THIS WEEK'S STORY
The money you can pull out of your company that never gets taxed.
Lisa runs a small architecture firm here in the Bay Area. Six people. Good year behind her.
We hopped on a Zoom call and she said, "Samy, I'm making money now. But it feels like every dollar gets taxed twice. Payroll takes a cut. Then I pull cash out and it gets hit again. Is this just how it works?"
I asked her one thing. "Where do you hold your board meetings?"
She looked at me funny. "At my kitchen table. Why?"
That was the opening.
Lisa's firm is an S-corp. She's the owner and the employee. That second part matters. As an employee, she can be reimbursed. And some of those reimbursements are a deduction to the firm and tax-free to her.
Start with her home. Section 280A lets her rent her house to her own company for real business meetings. Not monthly. That's the move that gets people audited.
Four solid meetings a year, one a quarter, with an agenda and minutes. Fifteen hundred dollars ($1,500) a meeting holds up for her area. That's a real deduction on the firm's return. She reports none of it. Six thousand dollars ($6,000) out of the company, no tax on the way.
Then the home office. She designs from a back room. That room qualifies. The firm pays her back for a slice of the rent, the utilities, the internet.
Then the miles. Every drive to a job site, a client, the permit office. The firm pays it back at seventy-two and a half cents ($0.725) a mile.
Lisa left more than ten thousand dollars ($10,000) on the table last year. Not again.
Sit down with your own numbers. Count what walked out the door.
