Freakonomics is a classic read about initially uncorrelated outcomes. ๐ One of the more memorable correlations is how diapers and beer were purchased together at grocery stores. It seems weird at first until you think about young dads at the store to buy diapers and likely not being able to go out to a bar and drink. ๐บ Tax strategy works the same way. ๐ Business owners and tax pros alike can approach each tax strategy as a standalone tool. A Roth conversion is a part of retirement planning ๐จ๐ฆณ...
22 days agoย โขย 4 min read
Ten years ago, I met with my business development partner and shared with him this idea of documenting and sharing the tax strategies each client was using. ๐ It would make us intentional strategists - having to commit to strategies and execute on them. The idea floundered in that firm but it stuck with me. Fast forward to 4 years ago when I left Baker Tilly and shared the same idea with my now partner, Mitchell Baldridge. We doubled down into the idea and have built out work-up's and...
29 days agoย โขย 4 min read
A powerful unlock ๐ in small business is owning your own real estate. It protects you from rent increases and inflation ๐ It accretes to your balance sheet the value of a reliable tenant (yourself) ๐ค It opens up additional and creative ways to finance business operations with tax benefits ๐ค But that last point isn't a slam dunk. Section 469, the passive activity loss rule from 1986, treats all rental real estate as a passive activity by default. Any depreciation losses from that real estate...
about 1 month agoย โขย 5 min read
Selling a property or business can be one of the happiest days an owner experiences. ๐ But it's not until the K1s are filed and the gain is reported to the IRS that the celebrations should really begin. Every year I see a few of the same mistakes made on returns - many from other tax preparers, but some come from my own team that we have to send back through QC. These can shave off percentage points of IRR. ๐งฎ Today, we're talking about some of the biggest errors I see in the year of a sale of...
about 1 month agoย โขย 5 min read
I'm currently reading The Outsiders: 8 Unconventional CEOs ๐ - a book that was on Warren Buffett's must read list in 2012. One of the points it makes early on is about the need for CEOs to be good investors ๐ at heart. They are stewards of capital and so constantly analyze inputs to make the best decision for shareholders and the business. The same holds for small business, with one tiny wrinkle: a drastically smaller finance team. ๐ค Until your business gets to $10 million in revenue, it's...
about 2 months agoย โขย 3 min read
CPAs and tax preparers (shout out to all my EA friends) get a bad wrap for adding zero value to their clients. So when we have a chance, we have to be ready to lay the pipe and bring it. ๐ช One of the best ways I've done this for my real estate (and small business) clients is through a good scrub of their operating agreement (OA) - with practical suggestions and changes. If you are the client, this is an incredible way you can bring value to your LPs as well as save yourself some tax - by...
2 months agoย โขย 4 min read
Every month, my firm sends out dozens of financial statements to our clients who are too small to have their own full-time accountant. Think revenue of $1 million to $5 million. Of those we send out, maybe 50% are reviewed in detail - the other 50% are ignored until the tax return when taxes are due on that income. ๐ต Of the 50% of financials that are opened, even a smaller fraction are used to their full potential. If you're a DIY founder, owner, or operator - today is all about how to use...
2 months agoย โขย 4 min read
I'm asked this question probably 100 times every year: "Should I be a S-Corp?" ๐คทโ๏ธ A tiny fraction of the answers do I ever get paid for - family, friends, new client prospects. Most of the time they get talked out of it or don't get the confirmation they were looking for it and we never talk again. So I spent some time thinking it through and shared a full blown "Pass-through Entity Selection Decision Tree" last ๐ week. If you can't find it, it's right above the degenerate Twitter Posts at...
3 months agoย โขย 5 min read
Tax meetings are stressful to plan for. As advisors, we only have a few deliverables each year and planning / strategy meetings are a big one. So early in my career when the client told me during one of these meetings that, "this was the biggest waste of time I've had in a while" - it's one I took home and really thought about. Why It Sucked For starters, I didn't appreciate where I fit in as a tax advisor in the finance team - and I think most CPAs still don't. ๐ But let me lay the...
3 months agoย โขย 4 min read