Posted 15 days ago

The Four Tax Strategy Levels Most Business Owners Overlook

A few years ago, I realized something most business owners never get told: your CPA is not a tax strategist. They file taxes. They don’t design them.

And that’s how I ended up overpaying six figures in taxes for years.

Now, after working with hundreds of professionals and entrepreneurs through The Wealth Elevator, I use a four-level tax strategy model to help investors build and keep more of their wealth.

Let’s break it down for you, BiggerPockets style.

From Reactive to Proactive: Why This Matters

The majority of CPAs are playing defense. They take what you did last year and tell you what you owe. That’s fine if you’re a W-2 employee with no side income.

But if you’re a business owner, real estate investor, or high-income professional? You need to be playing offense.

The difference can be tens (or hundreds) of thousands of dollars a year.

Level 1: Free Money Through Smarter Bookkeeping

Home Office Deduction: If 10% of your home is used exclusively for your business, you can write off 10% of utilities, rent, mortgage interest, etc.
The Augusta Rule (IRC Section 280A): Rent your personal residence to your business for up to 14 days/year. Your biz deducts the rent. You pay $0 tax on it personally.
Kids or Family on Payroll: Pay them for legitimate work. They earn income tax-free up to the standard deduction, and you write it off.

Case in point: One of our LPs put their kids on payroll and used the Augusta Rule for $14K of tax-free income. That’s $29K shifted from taxable to tax-free. Big win.

Level 2: Invest to Save

This is where tax-advantaged investments come in.

Solo 401(k) or Defined Benefit Plan: Defer $100K–$200K/year in pre-tax income if structured right.
Roth Conversions Offset by Passive Losses: You can move money into tax-free growth vehicles without triggering a huge tax bill.
Entity Structuring: Optimize S-Corp wages vs distributions or consider restructuring to use contractor models where legitimate.

If you’re self-employed and not doing this yet, you’re leaking wealth every year.

Level 3: Advanced Combinations Most CPAs Avoid

Here’s where things get interesting.

Captive Insurance Companies: Your business pays premiums to an insurance company you own. That’s a deduction. The captive grows tax-deferred. You control the capital.
Accountable Plans: Reimburse yourself tax-free for home office expenses, mileage, meals, etc. Done right, this is IRS-blessed.
Real Estate Depreciation Strategies: Combine cost seg with Roth conversions and capital events to offset income creatively.

This is the world most CPAs won’t enter. Not because it’s illegal—but because it’s unfamiliar.

Level 4: The No-Fly Zone (Tax Fraud)

We’ve all seen it: “Set up a shell church and eliminate taxes!”

No. Just no.

Stay off the IRS Dirty Dozen list and stick to proven, documented strategies. The tax code has plenty of legal ways to reduce liability.

Final Thoughts

If you’re earning a high income and want to build lasting wealth, this is the game. Invest passively. Take depreciation. Leverage proactive planning. PS not a cpa