Episode 176-Optimizing Your Small Business Tax with Jeremy Herskovic
In this insightful episode of The Prospecting Show, Dr Connor Robertson sits down with Jeremy Herskovic, tax expert and entrepreneur, to explore the most overlooked tax strategies for small business owners. Their conversation goes far beyond deductions—it’s about using entity structure, timing, and proactive planning to legally minimize taxes and maximize long-term wealth.
The Mindset of Tax Optimization
Dr Robertson begins the episode with a common frustration: “Most small business owners treat taxes like an annual panic button instead of a strategic opportunity.”
Jeremy agrees. “Exactly. The tax code rewards the organized, not the overwhelmed. The earlier you plan, the more you keep.”
He explains that tax optimization begins with mindset. “You have to see taxes as part of your business model, not a line item. Every decision—how you pay yourself, where you spend, and how you reinvest—affects your tax outcome.”
Dr Robertson adds, “That’s what separates owners from operators. Owners make decisions based on structure, not stress.”
Entity Structure and Strategy
One of the biggest opportunities Jeremy highlights is choosing the right entity type. “Many entrepreneurs start as sole proprietors or single-member LLCs because it’s simple—but simple often means expensive.”
He breaks down the three major options:
- Sole Proprietorships: Easy to start, but offer no liability protection or tax leverage.
- LLCs with S-Corp Election: Ideal for most service-based businesses, providing both flexibility and savings on self-employment taxes.
- C-Corporations: Best for scalable companies reinvesting profits or planning for exit events.
“The key,” Jeremy says, “is matching your entity to your vision. If you plan to scale or bring in partners, think ahead.”
Dr Robertson relates it to acquisitions. “In every deal, structure determines outcome. Taxes are no different—it’s all about alignment.”
Payroll, Draws, and the IRS
One common mistake entrepreneurs make is how they pay themselves. “If you’re an S-Corp owner, paying a reasonable salary is non-negotiable,” Jeremy says. “Too low and you risk an IRS audit. Too high and you lose your advantage.”
He recommends a blend of salary and distribution. “The right mix minimizes payroll taxes while staying compliant.”
Dr Robertson adds, “That’s the balance most founders miss—they either overpay themselves through payroll or underpay and trigger scrutiny.”
The Power of Timing
Jeremy emphasizes that timing expenses can drastically affect tax outcomes. “Tax planning isn’t about cutting corners—it’s about controlling timing.”
He offers examples:
- Prepaying expenses before year-end to lower current income.
- Deferring revenue if it won’t disrupt cash flow.
- Accelerating deductions through bonus depreciation or Section 179.
Dr Robertson notes, “Timing is the ultimate tax lever—it’s how you manage perception of profit without changing your business reality.”
Depreciation and Asset Strategy
Jeremy explains how cost segregation and accelerated depreciation can create major advantages. “If you own property or equipment, depreciation can be your best friend,” he says.
He describes how identifying shorter-lived assets—like fixtures or technology—can allow faster deductions. “It’s not just real estate investors who benefit; even small businesses with vehicles or equipment can leverage it.”
Dr Robertson adds, “That’s how you turn spending into strategy. Depreciation converts investment into immediate tax relief.”
Retirement Planning and Owner Benefits
Jeremy stresses that business owners often ignore retirement planning. “You can shelter tens of thousands of dollars through a Solo 401(k), SEP IRA, or defined benefit plan. It’s not just about the future—it’s about reducing current taxes.”
He points out that these contributions are deductible and double as long-term wealth vehicles. “You’re paying yourself instead of the IRS.”
Dr Robertson agrees. “It’s the one deduction that compounds—financially and emotionally.”
Home Office, Travel, and Everyday Deductions
Jeremy clarifies common misconceptions about write-offs. “The home office deduction is legitimate if used correctly. You can deduct rent, utilities, and even maintenance proportional to your workspace.”
He adds, “Travel is another area where business owners leave money on the table. If you mix business and personal travel, document the business purpose and keep receipts.”
Dr Robertson emphasizes, “Documentation is everything. If it’s defensible, it’s deductible.”
Avoiding Common Mistakes
When asked about the biggest tax pitfalls, Jeremy lists three:
- Waiting until March to think about taxes.
- Ignoring bookkeeping until it’s too late.
- Mixing personal and business expenses.
“Good records equal good outcomes,” he says. “If you don’t know your numbers, you can’t plan effectively.”
Dr Robertson adds, “That’s why proactive entrepreneurs win—they see taxes as a year-round activity, not a seasonal one.”
Building a Proactive Tax Strategy
Jeremy outlines a simple quarterly plan:
- Q1: Review structure and payroll.
- Q2: Adjust estimated taxes.
- Q3: Plan major purchases or investments.
- Q4: Execute deductions before year-end.
“It’s not about reacting—it’s about reviewing and revising,” he explains. “Each quarter gives you a chance to optimize before it’s too late.”
Dr Robertson nods. “That’s how smart business owners create predictability—they eliminate tax surprises.”
The Intersection of Tax and Growth
Jeremy believes that tax strategy and business growth go hand in hand. “If your accountant isn’t talking about your goals, you don’t have a strategist—you have a filer.”
He encourages entrepreneurs to align their tax plan with their expansion goals. “When you plan around revenue targets, you unlock growth while controlling liabilities.”
Dr Robertson adds, “That’s the essence of operational mastery—making every decision serve both growth and efficiency.”
Key Takeaways
- Treat taxes as a strategic discipline, not a seasonal chore.
- Choose your entity based on growth goals, not convenience.
- Mix salary and distribution to stay compliant and efficient.
- Use timing and depreciation to create real tax leverage.
- Prioritize retirement and reinvestment for long-term wealth.
Dr Robertson closes the episode with a practical summary: “Jeremy Herskovic reminds us that proactive tax planning is proactive wealth building. You’re not just saving money—you’re designing freedom.”
Jeremy adds, “Exactly. Taxes aren’t punishment—they’re part of the game. When you understand the rules, you play to win.”
Listen and Learn More
Listen to the full episode here: Optimizing Your Small Business Tax with Jeremy Herskovic