Subscribe
Share
Share
Embed
Hit 7 figures but losing 5 figures to taxes? Earn a 6-figure income but feel financial chaos? Welcome to the show helping you Simplify Your Numbers.
Most business owners in the $1M–$10M range feel like "passive payers"—surprised by a massive bill every April and wondering why their hard work isn't reflected in their bank account. Host Fabrice Metan, a veteran CFO and tax strategist, cuts through the noise of complex financial data to provide straightforward, actionable insights for the "7-6-5" entrepreneur.
This podcast is the bridge between traditional bookkeeping and high-level advisory. We move you away from a reactive "compliance mindset" and into a proactive strategy where your business becomes your greatest wealth-building tool.
Stop being a passenger in your own financials. It’s time to simplify your numbers, maximize your profit, and hold onto more of what you earn.
Subscribe to join the 7-6-5 community and start your transformation today.
Ep11
===
Game Setup
---
[00:00:00]
Fabrice Metan: All right, so in this episode, we'll try to do something a little different. I'm inviting my producer to kind of ask me some questions about different tax strategies I like to use for our seven-figure [00:01:00] business owners. And we'll try to, you know, see how they rank. yeah, Bryan how about uh, you give a little context about what we're doing here?
Producer Bryan: Yeah. So we're gonna play a little game.
Fabrice Metan: Okay.
Producer Bryan: And what I'm going to do is I'm gonna give you two items that would be considered a tax strategy.
Fabrice Metan: Okay.
Producer Bryan: And you're gonna tell me which one you would choose- ... for the seven-figure business owner. Now, before we get into it-
Fabrice Metan: Okay, so specifically seven figure ...
Who Is Seven Figure
---
Producer Bryan: what would you say is, like, the seven-figure business owner who would maybe we're talking about here?
Fabrice Metan: For sure.
Producer Bryan: Like, when we talk about the 765 entrepreneur.
Fabrice Metan: Right. So the seven-figure entrepreneur is typically the business owner running a company that grosses seven figures annually. And I say gross because it's top line revenue, so a million dollar or more in top line revenue.
Typically, they land between, you know, zero to 500,000 in net profit for themselves. So, so, you know, they become a six-figure earner, and then they typically see about five figures in taxes on that income. That is the [00:02:00] 765 scenario that we typically talk about.
Producer Bryan: Okay. So with that in mind-
Fabrice Metan: Mm-hmm ...
Producer Bryan: I'm gonna run through these, and I'm gonna give you those two tax strategies.
You tell me which one you'll choose.
S Corp Versus Basics
---
Producer Bryan: So first, S corp election- ... or accountable plan?
Fabrice Metan: ~Hmm. So the accountable plan is great. Uh, ~Uh,
the accountable plan is great because that is, essentially reimbursing you for business use of your personal assets, but it's still limited to what you're already spending, right?
So I would say S corp election on that.
Producer Bryan: S corp election- or hiring your children in the business?
Fabrice Metan: So hiring your children is, is a great strategy as well. As long as you're paying them under the standard deduction, you get an opportunity to take that deduction without ~ your,~ your children seeing any tax event on their end, right?
The problem is that it's still limited to standard deduction to make sense and the number of kids that you have, so I'm gonna say S corp election.
Producer Bryan: Okay. S corp election or Augusta Rule?
Fabrice Metan: [00:03:00] Ooh, okay. That is getting fun. So the Augusta Rule is still limited to 14 days, right, of you being able to rent your home to your business, and it's limited by market rate because you can't just determine whatever rate you want that to be.
So I would still go S corp election because I believe with the S corp conversion you can sometimes save between 10 to $50,000 in taxes just by doing that.
Producer Bryan: Okay.
Retirement Plan Showdown
---
Producer Bryan: S Corp election or cash balance pension plan?
Fabrice Metan: Ooh, okay. Now, now we're getting, this is the big boys, right? Cash balance pension plan, I believe, allows you to put so much money away, that it could create an extremely high tax deduction for you.
So I'm gonna go cash balance plan on that one.
Producer Bryan: Cash balance pension plan or solo 401k plan?
Fabrice Metan: Hmm,
Okay. So the solo 401k, that would only work if you are by yourself in the [00:04:00] business, maybe just yourself and your spouse, but it's still limited, right? There's some federal limitations to how much you can invest in that solo 401k, so I'm gonna go with the cash balance plan again.
Producer Bryan: Cash balance plan or cost segregation on long-term rental property?
Fabrice Metan: Okay, so specifically on long-term rental properties, cost segregation. I'm gonna say the cost segregation is more powerful, ~but, ~but it might be limited somewhere there, right? Because ~it all ~it all depends on what your status really is, so we might need some extra strategies to go along with that.
But I'm gonna go cost segregation on long-term properties.
Real Estate Loss Unlocks
---
Producer Bryan: Okay, so then the cost segregation on long-term rental property or real estate professional status.
Fabrice Metan: Okay, so now we're talking. If you're a real estate professional, then you can unlock all of the real estate losses that you have to offset your ordinary income.
So we can't just do the cost segregation by itself and just call it a day. We want you to be a real estate [00:05:00] professional, right? So RPS is what we call it, real estate professional status, so that you can take advantage of the depreciation at the highest level. So I'm gonna go real estate professional status.
Producer Bryan: Okay.
Short Term Rental Wins
---
Producer Bryan: Real estate professional status or short-term rental strategy.
Fabrice Metan: That's a tough one. ~That's a, that's a good one. That's a good one. I, ~I'm gonna say short-term rental strategy. ~The reason why is because my real estate prof-- it's harder,~ I think it's harder for you to be a real estate professional than to simply do what you're supposed to do for your rental to turn into a short-term~ rental~ so that you can take advantage of the tax deductions there.
Because to be a real estate professional, you would still need 750 hours spent on real estate, and you cannot spend more time on anything else, right? You have to spend more time in real estate activities than anything else that you do. Short-term rental, you could still have a full-time business or even a full-time job, but as long as your average rental stay is less than seven days, and that you spend [00:06:00] more time than anybody else on your Airbnb or Vrbo property, then you can turn that into a short-term and then do a cost segregation, take depreciation, and offset all of your ordinary income.
I'm gonna go short-term rental.
Producer Bryan: Short-term rental strategy or Section 179 vehicle deduction.
Fabrice Metan: Okay. ~Um, ~short-term rental again, because the vehicle deduction is still limited to the vehicle and the cost of the vehicle. I would argue that your rental ~could be, ~could cost anything, right? I mean, it could be any amount, right?
~On the rent- on the real estate side. ~Your vehicle can only cost so much, and you can only need so many vehicles, right? So I'm gonna go short-term rental.
Producer Bryan: Short-term rental strategy or R&D tax credit.
Fabrice Metan: The R&D tax credit is great, especially in this day and age where so many companies are trying to figure out how to implement AI and create something new, and a lot of them are kind of losing a lot of money doing that.
I've been doing a lot of,~ you know, uh,~ strategy sessions regarding how they [00:07:00] can use R&D tax credits to, you know, offset some of those losses. But here again, I'm gonna go short-term rental because R&D tax credit does not apply to every business.
Producer Bryan: Okay, then finally, short term rentals or buying equipment using bonus depreciation Bonus depreciation.
Fabrice Metan: Oof. Okay, so depending on your business, right? A construction business that actually owns its own equipment can definitely see a lot of a high deduction from bonus depreciation by buying a bunch of equipment if they need it in their business. But it's still limited to the amount of~ eq- ~equipment you need, to the cost of that equipment, and to the type of business you really run.
So as an accountant, I won't be able to justify that kind of strategy, but I can justify the short term rental. So I'm gonna go short term rental as my number one.
Producer Bryan: O
Final Picks And Caveats
---
Producer Bryan: kay. ~That, ~that sounds great. That's all I got for you today.
Fabrice Metan: Okay.
Producer Bryan: Take us home.
Fabrice Metan: Yeah. So, so I mean, [00:08:00] essentially, what I don't want you to take from this episode is that the short term rental strategy is the number one tax strategy for everybody, right?
It all depends on your situation to see if it actually makes sense, which is why tax planning is so important, and actually having a tax strategies that you can do this with throughout the year, right? So all I was doing essentially was just kind of looking at what a seven six five entrepreneur typically faces in terms of, tax liability and tax, ~uh, ~exposure, and then figuring out what do I like most.
It doesn't mean that we can't take advantage of all of those strategies together, ~right? ~We can still combine several of them. But if you ask me to pick one, I'm giving you the one that I think applies in most cases And the one that essentially creates the most tax savings. So thanks again for listening to us today, and I can't wait to see you on the next episode
[00:09:00]