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If you're a small business owner with employees and you still don’t have an accountable plan, then now is the time to start thinking about it. In this episode, we're diving into using an accountable plan to create tax-free reimbursements – in a legal way.
Every decision is a profit decision, and profit is measured in time, energy, and money, and that especially happens around your tax, your tax strategies, and your policies. And if you’re able to hit all three, this means more pay, play, and profit for you and your business!
Basically, an accountable plan is a policy around how you're going to be reimbursed for expenses inside your business. One of the biggest reasons why you want an accountable plan in place is reduced taxable income and self-employment tax for the owner or the shareholder. It also allows the reimbursement to be excluded from taxable income for employees.
An accountable plan is absolutely legal. If you're ever audited, then you have nothing to fear because then you've got all the structure in place.
In this episode, you will hear:
- Accountable plan of a business owner vs. shareholder
- Why consider an accountable plan
- Entity types that can benefit from an accountable plan
- Assumptions made and three rules when setting up an accountable plan
- Pros and cons of an accountable plan
- Other considerations (ex. meal deduction, home office expense, codes)
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