"How the f**k am I supposed to know something like that? No one tells me these things." π‘ I have some version of this conversation at least once a year with different clients. There's nothing entrepreneurs hate more than feeling like their competition or their buddies have an edge on them - including tax efficiency. So when someone tells them that they're doing "XYZ," the immediate response is "why didn't my guy tell me that?" The answer is one of three things - it's not the right thing to do...
13 days agoΒ β’Β 5 min read
We're going deep real estate niche today - but with a purpose: to illustrate the power of timing in tax strategy. Real estate partnerships are powerful for several reasons, but the primary one is the ability to use debt on the property as basis for the owners and investors. But the thing about debt is that it's not created equal. π
βοΈ Debt can be: Recourse (guaranteed by one or more partners) Nonrecourse (not guaranteed by anyone) Qualified Nonrecourse (rental property, issued by a bank, not...
20 days agoΒ β’Β 4 min read
A few years ago, we were engaged to help clean up the accounting for a rental property portfolio that had recently been sold to Carlyle. The accounting was being done partly by an in-house "accountant" and overseas full-time accountant. Carlyle had just taken down the entire portfolio but left the GPs in place to manage it - and were not happy with the non-GAAP accounting and lumpiness in the monthly P&Ls. We rolled up our sleeves and dug-in to clean them up and eventually shared our...
27 days agoΒ β’Β 5 min read
π¨I've replaced the "News" section with some of my favorite Twitter / X posts from the last week. Enjoy!π¨ Tax structuring won't make a bad business good, but it can make a good business better. And with millions in capital flowing to SBA loans from real estate, I wanted to share some best practices to keep your post-tax cost of capital as low as possible: Partnerships > S-Corps > C-Corps Any time you're buying a business with debt (SBA ποΈ, seller notes π΄, traditional π¦), a partnership is...
about 1 month agoΒ β’Β 5 min read
The average business will spend 1-2% of revenue on accounting and finance. π€ That means you're at $5 - $10 million of top line before you get a dedicated accountant. But good accounting really doesn't happen until the department is 2-3 people deep - as one accountant usually ends up wearing too many hats (operations, legal, HR, etc.). So from 0-$20 million, business owners often find themselves in a no-mans land of good reporting. Which means owners need to have a good baseline of accounting...
about 1 month agoΒ β’Β 4 min read
56% of you are lawless degenerates π§ - opting for the "give me all the above" content on last weeks poll. But I'm here for it. It fits in with the below graphic that pretty well sums up what I'm about: my mission is to lower the cost of capital for business owners, investors, and advisors through accounting, tax, and planning. So this week, we're going to talk about a concept I've been cooking on for a little while: how to capture 80% of good tax strategies and plot them out chronologically...
about 2 months agoΒ β’Β 9 min read
An unexpected benefit of writing this newsletter for the last 6 months has been the ability to clarify what I do and for whom. The best experiences I've had are when I'm walking alongside entrepreneurs on a path to meet their personal financial goals by lowering their cost of capital - quantifiable and not. This journey usually follows three steps unique to business owners: Get better accounting Get better tax strategy Get better business forecasting I spend a majority of my time on #2, but...
about 2 months agoΒ β’Β 5 min read
Confession - this is the second newsletter I wrote this week. The first one was a wrap-up of the last few weeks talking about how business owners can turn their business finances around in three steps - accounting, tax, and cash forecasting. But it felt bland AF so I'm shelving it for now. If you want to read it, let me know. This week, what's really been on my mind is partnership allocations. π¬ Mainly because we finally hit our stride and hit a record number of partnership returns filed for...
2 months agoΒ β’Β 3 min read
Last week, we talked about why basic accounting is critical to small business owners - including the extreme real example of having the business valuation move by 7 figures in the wrong direction. If you missed it, check out the previous issues link at the bottom of this email. π But accounting is the boring bit. Once we feel good about our reporting, nailing down the tax strategy is the next big project. ποΈ That's because taxes are the average highest single cost over the taxpayers lifetime....
2 months agoΒ β’Β 6 min read