Mastering Loopholes: Navigating Taxes and Business Strategies with a Mindful Twist
You thought we were done with loops didn’t ya
This week’s blog is all about LOOPHOLES. Here’s the thing it’s T*X season and this month is going to make you go 🤔. I’m not an accountant, but there are ways around everything…good and bad.
We know them, we love them when they work for us, we hate them when they work against us….they are LOOPHOLES.
Loopholes are defined as an ambiguity or omission in the text through which the intent of a statute, contract, or obligation may be evaded. Most likely you’re looking at finding a few of those lil’ dudes in the next two weeks as we are coming up on t*x season, especially if you own your own business or pay a sh*t load of money in t*xes. (It’s the truth - someone had to say it!)
…and yeah I did put a * over the “a” in t*xes…because talking about finding loopholes for them does feel a lil’ naughty.
Recently, I was able to get out of my son’s traveling competitive soccer team via a loophole - not my proudest moment but so grateful to be able to read legal contracts 😝
Since I’m not an accountant there are a few things that I do know to do with loopholes and tax season, but first, let’s talk loopholes in business.
Did you know that many key businesses and new products were created because of loopholes? Think about Airbnb (or VRBO) an entirely new industry created in hospitality that serves both the person needing a place to stay and the person not using their home. This industry was unregulated and didn’t have to comply with the same safety standards, inspections, or taxes as a hotel or other commercial lodging. However, there are still lots of problems that need to be addressed and many HOAs have started adding by-laws of “no short-term rentals,” but that didn’t stop Airbnb from exploiting loopholes in traditional hotels and zoning regulations that were never addressed.
Another big loophole that came about recently is companies called SPACs (Special Purpose Acquisition Companies.) SPACs are a great way to IPO without all the regulatory BS. Basically what happens is a group of investors’ goal is just to raise money. They have no actual business operations - their only goal is to purchase/acquire a private company. The SPAC is what IPOs and sell their shares to raise money. The goal is usually to purchase a private company that wants to go public but is maybe uncertain about the IPO process. Once they decide to go through with the merger, the SPAC is then swapped for the private company (which is now public) on the NY Stock Exchange.
Not to get all political - JUST FACTUAL. Trump’s social platform recently did just this. The Shareholders of the SPAC Digital World Acquisitions Corp approved a merger with Trump Media and Technology Group, which in fact runs Truth Social and $DJT is now the ticket name. Loophole for funding….Facts.
Here’s two more that might hit close to home -
First, hiring people as “independent contractors” instead of “employees.” Yup, been there, done that. Don’t want that T-shirt. For many group fitness facilities and boutique studios it is industry standard to hire people as independent contractors instead of employees because of the cost. If you don’t pay EMPLOYEE payroll you don’t get it, if you do - you do. By NOT having employees and hiring independent contractors, you can normally save 15-30% overall - however, this should be done WITH CAUTION - we’ll dive into this another time.
Real talk, the yoga studio used to do just that - pay independent contractors. Then, when the pandemic hit we were totally screwed because we technically didn’t have any employees on payroll - No PPP, minimal grants were given, and not a lot of help except from my personal capital.
Second, on the same note of independent contractors - say HI to Jenn! She’s my virtual assistant who helps put together these emails. She works as an actual independent contractor, so hiring her isn’t a loophole, her business is! She said goodbye to her executive assistant role to a bigshot CEO and found a loophole to work from home, raise her kids, work for other entrepreneurial women, and oh yeah scale her business all by doing what she already did! She made her business work and fit within her life - what a success loophole story!
Okay, let’s jump back to t*xes….when talking to your accountant about your own business consider asking them about the following tax loopholes if you haven’t already:
Qualified Business Income Deductions
Things like education, training
Health Insurance
Vehicle Usage
Using Independent Contractors (not as employees)
Legal and Professional Fees
*Once again - NOT an accountant or CPA, just ask and see if they can help!
Let’s take a reality inventory:
Since I’m not a CPA or an accountant - the next best thing is to look around and notice where you can apply loopholes to your business, but first let’s dive further into mindfulness….
Ask yourself: Are there loopholes that I currently use that help me? Are there any hurting me?
For instance, I always override the time usage that I give myself on social media. I just put my password in and BOOM - loophole I know the password and can give myself more time. That one definitely hurts my productivity. A helpful loophole that I use in everyday life is batch cooking my kid’s breakfasts. I make these super yum chocolate protein waffles, and keep them in the fridge or freezer and pop them into the toaster each morning. Honestly, that one is a double loophole because it also is full of really nutritious stuff for them and have no idea!
You can also be mindful of this in your business as well as your business productivity and practices. Ask yourself the same questions: Are there loopholes that I currently use that help me? Are there any hurting me?
Last lil’ loophole here: some people call these “hacks” if you are having a hard time wondering about your business or yourself.
So, whether you’re hiring, IPO-ing, t*x seasoning, or getting out of something - Loophole it up. Remember, it’s not just about finding ways around things but being mindful on if the loophole is helping or hurting you or your business.
Next week we’ll dive into the loopholes of understanding systems more deeply via some super fun self-sabotage techniques - ya know like not saving for t*xes or waiting until the last minute to prep everything to send to your accountant….
But beyond the practical, let's not forget the philosophical. In every loophole, there’s a lesson about creativity, resilience, and sometimes, the need for change in our systems. So, keep your eyes peeled, and your mind open, and who knows? Maybe you'll discover the next big loophole that’s not just a hack, but a genuine breakthrough.
Loopin. Loopout. Either way continue to loop ahead with your courage, strength, and capabilities - and stay curious for what’s possible.