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Stop the Tax Surprises: Mastering Quarterly Estimates with Kevin Rhoton · 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
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  to be. Please be advised we do speak with an honest tongue and may
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  not be safe for work. Hello and welcome. This is Casey Hires back
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  at the Millionaire Dentist Podcast in studio with co host Jared. I was like,
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  what's the pause there? Just building up suspense. I love it.
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  Hi, Casey, how are you doing well. We've also got Kevin Rotten
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  in the house. Hello, NBA CPA. Generally nice guy, Kevin.
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  You you helped with our tax team, task management, tax planning, onboarding
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  anything tax. Yeah. I'm with the accounting text team and I specialize with
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  onboarding our new clients. He also specializes in barbecuing and smoking meats and making
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  jerkys I do. It's very nice when he makes quote unquote too much and
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  he brings it in. I'm a big fan of when that happens. Jared
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  loves a free lunch. I sure do. I probably owe you one.
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  Actually, I've taken so many meetings just to get a lunch out of it.
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  I do have somebody you want me to bring it into me? Yes,
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  that'd be great. Thank you. Paying off already, paying off already.
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  But as you said, Kevin is like he's like a CPA tax kind
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  of genius. It's like our rain Man with numbers, but smarter on the
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  front end. I guess again, I don't know how to take that.
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  Not a compliment or it's kind of meant to be a compliment. I just
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  the Rainman. Well, actually it's from the Hangover when gillifanakish and doing the
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  rain Man with the numbers going through the head. And you know, anyway,
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  you're really smart. That's what I'm trying to say. Thank you.
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  Yes, and you came here today to talk to us about tax right estimates,
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  tax projections and estimates. What what he knows for? Well, if
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  you do not like writing five digit checks to the irs when you file your
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  tax returns, then you probably want to listen to this. So if you're
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  a practice owner who you pay your taxes all year and then you have to
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  pay ten, twenty thirty, forty fifty sixty thousand more, still pay more?
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  And actually if you get the refund, it's still bad. But we'll
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  just talk about the estimates. Okay, yeah, Jared, drive us home
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  today, pal Okay, So in terms of estimates and tax projections, and
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  if it's not handled well enough, as you said, some of the uh,
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  you know, bad things that could happen is writing a large check yes,
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  the end of the year. Why isn't it. Why don't traditional CPA
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  or accounting firms already do that? Four people? Yeah, most are lazy.
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  Sorry, go ahead, Kevin. Yeah, most traditional CPA firms probably
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  a lot of practice owners experiences where you really only talk to them once twice
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  a year leading into tax season. They'll get all of your information, prepare
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  your tax returns, file them, and then you don't hear them for nine
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  to ten months, don't check in with you, anything like that. And
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  so it's as part of like what a traditional CPA firm does. This is
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  a term I've heard thrown around. I'm going to be straight up honest.
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  I get kind of the concept. I'm not sure what it is. What
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  is a safe harbor? What is it? And how does that work?
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  Yeah, so, most traditional CPA firms will prepare safe harbor estimates when they
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  prepare your tax returns. So given the example that we've just come out of
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  file the twenty twenty two tax returns, they automatically do maybe a safe harbor
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  twenty twenty three estimates, quarterly estimates, and all safe harbor is is the
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  IRS says you need to pay a ninety percent of your twenty twenty three tax
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  liability or one hundred percent of your twenty twenty two tax liability to keep you
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  out of paying any under payment penalties. And that's it. That doesn't mean
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  anything about any type of fluctuations. So if you had a really good year
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  or a really bad year, or you know, there is a medical issue
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  in your home a lot, it's it's just what happened whatever you did two
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  years ago or last year. Yeah, last year, that's all it means.
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  So, yeah, you could have a fifty thousand dollars tax bill,
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  but as long as you paid in one hundred percent of last year's taxes.
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  Hey, I just tuned out. But is the answer is because they're lazy?
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  Like yes, sure, short and sweet, they're lazy. So this
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  is more of a let's prevent penalties. Yeah, that's all it is.
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  Why wouldn't they take into account again? Is it just because they touch one
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  time a year? Even so, let's say you're the traditional CP over here,
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  I give you my tax info. You see that, Hey, you
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  were up two hundred thousand dollars compared to last year. Why wouldn't you adjust
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  that or change that for or is it too late by that point? It's
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  too late by that point, I mean because they're looking at your twenty twenty
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  two books in first part of twenty twenty three. So before let's say,
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  because you know you, hey, you work with us, obviously you work
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  here and you work with all of our clients. Do you find when people
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  come in for the first time as a client or even as in a consultation,
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  they're frustrated with those year to year swings with a lot of prospects that
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  come in. We see that a lot of fluctuations in taxes, I mean
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  from one year to the next. Looking at prior year returns, you know
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  they'll oh a whole lot one year and then turn around and get a refund
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  the next year. And a refund there's not always a good thing, right,
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  No, it's just a poor use of your money. You're giving Uncle's
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  giving the federal government a interest free loan. See, now these are things
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  I didn't know before coming to work here too much, because I remember being
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  in college and getting a nice little tax refund and went straight to you know,
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  booze, let's be honest. But now it's like, I rather would
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  have that money month a month, or you know, week to week,
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  whatever it comes down to. Yeah, Kevin sees this firsthand as he's onboarding
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  new new folks that get to work with our firm. Most of the time
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  they start out thinking that their tax situation is is okay, or maybe it's
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  just maybe not as proactive as they would like, and then ultimately they get
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  pissed off because they a lot of times we find a lot of error's mistakes
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  issues, things that they just didn't know because they like their accountant, they're
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  a nice person, or it's been so many years. I think that's the
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  norm. This is what I think. It's the norm. And there are
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  other fourteen friends who use the same CPA. They all have different degrees of
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  mediocrity when it comes to their accounting, so they don't know any different until
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  the proverbial blindfolds lifted off and they go, wait, what you mean I
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  didn't have to pay sixty thousand dollars and I can do this or that,
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  and I mean you see that all the time all the time. So how
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  do we hear at four quadrants do that differently than say in the traditional firm.
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  So right off, we have I guess a leg up. You would
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  say, we work with practice owners on a monthly basis. We reconcile their
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  bank accounts, update their quick books, and we're generating monthly financial statements for
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  them. So you're elbow deep in the process. Yeah. Yeah, so
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  we're able to provide up to date tracking on their tax will income. So
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  you're in the practices accounts and looking and they're quick books and all that stuff
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  on a monthly basis. From there, where does it go? Yeah,
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  So that leads right into being able to prepare a customize quarterly estimate for our
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  clients each quarter. We actually have a proprietary tax projection method that we go
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  through for every one of our clients. And it's really about it probably about
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  a ten step method that pretty much looks at every aspect of our clients in
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  anything that might affect their taxes. We take a look at that and incorporate
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  that into their quarterly tax projection, and each time if there if something pops
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  up, you're right there to ask them a question like what is this?
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  Where did this come from? Okay, so someone's trying to cook the books,
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  we know sure. Well more importantly in buzzle when when you which is
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  a practice owner, you probably shouldn't be spending hours of your time doing this
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  stuff. But for our clients, when you have a team and everything all
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  the time, there's no chance for embezzlement or uh no chance of it.
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  Yeah, no catching it right away. But but from what I understand,
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  most folks, they only get the safe harbor estimate, which is last year
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  I did X divide by four. There's the payments. Best to luck.
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  We'll talk to you November. Yep. The extra parts are we with our
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  clients forecast out the next year? Correct? So we might say that is
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  that correct? That's correct? Yeah? So well maybe one of our female
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  clients, maybe they're gonna have a baby. Well guess what you can actually
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  plan and forecast for that novel things. A lot accounting firms won't do that
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  because they're not talking, because they're getting nickel and dimed. Don't get me
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  started. But the safe harbor a forecast and then the monthly and the quarterly
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  tweaking changing being in there adjusting that that's the recipe. It drives us nuts
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  because it's not it's not like the hardest thing to do, and so few
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  people have a accounting firm that does that. Yeah, I mean, think
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  about all the swings that happen just in one year in practices you have dealing
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  with ups and downs with revenue, employee wages, I mean they're mostly going
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  up, but major equipment purchases, we have practice owners. All the time
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  piece equipment goes down, they do have to purchase that replacement. We've just
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  seen all kinds of ups and downs. And then not to mention everything that
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  affects taxes outside of the practice, personal investments, you know, home sales,
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  home purchases. Kids like Casey had said all that, Yeah, I'm
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  blame with crypto. I mean yes, actually, well yeah, and this
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  all ties into you know, right now, there's people listening that in June
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  have no idea that for the first six months of the year something was not
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  accounted for, and when are they going to hear from it about it?
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  In November? Not even they'll hear about it in April of twenty twenty four.
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  So with the traditional accounting firm, a lot of times people don't find
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  out, let's say November of that year, that there's been poor accounting done
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  and that they owe a bunch of money, and so you have what five
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  weeks to correct that. Well, that's not enough time. So then what
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  did they say, Section one seventy nine, Go buy some stuff, go
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  by, go by a ninety thousand dollars truck because all because it's letting him
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  off the hook, yes, or they go behind your back and get you
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  a shareholder loan. We talked about those a lot that right, that's right
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  Kevin doing it, doing it the poor quadrants way and getting proper and methodical
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  quarterly estimates done. Besides maybe not owing a bunch come tax time, what
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  are some major benefits that someone can see from that. Yeah, definitely two
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  major ones besides just the fact of not owing a tax pumbly is it helps
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  avoid those tax aprizes when you go to file your tax returns. Again,
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  probably practice owners out there that every year they kind of have that dread in
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  the pit of their stomach of when their accountant calls your taxes done, you
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  owe insert huge dollar amount. They hate this that time of year. So
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  and they're giving themselves all sorts just thinking about it. Yeah yeah, and
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  then they're spending money to the doctor. That's more money. Yeah, that's
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  the whole thing here. And tons of the prospects that we talk to that
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  they hate that thing. Yep I had a tax surprise, yep I hated
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  it. More money out the door. Was anybody ever surprised they had to
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  pay taxes in general? One of the lines. One of the lines I
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  hear as well, it's not really a surprise because it's always jacked up some
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  way, Like if it was, hey, you o four hundred and seventy
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  five extra dollars, that would be the surprise, because it's never very consistent,
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  right, And and taxes get people to move. That gets people frustrated.
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  And when they wake up and realize that it shouldn't be like that,
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  then they make a nice change. Some people there their tax situation. Maybe
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  it's not it's not as glaring as we're talking about here, But Kevin and
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  his team do a good job finding details, find getting in the weeks,
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  finding minutia things that it can just be better. Yeah, And I mean
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  I guess a little bit to tut our own is every year there'll be a
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  couple of clients, a few clients that we'll get probably within one hundred dollars
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  of zero on filing the return, whether it's owed or refund We can get
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  that close. Will you do my taxes too? Absolutely? Absolutely? What's
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  another great benefits that we can see? I feel like it may have somebody
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  with having just more cash in hand out the year. Absolutely. So talked
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  about avoiding tax abilities, talked about avoiding that tax surprise, but also kind
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  of on the other end, is you know, helping with cash flow if
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  we are able to lower your estmate who wants to give the government an interest
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  free loan, Yeah, I wouldn't, So what would you What could be
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  done with that money instead? The main thing is put it in retirement,
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  let it let it earn interest for you, or if you need it for
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  new equipment. I know plenty of uses a practice owner would just in the
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  practice or personally, maybe there's a home improvement that they're wanting to do or
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  Kevin, I want to thank you for coming on. Is there any last
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  words you have, not like a death sentence. But is there anything else
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  that you went on? Your team's done? Just so yeah, I mean
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  right now, the second quarter tax estimates are due June fifteenth, and quarterlybe
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  every three months. Yeah, so after June fifteenth, when would you say
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  the next September fifteenth, it's quarter three. Quarter four will be January sixteenth,
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  and then of course you're ten forties due on April fifteenth and twenty twenty
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  four. And really my last comment would be, if you're not talking to
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  your tax prepare around those dates, then come talk to us. That's right.
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  Pisted our website or give us a call. We do offer free tax
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  assessments as if you just want to come on and see, like you know,
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  we'll spend a little bit of time on Why would we do that?
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  Honestly, I would say, the goodness of our hearts, No, that's
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  a lie. Two reasons. Number one, so many people's tax situation is
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  not very good, even when they think it is. But number two,
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  when we point that out with a little bit of information and a little bit
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  of time, that builds credibility for people to go, well crap. If
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  they just found that in thirty second, imagine what they can do to help
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  us in a broader way. Let's investigate if that should happen. Right,
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  that's why we do it. It's right, but we do find a lot
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  of issues and taxes and we offer that complimentary as a springboard to potentially talk
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  to somebody. Right, that's full disclosure, right, I mean we're pretty
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  straight juice here, that's right, and it's listen again. It's free reach
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  out and we would love to take a look at your stuff and see what
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  we can do to help. Yeah, all right, take a look at
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  it. Kevin. I want to thank you so much for being on here,
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  and thank you laughing at my jokes. It's always appreciated. Casey,
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  you did amazing as usual. Much love. That's all the time we have
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  today. Thank you to our guests for their insight and for sharing some really
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  great information. And thank you to you the listener for tuning in. The
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  Millionaire Dentist podcast is brought to you by Four Quadrants Advisory to see if they
• 16:14
  might be a good fit for you and your practice. Going over to four
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  Quadrants Advisory dot com and see why year after year they retain over ninety five
• 16:22
  percent of their clients. Thank you again for joining us. And we'll see
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  you next time.