state taxes, like, the contrast between the two different types of states?

Mike Jesoshek: 

Yeah, you know, I get that question a lot. I get questions from people like, “Hey, you know, should.” Can I just move to Florida? And then that takes care of that problem. And, you know, there are a lot of questions behind that. And it really comes down to, you know, every state’s got its own different things. 

And so the part that you don’t hear too much about is, does Florida have a higher sales tax? Does Florida have potentially a higher property tax? And so we like to look at the total tax picture to get a better sense of what that means. 

Now, Florida will win every single day over New York State. Right. That’s, that’s, that’s a given that taxes, whether you look at the bucket or not, it’s always going to win. But when you start to look at some of those other taxes, just saying Florida’s got no income tax doesn’t necessarily mean that your tax is going to be zero. There’s likely to be maybe an increase in sales tax that you weren’t used to, or an increase in property tax that you weren’t used to. I think Texas, I don’t know if ham. I think Texas is sometimes known for slightly higher property taxes. So that’s something that, you know, if you had a low property tax state with a high income tax rate. You move to Texas, and you’re like, oh, okay, no taxes. 

But our property taxes definitely went up. So that’s one thing to consider. But I would never generally advise someone to move to a different state to save on state income tax. The first thing I’d say is: can your business operate the same, or similarly, in that different state? If yes, okay, that checks the box to say maybe let’s, let’s move there. The second piece is, is that a move you want to do? You know, Puerto Rico is well known for its tax benefits, with much lower tax rates. But one of the requirements is that you have to live in Puerto Rico. And it sounds great. People love it; they visit it; they say, “Puerto Rico’s great.” We’re living on a beach, and everything’s awesome. 

And then they move there for the tax benefits. And they get there, and this is another case for everybody. But I have seen clients go through this process, and they’re like, man, I just miss the homeland. I miss my family. I miss, you know, all these different opportunities. And I feel we’re kind of stuck here because we can’t get out. We have to spend so much time here for the tax benefits. 

And so I always say, ” Is that something you want as well? You know, don’t do something just for the tax benefits. Don’t let the tax tail wheel wake the dog or whatever, whatever the quote is, you know, don’t do something just for tax purposes. Make sure it makes sense in your family picture. Now, a different case. You know, I’m in Wisconsin. We have generally higher tax rates, and, unlike New York or California, income taxes are relatively high here in Wisconsin. And let’s just say that I wanted warmer weather, I wanted to enjoy the beaches, I wanted to get down there, and it made sense for my business. It made sense from a tax standpoint. It made sense for my family. 

Okay, that Florida might be a really good opportunity, or that Arizona might be a really good opportunity. So it’s taking all the factors in, which is what I always say when it comes to that. But also check the total tax rate, because don’t overlook some of those taxes that maybe aren’t headliners, like property taxes, sales taxes, maybe a franchise tax, or something like that. Don’t forget to look into those two to factor that in and how that’s going to play into your tax planning piece of that move.

Cosmos: 

You mentioned Puerto Rico and beaches, and a lot of people from California, like, they love the weather and the beaches, but they come to Austin, Texas, or like, to escape the taxes. And many ex-Californians are moving to Texas. 

One of the reasons I was asking this question is that a lot of people move for, like, not paying state income tax.

Mike Jesoshek: Yeah. And, I’m not saying that that’s a bad, bad choice. Like if I were in New York or something like that, I probably wouldn’t, you know, definitely consider it deeper. But I don’t want to say that or encourage a client or a business owner to move specifically for tax purposes. Like taxes are one thing. If you live in Southern California, guess what, the weather’s perfect, and you got great views, and life is good, but that comes with a cost, and there are taxes involved with that. 

And so if you’re okay with lower taxes but lose the great weather and views, that’s fine. That’s a trade-off that you need to understand. So it’s just kind of weighing your options and making sure you’re making a full, complete decision, not just a tax decision.

Cosmos: 

No, for sure.

Mike. And Mike, during your time in this space, right, what are the greatest lessons you learned regarding just like entrepreneurship, business tax, and just like everything else?

Mike Jesoshek: 

Yeah, you know, it’s been a journey because you know, I’ve been on my own entrepreneur journey, going from, you know, startups, having a couple of exits, and the online marketing industry, then going into the accounting side, having an exit on the accounting side. 

So I’m on my own entrepreneurial journey, but the business owners I talk to every day are on theirs. And so I get a kind of inside look at what it’s like to work alongside many entrepreneurs day-to-day. And, you know, when you look at the most successful business owners that I operate with, generally we’re saying they have a team, they have a strong team together with them. 

And if I look at some of the business owners who are burnt out, struggling, and facing various challenges, a lot of times, they don’t have a great team behind them or the leadership on their team to help move their company forward. 

And so what I always say is with a company, and it depends on where you are, there are a lot of people that make really good money running a one-person shop, and they love life, and there’s nothing wrong with that, and that’s perfect. But if you’re in the stage where you know you’re gonna have to have employees and a lot of business owners, it’s funny, say I’m never gonna have employees, talk to them. Three years later, they got a team of five, and, you know, they say they don’t want employees, and all of a sudden, they start to have employees. But take your time to find those excellent team members, or that one person who’s really gonna be your right-hand person through this journey. Because you know, I see it day to day. I see business owners who are very, very successful. You start looking into their team; they have some strong leaders. 

And, when I talk to those businesses, I say, ” You know what, what got you here today? And then, being on the inside and knowing their business better, I say: would you have gotten there without X, or without Y? And they’re like I probably would have gotten here, I just don’t know. It probably would have looked a little different or been a little bumpier, or taken a, you know, team can play such a big role in finding that right team member, which is just so key.

Cosmos: 

The team plays an essential role. But managing the team and employees is also harder than most people think.

Do you have any thoughts on how to manage people and just on human nature in general as it applies to business?

Mike Jesoshek: 

And this was a stage where my real reason for leaving the account firm was to go beyond expanding on the education piece and really drill these tax strategies to the public, not under some kind of guardrail that people won’t let go. But another reason why I’m just getting burnt out on the day-to-day in, in a Rhett. I reached a point in our firm where, once you hit it, you either have to stay where you are or need a really good team to move forward. And I was starting to get burned out. 

And one reason is that I started this firm from the beginning, so I was very involved in the day-to-day. I was integrated with that team. I know all of our clients; I’ve talked to them all. I likely was on the sales call that initially brought those clients in. And if I could take a step back and relive that journey. What I would do is have a mindset of saying, “How can I build this firm so that it can run without me in every move I make?” Now, I’m not going to be able to do that from the beginning, but every move I make, I’m going to be thinking about that and saying, like, okay, if I get my hands in this, can this firm run without me? How do I build processes, build teams, build systems so the firm can run without me? And that will just help that growth so much more. 

So the biggest advice I always give people is to understand where you want to go. You know, some people want to have a $100 million business and get there. Other people say, ” Hey, you give me $250,000 a year for the next 10 years, I’m good. That’s all I need. I don’t need to make a million dollars a year. I don’t need to get to that pace. So it’s understanding where you want to go, but then building out that path to say, when you get there, when you get 25% of the way there, 50% of the way, 75% of the way there, what does your role look like? And start planning for that now. Because if I had done that long back, our, ah, phone would have looked completely different than what it did.

Cosmos: 

What you just said is actually like, pretty relevant because it’s like a lot of people, like, they create a prison. They’re doing business, but the business cannot run. And they don’t have an exit strategy. 

 I think having an exit strategy for a business is really important, and most people overlook that when starting their own business.

Mike Jesoshek: 

Yeah, you know, that’s the biggest thing, someone said, how do I make my business more valuable? I say, take yourself out of it. What does that business look like without you in it? If you can say that the business changes very little. By removing me from it, you’ve just doubled your value. 

Because someone who’s buying the business doesn’t want you in anymore, they know that if you’re looking to execute it, you’re. You may stay on for a few years, something like that. But you plan to move on. You want to do something different, you want to retire, whatever that might be. 

And so they want that business to be just as good without you as it was with you. And so you want to make your business more valuable, find a way to make it operate the same way. That it always has without you in it. And that will be a selling point in and of itself.

Cosmos: 

What was the greatest mindset shift that you had during your journey? Or like, a great revelation regarding the mindset around running a business?

Mike Jesoshek: 

Yeah, you know, it’s. It’s two things. One thing that I learned early on, because hiring was a struggle for me, you know, really was something that I struggled with, especially early on. And the reason is that I was looking for someone to replace me or replicate how I work. 

And those were my expectations, and I say, hey, I’m going to hire somebody. I’m going to expect them to do it the same way I did it, or better. And one mindset shift that changes is: I told myself when I’d hire somebody to expect them to do 75% of what you do. 

So if I do it at 100%, expect this new employee to do it 75%. Because guess what? It’s going to take time. I’ve been doing this job for how long? Someone can’t come in today and do it the same way and as efficiently as I can. It’s not physically possible, but guess what? That person can, over time, and they will likely, if we’re hiring the right people, do it better than I ever did. 

And so it’s just being patient with that journey because it can take time to build that person up, to build that team up, to get them to where your expectations are. But it’s also important to be a visionary. Understand, like, if this person isn’t on a trajectory to get where they need to go, you need to hire fast or hire fire fast. 

So I always say hire slow, fire fast. I’ve seen it over and over. You have a team member who just is not putting out, and it’s hard. The longer you hold onto them, the harder it is to let them go. And so just being able to build a vision to understand kind of what trajectory people are on, but not having unmanageable expectations, that someone can’t achieve, is one key thing in the final piece, it’s just constantly learning.

That’s something that every day I’m in the tax world, I teach the tax world, I help people with the tax stuff. Every day, I learn something new about taxes because I’m constantly learning and want to deepen my knowledge in a specific area so I can share it with other business owners. And so, constantly learning, but not just learning, taking it into action. I always talk about this in our podcast. I talked to so many business owners, say, Mike, I love your content. And I’d say, oh, great. You know what’s. What are your 1, 2, 3, 4, 5 different strategies? Favorite strategies that we talk about. Like, well, I haven’t really done anything with it yet, but it’s on my plan. I said, ” Okay, so you’re learning, but you’re not implementing. Make a practice of when you hear something good. If you’re listening to a podcast, you’re reading a book, you’re watching a webinar, whatever it is, when you hear something good, write it in a notepad and then put something on your calendar once a month, twice a month, once a week, whatever it might be, put something on your calendar that you’re going to check that notebook and take action on, whatever that was. 

So I heard a big tax strategy. I need to hire my kids in my business. Okay, I know I’m not going to do it now when I’m driving in the car, but I’m going to write it in my notebook, and when that calendar pops up, I’m going to start to look into it. What does it look like to hire my kids? I’m going to start to take action on that. Because you can learn tax strategies all day long—every day. You won’t save any taxes until you actually implement those tax strategies. And that applies to anything, whether it’s a tax strategy or another type of learning.

Cosmos: 

So, Mike, I’m actually curious, right? Like, in the course of a career, like, what is the catalyst that got you towards, towards, like, tax planning and tax strategy versus anything else? Like, you could have done business in any other field, but you chose this one. What is the motivational factor behind that?

Mike Jesoshek: 

Yeah, it’s just falling in love with the understanding that so many business owners are missing out on this. You know, before I even offered tax or knew anything about tax, people were coming to me, and that was their biggest concern. And we didn’t even do tax. 

So they were saying, I can’t. I’m struggling to learn about tax strategies. I’m paying way too much in tax. It’s really kind of eating into my business operations, my personal life. And there’s so much more I could do if I could just save 10% of my tax bill, 20% of my tax, whatever. Is there so much I can do, but I don’t know what to do? I hear these things flying around and people talking about them, but I don’t know what to do. 

And so it really became a passion of mine, saying I want to help you, and I want it for myself as well. And so, I started learning tax strategy and really fell in love with it. And so my goal has been to make most tax strategies easy to understand. But whenever you talk to your accountant about a tax strategy, they say, well, it depends. 

And they make it seem like they need all this different information to help make that tax strategy a, ah, reality. And one thing I learned when I started my research is that tax strategies are the same for everyone. You know, if you look at this concept of hiring your kids, if you talk to your accountant, you say, ” Hey, I’m looking to hire my kids, can you help me do that? Like, well, I need to know this. And it depends on this and how you rent. They’d kind of ramble. And the business owner lost the business right away. 

My goal is to say, hey, I’m going to tell you all about hiring your kids and hiring your kids. That strategy is the same, 90% the same for every single person. And then you’ve got to tweak it that last 10% for yourself. So if you’re a plumber and I’m an electrician, or you’re a plumber and I’m an accountant, we’re going to hire our kids a little bit differently. Or if you have a 10-year-old and I have a 7-year-old, we’re going to hire our kids a little bit differently. That’s the 10% that we tweak. 

And so my goal with all of our content is say, how do I get business owners 90% of the way there? How do I let them know exactly what hiring the kids is, the concept behind it, and what you need to do correctly? All of that’s the same for all of us. And then they can take that, and they can go to their account and say, ” Hey, I’m going to hire my kids. Here’s the pay, I’m going to pay them, here’s how many hours they’re going to do, here’s the jobs they’re going to be doing. Can you help me tweak these last few pieces? 

Hopefully, that is the goal: you can start to see business owners stop getting drowned by their taxes and start saving on taxes, using those savings not to buy fancy houses. And fancy cars, but using those savings to put back into their business, to grow the economy, to grow their business, to hire more people, to create even more growth and more tax savings from there on beyond.

Cosmos: 

This is amazing, Mike.

And Mike, I know you have this podcast, the tax-saving Small Business Tax Savings podcast. Can you tell me a little bit more about that and what it’s about?

Mike Jesoshek: 

Yeah, absolutely. 

So once a week, we take a tax strategy and break it down into that goal for that strategy to get 90% of the way there. So, so how do we get people, introduce people to a tax strategy, but also talk about the details, what is needed to do it correctly? You know, this isn’t the type of fluff like, oh, hire your kids, and they pay no taxes on it, and it’s great, and ends there. Now let’s talk about the details. Let’s talk about the dirty stuff. 

Like, yeah, it’s sexy, but there are also some things you gotta do to make sure you’re doing it right. And so, every week we share a new strategy, a new episode that’s gonna break down a specific tech strategy and exactly what you need to know about it so that you can take action. You can listen to those episodes and go and implement that tax strategy. 

So weekly episodes, I’ve been doing it for about eight years now, and just loving it, kind of getting in touch with business owners and seeing the changes that business owners come to me and say, like, this is great, Mike. Like, you’ve opened the door and opened my mind to this whole concept of tax strategy.

Cosmos: 

No, this is amazing. And I would recommend my audience take a look at your podcast because saving taxes and not paying unnecessary money is one of the greatest things you can do, and I would definitely recommend it.

And Mike, I know you also have a book by the same name. Ah, can you tell me a little bit more about your book and the premise of how you got that started?

Mike Jesoshek: 

Yeah. So, the book is called the Small Business Tax Savings Handbook and was launched in January of this year, as just another resource to help people understand it. So it’s taking many of the strategies we talk about and putting them into a more formal, step-by-step format of what they need to do correctly. 

So I often talk about it; it’s something we should be reading every single year, and keep it on your desk as a reference piece, like, “Oh, this life-changing event happened.” Let me go to this chapter and let’s find out, you know, what opportunities may have increased for me this year based on. Based on those changes. 

But it’s also a refresh because the more you can change your mindset about these tax strategies and what’s available to you, the more you’re going to start seeing opportunities that were always there, but you just didn’t recognize before. And you’re like, oh, that’s actually a valid business deduction. There’s an opportunity for us, and that’s the hope with the book, the podcast, and everything we do.

Cosmos: 

That is awesome, Mike. And Mike, if someone from this audience wants to connect with you, learn more about you and the work you do, and also hire you as a CPA, how do they go about doing so?

Mike Jesoshek: 

Yeah, the two main places you can find everything about our tax, our podcast, our book, and everything like that are @tax savingspodcast.com and our software. It is a SaaS product that is done for you.

 Done with you type service, where we help you understand what strategies are available to you, and we help you implement them. Our team is there to help you along the way. And you can find out more about that software product at Tax Elm. 

Cosmos: 

That is amazing, Mike. And Mike, I’m so thankful that you took the time to come on this show and share your knowledge about tax-saving and tax strategy, because this is such a relevant subject. People pay too much in taxes, and it’s something they definitely need to look into. And I would definitely hope that you come back on the show at a later time.

Mike Jesoshek: 

Time. Yeah, thanks for having me. It’s been fun.

Cosmos: 

Yeah. And I want to conclude this episode by letting my fellow extraordinary Americans know that there’s an extraordinary within each of us. It’s our duty to awaken it and unleash it. Until next time. Bye for now.