When I decided to start my own business back in Feb, there were so many unknowns - I was not sure if I would make any money, I was not sure if I wanted to do this long term, I was not sure I'd like being my own boss, I was not sure I was cut out for entrepreneurship etc. So I went with the simplest option - I created an LLC online with ZenBusiness. I had posted about this about 6 months ago - here. I had also decided that I was going to use GenAI as much as possible in setting up my business.
6 months into this experiment and there are a few things I have figured out -
It is a viable business model and I am generating revenue
I am enjoying being my own boss.
There are enough innovators that are willing to invest in leveraging GenAI
There are 3 main areas that I have had great success with - Advising on GTM strategy, GenAI in GTM for technology vendors and GenAI for Consulting (SMB).
I am solving real business problems and my customers are seeing value.
Recently, I was playing golf with an accountant friend and when he heard I had started my own LLC, he told me about a few ways to reduce my tax obligation. He talked about advantages of opening a Solo 401K etc. Reducing tax obligations was not something I had been thinking about when I started my LLC as I was more concerned about bringing in revenue.
I quickly realized that as an expert he had some very valuable insights. My current tax advisor had not told me about either of these ideas and this was someone that came highly recommended. So then I reached out to another tax advisor and she was very knowledgeable and told me that I should convert to an S Corp (for various good reasons). That being said, her fees were very high. I was confident that if I worked with her, I would save money on taxes but I was not sure the fees justified that.
So I was back to where I have been in various areas of my life - learning tennis, learning golf, going to a doctor etc. You know there are lots of experts but some of the really good ones charge a lot or are not local to you. Secondly, you need to go to these experts multiple times, it is not a one and done thing, so the costs add up really quickly. Alternatively, you have lots of experts that are not that great and you don't have the time to try them out one by one.
You all know where this is going - CAN GENAI HELP? The short answer is that GenAI is amazing. I asked it to come up with 10 creative tax strategies and I was impressed at the ideas. Here are some that I had not heard from any of the tax experts that will help me save a lot of money (and they are all legit) -
Qualified Business Income Deduction
Establish retirement plans such as a Solo 401(k) or a SEP IRA
Research and Development (R&D) Tax Credit (yes it applies to me because I am providing a service that is innovative and helps organizations improve processes).
Using the 14 day rule and renting out my house for board meetings.
Convert to an S Corp and lower payroll taxes
Now I am not going to just follow this blindly but I can now go to any tax advisor and have them look into this and make sure that I am not forgetting to take something that I am eligible for. I can have an intelligent discussion with the tax advisor and go deeper into topics that I normally would have just believed them.
Here is an example - One of the tax advisors I spoke to said that I was not eligible for the R&D tax credit. She said it was only applicable to companies that were building a product (software or manufacturing companies).
I wanted to confirm this and I asked GenAI this question and the short answer is that according to GenAI I am eligible for the R&D Tax Credit. Now I am not going to take it at face value but I can be much more educated when I talk to a tax advisor.
Here is a sample of my back and forth with GenAI on the R&D Tax Credit.
Here is a sample of my back and forth about QBI.
Where this leaves me is that I feel a lot more educated about these topics and feel I can ask the right questions of any tax advisor and if they push back I can use GenAI to educate myself and go back with more questions / clarifications.