Have you seen the social media post about buying a G Wagon and writing it off for taxes. Well this is one of the most famous tax deductions business owners can take advantage of. We are going to dive into this strategy and more in this blog. Tax deductions are one of the most powerful tools business owners have to legally reduce taxable income. Whether you’re just starting out or running a 7-figure operation, knowing what you can write off and how to do it right can save you tens (or hundreds) of thousands of dollars a year. Want to go beyond tax deductions? Check out our Moment guide to tax planning for business owners here. Tax Deductions for Business Owners In this guide, you'll learn: What counts as a tax deduction in 2025 Which expenses business owners can (and can’t) write off A real-world, 7-figure example with detailed tax savings The answer to the question we are frequently asked by business owners like you. What Is a Tax Deduction? A tax deduction reduces your taxable income, which lowers the amount of income that gets taxed. Example: If your business earns $1,000,000 in gross revenue and you deduct $400,000 in expenses, you're only taxed on $600,000. To be deductible, the expense must be: Ordinary — common in your industry Necessary — useful for your business operations What Business Expenses Are Deductible in 2025? Can I deduct my home office? Yes, if it’s used exclusively and regularly for business. You can deduct a percentage of: Rent or mortgage interest Utilities Internet Repairs Can I deduct business meals? Yes. In 2025, you can deduct 50% of meals that are business-related, including: Client lunches Travel meals Staff celebrations Can I deduct business travel? Yes. You can write off: Flights Hotels Rental cars/Ubers 50% of meals while traveling Can I deduct my car expenses? Yes. You can choose between: Standard mileage rate (TBD for 2025, but was $0.67 in 2024) Actual vehicle expenses (gas, insurance, depreciation) Can I deduct software and tools? Yes. Tools like CRMs, accounting software, design platforms, and project management apps are all deductible if used for business. Can I deduct advertising and marketing? Absolutely. Common deductible marketing costs: Paid social ads SEO services Influencer marketing Branded content Sponsorships Are wages and benefits deductible? Yes. Employee salaries, payroll taxes, health insurance premiums, and retirement plan contributions are all tax-deductible business expenses. Are contractor payments deductible? Yes. Payments to freelancers, consultants, or 1099 contractors are fully deductible if for business services. Can I deduct education and training? Yes, if it improves your skills or helps maintain your business. Examples: Certifications Business courses Industry conferences Can I deduct startup costs? Yes. You can deduct: Up to $5,000 in the first year The rest amortized over 15 years Are bank fees and interest deductible? Yes. This includes: Credit card processing fees Business loan interest Bank service charges Real-World Example: Tax Strategy for a $1.3M Business in 2025 Business Profile: Boutique Marketing Agency Owner: Danielle Business Structure: S-Corp Location: Austin, TX Gross Revenue (2025): $1,300,000 W-2 Salary (Danielle): $160,000 Team: 5 full-time employees + contractors Deductible Expenses Category Amount Salaries & Wages $420,000 Payroll Taxes $35,000 Health Benefits $28,000 Contractor Payments $96,000 Office Rent $48,000 Software & Tools $12,000 Marketing & Lead Gen $39,000 Business Travel $21,000 Legal + Accounting $16,500 Equipment (Sec. 179) $23,000 Utilities + Internet $6,000 Insurance (General + Cyber) $7,800 Education & Training $5,400 Business Meals (50%) $3,750 Home Office (Accountable Plan) $3,600 Total Deductible Expenses: $771,050 Retirement Strategy: Maxing Out the Solo 401(k) Danielle contributes the maximum allowed in 2025: Contribution Type Amount Employee deferral $23,500 Employer contribution $46,500 Total Contribution $70,000 Additional Tax Strategies Used Strategy Amount Deducted / Saved Section 179 Equipment $23,000 Solo 401(k) $70,000 Accountable Plan $3,600 R&D Tax Credit $14,000 (credit, not deduction) Taxable Income Calculation (After Deductions) Gross Revenue: $1,300,000 Business Deductions: $771,050 401(k) Deduction: $70,000 Accountable Plan (home office): $3,600 Taxable Income: $455,350 R&D Credit: –$14,000 (direct tax reduction) Federal Tax Comparison: With vs. Without Deductions Scenario Taxable Income Est. Tax (32%) Less R&D Credit Final Tax Owed No Deductions $1,300,000 $416,000 — $416,000 With Deductions $455,350 $145,712 –$14,000 $131,712 Total Tax Savings: $284,288 Real-World Example 2: Solo E-Commerce Seller (LLC) Business owner: Mariah Business type: Single-member LLC (Schedule C) Gross revenue: $220,000 (Shopify + Etsy sales) Products: Handmade skincare No employees Deductible Expenses Category Amount Cost of goods sold $65,000 Packaging + shipping $11,000 Software + e-commerce tools $4,500 Marketing (Facebook, IG ads) $18,000 Product photography + branding $2,000 Home office (15% of rent/util) $3,000 Phone + internet (80% bus use) $1,600 Equipment (label printer, desk) $2,500 Education (YouTube ads course) $1,200 Health insurance (self-employed) $4,200 Business travel (2 trade shows) $3,600 Total deductions: $116,600 Solo 401(k) Contribution Mariah netted about $100,000 after deductions. She contributed: $23,500 employee deferral $18,000 employer contribution (approx.) Total retirement deduction: $41,500 Tax Summary Revenue: $220,000 Total deductions: $116,600 + $41,500 = $158,100 Taxable income: $61,900 Estimated federal tax (22%): $13,618 What Can’t You Deduct? Some common expenses are not deductible, including: Personal expenses (unless allocated properly) Clothing (unless uniforms or protective gear) Fines and penalties Political contributions Social or athletic club dues Frequently Asked Questions Can I deduct business expenses if I don’t have an LLC? Yes. Sole proprietors and freelancers can deduct business expenses on Schedule C of their personal tax return. You don’t need an LLC. What records should I keep to support deductions? Keep: Receipts Invoices Mileage logs Bank/credit card statements Notes describing the business purpose Maintain documentation for at least 3 years. Can I deduct business expenses paid from my personal account? Yes. As long as the expense was 100% business-related, it’s deductible.But it’s better to use a dedicated business account or card for clean record-keeping. How do I deduct partial-use items (like a phone or car)?Deduct only the business-use percentage. Example: If you use your car 70% for business and total expenses are $10,000, you can deduct $7,000. Is my own pay deductible? Sole Proprietor or Single-Member LLC: No. Owner draws are not deductible. S-Corp/C-Corp: Yes. Wages you pay yourself through payroll are deductible. What if I get audited? As long as your records are organized and the deductions are legitimate, you're fine.Most audits are triggered by: Excessive deductions Inconsistent income reporting Poor recordkeeping Can I amend a previous tax return to claim missed deductions? Yes. Use Form 1040-X to amend a federal return.You have up to 3 years from the original filing date. Can I deduct losses from a business that didn’t make a profit? Yes. If you show a true profit motive, the IRS allows deductions—even with losses. But if you report a loss 3 out of 5 years, the IRS may treat it as a hobby. What tax deductions do most business owners miss? Home office Section 179 equipment Health insurance (self-employed) Augusta Rule (rent your home) Solo 401(k) employer contributions Mileage for local business errands Can I deduct clothing or personal grooming? No—unless it’s a uniform or protective equipment required for the job.Regular clothes, even if worn for work, are not deductible. Are gifts to clients deductible? Yes, but limited to $25 per person per year. Branded swag may qualify separately under marketing. What if I run multiple businesses? You must keep separate records and only deduct expenses specific to each business.Some shared costs (like your phone) can be allocated proportionally. Can I pay my kids and deduct it? Yes—if they perform real work, you can pay them a reasonable wage: Under 18: No payroll taxes (if sole prop or partnership) Deductible as a business expense Great way to fund their Roth IRA or 529 plan. Business Tax Deductions Checklist (2025) Fixed Expenses Office rent Utilities, internet, phone Software subscriptions Insurance (liability, auto, cyber) Variable/Strategic Expenses Marketing & advertising Business travel Equipment purchases Education & training Labor Costs W-2 employee wages Payroll taxes Contractor (1099) payments Owner retirement contributions Home-Based Business Home office Rent under the Augusta Rule Partial utilities/internet Furniture/equipment Financial/Admin Legal & accounting fees Bank fees Credit card processing Business loan interest Final Thoughts: Deductions Are Growth Tools Tax deductions aren’t just about lowering your bill. They’re about: Keeping more capital in your business Reinvesting in growth Funding things like retirement and hiring Lowers your tax bill Increases reinvestable profit Supports long-term planning (hiring, scaling, saving) The better your tax strategy, the faster your business scales—legally and profitably. And if your tax pro isn’t walking you through all of these opportunities?It might be time for an upgrade. Bonus Tip: Work With a Proactive Tax Advisor Most business owners work with a tax preparer who files returns after the year ends. That’s reactive. What you need is a proactive tax strategist—someone who: Reviews your financials quarterly Suggests entity changes when appropriate (e.g., switching to S-Corp) Helps you plan retirement contributions strategically Guides you on recordkeeping that protects you in audits This is where Moment Private Wealth steps in. Ready to talk tax planning? Get in Touch With An Advisor Frequently Asked Questions: Tax Deductions for Business Owners Here are some answers to questions I received frequently about this topic. How does the "G-Wagon tax write-off" or Section 179 deduction work for business vehicles? To claim a full or partial Section 179 deduction for a heavy SUV or truck (vehicles with a Gross Vehicle Weight Rating over 6,000 pounds), the vehicle must be purchased and placed into service during the tax year and used more than 50% for business operations. The deduction is limited based on your exact business-use percentage and capped at specific inflation-adjusted IRS limits for the year. Can I use the Augusta Rule to rent my home to my business tax-free? Yes. Under Section 280A(g), you can rent your primary residence to your business for up to 14 days per year for corporate events, board meetings, or client entertaining. The business claims a write-off for the rental expense, while you receive the rental income on the personal side completely free from federal income tax—provided the rate reflects local market comparables and is backed by thorough corporate minutes. What is the difference between a business tax deduction and a tax credit? A tax deduction reduces your total taxable income, meaning your net cash savings depend entirely on your marginal tax bracket. A tax credit reduces your actual tax bill dollar-for-dollar. For example, if you are in the 32% tax bracket, a $10,000 deduction saves you $3,200 in cash, whereas a $10,000 R&D tax credit slashes a full $10,000 directly off what you owe the IRS. How do I legally pay my kids through the business to lower my taxable income? You can hire your children to perform legitimate, age-appropriate work for your company, such as managing social media, modeling for marketing materials, or handling basic data entry. The wages paid must be reasonable for the job performed and are fully tax-deductible to the business. If your business is an LLC or sole proprietorship, wages paid to children under 18 are exempt from FICA taxes, and the earnings can be used to fund a Roth IRA to build early generational wealth. What triggers an IRS audit for high-earning business owners taking heavy deductions? The IRS relies on automated system flags that track anomalies. For business owners, the most frequent audit triggers include taking disproportionately high deductions relative to your gross business revenue, writing off 100% of a personal vehicle without a secondary commuter car, claiming a home office deduction that violates the "exclusive use" rule, or reporting recurring net losses on a business across multiple years. Keeping clean, digitized documentation for a minimum of three years is your best line of defense.

“Wait, you mean to tell me I owe more in taxes?” This was me circa 2009 when it came time to file my tax return. You see, I had just signed my first MLB contract, paid what I thought was a king’s ransom in taxes, and here I was still owing more. Fast forward a few decades, and I have the opportunity to lead Moment Private Wealth. A financial planning firm that specializes in athlete wealth management. They say history repeats itself, and that certainly feels true as we advise our athletes. They sign for life-changing money. They pay a king’s ransom in taxes. They owe more come the tax filing deadline. So in today’s blog, I am going to break down everything you need to know about your MLB signing bonus. You will understand what gets taken out, what taxes you will pay, and the strategies to consider. Let's dive in... The MLB Draft Experience The MLB draft is a life-changing experience for athletes (and their families). Yet, with all that excitement, also comes a world of unknowns. Heck, unless you had family members go through this experience, chances are everything is new. Stack on the fact that everyone has an opinion, comment, or “the way to do it.” The endless sea of information can lead you to be more confused than when you started. Good news, if you want a deep dive into the MLB draft, check out The Moment Guide to the MLB Draft. If you want to understand everything you need to know about an MLB signing bonus, keep reading. We are going to break down this topic into three sections. 1) MLB Signing Bonus Structure The MLB draft is built around a slot system. It works like this: teams are assigned certain picks (slots) in the draft based on how their MLB team performed the previous season. The worst teams get the first picks. The best teams get the last picks. Major League Baseball then assigns a slot value to each of those selections. Add up all of a team’s selections, and that is how you get an MLB team’s collective bonus pool. This is the amount of money a team can spend on its entire draft. Go over that amount and risk paying an overage tax or worse, losing a draft pick in a following year. Teams then draft players based on a combination of talent and their ability to sign for them their assigned slot value. The key aspect to understand outside of the dollar amount is how the bonus is structured. The typical signing bonus is paid 50% in year one and 50% in year two. The first payment, on average, is 30 days after approval of the contract. The second payment, on average, is in the first quarter of the following year. The higher you are picked, the more leverage you have to negotiate the percentages paid in each year. Depending on how you approach your overall tax planning strategy, this greatly affects what hits your bank account. For a full guide on athlete tax planning, check out our Moment Guide on Athlete Tax Planning. The other key structure to understand is the abandonment clause. This is a clause teams try to place in MLB draft contracts that allows them to pull back signing bonus money should a player quit the sport in the first few years. For most players, it pays to remove this clause if the team is willing. The reason is two-fold: 1. It ensures the players will receive all the money. 2. It ensures the signing bonus is taxed as a true signing bonus (more on that later) In short, I want you, the player, to have control over not just your bonus but also your tax planning. Removing the abandonment clause ensures both of those things. In short, every MLB draftee that signs a draft contract will sign a standard MiLB contract. This language is set. Yet as discussed above, there are tweaks to this structure that are critical to understand when it comes to a signing bonus. A properly structured signing bonus ensures you pay the least amount in taxes and control of your signing bonus payouts. 2) MLB Signing Bonus Taxation There is so much confusion around taxes and MLB signing bonuses, and this section will teach you exactly what you need to know. Signing bonuses are earned income, so in short, they are taxed in a similar manner to any salary you earn on the field. Yet how you get paid them, the moves you make around payments, and the planning needed are quite different. For clarity, let’s walk through a hypothetical signing bonus of $2,000,000. Let’s say it is structured as 50% in year one and 50% in year two. Most MLB teams will withhold 22% for taxes from that initial $1,000,000 payment. That means $220,000 goes to taxes and $780,000 goes into your bank account. Now here is where the confusion starts. You will owe more than 22% in taxes on your signing bonus. 22% is a standard tax withholding on the first million of a signing bonus. The top federal income tax rate is 37% and your $1,000,000 payment puts you squarely in that bracket. That means your total tax liability is closer to $370,000 (actually a touch less). But remember, the team only withheld $220,000. So you need to set aside another ~$150,000 for taxes come next April 15 (tax filing deadline). Now the good news is you can (and should be) earning interest on that $150,000 before you have to pay it to the IRS. The bad news is if you don’t have a team that specializes in athlete wealth management you might have a huge surprise come tax season. At Moment, our first move after a signing bonus comes in is running a tax projection and setting aside the necessary money needed to fulfill the full tax obligation. Now, a short aside on state taxes. This blog is not going to dive into the nuances of state taxiation on signing bonus. Yet you need to understand the role state taxation plays in the taxation of your signing bonus. In our hypothetical $2,000,000 example a player in CA would be subject to roughly $208,000 in state taxes while a player with Florida residency would pay no state income taxes. This is another massive tax planning opportunity for MLB draftees and something that we help our MLB draftees with at Moment. Now, onto the strategies you need to consider with an MLB signing bonus. 3) MLB Signing Bonus Strategies There are so many things you “could do” with your MLB signing bonus to maximize it. So I am going to list the four most critical ones to consider, from easiest to hardest. Maximize your MiLB 401(k) Major League Baseball made a massive change in 2024. They created a league-wide MiLB 401(k) plan that newly drafted players are eligible to contribute to. This is the easiest way for any MLB draftee to reduce their current year tax bill. Consider our previous example of a player with a $2,000,000 signing bonus. In 2025, that means a contribution $23,500 into the MiLB 401(k). That equates to a current-year tax savings of more than $8,500. The key factor here is time; in order to maximize this contribution in the year a player signs, it needs to come out of your signing bonus. That means enrolling, setting up, and electing the correct contribution in the first 15 days after a player signs. The reason for this is that most teams require a two-week notice to make any payroll changes. Those changes include 401(k) contributions. Run a Tax Projection You don’t want to be like me and have a surprise tax bill come next April. You want to work with a team that specializes in athlete tax planning. At Moment, we work directly with the team payroll department to source the paystub and run a tax projection, ensuring every player knows what was withheld for taxes and what will be owed come next April. Set Aside the Taxes Owed (but not yet paid) Now, just understanding what you owe is step one. Understanding how to maximize that money is step two. For our MLB draft clients, we use low-risk positions that allow players to earn interest on that money until we have to pay it. In previous years, this has meant thousands of dollars of additional money earned. State Residency Strategy Look, state residency is your biggest move as a current or future MLB draftee. It is the single biggest step to take to save the most money on taxes. Yet to do it correctly, it is a complex step with lots of moving parts. You need to structure the signing bonus correctly, navigate the steps of establishing new residency, and ensure your financial team is working in unison with the MLB team’s payroll department. At Moment, we have walked through this process ourselves and helped MLB draftees navigate these complexities each year. Yet, it is different for each family, so here is my advice ~ Get educated on the options, the pitfalls, the pros, and the cons so you can make an educated decision. After all, we have one chance to do this right. I have an incredible passion for helping the next generation of MLB draftees maximize every aspect of their financial life. That drive stems from personal experience walking in your shoes. Personal experience, knowing how hard it is to make money playing a sport. Personal experience knowing how much subpar information is out there for families. My mission as always is to help you get smarter with your money and I hope this blog helps you and your family navigate the complexities of an MLB Signing Bonus. Moment was built to serve the specific needs of professional athletes. To learn more about how we help book a call today and speak to our team today. Looking for more ways to get smarter prior to the MLB draft - Check out my YouTube page. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions received regarding athletes and money: When does Moment start working with future MLB draftees? We start working with families often a year before the MLB draft. Our goal is to ensure every family is educated on their options and can enjoy the draft when it comes. Does Moment help players with state residency? Yes, Moment has a checklist we walk every player through to ensure they are compliant in navigating state residency. How does Moment work with my agent? Moment works with every major sports agency, and that collaboration ensures all of our athletes maximize not just their signing bonus but their career earnings. Does Moment provide tax planning and strategy for MLB draftees? Yes, we handle all of our athletes' tax planning and team coordination. As part of your team at Moment, you will be working with a sport-specific CPA firm specializing in navigating everything that comes with athlete taxation. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Draft day is electric. Years of work finally pay off - and for the first time, life-changing money is on the table. But here’s the reality no one tells you: That headline signing bonus? It’s not what actually lands in your account. And the decisions you make in the first 90 days determine whether that moment becomes a launchpad for long-term wealth… or a story of missed opportunity. At Moment Private Wealth, this is where we come in. We help athletes take control of the money game - so they can focus on the actual game. The Illusion of the Bonus The average signing bonus of the first 43 picks in the 2025 MLB Draft was $4,338,931. Here’s what that really looks like after taxes and fees: Federal Income Tax (~37%): ~$1.60M Agent Fees (5%): ~$220K State Income Tax (North Carolina @ 4.25%): ~$180K ➡ Total Costs: ~$2.0 million➡ Net in Your Account: ~$2.34 million That means roughly half your bonus is gone before you make a single financial decision. This is why the first 90 days matter so much. The earlier you put structure in place, the more control you’ll have over what you keep. The Payment Schedule: Two Checks, Two Tax Years One often-overlooked detail: your signing bonus usually isn’t paid in one lump sum. For most players, it comes in two installments over two calendar years: First 50% — typically 30-45 days after your contract is approved. Remaining 50% — paid the following year, usually between January and April, depending on the team’s payroll schedule. For example, on the average $4.34M bonus: ~$2.17M arrives within weeks of signing. ~$2.17M comes in early the next calendar year. This structure has major implications for tax planning, cash flow management, and investment timing. Knowing when your money hits is just as important as knowing how much. The higher the draft pick the more leverage you have to negotiate how your signing bonus is paid out. That leverage can open the door to further tax planning opportunities based on the percentage paid out in a given year. State Residency for Athletes Residency is one of the most misunderstood aspects of professional sports. Where you live on draft day has an outsized impact on your finances. MLB spring training happens in Florida (0% tax) or Arizona (2.5%). Establishing residency in one of these states can create six-figure savings. Example: California (13.3%) vs. Florida (0%) on a $4.34M bonus = $576,000+ swing. But this isn’t just swapping your driver’s license. A proper residency plan includes housing, documentation, lifestyle alignment, and ongoing proof to withstand scrutiny from state tax authorities. We guide clients through this step-by-step and coordinate with CPAs, agents, and payroll departments to ensure it’s done right. Retirement Accounts: The Hidden Advantage Most players think retirement accounts are for the future. In reality, they’re a tool to save money now and build wealth for later. MiLB/Solo 401(k): Contribute up to $70,000 and deduct it from taxable income. Backdoor Roth IRA: Add another $7,000 with tax-free growth. Together, these moves can reduce your tax bill by ~$27,500 in year one. More importantly, it jumpstarts compounding - turning today’s dollars into tomorrow’s wealth. Investing Like a Pro Athlete (Because You Are One) Getting money in the door is only half the battle. The real question is: How much do you keep after taxes and bad investment choices? Athletes earn early, peak fast, and face unique risks. That’s why we design portfolios with an emphasis on flexibility and tax efficiency: Municipal Bonds: Generate tax-free income. ETFs & Individual Stocks: Provide more control and efficiency than traditional mutual funds. Donor Advised Funds: Lock in charitable deductions while supporting causes you care about over time. Our goal is simple: growth that matches your career arc and maximizes after-tax returns. Why the First 90 Days Define the Next 30 Years Draft day is a milestone - but it’s only the beginning. The financial moves you make in the weeks after being drafted will echo for decades. This is why Moment Private Wealth exists. We’re not product salespeople. We’re fiduciaries - CFPs and investment professionals dedicated to building financial game plans for top MLB Draft Picks and the games biggest stars at their most pivotal moments. Key Takeaways for Draft Picks Half of your bonus disappears fast — taxes and fees take a huge bite before you ever touch the money. Plan for the net, not the headline number. Your bonus comes in two checks — one soon after signing, the other the following year. Plan for both tax years. Residency is a game-changer — choosing the right state could mean six-figure savings in year one alone. Retirement accounts are tax weapons — use them early to lower today’s bill and build long-term wealth. After-tax investing matters most — the goal isn’t just growth, it’s keeping as much of that growth as possible. The first 90 days set the tone — the right structure now creates clarity, security, and momentum for decades. If you’re ready to see how much of your bonus you can truly keep and how to turn it into long-term wealth, let’s run the numbers and build your playbook today. If you are an athlete or the family of an athlete exploring the MLB draft, connect with our team. Moment was built to serve the specific needs of professional athletes. You can book a call today and speak to a founder. Have more questions? Check out our YouTube page for ways to get smarter with your money. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions received regarding athletes and money: How does Moment help draft picks prepare for the MLB draft? Our focus is on educating families around signing bonus structures, amounts, tax planning, and everything that goes into actually signing your MLB draft contract. What is the biggest tax mistake you see with professional athletes? The biggest mistake we see is not planning in advance. There is a big difference between tax planning and tax preparation. How does Moment work with CPA firms? We work hand in hand with CPA firms that specialize in professional athletes. This way our clients are getting specific advice regarding their tax planning moves. What is unique about tax planning for professional athletes? The short earning arc, multi-state taxation, and income fluctuations provide athletes with circumstances often unique to them. We must account for all of these factors when looking at tax planning for professional athletes. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

You've signed the deal. You're finally getting paid for what you bring to the game. You might have $500,000 coming in. Maybe $750,000. Maybe even a $1,000,000 NIL deal with incentives. But here's the part that gets lost in all those zeros: It's not what you make. It's what you keep. And more importantly - what you build with it. NIL Isn't a Scholarship. It's a Business. Believe it or not, you are a CEO now. Whether you're a quarterback, point guard, starting pitcher, NIL has turned you into a business owner overnight. That means new rules - financial, legal, tax, and investment rules - that weren't part of the playbook in the locker room. In this article, I am going to break down a clear roadmap built for athletes like you who are serious about building wealth. Where Most NIL Athletes Go Wrong Let's start here: You grew up in the state of California and are the starting quarterback for your high school. You sign a $1,000,000 NIL deal heading to a top 10 program. After agent fees (say 3% - 5%), taxes, expenses, and not knowing how to handle it... You might walk away with less than $515,000. - if you're lucky. Here's how (keep in mind, this is a complex example and other factors are involved): Item Amount Agent Fee (5%) $50,000 S Corp Salary $200,000 Distributions $750,000 Payroll Taxes on Salary (15.3%) ~$30,600 Federal Income Tax (blended) ~$285,000 CA State Tax (blended) ~$90,000 Legal/Business Setup $10,000–$20,000 Total Taxes & Fees ~$465,600 Take-Home (After Tax & Fees) ~$514,400 You can see where this is going. NIL athletes are cashing massive checks - but without a plan, that $1,000,000 can become $0 really quickly. The 5 Pillars of NIL Wealth There's a smarter way. One that protects your money, your brand, and your future. Here are the 5 Pillars we recommend building for every high-earning NIL athlete at Moment Private Wealth: Cash Flow Planning: Tell Your Money Where to Go You have earned that $1,000,000 NIL paycheck. But to keep it, you have to do some planning. Without a cash flow plan, your money will disappear - to taxes, spending, or just lifestyle creep. Here's how to stay in control: Use the 50/30/20 Rule (or better): 50% Needs (housing, food, taxes) 30% Investing/Saving 20% Wants (travel, fun, clothes) Create automatic transfers to your savings and investment accounts each month - PAY YOURSELF FIRST! Track your spending weekly or monthly - if you don't know where your cash is going, you are setting yourself up for failure. The key is to build your lifestyle around budget - not your NIL deal. Tax Planning: The Silent Killer Uncle Sam wants his share in your success - and trust me, he is not patient. Most NIL athletes don't know: NIL income is considered self-employment income That means you're responsible for federal, state, AND self-employment taxes The IRS doesn't care that you're 20 years old with a marketing major Here is what you should do: Pay quarterly estimated taxes Maximize deductions - business expenses, travel, legal, meals (within IRS rules) Hire a CPA who understands athlete tax law Use retirement accounts (Roth IRA, Solo 401(k)) to reduce taxable income Let me give you an example: You contribute $70,000 to a Solo 401(k) in 2025 (employee + employer match). That money grows tax deferred - and you save $70,000 off your taxable income. So on that $1,000,000 NIL contract, you are now only paying taxes on $930,000. That makes a difference. Entity Formation: Get Your LLC Right If you are earning six or seven figures through NIL, you shouldn't be taking checks in your personal name. You need an LLC. Here's why: Liability Protection - separates your business from your personal life Brand Control - gives you a structure to license your name/image Tax Benefits - allows for business deductions and S-Corp treatment Here's another example: You run all NIL income through Brendan Enterprises, LLC. You elect S-Corp status and pay yourself a reasonable salary of $200,000. The rest is taken as distributions - not subject to self-employment tax - saving you $30,000 to $50,000+ per year. So taking the $930,000 (after the Solo 401(k) contribution) and now electing an S-Corp, you are now paying taxes on $900,000. You see, this is where a financial team that specializes in helping athletes is a difference maker. At Moment Private Wealth we are specialists in athlete wealth management ensuring you maximize your benefits. Investment Strategy: NIL Doesn't Last Forever Let's be real for a second. NIL income is temporary. Let me say that one more time - NIL income is TEMPORARY. But if you play it right, the wealth can be permanent. Your game plan should include: Automatic investing into diversified portfolios. Setting up a Roth IRA or Solo 401(k) for long-term, tax-free growth Using a portion of NIL to build passive income - so your money works when you're not Check out this projection: If you put this money to work for you, earn ~6% in the market (which is very conservative by-the-way), by the time you are 70, your $1,000,000 NIL contract would be worth almost $12,000,000 without adding any other investments. Protection: You Are the Asset You are your business. If you can't play, promote, or post...you probably don't get paid. Here's what that means: You need to look at disability insurance in case injury cuts your earning power You need umbrella liability insurance to protect against lawsuits You need smart contracts and legal review for all deals You need estate planning (yes, even while you are young) to protect your family and your assets Why it matters: If you get injured during your junior season and lose a $1,000,000 NIL endorsement - disability insurance could replace a portion of that lost income. Real NIL Strategy in Action Let's walk through a real scenario: Athlete: Starting QB at a top-10 program NIL Income: $1,000,000 Goals: Play in the NFL, save for post-college life, invest, minimize taxes, protect brand Step-by-Step Plan: Hire a wealth management team that specializes in helping athletes - this may not seem important, but I am telling you right now...it is! Work with your wealth management team to form an LLC and elect S-Corp status. The right financial team will provide an attorney that specializes in helping athletes Pay yourself a W-2 salary and take the remaining as a distribution - this is a conversation to discuss with your wealth management team and CPA Set aside funds to pay your taxes immediately - no one likes doing this, but you need to stay out in front of this Max out your Solo 401(k) - in 2025, that is $70,000 Build 3 investment accounts: Short-Term Savings (cash, high-yield savings) Individual Brokerage Account Long-Term Growth (Roth IRA) Have risk management measures in place Umbrella Policy - work with your wealth management team to get you the proper coverage Disability Income Insurance Review Endorsement Contracts It may not seem important now, but by the end of the year, you will walk away with: Tax-compliant business income Money invested for the future Legal protection Peace of mind Final Word: NIL is a Window, Not a Lifetime Your average NIL career might last 3-4 years But, your wealth can last three decades - if you plan it right. At Moment Private Wealth, we specialize in turning short-term NIL income into long-term financial freedom. Your future starts now. ___________________________________________________________________________________________________________ If you are an NIL athlete and want to better understand how to manage your wealth, schedule a call with a Moment Founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Do I really need an LLC if I'm under 21? Yes. Your age doesn't matter - your income does. An LLC gives you protection and structure. How much should I set aside for taxes? Plan for 35-40% of your NIL income to cover federal, state, and self-employment taxes. Can I invest my NIL income? Absolutely! NIL income is earned income - you can use it to open a Roth IRA, Solo 401(k), or a brokerage account. What is the first step I should take? Set up a call with a financial advisor at Moment Private Wealth who understands NIL, taxes, and business structuring. Don't wait until tax season. ___________________________________________________________________________________________________________ *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Why Business Succession Planning Matters More Than You Think Being a business owner is not for the faint of heart. You’ve taken risks, survived the valleys, and built something that not only provides for your family today — but could support generations if you plan wisely. Yet Business Succession Planning is often the last thing owners tackle. You’re busy solving today’s problems — who has time to think 10 years ahead? But here’s the thing: Without a plan, you’re gambling with everything you’ve built. A smart succession plan isn’t just about selling — it’s about: Protecting your family from chaos and tax surprises. Keeping employees and partners whole when you step away. Maximizing the value of your life’s work. Locking in your legacy, on your terms. At Moment Private Wealth, we see it all the time: business owners who wait too long, then scramble when life happens. Our mission? Make sure that’s not you. When Should You Start Your Succession Plan? The best day to start planning was yesterday. The second-best day is today. Good succession plans take time to design, refine, and execute. We tell owners to start at least 5–10 years before your target exit. That gives you time to: Train a successor (if it’s internal or family). Position your business for maximum value. Create business strategies that don’t crush cash flow. Minimize taxes, which can gut your payout if you’re not careful. Life happens. Health changes. Markets shift. The sooner you plan, the fewer regrets you’ll have. Who Needs to Be at the Table? You can’t build a solid plan alone. These are the key players every owner should have around the table: Your family. Do they want to be involved? Will they inherit the business — or just the proceeds? Key partners and employees. If you’re selling internally, they need to know the roadmap. A fiduciary financial advisor. Like Moment Private Wealth — a team that works only for you, not for hidden commissions. A CPA. Taxes can take 30%–50% of your proceeds if you don’t plan carefully. An attorney. For buy-sell agreements, operating docs, and trusts. Good succession planning is a team sport. At Moment, we coordinate that entire team for you, so nothing slips through the cracks. Building a Succession Plan That Actually Works A succession plan shouldn’t live in a desk drawer. It should be real, written, reviewed regularly, and built to hold up when life doesn’t go as planned. Let’s break it down step by step. Step 1: Clarify Your Endgame Too many owners think they’ll “just know” when it’s time. But the way you exit shapes everything else, so be clear. Ask yourself: Do I want to sell to an outsider for maximum value? Is the dream to pass it to family? Could a key employee or group buy me out over time? What’s non-negotiable? Keeping the brand? Taking care of my team? When we work with clients at Moment, we start here. If you don’t know your final destination, no map will get you there. Step 2: Identify Potential Successors If you’re passing it to family or internal leaders, be honest: Are they ready? Do they want it? Family succession can be beautiful — or it can tear families apart if you force it. We help owners get real about: Who has the skillset? Who has the desire? How can you mentor them over time? Sometimes the answer is “none of the above.” That’s when an outside sale or employee buyout might make more sense. Step 3: Value the Business Properly Don’t guess. Your “napkin number” might feel right, but buyers (and the IRS) see it differently. A professional valuation considers: Earnings and cash flow Market trends Your industry’s multiples Future growth potential Existing debts or risks At Moment Private Wealth, we partner with top valuation pros so owners get a realistic figure, not just wishful thinking. Step 4: Create a Funding Strategy A great plan without funding is just a wish. Buyouts don’t magically pay for themselves. Most next-generation owners don’t have millions in the bank. Here are a few common funding tools: Installment sales. The buyer pays you over time, giving you income and tax flexibility. Life insurance. A policy can fund a buyout if an owner passes unexpectedly. ESOPs. Employee Stock Ownership Plans can let employees buy you out gradually. Private equity or outside investors. Sometimes the best buyer isn’t inside the company. The right strategy depends on your goals, tax situation, and timeline. This is where real advice pays for itself. Step 5: Put It in Writing If you only remember one thing: Write. It. Down. A handshake deal won’t cut it when life happens. A real succession plan should include: A buy-sell agreement. Clear terms on how ownership transfers. Updated operating agreements. So partners know what happens if someone leaves or passes away. Trusts and estate planning documents. To handle taxes and keep the IRS out of your family’s wallet. A funding plan. So there’s cash to make the deal work. This paperwork is your business’s final insurance policy. At Moment, we make sure it’s airtight — and stays updated as life evolves. How Taxes Can Wreck a Great Exit Taxes are the silent killer of wealth transfers. Without smart planning, capital gains, estate taxes, and income taxes can swallow 30–50% of your business sale. Some strategies we help owners consider: Selling stock vs. selling assets (big tax difference) Timing sales over multiple years Using trusts to shift assets ahead of time Taking advantage of lifetime gifting exclusions Using charitable strategies for big gains You built this company. Don’t leave the IRS a tip on the way out. Common Pitfalls That Sink Succession Plans We see the same mistakes over and over: ❌ Waiting too long. Health issues or sudden market downturns can force a bad deal. ❌ Overestimating the sale value. If your number’s off by millions, the plan doesn’t work. ❌ Failing to prepare the next leader. The business can collapse if they’re not ready. ❌ Ignoring taxes. A 7-figure surprise bill is the last thing your family wants. ❌ Not revisiting the plan. Life changes — so should your documents. Real-Life Example: When a Plan Saves the Day One of our clients at Moment was a third-generation owner of a manufacturing company. He assumed his kids would take over — until we sat down and asked them. Turned out, neither wanted the day-to-day headaches. Good thing he asked early. We helped him pivot to an internal buyout with his COO — with a life insurance policy to back the deal if something happened unexpectedly. The business stayed healthy. The family got paid. The team kept their jobs. That’s a win. Bonus: Top 10 Questions to Ask When Planning Your Exit 1️⃣ Who do I really want to take over — and are they ready? 2️⃣ What’s my company really worth? 3️⃣ How do I want to be paid? Lump sum, installments, or mix? 4️⃣ What taxes will I owe? 5️⃣ Who pays for the buyout? 6️⃣ How do I protect my employees? 7️⃣ Is my spouse or family aligned with my plan? 8️⃣ What happens if I pass unexpectedly? 9️⃣ What professionals do I need to get this right? 🔟 What happens if my plan doesn’t go as planned? FAQs on Business Succession Planning Q1: What’s a buy-sell agreement and why do I need one? It spells out exactly how shares are transferred if an owner dies, retires, or exits. Without it, disputes are almost guaranteed. Q2: What if my successor can’t afford to buy me out? That’s where insurance, installment sales, and creative financing come in. Planning makes it possible. Q3: Should I sell to family at a discount? Sometimes — but talk to your advisor first. Big gifts can create big tax issues. Q4: Can I still get income if I exit? Absolutely. Installment sales, consulting agreements, or partial buyouts can provide steady income. Q5: What’s the biggest mistake owners make? Waiting too long and assuming everyone’s on the same page. Spoiler: They rarely are. Final Thoughts: Lock in Your Legacy Business Succession Planning isn’t just another box to check — it’s the final chapter of your life’s work. At Moment Private Wealth, we know owners only get one shot to exit wisely. That’s why we roll up our sleeves, get our hands dirty, and build plans that actually work — so you can step away with confidence. Ready to talk exit planning? Schedule a conversation with a Moment founder today.

You started your business with a vision. You took the risk. You put in the work. You’re seeing the rewards. But here’s the problem—making money is just step one, managing it is step two. You see, it’s not just about how much you make—it’s about how much you keep and how well you use it. That’s where budgeting comes in. It is the foundation of financial planning for business owners. In this guide, I’m going to break down the key steps to building a budget that will give you clarity, control, and the confidence to scale your business Let’s dive in… The Budget Problem Many business owners run their operations without a defined financial strategy. Everyone knows their top-line revenue (it is good coffee shop conversation). Yet nearly no one knows their expenses like they should. They reinvest in the business but fail to monitor their profitability. They anticipate having leftover funds at the month's end but do not actively plan for it. The result? Cash flow issues, unnecessary debt, and missed opportunities for growth. If this sounds familiar, don’t worry—you’re not alone. But the good news is that fixing it is simpler than you think. The Three Buckets of a Business Budget Think of your business finances in three buckets: Fixed Costs – These are your non-negotiable expenses like rent, payroll, and insurance. They don’t change much month to month. Variable Costs – These are expenses that fluctuate, like marketing, advertising, and materials. The key is to control these so they align with your revenue. Profit & Distributions – This is what’s left over. The mistake many business owners make is treating profit as an afterthought. Instead, you need to build it into your budget from the start. You have to know more than just your baseline expenses. You need to know what expenses are set in stone (fixed) and what expenses could be cut at any time (variable). Understanding that provides the framework to know what needs to stay in your business and what can come out as distributions. Step-by-Step: How to Build a Budget That Works Know Your Numbers Start with your revenue: What are you bringing in each month? Track every expense: Where is your money actually going? Identify trends: Are expenses growing faster than revenue? Set a Profit First Mentality Instead of waiting to see what’s left at the end of the month, set a fixed percentage of revenue for profit and pay yourself first. Plan for Taxes Taxes are often a business owner’s biggest surprise expense. Allocate a percentage of revenue each month so you’re never caught off guard. Create Spending Limits Set clear limits for categories like marketing, office supplies, and software. This keeps spending intentional and aligned with your goals. Review & Adjust Monthly A budget isn’t static—it’s a living document. Review it each month and adjust based on your business performance. Common Budgeting Mistakes Mistake #1: Not Separating Business & Personal Finances Keep your business and personal accounts separate. Mixing them creates chaos and makes budgeting nearly impossible. Mistake #2: Overestimating Revenue, Underestimating Expenses Be conservative with revenue projections and realistic with expenses. Hope is not a financial strategy. Mistake #3: Ignoring Emergency Funds Every business needs a buffer. Aim for 3-6 months of expenses in an emergency fund to protect against slow periods or unexpected costs. A strong budget doesn’t limit you—it empowers you: To Reinvest To Scale Further To Take Out Distributions To Feel Confident In Your Next Move Let me be clear ~ You cannot grow a great business without first knowing your numbers. Whether your business is just starting out or already thriving, taking the time to create and maintain a solid budget will be one of the best decisions you make. If you are a business owner doing more than $1,000,000 in income and looking for a team that specializes in you schedule a call with our team. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions received regarding budgeting for business owners: 1. How much should I pay myself as a business owner? There’s no one-size-fits-all answer, but a good rule of thumb is to start with at least 30% of your profit and adjust based on business performance. 2. What percentage of revenue should I allocate for taxes? Set aside 25-30% of revenue for taxes to ensure you’re covered, especially if you don’t have automatic withholdings. 3. How often should I review my budget? At a minimum, review your budget monthly. A quarterly deep dive can help adjust for major shifts in revenue or expenses. 4. What if my revenue is inconsistent? If your income fluctuates, create a baseline budget based on your lowest revenue month to ensure essential expenses are always covered. 5. What’s the best tool for budgeting my business finances? There are great options like QuickBooks, Xero, or even a simple Google Sheet. The key is to choose one and use it consistently. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Your largest lifetime expense will be your tax bill. Take a moment and let that sink in. The biggest bill you will ever pay will be the one you pay to the IRS. That is the bad news. The good news is you can and should be planning around it. You see tax planning for professional athletes is critical given you have one shot to do this right. In this guide, I am going to give you 7 tax planning strategies for professional athletes. Let's dive in... Professional Athletes - Tax Strategies Consider the earning arc as a professional athlete. You are earning a lifetime worth of income in 3-10 years. Most can see that, but here is what most miss… The uniqueness of your tax bill as you're earning that money. You can go from high income (signing bonus)⬆️ to low income (minor leagues)⬇️ to high income (top league)⬆️ to low income (post-playing)⬇️ all in a decade. That means two things: Your tax planning is going to be unique. You will overpay the IRS without proper planning. Consider me, a professional athlete for 10+ years ~ I estimate that I have overpaid the IRS by a few hundred thousand dollars during my playing career. This was due to me not understanding the two concepts above. I failed to have experts in tax planning for professional athletes and I failed to think proactively about this. I thought, I made money so I will owe taxes on it. While on the surface this is correct, I didn’t think to the next level that there could be (and are) ways for me to legally reduce my lifetime tax bill. So, let’s dive into 7 ways that professional athletes can reduce their lifetime tax bill. 1) Qualified Accounts The easiest and most accessible way for professional athletes to reduce their lifetime tax bill is to maximize their qualified accounts. A qualified account is simply a retirement account. All that means it is a special type of account that the government provides you with either a current-year tax benefit or a future-year tax benefit. Here are my three favorite ones for professional athletes: Roth IRA - A Roth IRA is an individual retirement account that provides you no tax benefit on the money you contribute yet provides tax-free growth and distributions in retirement. Example: A player can contribute up to $7,000 in 2025 into a Roth IRA. If this money grows to be worth $50,000 at retirement age (59.5) that entire $50,000 amount can be withdrawn tax-free. ***We often implement a backdoor Roth IRA strategy to avoid income limitations. 401(k) – A 401(k) is the most common form of qualified account. There are three versions professional athletes should be aware of. The traditional 401(k), the Roth 401(k), and the Solo 401(k). Depending on the type of income (W2 vs 1099) and a player’s current tax rate should determine which of these three options an athlete should focus on. Example: In 2024 a player can contribute up to $23,500 as an employee and potentially up to another $46,500 as an employer contribution. This means an athlete could see $70,000 in tax-optimized retirement savings. HSA – An HSA or Health Savings Account is a special type of account designated for qualified medical expenses. So no it is not a typical “retirement” account but it is an extremely powerful qualified account. It is the only triple tax benefit account, meaning the contribution, growth, and distribution (for qualified medical expenses) are tax-advantaged. Example: A player needs to be on a high deductible health care plan (common for players post-playing). This provides them eligibility to contribute up to $8,550 as a family to an HSA. This $8,550 contribution gets deducted from their taxable income, grows tax-free, and can be distributed (for qualified medical expenses) tax-free. 2) Tax Loss Harvesting Consider for a second the fact that an athlete has an opportunity to save far and beyond the limits in just qualified accounts (retirement accounts). This means you as an athlete will have significant money in taxable accounts. These accounts provide you with the opportunity for further tax planning. One key element to consider is tax loss harvesting and here is how it works: Example: You buy a share of a stock for $10 and that stock falls in price to $8. You can sell that position, capture the $2 loss, and immediately rebuy a similar position. This allows you to take your $2 loss and deduct it against your income (saving you money in taxes) while keeping your investment portfolio fully invested. 3) Charitable Giving Giving is about the heart, not the tax benefit. Yet I have never met anyone who wants to give more money to the IRS and less to their favorite charity. Remember how we talked about an athlete's earning arc ~ sharp spikes and steep drops? One way to further take advantage of this is to be strategic about your charitable giving. In short, the most optimal time to give away money is during your playing career when your tax rate is high. Yet, you might want to spread that giving out over decades, long after your player career ends. This is where a Donor Advised Fund comes in and here is how it works: Example: A Donor Advised Fund (DAF) is a special type of account that allows someone to give a large sum of money in a given year, get the full tax benefit in that year, and then provides the optionality to distribute that money to charity over time (often years or decades). ***Pro Tip: You can further maximize this strategy by giving away appreciated stock to get a double tax benefit. If possible, never give away cash as this is the least efficient way to give away money. 4) Tax Efficient Investing Remember how I talked about as an athlete you have the opportunity to save far more money than qualified accounts allow. Because of this opportunity, you will have significant money in a taxable brokerage account. Well, this is where tax-efficient investing comes in and plays a key role in reducing your tax bill as a professional athlete. Here is how it works: Example: If you invest in certain ways, you can defer (push out) the gains from your investments longer. Consider an investment of $5 that grows to be worth $6 at the end of one year. If you can avoid taxes on your one-dollar gain you will have the opportunity to grow your money quicker than if you had to pay 25 cents in taxes that year. In short, tax-efficient investing is the art of building a portfolio that allows you to control your tax bill, compound your money quicker, and let you keep more of your hard-earned money. If you are interested in a deeper dive into how we think about investing you can check the Moment Guide to Investing for Professional Athletes. 5) State Residency Taxes hit you in a few ways as a professional athlete. The first bite goes to the federal government (top tax rate of 37%). The next bite goes to the state in which you either earned the money or you are a resident. This can range from 0% (Florida) to 13.3% (California). One of the single biggest tax planning moves as a professional athlete is to plan around state residency. It works like this: Example: If you can establish residency in a low or no state income tax state such as Florida or Tennessee this could save you hundreds of thousands if not millions of your lifetime tax bill. Consider an athlete receiving a $5,000,000 signing bonus. If that bonus is taxed in FL no state income taxes are due. If that bonus is taxed in California you would owe $665,000. ***Pro Tip: To navigate and establish state residency work with a qualified financial team that understands the nuances around multi-state taxation and athlete residency. 6) Income Shifting You either plan now or you will regret it later. That has certainly been true for me with my tax bill and still rings true for nearly every professional athlete we serve. One of the most proactive ways to plan is to always be running multi-year tax projections. In short, this means we are working to project what an athlete’s tax bill will be this year, next year, and into the future. When this is done correctly in coordination with an athlete's on-field team (Agency) athletes can potentially look to save big money on their taxes. Here is how it works: Example: If an athlete receives a signing bonus of $500,000, the standard payout could be all at once or 50% year 1 and 50% year 2. Yet, what that athlete should be doing is having a qualified team run projections to see if we allocated a specific amount of income in year 1 vs year 2 could save them money on their tax bill. ***Pro Tip: There is more nuance to this not covered in this blog but just know that if you are blindly allocating income to certain years chances are you will be leaving money on the table. 7) Tax Deductions The Trump tax cuts in 2017 significantly reduced the amount of tax deductions professional athletes could take. Yet that doesn’t mean there are zero deductions for professional athletes. The key here is to understand which expenses you incur reflect the type of income you are earning. Example: All of your off-the-field money (1099 income) and the expenses that incur with that have the ability to be deducted. This is things like travel, food, and agent fees. Your on-field money (W2) does not allow for those same deductions. ***Pro Tip: Make sure you get an itemized bill from your agent reflecting agency fees for on-field income versus off-field income. The seven strategies above are level one tax planning. Every professional athlete should be considering these moves. Depending on your situation tax planning as an athlete can significantly reduce your lifetime tax bill. Yet what is most important is that you are considering (and planning) what ways you can implement to reduce your lifetime tax bill. After all, it will be your largest lifetime expense. If you are a future, current, or former professional athlete looking for help reducing your tax bill, let’s talk. Moment was built to serve the specific needs of professional athletes. You can book a call today and speak to a founder. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions received regarding athletes and money: How does Moment help professional athletes with tax planning? For us, it is all about presenting strategies to athletes that might make sense for them and then determining what is worth pursuing. What is the biggest tax mistake you see with professional athletes? The biggest mistake we see is not planning in advance. There is a big difference between tax planning and tax preparation. How does Moment work with CPA firms? We work hand in hand with CPA firms that specialize in professional athletes. This way our clients are getting specific advice regarding their tax planning moves. What is unique about tax planning for professional athletes? The short earning arc, multi-state taxation, and income fluctuations provide athletes with circumstances often unique to them. We must account for all of these factors when looking at tax planning for professional athletes. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Running a business is demanding, and managing taxes can feel overwhelming. But with smart tax strategies, you can lower your tax bill, keep more money in your business, and grow wealth efficiently. Below are key tax strategies every business owner should use to maximize savings and avoid costly mistakes. Are you looking for a comprehensive blog on wealth management? Check out this Blog. Why Tax Planning Matters for Business Owners For business owners, taxes are often the biggest expense. Without a solid tax strategy, you could be paying tens of thousands of dollars more than necessary each year. The good news? With the right planning, you can minimize your tax burden and maximize your business’s growth potential. Avoiding Common Tax Mistakes Many entrepreneurs make the mistake of thinking tax planning is something to consider only at the end of the year. In reality, effective tax planning is a year-round strategy. Business owners who neglect tax planning often find themselves facing unexpected tax bills, penalties for underpayment, and missed opportunities for deductions and credits. Why Tax Planning is Essential: Keeps More Money in Your Business: Every dollar saved in taxes is a dollar that can be reinvested in your business to fuel growth. Helps Avoid IRS Penalties: Failing to pay estimated taxes or misreporting income can lead to hefty fines. Provides Financial Stability: Knowing your tax obligations in advance helps you manage cash flow more effectively. Prepares You for the Future: Smart tax planning doesn’t just reduce your current tax bill; it also helps you build long-term wealth. By understanding and applying tax strategies, business owners can reduce their liabilities, optimize cash flow, and focus on growth. Let’s explore how. 1. Choose the Right Business Structure Your business structure has a huge impact on your tax liability. Choosing the right one can help you minimize self-employment taxes and qualify for special deductions. Common Business Structures: Sole Proprietorship: Easy to set up, but offers no tax separation between business and personal income. LLC (Limited Liability Company): Provides legal protection and allows flexible tax options. S-Corporation: Let owners avoid self-employment taxes on distributions and qualify for the Qualified Business Income (QBI) Deduction. C-Corporation: Best for businesses planning to scale but subject to double taxation. How the Right Structure Saves You Money: S-Corps can help you save on self-employment taxes by allowing you to pay yourself a reasonable salary and take additional profits as distributions, which are not subject to payroll taxes. LLCs offer flexibility to be taxed as a sole proprietorship, partnership, S-Corp, or C-Corp, depending on what’s most tax-efficient. Example: James restructured his business as an S-Corp, reducing his taxable income by $200,000 annually using the QBI Deduction, saving $70,000 per year in taxes. 🔗 Learn about tax-efficient business structures. 2. Maximize Deductions Tax deductions reduce your taxable income, helping you keep more of your profits. Key Deductions for Business Owners: Home Office Deduction: Deduct a portion of your rent, utilities, and internet. Section 179 Depreciation: Deduct the full cost of business equipment in the year of purchase. Travel & Marketing Expenses: Deduct business trips, advertising, and client entertainment. Health Reimbursement Arrangements (HRA): Reimburse yourself for medical expenses tax-free. How to Maximize Deductions: Track Every Expense: Use accounting software to capture every deductible cost. Document Thoroughly: Keep receipts and detailed records to substantiate deductions in case of an audit. Bundle Expenses: If possible, make large purchases before the end of the fiscal year to increase deductions. Example: James claimed $130,000 in deductions annually, saving $45,500 per year at a 35% tax rate. 🔗 Explore business deduction strategies. 3. Contribute to Retirement Accounts Retirement accounts are a powerful tool to reduce taxes and build wealth. Best Retirement Plans for Business Owners: Solo 401(k): High contribution limits for self-employed individuals. SEP IRA: Contribute up to 25% of net earnings. Defined Benefit Plan: Ideal for high earners wanting to maximize tax-deferred savings. How Retirement Contributions Save Taxes: Contributions to these accounts are tax-deductible, reducing your taxable income for the year. Additionally, the investments within these accounts grow tax-deferred, allowing your money to compound faster. Example: By contributing $100,000 annually to his Solo 401(k) and Defined Benefit Plan, James saved $35,000 per year in taxes while growing his retirement fund. 🔗 Learn about tax-efficient retirement planning. 4. Utilize Tax Credits Tax credits offer a dollar-for-dollar reduction in your tax bill, making them incredibly valuable. Top Tax Credits for Business Owners: R&D Tax Credit: For businesses investing in innovation and development. Work Opportunity Tax Credit: For hiring employees from targeted groups. Energy Efficiency Credits: For adopting sustainable practices in your operations. How to Leverage Tax Credits: Keep Detailed Records: Documentation is key to claiming credits. Consult a Tax Professional: Some credits require complex calculations. Stay Updated: Tax laws change frequently, and new credits may become available. Example: James claimed $27,000 in tax credits annually, including the R&D Tax Credit and Work Opportunity Tax Credit. 🔗 Discover tax credits for business owners. 5. Pay Estimated Taxes Quarterly Paying estimated taxes helps avoid IRS penalties and keeps your business finances on track. Estimated Tax Tips: Make payments quarterly (April, June, September, January). Base payments on expected income to avoid penalties. Use accounting software or a tax professional to stay organized. Why Quarterly Payments Matter: Missing quarterly payments can result in underpayment penalties. Regular payments also help you manage your cash flow by spreading out your tax obligations throughout the year. Example: James paid his taxes on time every quarter, avoiding $10,000 per year in penalties that Eric faced due to late payments. 🔗 Get help managing estimated taxes. Case Study A Tale of Two Business Owners: Tax Planning vs. No Planning Meet James and Eric: Two Entrepreneurs, Two Different Outcomes James and Eric both run successful businesses, earning $1,000,000 per year. James owns a manufacturing company, while Eric runs a marketing agency. Both have strong profits, but their approach to tax planning makes all the difference. By age 60, James has $12.5 million in wealth, while Eric struggles with $3.2 million and high tax debt. Here’s how tax strategies changed their financial future. James: The Business Owner Who Used Tax Strategies James understood that taxes were his biggest expense and took a strategic approach to managing them. Step 1: He Chose the Right Business Structure James structured his company as an S-Corp to minimize self-employment taxes. He also took advantage of the Qualified Business Income (QBI) Deduction, allowing him to deduct 20% of his business income, reducing his taxable income from $1,000,000 to $800,000. At a 35% tax rate, this saved him $70,000 per year. Step 2: He Maximized Deductions He deducted $50,000 annually for home office expenses, travel, and marketing costs. He wrote off $80,000 per year for vehicle and equipment purchases using Section 179 depreciation. Total deductions of $130,000 lowered his taxable income to $670,000, saving $45,500 per year in taxes. Step 3: He Contributed to Retirement Accounts James used a Solo 401(k) and Defined Benefit Plan, contributing $100,000 annually. At a 35% tax rate, this saved him $35,000 per year in taxes while building a multi-million-dollar retirement fund. Step 4: He Claimed Tax Credits James took advantage of: The R&D Tax Credit, saving $15,000 annually. The Work Opportunity Tax Credit for hiring employees, saving $12,000 per year. Step 5: He Paid Estimated Taxes James avoided penalties by paying estimated taxes every quarter, preventing surprise IRS bills and saving $10,000 per year. Final Outcome: Financial Success By 60, James had accumulated: Retirement savings: $6M Investment portfolio: $3M Real estate holdings: $2M Cash & liquid assets: $1.5M Total Wealth: $12.5M 🔗 Learn about tax planning for business owners. Eric: The Business Owner Who Didn’t Plan Eric assumed that paying high taxes was just part of being a business owner. He didn’t plan ahead, and it cost him millions over his career. Mistake 1: He Chose the Wrong Business Structure Eric remained a sole proprietor, paying self-employment taxes on all profits. He never took advantage of the QBI Deduction, losing $70,000 in annual tax savings. Mistake 2: He Missed Deductions Eric didn’t track expenses properly, missing out on $45,500+ per year in tax savings from deductions. Mistake 3: He Ignored Retirement Contributions Without a retirement plan, Eric paid taxes on his entire $1M income each year instead of sheltering it in tax-deferred accounts, losing $35,000 annually in potential tax savings. Mistake 4: He Didn’t Use Tax Credits Eric missed out on $27,000+ per year in available tax credits, including the R&D Tax Credit and hiring incentives. Mistake 5: He Paid Taxes Late Because he didn’t plan for quarterly taxes, he was hit with IRS penalties and interest, costing him $10,000 per year. Final Outcome: Financial Struggles By 60, Eric had accumulated: Retirement savings: $1M Investment portfolio: $700K Real estate holdings: $1M Cash & liquid assets: $500K Total Wealth: $3.2M 🔗 Get expert tax planning to avoid these mistakes. The $5.7 Million Tax Planning Gap (Adjusted for Real Tax Savings) Tax Strategy James' Annual Tax Savings Total Over 30 Years Eric's Tax Savings Total Difference QBI Deduction $70,000/year $2.1M $0 +$2.1M Deductions Used $45,500/year $1.365M $0 +$1.365M Retirement Contributions $35,000/year $1.05M $0 +$1.05M Tax Credits $27,000/year $810K $0 +$810K Avoided Penalties $10,000/year $300K $0 +$300K Total Tax Savings $5.7M $0 +$5.7M Because James planned ahead, he ended up $5.7 million wealthier than Eric, giving him financial freedom in retirement. Lessons from James vs. Eric ✅ Start Tax Planning Early – The sooner you start, the more you save. ✅ Use Every Deduction – Track expenses and claim every tax break available. ✅ Maximize Retirement Contributions – Shelter income from taxes while growing wealth. ✅ Claim Tax Credits – These directly reduce taxes and add up over time. ✅ Work with a Tax Professional – Expert guidance pays for itself in savings. 🚀 Want to avoid Eric’s mistakes? Schedule a tax strategy session today. James' tax planning allowed him to retire comfortably at 60, while Eric's lack of preparation forced him to delay retirement and struggle financially. By implementing the tax-efficient, diversified strategies outlined in this blog, entrepreneurs can ensure long-term financial security and avoid a retirement crisis. Want to start planning today? Contact us for a personalized tax strategy. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Frequently Asked Questions (FAQ) – Tax planning for business owners 1. What are the best tax-saving strategies for small business owners? The best strategies include choosing the right business structure, maximizing deductions, contributing to retirement accounts, utilizing tax credits, and paying estimated taxes quarterly. 2. How does an S-Corp save business owners money on taxes? An S-Corp allows you to pay yourself a salary while taking additional profits as distributions, which are not subject to self-employment taxes, potentially saving thousands annually. 3. What is the Qualified Business Income (QBI) Deduction? The QBI Deduction allows eligible business owners to deduct up to 20% of their qualified business income, reducing their taxable income significantly. 4. What business expenses are tax-deductible? Common deductible expenses include home office costs, vehicle expenses, marketing, travel, office supplies, and health insurance premiums. 5. How can retirement contributions lower my tax bill? Contributions to accounts like a Solo 401(k) or SEP IRA reduce your taxable income, saving you money on your current tax bill while building future wealth. 6. What tax credits are available to business owners? Popular credits include the R&D Tax Credit, Work Opportunity Tax Credit, and Energy Efficiency Credits, which directly reduce your tax liability. 7. Why is it important to pay estimated taxes quarterly? Paying estimated taxes helps avoid IRS penalties and interest charges while ensuring you don’t face a large tax bill at year-end. 8. Can I deduct health insurance premiums as a business owner? Yes, self-employed business owners can deduct health insurance premiums for themselves, their spouses, and dependents. 9. How do I choose the best business structure for tax purposes? Choosing the right structure depends on your income, business size, and goals. Consulting a tax professional can help you decide between LLCs, S-Corps, and C-Corps. 10. What happens if I don’t plan for taxes properly? Failing to plan can lead to overpaying taxes, missing deductions, and facing penalties for underpayment. Proactive tax planning helps avoid these costly mistakes. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Selling your business is one of the most significant financial decisions you'll make. Whether you’re planning for retirement, starting a new venture, or simply moving on, the process requires thoughtful strategy, clear organization, and expert advice. In this guide, we’ll walk you through the key steps to successfully sell your business and maximize your outcome. If you are looking for a comprehensive wealth management blog for business owners - Check it out here. Why Selling a Business Requires Strategic Planning Selling a business isn’t just about finding a buyer and signing papers. It's about optimizing your business's value, preparing financials, minimizing tax liability, and ensuring a smooth transition. Without a strategic approach, you could leave substantial money on the table. Key Benefits of a Thoughtful Exit Strategy: Maximize the sale price. Minimize tax consequences. Preserve business continuity and legacy. Ensure a stress-free transition. 🔗 Learn how our team can guide your exit strategy 1. Get a Business Valuation Understanding what your business is worth is the foundation of a successful sale. A professional business valuation assesses revenue, profitability, growth potential, market conditions, and assets. Valuation Factors to Consider: Revenue and EBITDA Industry benchmarks Customer base and contracts Intellectual property 📌 Tip: Hire a certified business appraiser or advisor to get a realistic, market-based valuation. 2. Organize Your Financials Buyers want to see a clear, accurate financial picture. Organized books increase buyer confidence and streamline the process. Documents You’ll Need: Profit & Loss statements (3–5 years) Balance sheets Tax returns Cash flow statements 📌 Tip: Clean up your financials well before you list the business. 3. Optimize Business Operations A business that runs smoothly without the owner is more appealing. Show buyers that your systems and team are capable. Operational Enhancements: Delegate daily tasks Document SOPs (Standard Operating Procedures) Retain key employees 📌 Tip: Reduce owner dependency—your role shouldn’t be irreplaceable. 4. Prepare for the Tax Impact Taxes can take a significant bite out of your sale proceeds. Structuring the sale properly can help reduce the tax burden. Key Tax Considerations: Capital gains vs. ordinary income Asset sale vs. stock sale Installment sales for tax deferral Qualified Small Business Stock (QSBS) exclusions 📌 Tip: Work with a tax advisor to create a tax-efficient deal structure. 🔗 Learn more about tax planning 5. Identify the Right Buyer Finding the right buyer is about more than price. The ideal buyer aligns with your goals, whether that's preserving your brand or rewarding loyal employees. Types of Buyers: Strategic buyers Private equity firms Management buyouts Individual entrepreneurs 📌 Tip: Consider your legacy and long-term vision when selecting a buyer. 6. Negotiate the Deal Negotiations determine more than just the sale price—they shape your exit terms, liabilities, and future role. Key Deal Elements: Purchase price and earnouts Payment structure (cash, stock, installments) Non-compete agreements Transition timelines 📌 Tip: Hire a legal and financial team to protect your interests during negotiations. 7. Plan Your Life After the Sale Selling your business marks the beginning of a new chapter. Consider what’s next for your life and wealth. Post-Sale Planning Areas: Investment strategy for sale proceeds Estate and legacy planning Philanthropic goals Entrepreneurship or advisory roles 📌 Tip: Develop a comprehensive wealth plan before you close the deal. A Tale of Two Business Owners: Planning vs. Winging It Let’s look at two business owners—Susan and Tom—both preparing to sell their businesses after 20 years. Susan: The Strategic Seller Susan ran a successful marketing firm. When she began thinking about an exit, she followed the exact steps outlined in this guide: She hired a professional to value her business. She cleaned up her financials, showcasing steady growth and profitability. Susan optimized operations by training her management team and documenting processes. She worked with a tax advisor to reduce her liability, opting for a stock sale with capital gains tax treatment. She marketed her business strategically and attracted multiple offers. With a strong team in place, the buyer was confident in taking over with minimal disruption. Result: Susan sold her business for $4.5 million, paid $700,000 in taxes, and invested the rest into a diversified portfolio and retirement accounts. She exited with peace of mind, financial security, and a continued legacy. Tom: The Reactive Seller Tom owned a similar-sized business in the same industry. But he didn’t plan ahead: He relied on guesswork for pricing and skipped a formal valuation. His financial records were disorganized, making due diligence difficult. Tom handled most operations himself, and the buyer viewed this as risky. He accepted the first offer out of urgency—an asset sale with a lower valuation. Without proper tax planning, he faced higher ordinary income tax liability. Result: Tom sold for $2.8 million, paid $1.1 million in taxes and fees, and walked away with significantly less despite having a comparable business. The process was stressful, rushed, and left him with regrets. Takeaway: Planning matters. A few smart moves can mean millions more in net proceeds—and a much smoother transition. Want to start planning today? Contact us for a personalized exit plan. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. 1. How do I know when it’s the right time to sell my business? When you’ve achieved your goals, market conditions are favorable, and your business is well-positioned. 2. How is my business valued? Valuation considers financial performance, growth potential, industry factors, and market trends. 3. What documents do I need to sell my business? P&L statements, tax returns, balance sheets, and contracts are key documents. 4. Can I sell my business and still be involved? Yes, many deals include consulting or transition agreements. 5. What taxes will I owe when I sell? You may owe capital gains tax, income tax, or alternative minimum tax depending on deal structure. 6. Should I sell my business assets or the entire entity? It depends on your goals and tax situation—each structure has pros and cons. 7. How long does it take to sell a business? It can take 6–12 months depending on market conditions and deal complexity. 8. Do I need a business broker? A broker can help find qualified buyers, negotiate deals, and market your business. 9. How do I prepare my business for sale? Organize financials, optimize operations, and reduce reliance on the owner. 10. What should I do with the proceeds after selling? Work with a financial advisor to create a long-term wealth management plan. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Entrepreneurs build businesses. But many forget to build their own retirement plan. Without a 401(k) from an employer, you need a strategy. If you wait too long, you might end up working forever. This guide breaks down easy steps to retire rich. If you aren't looking to retire but still want to maximize your finances as an entrepreneur check out our complete guide to wealth management for entrepreneurs here. Why Entrepreneurs Must Plan for Retirement Unlike employees, entrepreneurs get no automatic retirement benefits. You must: Save for your own future. Use tax-smart investment plans. Balance business growth with personal wealth. Protect yourself from financial risks. Without a plan, you may run out of money in old age. But if you start now, you can retire on your terms. 5 Steps to a Strong Retirement Plan 1. Open a Retirement Account Entrepreneurs have powerful savings options: Solo 401(k) – Best for business owners with no employees. Max contribution: $70,000/year. SEP IRA – Good for business owners with employees. You can contribute 25% of net earnings. SIMPLE IRA – A low-cost plan for businesses with fewer than 100 workers. Defined Benefit Plan – Best for high-income earners. Allows the largest tax-deferred savings. Smart Savings Tips: ✅ Over 50? Make catch-up contributions to grow your money faster. ✅Contributions lower taxes while boosting wealth. ✅ Choose a plan based on income, business size, and future goals. Example: Lisa, a consultant, started saving $35,000 a year in a Solo 401(k) at age 35. She stayed consistent, never missing a year. By 60, with 7% average growth, her savings had grown to $2.7M. When she decided to retire, her investments provided $100,000 per year in passive income, allowing her to enjoy life without financial stress. Learn more about retirement accounts. 2. Invest Beyond Your Business Relying only on your business is risky. You need other investments. Where to Put Your Money: Stocks & Index Funds – Grow wealth with dividends and capital gains. Real Estate – Rental income covers expenses in retirement. Tax-Free Accounts – Roth IRAs and Roth 401(k)s let you withdraw tax-free later. Example: Mark, a restaurant owner, invested $500,000 in stocks and real estate over time. He purchased two rental properties worth $250,000 each and invested in low-cost index funds. By age 60, his rentals had appreciated to $1 million total, and his stock portfolio had grown to $500,000. With passive rental income covering 60% of his expenses, Mark was able to retire without relying on business income. Read about investment strategies. 3. Plan Your Business Exit One day, you will leave your business. A solid exit plan ensures you get paid well. Your Exit Options: Sell the business – Cash out to fund retirement. Transfer ownership – Pass it to family or employees. Merge with another company – Get paid while staying involved. Steps to a Smooth Sale: ✅ Get a business valuation so you know what it's worth. ✅ Structure a tax-friendly sale to keep more money. ✅ Plan early so you don’t have to sell in a rush. Example: Jake, a tech entrepreneur, built his company over 20 years. At 50, he worked with a financial planner to increase profitability before selling. At 55, he sold the company for $3M, keeping $2.5M after taxes. He reinvested the funds into stocks and annuities, creating a steady retirement income of $150,000 per year. Explore exit planning strategies. 4. Use Smart Tax Strategies Taxes can eat into your savings if you don’t plan well. Here’s how to keep more of your money. 3 Tax Moves for Entrepreneurs: Max out retirement contributions – Reduces taxable income today. Roth Conversions – Pay taxes now for tax-free withdrawals later. Deferring Income – Delay taking profits in high-tax years. Example: Sarah, a marketing agency owner, learned about Roth conversions in her 40s. She moved $500,000 from her traditional 401(k) into a Roth IRA in lower-income years. By 65, her Roth IRA had grown to $1.2M, and she never had to pay taxes on withdrawals. Because of this strategy, she saved $250,000 in future taxes, letting her keep more of her wealth. Learn about tax-efficient retirement planning. 5. Protect Your Wealth from Risk Your retirement savings need protection from lawsuits, business failures, and accidents. Shield Your Retirement Savings With: ✅ LLC or S-Corp – Keeps business debts from touching personal wealth. ✅ Asset Protection Trusts – Protects savings from lawsuits. ✅ Insurance Policies – Cover business risks so savings stay untouched. Example: John, a consultant, was sued for business-related issues. Luckily, he had set up his business as an LLC and had an umbrella insurance policy. His $2M in retirement savings stayed safe, and he continued to live comfortably in retirement. Without these protections, he might have lost half of his savings to legal fees. Read more about asset protection. Case Study A Tale of Two Entrepreneurs: A $7 Million Retirement Gap Meet James and Eric: Two Business Owners, Two Different Futures James and Eric both started businesses at 30 years old. James built a software consulting firm. Eric ran a construction company. Each made $250,000 per year. James planned for retirement. Eric didn’t. At 60, James had $7.6 million in retirement savings. Eric had $550,000 and had to keep working. Financial Metric James (Planned) Eric (Did Not Plan) Difference Solo 401(k) Savings $3.1M $0 +$3.1M Investment Portfolio $700K $0 +$700K Real Estate Value $1M $0 +$1M Business Sale Proceeds $2.8M $500K +$2.3M Total Wealth at 60 $7.6M $550K +$7M Let’s break down why. James: The Entrepreneur Who Planned for Retirement James knew his business wouldn’t last forever. He took four smart steps to secure his future. Step 1: He Used Tax-Advantaged Retirement Accounts He started a Solo 401(k) at 30. He contributed $25,000 per year, increasing to $35,000 after 50. His 401(k) grew to $3.1 million, assuming a 7% return. Step 2: He Built Income Beyond His Business He invested $10,000 per year in stocks and index funds. He bought two rental properties worth $250,000 each. His investments reached $700,000. His real estate grew to $1 million. Step 3: He Had a Business Exit Strategy At 50, he hired a consultant to increase profits. At 58, he sold 40% of his business for $1.5 million. At 60, he sold the rest for $2 million, walking away with $2.8 million after taxes. Step 4: He Used Smart Tax Strategies He converted $500,000 into a Roth IRA for tax-free withdrawals. He saved $300,000 in taxes by using Roth conversions and tax-loss harvesting. James’ Final Wealth at 60 Solo 401(k): $3.1M Investment portfolio: $700K Real estate: $1M Business sale proceeds: $2.8M Total Retirement Wealth: $7.6M James retired early, debt-free, and stress-free. His rental income and dividends covered his living expenses. Eric: The Entrepreneur Who Didn’t Plan Eric assumed his business was his retirement plan. He reinvested all profits back into the company but saved nothing. Step 1: He Ignored Retirement Accounts He never opened a Solo 401(k) or IRA. He missed out on 30 years of compound growth. If he had saved $25,000 per year, he’d have $3.1 million like James. Step 2: He Didn’t Invest Beyond His Business He never bought stocks or real estate. His only asset was his company. When business slowed, he had no backup income. Step 3: He Struggled to Sell His Business At 55, he tried to sell but couldn’t get his asking price. By 60, the value dropped to $700,000. After taxes, he walked away with only $500,000. Step 4: He Had to Keep Working Without passive income, he had to keep withdrawing savings. He delayed retirement until 67. He downsized his lifestyle to stretch his money. Eric’s Final Wealth at 60 Business sale proceeds: $500K Personal savings: $50K Real estate assets: None Investment portfolio: None Total Retirement Wealth: $550K Eric had to take a part-time job to cover expenses. The $7 Million Retirement Gap Financial Metric James (Planned) Eric (Did Not Plan) Difference Solo 401(k) Savings $3.1M $0 +$3.1M Investment Portfolio $700K $0 +$700K Real Estate Value $1M $0 +$1M Business Sale Proceeds $2.8M $500K +$2.3M Total Wealth at 60 $7.6M $550K +$7M James ended up $7 million richer because he planned ahead. Eric relied only on his business, which left him financially stranded. Lessons from James vs. Eric ✅ Start Early: Even small contributions grow over time. ✅ Diversify Investments: Never depend only on your business. ✅ Have an Exit Plan: A structured business sale brings security. ✅ Use Tax Strategies: Maximize retirement accounts and Roth conversions. ✅ Create Passive Income: Stocks and real estate provide stability. James' retirement planning allowed him to retire comfortably at 60, while Eric's lack of preparation forced him to delay retirement and struggle financially. By implementing the tax-efficient, diversified strategies outlined in this blog, entrepreneurs can ensure long-term financial security and avoid a retirement crisis. Want to start planning today? Contact us for a personalized retirement strategy. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. What is the best retirement plan for self-employed entrepreneurs? The best plan depends on your business and income. A Solo 401(k) is great for those with no employees. A SEP IRA works well for business owners with staff. A Defined Benefit Plan allows the highest tax-advantaged savings for high earners. How can I save for retirement while reinvesting in my business? Set aside a fixed percentage of income in a retirement account each year. Keep investing in stocks, real estate, or tax-free accounts to build wealth outside your business. Never put 100% of your money into the company. What tax benefits do entrepreneurs get for retirement savings? Retirement contributions lower taxable income. Pre-tax plans like Solo 401(k)s and SEP IRAs grow tax-deferred. Roth accounts allow for tax-free withdrawals in retirement. How do I retire if my wealth is tied to my business? You need an exit plan. Sell to an outside buyer, employees, or family. Use sale proceeds to fund retirement accounts. Avoid waiting until the last minute to sell. What’s the smartest way to invest for retirement? Don’t rely only on your business. Invest in stocks, real estate, and tax-free accounts. Build passive income streams like rental properties or dividend stocks for stability. Can I use a Roth IRA for retirement savings? Yes! If you make too much, use a Backdoor Roth IRA. This moves money from a traditional IRA to a Roth IRA for tax-free withdrawals later. A Roth Solo 401(k) is another option. What happens to my retirement savings if my business fails? If your business shuts down, your retirement savings stay safe. Solo 401(k)s, IRAs, and Roth accounts are protected. Never mix business and retirement funds. How much should entrepreneurs save for retirement? Aim to save 15-25% of your income. Build multiple income sources like stocks, rental properties, and dividends to reduce risk. What insurance helps protect retirement savings? Get umbrella insurance, key person insurance, and disability insurance. These policies protect you if your business suffers or you can’t work. How do I make sure my savings last in retirement? Use a 3-4% withdrawal rule to avoid running out of money. Keep a mix of investments for stability. Plan tax-efficient withdrawals so you keep more of what you saved. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

As a business owner, understanding and implementing effective tax strategies can be a game-changer for your financial success. Tax planning is not just about compliance; it’s about strategically positioning your business to minimize liabilities and maximize savings. In this comprehensive guide, we’ll explore key tax strategies, real-world examples, and actionable insights to help you navigate the complexities of the tax landscape. Looking for a full tax planning guide click here. Why Tax Strategies Matter for Business Owners Effective tax strategies can: Reduce your tax liability, leaving more capital for growth. Ensure compliance and avoid costly penalties. Align your business structure with your financial goals. Provide peace of mind during tax season. Tax planning is not a one-size-fits-all approach. It requires understanding your unique business model, industry, and financial goals. Key Tax Strategies for Business Owners 1. Choose the Right Business Structure Your business structure significantly impacts your tax obligations. The most common structures include: Sole Proprietorship: Simple to set up but subject to self-employment taxes on all profits. Partnership: Offers flexibility but shares similar tax obligations as sole proprietors. S-Corporation: Allows for tax savings through reasonable salary and dividend distributions. LLC: Offers flexibility in taxation (can be taxed as a sole proprietor, partnership, or corporation). Choosing the right structure requires evaluating factors such as income, business size, and long-term goals. Each structure offers unique benefits, but improper selection can result in higher tax burdens or compliance risks. Example: A graphic design business earning $150,000 annually saved $15,000 in taxes by transitioning from a sole proprietorship to an S-corp, leveraging salary distributions and dividend income. This change also improved the owner’s ability to invest back into the business and enhanced financial stability. Learn more about choosing the right business structure. 2. Maximize Deductions and Credits Business deductions and tax credits are powerful tools to lower taxable income. Some common deductions include: Home Office Deduction: If you use a dedicated space in your home for business, you can deduct related expenses. Vehicle Expenses: Deduct mileage or actual expenses for vehicles used for business purposes. Professional Services: Costs for accountants, legal advice, and consultants are fully deductible. Employee Benefits: Contributions to employee health insurance or retirement plans can reduce taxable income. Deep Dive: Specialized Deductions and Strategies Startup Costs: Deduct up to $5,000 in business startup costs during your first year of operation. Technology Expenses: Software subscriptions, website hosting, and cloud services are eligible deductions. Research and Development (R&D) Tax Credit: Particularly valuable for tech and manufacturing businesses. Example: A marketing firm offering a 401(k) match for employees reduced its taxable income by $30,000 annually while retaining top talent. By reinvesting the tax savings into advanced analytics tools, the firm improved client results and increased revenue by 10%. Discover tax deduction strategies. 3. Leverage Retirement Contributions Retirement accounts provide dual benefits: reducing taxable income and securing your financial future. Options include: SEP IRA: Ideal for small businesses and allows contributions up to 25% of compensation or $66,000 (whichever is lower). Solo 401(k): For sole proprietors, combining employee and employer contributions up to $66,000. Defined Benefit Plan: Offers the highest contribution limits, suitable for high-income earners. Deep Dive: Tax-Deferred Growth Tax Advantages: Contributions are made pre-tax, reducing current-year liabilities. Compounding Benefits: Earnings grow tax-free until withdrawal, maximizing long-term growth. Plan Customization: Defined benefit plans allow owners to adjust contributions based on income fluctuations. Example: A boutique owner contributed $50,000 annually to a Solo 401(k), reducing taxable income while growing a retirement nest egg. Over five years, these contributions, combined with investment growth, added $300,000 to their retirement savings, ensuring long-term security. Explore retirement planning options. 4. Optimize Depreciation of Assets Depreciation allows you to deduct the cost of assets over their useful life. Key depreciation methods include: Section 179 Deduction: Deduct the full cost of qualifying assets (e.g., equipment, vehicles) in the year of purchase. Bonus Depreciation: Deduct up to 100% of the cost of certain assets in the year they are placed in service. Deep Dive: Types of Assets Eligible for Depreciation Real Property: Buildings, warehouses, and office spaces qualify for depreciation over 39 years. Equipment and Machinery: Depreciation over 5-7 years. Technology: Computers and software can often be fully deducted under Section 179. Example: A construction company purchased $500,000 worth of equipment and claimed $400,000 in bonus depreciation, significantly reducing taxable income. The savings enabled them to hire additional staff, improving project completion times and increasing revenue. Learn about asset depreciation strategies. 5. Manage Self-Employment Taxes Self-employment taxes (Social Security and Medicare) can take a significant bite out of your income. Strategies to manage these include: S-Corp Election: Pay yourself a reasonable salary and take the remaining profits as distributions, which are not subject to self-employment taxes. Maximize Deductions: Reduce net income by claiming all eligible business expenses. Deep Dive: Advanced Techniques Retirement Plan Contributions: Reduce taxable self-employment income. Health Insurance Premiums: Deduct premiums directly from self-employment income. Qualified Business Income Deduction: Small businesses may deduct up to 20% of qualified business income. Example: An IT consultant earning $120,000 reduced self-employment taxes by $10,000 annually by transitioning to an S-corp and optimizing deductions. This allowed the consultant to reinvest in professional certifications, increasing billable rates by 20%. Find out how to manage self-employment taxes. 6. Plan Quarterly Estimated Payments Avoid penalties and interest by staying ahead of your tax obligations with quarterly payments. Calculate estimated taxes based on: Expected income. Deductions and credits. Previous year’s tax liability (safe harbor rule). Deep Dive: Streamlining Payments Automated Systems: Use tax software to calculate and schedule payments. Review Regularly: Adjust payments quarterly based on income changes. Safe Harbor Rule: Ensure at least 90% of current-year taxes or 100% of prior-year taxes are paid. Example: A restaurant owner who struggled with quarterly tax payments implemented automated systems to calculate and remit taxes. This reduced stress, avoided $3,000 in penalties, and improved cash flow management throughout the year. Read more about managing estimated tax payments. 7. Take Advantage of Tax-Free Benefits Some business benefits are tax-free, reducing your tax liability while providing perks for employees and yourself. These include: Health Savings Accounts (HSAs): Contributions are tax-deductible, and withdrawals for medical expenses are tax-free. Education Assistance: Cover up to $5,250 annually in employee education costs, tax-free. Commuter Benefits: Provide tax-free transportation or parking benefits to employees. Deep Dive: Additional Tax-Free Opportunities Dependent Care Assistance: Offer up to $5,000 annually in tax-free childcare benefits. Wellness Programs: Provide fitness subsidies or wellness programs as tax-free benefits. Adoption Assistance: Support employees with tax-free adoption reimbursements. Example: A software company offering commuter benefits and HSAs saved $12,000 annually in taxes while enhancing employee satisfaction. This initiative also improved employee retention by 15%, reducing recruitment costs. Discover more about tax-free benefit options. Real-World Case Study: Tax Optimization in Action Maria’s Tax Makeover Maria owns a growing e-commerce business generating $500,000 in annual revenue. Despite her success, she found herself overwhelmed during tax season and paying more than expected. After consulting with the Moment team, she implemented the following strategies: Restructured Business Entity: Transitioned from an LLC to an S-corp, saving $20,000 annually in self-employment taxes. Maximized Retirement Contributions: Opened a SEP IRA, contributing $40,000 annually and reducing taxable income. Leveraged Depreciation: Claimed $150,000 in bonus depreciation for new warehouse equipment. Implemented Quarterly Payments: Set up automated quarterly payments, avoiding $3,000 in penalties. Expanded Insights: By separating personal and business expenses, Maria identified additional deductions, such as $10,000 in home office and software costs. Her proactive tax planning also allowed her to reinvest $50,000 into marketing, which increased revenue by 15% the following year. She also worked with a financial advisor to develop a three-year growth plan, focusing on scaling operations efficiently. Outcome: Maria reduced her overall tax liability by $63,000 in the first year while improving cash flow and peace of mind. Tax strategies are essential for business owners looking to maximize savings and minimize liabilities. By choosing the right structure, leveraging deductions, and staying proactive with tax planning, you can significantly improve your financial outlook. Ready to optimize your tax strategy? Contact us today to schedule a consultation. Schedule a call with our team here. Selling your business can be exciting, lonely, and challenging all at once. Connecting your personal goals to your finances can be challenging alone. Business owners turn to Moment Private Wealth when they are looking for a financial advisor who has walked in their shoes. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Q: How do I know if my business structure is tax-efficient? A: Consult a tax advisor to evaluate your current structure and determine if transitioning to an S-corp, LLC, or another entity could provide savings. Q: What deductions can I claim as a small business owner? A: Common deductions include home office expenses, vehicle mileage, professional services, and retirement contributions. Q: How do estimated tax payments work? A: Calculate quarterly payments based on expected income and deductions to avoid penalties and interest. Q: What’s the difference between a SEP IRA and a Solo 401(k)? A: A SEP IRA allows contributions of up to 25% of compensation, while a Solo 401(k) combines employee and employer contributions for higher limits. Q: How can I reduce self-employment taxes? A: Consider electing S-corp status and taking advantage of deductions to lower your taxable income. Q: Are employee benefits like health insurance tax-deductible? A: Yes, contributions to employee health insurance plans are fully tax-deductible. Q: Can I deduct business travel expenses? A: Absolutely, expenses for flights, hotels, and meals related to business travel are deductible. Q: What’s the benefit of using a Health Savings Account (HSA)? A: HSAs provide triple tax benefits: contributions are deductible, growth is tax-free, and withdrawals for medical expenses are tax-free. Q: How does bonus depreciation work for my business? A: Bonus depreciation allows you to deduct the full cost of qualifying assets in the year they are purchased. Q: What’s the safe harbor rule for estimated taxes? A: To avoid penalties, pay at least 90% of the current year’s taxes or 100% of the previous year’s liability (110% for high-income earners). *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

When that wire hits your bank account everything will change. Many believe this to be true when they sell their business. From my experience selling your business is often one of the most anti-climatic events for business owners. I would go as far as to say that for many owners it spins them into a place that feels like a rudderless ship in the ocean. Searching for the next big thing. Well, I am here to tell you that you can avoid all of that by answering 3 easy questions. In this blog, we are going to break down mistakes to avoid while selling your business. Already sold your business? Skip this blog and check out the blog we wrote on how to manage wealth for business owners after selling. The Guide to Selling Your Business Yes, all your problems can be avoided by answering these 3 easy questions. Here they are. What outcome are you looking to achieve? How will you spend your time? What to do with the money? Now that you know the questions. Ready for the answers? Lucky for you we have helped countless business owners answer these questions and enjoy a successful exit. Let’s check out the most common answers we see from business owners. What outcome are you looking to achieve? When there is a big change in life I always encourage families to think about the outcome they are looking to achieve. Outcomes allow you to tune out the noise and make the situation personal to yourself. It helps you tune out the investment banker telling you it’s a great multiple. It helps you tune out the attorney telling you these are great terms. It helps you tune out the CPA telling you that this deal will save you millions in taxes. All of the examples you just read are not outcomes. These are attributes of a deal. These are outcomes. I want to spend more time with my family. I want to secure my family's financial future. I am tired of going all in and want to take chips off the table. These outcomes we can solve with the attributes of the deal. Many people work in reverse order. Let me show you. A private equity company sneaks into your inbox on a regular basis for 2 years. Probing to get enough information to provide you with an unsolicited LOI. It arrives after a long quarter of problem-solving where you are left exhausted. After a quick review of the offer letter, you see a line that notes a 10x multiple. Your buddy just sold for 6x and immediately you are intrigued. After a quick review of your EBITDA on QuickBooks you determine this private equity company is going to write you a check for $20,000,000. Wow. That is a lot of money I should probably give them a call. This is not the best approach to selling your business. Let me show you how an outcome-based approach can help. After a long quarter full of problem solving you are left exhausted. You start contemplating what you want your life to look like moving forward. Quickly coming to the conclusion that the things you say you value are getting overlooked. Your Spouse Children Community But you also love what you do and have no desire to retire. This leaves you thinking is there a way to keep doing this and get back my time? After meeting with Moment Private Wealth to review the options to achieve this outcome it becomes clear that a strategic partner could help you get the outcome you desire. The decision is made that we need to focus on the right strategic partner vs the highest price tag. After all the outcome you want to get has less to do with the money and more to do with how you are spending your days. I will let you daydream about how this story ends. The goal in this story is that you understand approaching selling your business the traditional way is unlikely to get you the outcome you desire. You need to plan for the outcome you want. How will you spend your time? You can always make more money but you can’t make more time. I have yet to meet a successful business owner who doesn’t ruthlessly take care of their time. It is the most valuable resource you have and you must treat it accordingly. You have spent your entire life building your business. Day in and day out showing up early and staying late. Spending all of your TIME in one place. Now you magically have nowhere to go and all the time in the world. This often leaves business owners in a tough mental state. One day they are problem solving and the next day they are golfing 5 days a week. There is only so much golf that one person can play. So how do you avoid this trap? Coming up with a plan prior to selling the business. Let's look at a plan we recently implemented for a business owner. This owner decided that they wanted the outcome of their business sale to be giving back to the community and buying a property for his family. Legacy was of the utmost importance. Now we needed to whiteboard what “giving back to the community” meant. For them it meant serving on two boards of charities they were passionate about. Well, they weren’t on those boards today. This became a project they worked on prior to selling the business. Let’s make sure you can get on the board and spend time doing things you want to do with those charities. Their eyes were opened when they started meeting with people at the charity and realized quickly that there was money being used in ways they didn’t agree with. Back to the drawing board. They found two additional charities to get involved in that they loved. Turns out this took an entire year for them to work through this process and were grateful they didn’t sell their business before doing the proper research. The farm was an easier project. Why? They already owned the land and there was perpetual work that needed to be completed. Currently, they were outsourcing the majority of the work but they planned to move to doing it themselves. With time being the most valuable resource you ought to plan for how you will use it. Don’t jump into a deal without knowing where your time will be spent. What to do with the money? Shockingly most families struggle with what to do with the money. I firmly believe this is due to past experiences. You have heard this disclaimer in investing. “Past performance doesn’t guarantee future results.” Well, the opposite is true for past experiences with money. “Past experiences with money will predict future decisions with money” Let me show you what I mean. This client grew up in the 70s in a middle-class family. Both parents worked jobs to make ends meet. Although there was always food on the table there was never extra money lying around. Family vacations were road trips not first class. Now that you have $20,000,000 in your bank account you don’t magically become good at spending money. Rather we have seen the reverse be true. Fear that you will blow it all drives your decision-making. This is not a good outcome which is why we need to plan in advance and solve the math equations that are important to you. Remember what is important to you may not be important to your buddy who just sold his business. Just because he wants to charter a jet doesn’t mean that you should do the same. Planning for the money will give you confidence during your deal. Too many times business owners sell their business hoping that the money they will get will be enough. Sometimes it is and sometimes it isn’t. We help clients come up with a number. That number encompasses all of the outcomes they hope to achieve. - Giving their kids each $250,000 today. - Paying for the grandkids college. - Giving $1,000,000 to charity - Spending $50,000 a month to live their ideal life in retirement - Paying for health insurance before they reach Medicare at 65 All of these are math formulas that we can solve for you. Once we solve each math formula we add them together and subtract projected taxes and this gives us our north star. The north star is the amount of money you need to accomplish your outcomes. This gives crystal clear direction for how to approach your deal. It will give you the confidence to decide which deal is the right deal for you. Selling your business can be the highlight of your professional career. From experience the best way to make it that is to make sure you answer these 3 questions before you plunge into selling. What outcome are you looking to achieve? How will you spend your time? What to do with the money? There is no plan that is right for every owner, but there is a perfect plan for you. Not sure where to go from here? Schedule a call with our team here. Selling your business can be exciting, lonely, and challenging all at once. Connecting your personal goals to your finances can be challenging alone. Business owners turn to Moment Private Wealth when they are looking for a financial advisor who has walked in their shoes. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. How much is my business worth? The value of your business is going to be determined by a number of factors. This will be determined by the amount of profit or EBITDA that your company generates on an annual basis multiplied by an industry multiple. Example = Profit x Multiple = Business Value $1,000,000 x 5 = $5,000,000. How to sell my business? Selling your business is done best through an intermediary. These are financial professionals who help market your business. Depending on the size of your business this professional will be a business broker or investment banker. How much in taxes do I pay on my business sale? Businesses are taxed based on the terms of your deal. With the proper structure, deals are often taxed at long-term capital gains rates. These rates range from 0% - 20% in taxes. What is the cost of selling my business? The size of your transaction will determine the cost of selling your business. Intermediaries charge 5% - 10% of the transaction value to market and sell your business. They are worth their weight in gold. Who is going to buy my business? The buyers of business vary widely based on industry and company size. The most common buyers are strategic buyers and private equity. Strategic buyers are competitors in and around your industry who want to own your company. Private equity buyers will look to own your company for a period of time before reselling it at a higher price. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.