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Avoiding $10K Tax Surprises: What Your CPA Might Be Missing · The Millionaire Dentist™

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  Hello, everyone, welcome to the Millionaire Dentist podcast, brought to you by
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  Four Quadrants Advisory. On this podcast, we break down the world of dentistry,
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  finances and business practices to help you become the millionaire dentist you deserve to
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  be. Please be advised we do speak with an honest tongue and may not
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  be safe for work. Hello and welcome to the Millionaire Dentist. I am
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  Jared Bridgeman. I'm your host. Today. Casey Hires is out and about.
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  He's at He's done in Dallas doing one of our top golf events.
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  Today, I have special guests Kevin Rotten. He is our CPA and he
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  is also at MBA. He is an onboarding specialist here at Four Quadrants Advisory.
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  Kevin, how are you? I'm doing great? Thanks for having me.
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  Kevin. Can you explain to me what an accounting onboarding specialist is and
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  what you do? Yeah. So, specifically, with our new clients after
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  they come on board, I work with them very closely with getting all of
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  their accounting, all their taxes, you know, quick books, banking,
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  credit cards. I work with them on getting all of that information transferred over
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  to us. Let me ask you on average, when you're when you're bringing
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  all that in and onboarding this new client, how long does that take?
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  It's usually about three months. Some clients the transition goes a little bit quicker.
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  Some maybe takes a little bit longer. But a lot of that would
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  be because we were so thorough. Yes, right, and in the past
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  several years that you've been here, every new client, every clients has had
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  to go through you at some point. That's right. That's right. You're
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  the gatekeeper, an gatekeeper, and I'm the key master. So this all
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  works out. So Kevin, today we wanted to bring you on and talk
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  about you know, it's very appropriate. Taxes were due last week. We
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  talked about this oftentimes on this podcast of a tax surprise being plus our minus
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  ten thousand that you either owed or refunded. But I wanted to get your
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  opinion on can you dive a little bit more into that, Like it's it's
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  not just owing ten thousand, right, that's correct. With our clients,
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  a lot of times we have the quarterly estimates things like that. So what
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  we key in on is when tax day comes, like just happen. You
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  should not be having a surprise of more than ten thousand dollars that you're not
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  expected. Yeah, so it really doesn't matter. You still have to pay
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  taxes, right right, right, it's not at the end of the year
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  you're like, oh, I'm only owing a thousand dollars, it's not going
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  to happen. Yeah, So we definitely don't want our clients to owe more
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  taxes than the mainteen too. Right, So we're going to look for every
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  deduction, every credit that we can. But at some point, if you
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  make money, the RS is wanting their share of it. So, yeah,
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  we see so much in the practice owners the prospects that come across my
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  desk of their taxes that come through. It would this be even before their
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  clientses this part of the consultation process, like yes, I'll see you know
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  in prior years they'll owe you know, fifty thousand dollars or get a seventy
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  thousand dollars refund. Has that actually happened? It has happened. You know.
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  In a lot of these practice owners, they don't have a dedicated dental
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  specific CPA that works with them throughout the year. They may have someone they
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  know or might be a part of a bigger yeah firm. Yeah, you
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  get, you get. You have the major CPA firms and and they're pretty
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  much just ten forty factories or eleven twenty yes factories where you talk to them
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  two three times a year. You send them all your stuff. At the
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  end of the year, they churn out your tax returns. They maybe churn
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  out estimates. Okay, there's no customization, there's no analysis throughout the year.
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  But they'll basically they'll look at the practice almost like any other business,
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  not really dive into what specific towards what they need. Right. You know,
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  as we said, every every client and every prospect comes across your desk.
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  Yep, Are there any let's say, when you're looking at their their
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  previous taxes? Are there? Is there anything you've noticed a trend, like
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  an issue or a problem that you've seen multiple practice owners out there kind of
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  come across. Yeah, there's there's probably two or three of them that generally
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  will see this as common. One is their income structure, and what that
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  is is based on their indie type. Their income structure being their W two
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  wages and their distributions. That's what we consider their income as a practice owner.
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  Um, what they get through W two earnings and what they bring home
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  through tax three tax free distributions. Okay, with that, we see that
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  they don't maximize their income through there, and they also don't maximize their deductions,
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  whether it's retirement savings, maximizing their four one K, maximizing their company
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  match. Most of these guys will, well most of people listening would know
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  this on some level. But for example, when you're putting your money to
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  a four O one K that's taken out before taxes, so that lowers your
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  is it tax base? Your tax base at tax time? Right? Yeah,
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  you're you're a tax file income and lowers your taxable income. Yes,
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  yeah, so uh. And then even for practice owners that implement profit shares,
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  you know, that's an expense to the business. That's money that's going
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  into your retirement for retirement savings, and an expense for the company itself,
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  which then flows through lowers your taxable income. And so some people may not
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  be utilizing all the maximizations of these deductions and things like that and are essentially
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  paying more than they That's exactly right, and that could add up. You
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  could be tugging thousands of dollars a year, tens of thousands of dollars over
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  many of you are you know, a practice owner for thirty years? Yeah?
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  Wow, yeah, I mean that really that can really add up.
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  And that's part of what we do here is find ways to well it gives
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  you more of that money. Yeah, and it's a double whammy where you're
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  not maximizing those that tax break and you're not maximizing that retirement savings. Does
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  any of this have to do E said with income structure? Is that the
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  same or related to I believe it's like S corp And Uh, I know
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  it's not. I know it's not a C section, but it's uh,
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  there's C corps, the corps, there's sole proprietorships that file a Schedule C
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  on the ten forty. There's partnerships and each one of those can vary on
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  your your what you write pay right. And there's there's different tax laws.
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  There's different tax benefits to each type of entity. And that's also something that
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  we look at as well when we that is uh, and is that your
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  second point? That is steal your thunder? That was my second point.
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  Is in fact, over the past twelve months or so, a few of
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  the ones that come across my desk those prospects. Looking at their taxes,
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  you know, we see ways that they can change, maybe their entity type,
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  maybe their sea corp make an selection. We look at what would be
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  the most beneficial to them. Maybe for this client it would be this certain
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  plan. Another one would be this certain type of entity. Now you said
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  there was two or three things? Is there? Do you have a third?
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  Uh? Do you have a third kind of point for me here?
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  Yeah? Actually, um, can you get to the point, Kevin.
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  Something else that we see is just downright errors on prior tax returns. You
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  know, we'll have to carry the one to carry the one. Sometimes that
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  does happen. Now, things like you know, some of these the practice
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  owners again that we talk to, that we see unless they'll say yeah it's
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  a family friend, or yeah they did my dad's my parents' taxes, or
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  yeah it's a family member of one of my employees that's helping me out.
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  You know, I don't want to put them down or anything, but just
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  a little bit out of their league. You need more detail oriented dental specific
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  tax advice. Text your your line of business and understands the laws that tie
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  into that. And that's exactly right. I've seen things where there's a deduction
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  called the Qualified Business Income Deduction. You know that's filed wrong. They've made
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  mistakes there. There's something called the net investment tax. I've seen that where
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  that was implement it wrong. Is there a do you have a nice point
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  of like, Hey, here's a really cool case where we were able to
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  recoup or save you know, identists a large amount of money or a decent
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  amount of money. Yeah, going back to that entity type, there's one
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  whereby reorganizing will actually be able to save them in income taxes over nineteen thousand
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  dollars in just one year, in just one year. Someone's listening to this,
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  they just filed their taxes or they're pretty close to it. I know
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  there's a couple of cases out there where they may have to file an extension
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  because they haven't gotten all the stuff they need from everybody else. Yes,
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  but let's say they filed, they knew they were going to pay something and
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  ended up being oh, nice, I have to I'm paying ten twenty thirty
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  thousand more than I thought. Is there something we can do to help help
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  somebody out? Yeah? I believe we are implementing a free tax assessment.
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  What free? Just call and say where's keV Dog something like something like that.
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  Yeah, sure, here's the deal. Here's the deal is that I'm
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  going to all repeat it again later at the end of the episode. But
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  if you go to four Quadrants Advisory dot Com slash taxes, we're gonna have
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  information on there as well as a form and a phone number you can call.
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  And you know, it's not going to be as a deep of a
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  dive as I say, our full on consultation is, but we'll take a
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  high level of view and maybe maybe able to point out some things. So
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  Kevin, can you kind of walk me through the process of what this tax
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  assessment is and kind of what we're looking for. It's just a fresh set
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  of eyes. You know, sometimes you get into that rut if you've had
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  a CPAU doing your or an EA or whoever doing your tax returns for a
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  few years, they get into that rut of this is just this is just
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  what we do, not asking questions, not If you want that fresh set
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  of eyes, just take a look. Many of these examples that we talked
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  about was for our prospects. I saw I took a look at those tax
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  returns and right off the bat, saw those areas that we could make changes
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  too, and they could say on taxes, what's what can someone expect if
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  they sign up, you know, I fell out the forum and we can
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  get in contact with them. What are some things they can expect to have
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  to send in their practice tax returns and their personal tax returns really and just
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  therefore, most of the time we look at just their federal um. You
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  know, a lot of times just states have a lower tax rate and kind
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  of deal, and many states just piggyback up off of what you report to
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  federal. You know, they Federal you do all your adjustments to your income
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  adjustments off credits and things, and then they'll be like, okay, just
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  tell us what your AGI was for federal and we'll go from there. So
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  there's not as much low hanging fruit on state returns, but for federal,
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  you know, for sure, So definitely look at federal, uh, personal
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  and practice tax returns, you know. And these prospects that have come across,
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  I would say three quarters of them at least where I can say we
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  could go back amend find some money, or there's some changes you can make
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  going forward that would save you on taxes and help with the cash flow.
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  Uh, it's there's a lot that's the big chunk of people that you've you've
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  talked to that have had Yeah, it's just as that at the end of
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  the day, make different thousands of thousands, tens of thousands over over years.
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  Another horror story that one that I hate to see is this kind of
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  gets into distributions and shareholder loans things like that that that we've talked about shareholder
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  loans for what those can be an IRS red flag really and a lot of
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  times we'll see these practice owners be like, what what shareholder a loan?
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  I have a fifty thousand dollars one hundred and twenty thousand dollars shareholder alan,
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  Yeah, you on your balance sheet says you owe your practice one hundred No
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  I don't, Yeah, yeah you do. And that without getting into the
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  weeds I RS red flag. We don't like to see that. We also
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  don't like to see things like capital gains on distributions and that just comes from
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  lack of dental specific accounting. Maybe the account not explaining, not explaining what
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  we're clearly happening. What's going on if distributions for an S Corp owner practice
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  owner distributions should be tax free if if they plan right, if they have
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  somebody like us to help them, you can pull that money out tax free.
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  If you don't do it the right way, it can be tax And
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  that's something I see from time to time. That's like, you know,
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  it's one thing to defer taxes and that's great, but to pay taxes on
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  money that you shouldn't have to just because of not getting great, not getting
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  advice at all from your accountant CPA, it just hurts. Well, Kevin,
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  I really appreciate you coming on here. This was your first time I
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  believe being a guest on here. Were you nervous? I was a little
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  bit of it? Yeah? Is that what you're holding my hand right now?
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  Anyways, thank you Kevin for being on here. I really appreciate all
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  the time and effort you put into this. Folks, don't forget we're gonna
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  be all over the country all summer long and the rest of the year.
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  Go to four Quadrants Advisory dot com slash events and check out where we're gonna
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  be. Thanks Kevin. Thanks, that's all the time we have today.
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  Thank you to our guests for their insight and for sharing some really great information
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  and thank you to you the listener for tuning in. The Millionaire Dentist podcast
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  is brought to you by four Quadrants Advisory to see if they might be a
• 15:11
  good fit for you and your practice. Going over to four Quadrants Advisory dot
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  com and see why year after year they retain over ninety five percent of their
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  clients. Thank you again for joining us and we'll see you next time.