Latest / Marci talks money (and life) / From Tax Returns to Tax Attorney: Nik Argharkar’s Journey
Transcript
- Marci Grossman (01:01) Hello, I am MoneyMarci. Welcome. I am thrilled to welcome today's guest, Nik Agharkar. Nik is the founder, owner, and managing member of Crowne Point Tax. As a tax attorney, wealth advisor, founder, and entrepreneur, he offers clients a unique 360 degree perspective on their finances. He is a graduate of Carnegie Mellon University with dual degrees in economics and public policy. Nik brings nearly two decades of experience helping executives, business owners, entrepreneurs, and individuals. Known for uncovering powerful, often over-looked sections of the tax code, he develops dynamic, compliant strategies that reduce tax burdens and strengthen long-term financial security and asset protection. He takes a financial concierge approach, working at the intersection of tax law, asset protection, and wealth strategy, with a focus on creating smooth, lucrative transitions for business owners preparing for sale or succession. Nik learned taxes as a teenager and later realized this simple skill could genuinely change lives. His unconventional career path from successful litigator to management consulting to respected authority in wealth management has shaped his belief that success isn't just about scaling wealth, but sustaining and protecting it while aligning it with your values. Welcome, Nik. Nik Agharkar (02:33) Thank you so much for having me, Marci. I'm excited to be here. Marci Grossman (02:36) So I gotta start with, as a teenager, tax preparation. Nik Agharkar (02:39) Yeah, so similar story to yours. Similar story to yours, right? Parents. So, you know, my background, my parents are from India and they came from India in the early 70s. And people forget in the early 70s how bad inflation was, right? We think it's bad now. It's much worse then. And so actually immigrants from certain countries were only allowed to bring in no more than eight US dollars. So my father came here in 1972 with a suitcase and $8. He was a chemist and he did very, very well for himself. And when I was a preteen, he discovered Allegra and he ended up getting his name on the patent. And so that's appreciably changed our lives. And my mother took an interest in, why are we spending so much in taxes? So when I was a teenager, we went down to H &R Block and my mom told them that I would work for them, right? Cause I'm under 18, so she needed consent. So I did the six week training course, never worked for H &R Block, but learned to do taxes, right? So I was doing family taxes, taxes for family friends, similar to you, right? Doing journal entries with your father when you're 14 years old. Marci Grossman (03:45) Yeah, well, I mean, the difference was I grew up, my father was a CPA from before I was born. So it was just something that was always done. He didn't drop me off at H &R Block and say, learn this one. Nik Agharkar (03:56) Hahaha! Well, but I mean, you know what's interesting, though, is that honestly, I've been an attorney for a little bit almost 20 years now, and I spent a bulk of that. Well, not a bulk. I spent the first part of that as a litigator. And it wasn't until my mid 30s that I realized that most people don't know the tax code, right? And they don't know how to to operate or navigate the landscape in order to grow wealth, because really the tax code is an incentive system and it's a manual on how we can all grow wealthy in this country. Marci Grossman (04:29) I guess let's put this out there because for many of my listeners they don't know what is a tax attorney versus the other kinds of attorneys. What makes a tax attorney unique? Nik Agharkar (04:39) Yeah, well, then there are even, I would say, three classes of tax attorneys, So then there is the estate tax attorneys, They're going to do your estate planning. They're going to do estate, maybe estate tax filings, trust and estate tax compliance. Then we have the tax controversy attorneys who are constantly fighting the IRS and the state. And then we have tax attorneys like myself, the strategists, the ones that help business owners really think through a tax strategy throughout the year. You know, one of my law school professors, he's actually my federal tax professor, said that you really don't have a choice. Either you practice tax or you malpractice tax because your clients are going to touch money. And if you don't advise them on the tax ramifications of their money, that is malpractice because you owe them a duty to explain to them what they need to do next, right? So as to not get in legal jeopardy. And so really that's where my interest in tax comes and sort of where my expertise lies is in putting together a plan of attack for business owners to really minimize taxes and ensure that their wealth is growing properly. Marci Grossman (05:46) So did you have to go back to school if you'd been practicing as a litigator? Were there extra classes or certifications or anything you needed to receive? Nik Agharkar (05:55) It's funny you say that. I, as a litigator, one of the last things I did was I actually, I built and then sold my own law firm. So doing that really taught me a lot about business and honestly about accounting, as owning my own small business, then selling that practice that really made me focus on what I want to do in my life. I really enjoy building businesses. It's what I like doing the most. And so I thought actually, maybe I'll go get to your point about credentials. Maybe I'll go get my MBA, right? I'll make a wholesale career change. And one of my friends was actually. a management consultant and he said don't go do that come work with us. We basically get dropped into these fortune 50 companies. We don't really know exactly their business, but we puzzle through and we solve their problems with analytics, right? The data and analytics. He was like, you can do that. So I was like, I can do that. So I did that for three years, right? And that was really the crash course in business and understanding sort of how accounts tie together, how to manage a P and L, what we're looking at when we're looking at a balance sheet. But what would happen during those meetings, during those strategy meetings was it was after the meetings that these these executives would pull me aside and say, but you're still an attorney, right? Because I have this side hustle. Do I need an LLC? Does that help me with taxes? Or how come I'm getting taxed on these stock options? I haven't even gotten them yet. And so it really, that's when the light bulb went off for me, right? That, okay, if these very wealthy, very smart people can't find very good advice on taxes, perhaps there's room for me to enter that market and really serve those people. And that's what I've been doing. Marci Grossman (07:25) That's a great evolutionary story of following the opportunities as they come up and seeing what's around you and what's interesting to you. Marci Grossman (07:34) Before we get into some of the other things that you do, I want to backtrack to your parents. So they came here, they didn't have anything, but they had their education and their knowledge and they learned. But what are the money lessons you learned growing up? Nik Agharkar (07:49) Yeah, I mean, listen, the number one lesson my mother taught me and it's my sort of my catchphrase here is it does not matter how much money you make. It's what you keep at the end of the day that really drives results. So ultimately, when we look at our sort of the money coming in, how are we allocating it first? So setting budgets, setting standards. But then also, what are we doing to grow that money? The best quote for money is Warren Buffett if you're not making money when you're sleeping you're missing out, right? And so it's really creating those systems and structures, but really it's about discipline, It's about understanding what that end goal is and making sure that every day you're thinking Okay, how am I going to get to that goal if I'm making these decisions. So it's it's really it's a mixture of things when it comes to money but ultimately the biggest lesson I learned was that it's a tool and really it's a tool for freedom because ultimately while money can't buy you happiness, it can certainly buy you optionality. It can certainly give you pathways to create wealth in lots of different ways that maybe isn't traditional in the old timey sense, but we're living in a very new economy where money can be made in many different ways. And it's important to be able to understand how to navigate the tax code so that you are making money in the most tax efficient ways. Marci Grossman (09:12) That makes sense. Talk about business goals and personal values and it's important to have those aligned because we are looking at the end of the day whether you're saying it's for retirement or your kids, or your longevity goals, that these two work in sync. That your business goals and your personal values, because if they're going in different directions, you're not getting anywhere. How do you work with that? Nik Agharkar (09:38) Well, I mean, the first step is honestly to sort of gently discover that those are misaligned. Right. So when I hear someone say, ⁓ I want to sell my business in three months. And I look at the P and L and it's bloated or it's kind of a disaster and we have a lot of holes to fix. Well, we, kind of can't, right? So your personal goal of selling your business in the next three months doesn't align with where the business is. And so that can be shocking to some people. Right. I mean, look, at the end of the day, everyone wants to believe their baby is pretty, right? No one wants to be told their baby is ugly. So ultimately that's a hard conversation to have, but what's nice about sort of the work we're in is that it's black and white, right? You can't really fight the math. And so ultimately there isn't sort of in my mind an emotional charge here to it. It's just, unfortunately, that's where the numbers are. But what I do offer is a host of services then that can get those numbers to a place where someone will want to buy this for the value that the owner believes is there. Marci Grossman (10:43) I guess that we'll transition from ugly babies back ugly spreadsheets. Financial literacy education is kind of my thing, but when you're telling someone their spreadsheets are ugly, how well are they understanding their spreadsheets and how do you help them better understand them so they can make those better decisions? Nik Agharkar (11:02) Yeah, I mean, one of my the first things I ask every client that I onboard is what is your familiarity with accounting? Do you understand debits and credits? Do you understand how the balance sheet puts together? And do you understand that the debt portion of your business fuels the asset portion? Understanding these sort of concepts is basic, right? And from there, then we can build out a knowledge base. I think a lot of professionals and certainly a lot of attorneys come at it with an idea that everyone has your sort of same knowledge level and they just kind of breeze through things, perhaps don't explain it in granular detail and ultimately the client is left saying, well, I guess they know what they're doing, right? I want to empower my clients so that they can follow along with me and they can actually bring me ideas too, right? I don't think of this, you know, working with my clients as a one-way relationship. It's very collaborative. So if my clients are out there and they can understand what we're doing and then they see opportunities and they bring that to me, maybe it's one that I didn't even have on my radar, right? But ultimately this helps the client because it helps them understand their business. Marci Grossman (12:08) Right, of course you've got to get past that part of getting them to be willing to admit they don't know things. People don't like saying, I don't understand. So even if you explain something to them and you think you're explaining it at the knowledge they're a successful business owner so they must come with some base financial knowledge and you say, okay, did that make sense? And they'll just, nod and smile along and you have to kind of use, ESP powers to see if... they really understand you. How do you break that wall down to get them to ask the question so you can help them move forward? Nik Agharkar (12:44) Yeah, I use a simple trick of getting them started, right? So I might say something like, when I usually talk about this, I have clients ask this question, right? And is that a question you have or do you understand that question? And so there right now it's almost like, you know, making them feel like they're not alone in not understanding this. right? You know, This is a common question that I get. It's absolutely okay to not understand this stuff. We're not taught it, I sometimes open with that, If someone is truly sort of lost in their business, it's look, this isn't something that you learned in school. It's simply not taught, I think that's criminal, but ultimately running a business, running a spreadsheet, running a balance sheet, running a P&L, is not taught in any school, right? And so if we're not learning it, how can we be expected to just know all of this stuff simply because we own a business? You own a business because you are passionate about the products or services that you're delivering, not because you're passionate about debits and credits, right? That's of our domain. So, I try and get them comfortable with the idea that it's okay that you don't know this stuff, right? Because, I even go as far as to tell some of them, it's better that you don't know this stuff because now you don't have any junk, right? There's no bad habits. I can teach you everything from the beginning and make sure that we're understanding everything. We're always on the same page and the same wavelength. Marci Grossman (14:04) Right. Well, sometimes when someone starts a business, they struggle. We all hear the stories of someone who struggles for however long and then hopefully they turn a corner and it starts being profitable. And sometimes it doesn't and it never gets profitable. But you also have those challenges when a business rapidly grows. They start it and it kicks off. And so they don't necessarily have that time for that more gentle slope of financial education. Or you have someone that inherits something and ends up with a windfall of some kind. How can you prepare when there's less time to prepare? Nik Agharkar (14:42) Yeah, I mean, honestly, it's getting them to a place where we can kind of stop the bleeding. And this is the hardest part because ultimately those entrepreneurs loves the sales angle, right? They love getting the clients in the door, getting them to sign up, right? But what they don't pay attention to is all the systems processes and standard operating procedures that we need in the background to actually deliver excellent work. And so ultimately it's having that conversation around how are your clients doing? Are they all very happy right now or are there some bumps? Are there some things that we can, you know, smooth out. And so here we get to some of the process improvement questions, right? So, you know, if you could do this better, if you could do onboarding better, what would it look like? And so there we can then start developing those SOPs and those the standardization across delivery so that they can go back out and sell. And be that sort of front man for the business and bring in clients that rainmaker while we sort of help them set up that back end and operationally get it squared away so that the systems move seamlessly in the background. That's the businesses that we're trying to help and to help create. Marci Grossman (15:49) I appreciate that you seem to have it built into the process of spending the time with your clients to explain this and make sure that they understand the financial and can continue to gain the knowledge to be better able to participate in the business of their business. Nik Agharkar (16:09) I love talking about this stuff, right? And it's important, I think especially because the message is really coming out here today is that You're not alone, right? If you're a business owner that's struggling with these things, you are not alone. I think a lot of business owners, because they are alone most of the day, right? Even if they have a team. Generally, it's one or two entrepreneurs that are running the show and are calling the shots, and that's a lot of pressure. And so there's a lot of pressure to always have an answer, You know what? I know how to handle this. I'll take care of it, But ultimately, this stuff, the tax code, getting your accounting and your books and your sort of finances in order, It's complicated and it can get extremely complicated. So, I mean, the issue really for me is just telling people it's okay. You can get help and it's okay to pay for help. It's okay to pay for someone to do these things that perhaps aren't profit centers. But ultimately will drive a better business because you will have better outcomes for your clients, your customers, and ultimately that will allow you to scale. So while it may not have a direct sort of one-to-one relationship with what you spend on your sort of your CFO, your general counsel services versus what that profit line is, but ultimately over time, the whole business will improve because the systems inside of it have improved. Marci Grossman (17:27) Right, and that goes back to just preparing for that growth and putting those structures in place, the foundation so that you've got sustainable growth, because it's great you grew this year, but if you grew this year and now you've added assets this year, you better continue growing next year because you want to be able to afford to continue to pay for these assets you just bought this year. You don't want to be a business that I had a great booming year. I bought these things to support that. And then next year I stayed stable or went down and now I've got excess capability for whatever type of business it is, whether it's employees or machinery or whatever. And then you end up with this overhead that isn't making any money to support it. Nik Agharkar (18:16) This is why the 15 to 18 month rolling projections we do are so important. Right. And I think that's the problem is that so many people just want to project out, well, what's next quarter like? This is not enough of a timeline. We need much longer term thinking to your point to make sure that we aren't overbuilding capacity because there is that delicate balance. Right. I've had conversations with a lot of business owners that it's like kind of the chicken, the egg. What do I do first? Do I go out and sell first and get clients in the door and then build the infrastructure? Or do I spend the money and build the infrastructure first and then go sell? I think it's a mix. I think you have to kind of start with the sales angle simply because you want to make sure that there's a marketplace for your services. I've talked to so many entrepreneurs that come to me with ideas and they're like, oh, if I could tap into this $2 trillion market, well, sure, but will anyone buy anything from you? So if no one will buy anything from you, you don't have a business, you have a hobby. And so this is where we start. But ultimately, after you get those market signals, it's important to double back and build those structures, build the infrastructure so that you can now go out to the marketplace. in a very targeted and strategic way to grow the business development piece while the infrastructure is being built. Marci Grossman (19:32) You used the key words, so you brought me back one of my favorite words is projections. And let's talk about rolling projections versus budgets versus how this can help you plan for what that growth in the future looks like. Nik Agharkar (19:47) Yeah, I mean, look, at the end of the day, your forecasts are only as good as your data, right? So ultimately, you need to be able to first and foremost, trust the data. I've worked with far too many clients who have the data, but then say, no, no, that can't be right. That can't be right. There has to be more here, somewhat, right? You have to trust the data, right? So if your salespeople are out there telling you, look, these number of deals are going to close and you had an idea that many more would, we've got to face that reality, right? And we've got to make sure that our projections are not simply projections, right, that are based in no reality whatsoever, but that they're based in actual work that's going on in the business so that we can understand what's going on. So I think that's first. In terms of budgeting, we want to budget for growth, right, especially at the beginning. So perhaps your budgets at the very beginning might look a little more marketing heavy, and then we can sort of play with that over time as we need to. But the critical piece here, Marci, is reviewing these things. I've sat with too many entrepreneurs that have a budget. Don't look at it. They set it and never look at it again. We have to be tracking, right? We have to be tracking to projections and tracking to budget for them to be useful. ⁓ Marci Grossman (21:00) Right, so many businesses that I've come across, their next year's budget is basically taking what happened this last year and saying, okay, that's my let's go. Right, right, Here's what I budgeted for this year, here's what actually happened this year, I'm going to assume that what happened this year is gonna be my budget for next year. And the world changes every year, what your product or your service or your sales, Nik Agharkar (21:10) we're adding like 10 % and that's, know, to everything like wings. Yeah. Marci Grossman (21:28) you know, the needs, the availability, all of these things change continually. Your budget, your projection and forecast, all of these things have to be living and breathing. They can't be these rigid structures that you just assume are gonna fall into place. Nik Agharkar (21:48) Well, the other piece of just sort of taking your budget from last year and transposing it this year is ignores all your strategic initiatives, right? So if you if you just do that, then are you not planning at all? You have no strategic planning. And that's a serious problem because that is what really is going to inform the budget, right? We first have to decide where do you want to go? Then we can think about allocating resources to get you there. But ultimately, if you're just flying by and saying, you know what? Last year was good. I'll just do it again. really thinking about our business, right? We're not really thinking about what strategically is going to make sense for me to do next year to grow this business. Because the other thing is we talked a little bit about selling your business. I think you know this. So many business owners, their business is their largest asset by far. And so if they go to sell it and they're only going to get maybe 30 cents on the dollar in their mind, we're in big trouble, big trouble, right? Because so many of these folks don't have retirement plans. They couldn't afford it. They're putting everything back. into the business to grow it. So ultimately, if you're not really thinking strategically about your budget and about your forecasting, you're gonna have that shock at the end of the day when you go to sell it, that it's maybe not as worth as what you thought simply because of poor planning. Marci Grossman (23:07) Right. I think that brings us to business legacy planning because that flows right in. Nik Agharkar (23:11) Yeah. Yeah, I I talk to so many business owners who are afraid of this topic, and it makes me chuckle little bit because many of these business owners are in their 70s, some in their 80s, and I'm thinking, what do you think your staff thinks? You're going to live forever? That this is going to go on forever? I mean, they probably have the same questions, right? They probably have questions around what's going to happen to this place when you're no longer here. Because ultimately no one wants to think about that. But it is critically important, not only for your employees, but for your customers. Because ultimately, I've seen this too. Some customers will just leave a business owner who's obviously getting older, right? And it's probably going to retire in a couple of years. Clients do start to leave. Especially if they see that, you know what, he's just not putting in the hours anymore. It's pretty clear, like this is the sort of the end. That's going to start happening if you don't put a succession plan together. If you aren't holding up sort of a number two in your business or bringing on that next family member, if it's a family-run business, to really make a plan for what happens next because ultimately that continuity is going to keep the business going, keep your customers happy, and keep employees employed, which is what they want. Right? So ultimately not addressing this, we're trying to hide your head in the sand. Never a good strategy for legacy planning, especially with your most valuable asset. Marci Grossman (24:37) Right, and especially if you're in a service industry, whether it's an accountant or an attorney or whatever else, if you're the guy and there isn't a next guy, I don't want to call my attorney, hey, I need something now and find out that he died or he retired and he sold his practice to some firm. I get a letter in the mail all of a sudden that the firm I have dealt with, the individual that I've dealt with, sold it to somebody I don't know. Nik Agharkar (24:53) Yeah. Marci Grossman (25:05) I'm just supposed to move all of my faith and trust and work over to this individual that I don't know. So if you can create that, whether it's you send out a letter that says, I am merging with such and such a firm or hey I have picked up a number two or whatever so that there can be that more gentle transition. Nik Agharkar (25:26) Yeah, and I mean, honestly, it should take a couple years. This is the thing that I think most business owners really underestimate is how long that sort of planning for legacy is going to take because everyone has to get comfortable with it. And the next person up has to prove their competency. Right. So, you you could have a great number two, but if they can't make that leap to being number one, we've got problems, right. We've got to solve for that before we can sort of think about an exit. Marci Grossman (25:55) Or even if they're great but you haven't started introducing them to the clients. So I know you've got a number two at the office. I just don't know what it's going to feel like sitting across the desk from them. Nik Agharkar (26:05) And it's not just service based businesses, especially where the business owner is the face of the business, right? If they're the ones going out and winning all these customers and building those relationships, you have to transition those relationships because ultimately, business is all relationship driven. It's all about sort of forming these relationships to make sure that these folks are happy, that they're getting the value, and that you continue that relationship. And if someone leaves, that opens up this person's, the client's mind to, ⁓ maybe I should look for someone else because they're leaving and I like them, but they're retiring. And I don't know anyone else at that firm. He's the only contact I have. So that is a serious risk in your business. And it's one that too many business owners overlook. Marci Grossman (26:48) Yeah, and that's a shame because you have this asset that would be marketable, but someone who might look at buying it, if you wait too late to transition, you've already got your clients starting to, your customers, your patients, whatever type of business you might be, already starting to peel off. They're already saying, I've got to find someone that I know is going to be there for me in the long term. Nik Agharkar (27:11) Yep. Yeah. Marci Grossman (27:14) So the next two topics I'm kind of going to take together because there is some economic uncertainty. There is some unknowns. We've just had a major tax act come into play that is going to implement over a couple of years and then many of the things are going to sunset unless they are renewed in a few years. How do you plan for this? How do you build the resiliency in your business, yourself, in your clients, in your employees when there's so much unknown in the future? Nik Agharkar (27:53) Yeah, I mean, look, I think that you have to plan for everything costing more. Right. And that's always true because we live in a debt-based economy. inflation will always be there. Right. So I think we have to always plan as a baseline that next year, everything's going to cost more. But then it's also making sure that you have alternatives at the ready. So thinking through who are my other suppliers? If this certain supplier is going to get tariffed or, you know, that I can't get goods from that country anymore. What do I do? Where do I go? Right. And this is the thing is that you can't start thinking about that after you get the notice from that supplier that they're not gonna give you anymore, right? You to start thinking about that now while you still have that good relationship, but looking around for backups. I'm not saying sign another contract or go against a relationship that you've had for a while, but it's ultimately coming up with those backup plans is so critically important right now. And then also it's understanding that a lot of this is theater. A lot of this is just not going to come to fruition, a lot of the more far-fetched ideas. So ultimately, it's sort of trying to find the signal from the noise and then continuing to leverage the, I would say, tried and true methods within the tax code that offer business owners savings. I should add... We haven't yet, so, and we almost came close there to giving advice. Neither myself or Marci are your accountant or your attorney, so do not take anything we say today as advice or things you should be doing. This is just a conversation around tax. But again, the tax code is an incentive system. Business owners get a huge leg up. And if we stick to sort of the meat and potatoes of the tax code, it isn't really going to change. And we maybe bring in some of these new programs to help continue to mitigate taxes, we're going to be in a really good spot. But this all takes planning and it takes thinking about taxes regularly, not just around this time of year. Marci Grossman (29:49) ⁓ this time of year, yeah. So you're in New Jersey, are you as cold and snowy as we are here in Michigan? Nik Agharkar (29:51) Tell me about it. Yes, yes, absolutely. We got about two feet of snow on the ground. It is 20 degrees today. It's very, cold, but I grew up in Syracuse, so this is this is old hat for me. Marci Grossman (30:10) Fair enough. Yeah, you've got way more snow on the ground than we do, but I think your temperature is slightly warmer, I guess you pick your poison. Nik Agharkar (30:17) Yeah, yeah. Marci Grossman (30:18) Nik, do you have anything else you would like to mention that maybe we haven't covered? Nik Agharkar (30:23) I want to say I am a big proponent of modern monetary theory. And the thinking is that the government really doesn't need your tax money. And that's very true. The government can print money. We saw that during COVID. We can print as much money as we'd like. So the government isn't relying on your tax money to fund anything. What the government is doing by implementing a tax code is essentially telling us what we want in our society. We want people to invest in real estate because we want housing. We want people to invest in oil and gas because we need energy. We want people to start businesses because we want more people employed. These are all of the things that make a good society and a great society. And it's what the tax code does. It incentivizes us to do certain things. So when people get angry about how our tax dollars are spent, understand that the majority of that is not our tax dollars. It's simply money that's printed. And we can always print more money. But it's on us and it behooves us to understand the tax code so that we can keep more of that money and we're not giving it back to the government. Marci Grossman (31:24) Well said. Nik Agharkar, thank you so much for being my guest today. you taking the time to join us here. Nik Agharkar (31:31) Thank you so much for having me, Marci. This was a great discussion. Marci Grossman (31:34) You're welcome. Marci Grossman (31:35) my listeners, I will be sharing a link to Nik's information in the show notes. Please check him out. He shares a lot of interesting information. Don't forget to subscribe, leave us a review and stay tuned. I'll see you next time. This has been MoneyMarci on Marci Talks Money (and Life). You got this.