October 1, 2024 • 61 mins
To reach out to Frank Gomez:
frank@cbisdatatax.com
Office: 818-563-3700
To contact CBIS DataTax:
www.cbisdatatax.com
LinkedIn: www.linkedin.com/company/cbisdatatax
Instagram: @cbisdatatax
Navigating the complex world of taxes can be daunting, but it doesn't have to be. In our latest podcast episode, we had the pleasure of hosting Frank Gomez from CBIS DataTax. With decades of experience as an enrolled agent, Frank shares invaluable insights into managing both personal and business taxes effectively. This episode is packed with practical advice that can help you minimize stress and maximize deductions, making tax season a breeze.
One of the first topics we tackled was the importance of being well-informed about your tax responsibilities. Frank emphasizes that understanding the basics of tax filing can save you from costly penalties and interest. He explains the differences between various entities such as S-Corps, partnerships, and non-profits, and highlights the significance of meeting tax deadlines. Missing these deadlines can result in penalties and interest, but Frank offers hope by discussing potential penalty abatements for those with a good track record.
Year-end tax preparation is another critical area we delve into. Frank provides strategic tips on maximizing deductions through retirement account contributions and expense tracking. He stresses the importance of examining bank and credit card statements early to avoid last-minute stress. This proactive approach not only ensures a smoother tax filing process but also helps identify potential deductions that you might otherwise overlook.
Ignoring IRS letters is a mistake that can escalate into severe consequences like wage garnishments or bank account levies. Frank outlines the IRS collection process and the importance of responding promptly to any correspondence. He also discusses the IRS's authority to file returns on behalf of non-filers, which can result in higher balances due to the lack of itemized deductions or credits. This segment is crucial for anyone who has ever been anxious about receiving a letter from the IRS.
Business accounting and tax planning are also extensively covered in this episode. Frank explains the importance of depreciation and expense management, especially for new business owners. He introduces options like Section 179 deductions, which allow businesses to take immediate tax benefits on certain depreciable items. This can be a game-changer for managing profits and losses across different fiscal years. Additionally, he emphasizes the need for consulting with an accountant early on to choose the right business entity and set up a reliable bookkeeping system.
Choosing the right city to set up your business can have significant tax implications. Frank compares the tax structures of different cities, highlighting how the City of Los Angeles taxes businesses based on their gross revenue, whereas the City of Burbank does not. This makes Burbank a more attractive option for new businesses, offering a supportive business community with fewer hidden fees and taxes.
Throughout the episode, Frank shares his unique background in accounting, bringing a fresh perspective to the often intimidating world of taxes. His practical tips and expert advice are invaluable for sole proprietors, landlords, investors, and anyone looking to optimize their tax returns.
In conclusion, this episode is a comprehensive guide to mastering tax management. From understanding filing deadlines and penalties to maximizing deductions and planning for the future, Frank Gomez provides actionable insights that can help you navigate tax complexities with ease. Whether you're an individual taxpayer or a business owner, the advice shared in this episode can help ensure your financial well-bein
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
From deep in the Burbank Media District.
It's time for another editionof my Burbank Talks, presented
by the staff of my Burbank.
Now let's see what's on today'sagenda as we join our program.
Hello Burbank.
Greg Schubert here with you onceagain, and we're going to do a
very different type podcasttoday than we usually do.
(00:20):
I think it's something that,hopefully, is going to help you
a lot.
I know it helps me a lot.
So I figured I had questions.
So I got to figure you're goingto have questions too, and
while the subject matter, yousay, oh, there's a little bit
more.
No, it's only boring if youdon't take care of your business
(00:41):
here.
So knowledge is information.
Knowing what you're going totalk, knowing what is going on
in your life, is important and,let's face it, if it's you
versus the government, guesswho's always going to win.
So one thing we're talking hereis taxes, yes, taxes, and we
have a great accountant in withus today.
(01:03):
He works for CBIS Data Tax, andI hate the word transparency, I
hate that word.
Okay, full disclosure.
Cbis Data Tax is the my Burbankaccountant and Frank, who
you're going to be in a second,is actually our accountant, who
(01:26):
has done a great job for me, whoI highly recommend, and the
reason he's on this podcasttoday.
Okay, he's not paying for this.
This is something that I wantedto do, and I think it's
something that's important forpeople to have a perspective on
what's going on, especially, youknow, sometimes you're just
nervous about this stuff.
It's good to have somebody whocan talk you through it.
(01:47):
So, once again, I want towelcome Frank Gomez to the
podcast.
Frank, how are you doing?
Speaker 2 (01:55):
Very good.
Thank you, I appreciate comingon and also like to mention we
just recently celebrated our25th anniversary here in Burbank
, so we do appreciate, you know,the city of Burbank, our
clients, everybody, the businesscommunity.
It's a lot of fun to havepeople come out and, you know,
celebrate that with us just afew months ago.
Speaker 1 (02:19):
And I know my Berwick was there at the function, rick
was there at the function.
Now we had some people fromCBIS, data tax on before and the
question we had and we don'tknow if it's been answered yet
what?
Speaker 2 (02:38):
does CBIS stand for?
Speaker 1 (02:41):
I don't believe it has finally been answered.
Speaker 2 (02:42):
People have guesses, but there's no for sure
statement as of yet.
We're still doing research intothat topic.
Speaker 1 (02:49):
that's great you know , um, but anyhow, if anybody out
there knows the origins of cbis, please let us know, because
it's a mystery that needs to besolved.
Um, but they're really goodpeople.
They're located over at Alamedaand Hollywood Way and, like I
say, I really enjoy working withthem.
They've really taken care of us.
(03:09):
They've made me feel at easebecause, let's face it, I'm not
a tax guy.
I don't know about taxes, Idon't know about finance, I just
know about doing what I do andthat's where my expertise goes.
Well, let me give you a littlebackground on Frank here.
He's worked in the tax industrysince 1998 in both Los Angeles
(03:29):
and San Diego a tax professional, multi-unit manager and
independent enrolled agent.
What?
Speaker 2 (03:39):
does an enrolled agent mean?
Yeah, so an enrolled agentdefinitely means you have some
additional studies that you doin broad topics.
So it goes from individuals tobusinesses, other entities and
also kind of the I guess, theinteraction process with the IRS
.
They call it representation.
You know what can you do tostand in the place of a client,
(04:03):
help them out.
A lot of of times it's during,maybe, a collection process,
some kind of trouble they mightbe in, but it could be just on
day-to-day issues, and you takea number of tests in order to
certify that knowledge andexperience and you become an
enrolled agent, which is anational certification, so it
(04:23):
means you can practice in anystate across the country.
Normally taxes are kind of likestate-based, each with their
own either certification orrules or what it takes, and this
way you can deal with IRS onany issue for anybody across the
country.
Speaker 1 (04:41):
All right.
Well, there you go.
You work with both individualsand business entities and I
should know, because you workwith me individually as well as
my business, knowledgeable ofthe state and federal tax
returns for individuals,including expatriates,
nonprofits, s&c corporations,llcs and partnerships.
(05:01):
And, in all honesty, we we aremy burbank is a c corporation or
this s corporation scorporation.
See, I don't even know whatthat entails and what that means
.
I just know, when we firstsigned up for it, that they was
recommended to us, so we wentthat way.
What it means?
The difference?
I have no.
That's why I have people likeyou to help me.
(05:23):
So, um, you're client orientedand you're uncovering meaningful
deductions, absolutelymaximizing tax refunds and
minimizing balances due.
Once again, I will attest tothat.
You're also a UCLA graduateSorry about your football team
lately, I know it's a struggleright now and you have
(05:44):
additional experience inemployee benefits, group
insurance and direct eventmarketing.
Speaker 2 (05:50):
That is right Okay so there's the bio.
Speaker 1 (05:52):
So let me ask you this what got you into
accounting?
What was the draw?
You know effectively.
Let me start before that.
Where did you grow up?
Speaker 2 (06:01):
Oh yeah, so I did grow up here in Los Angeles and
I went to school at UCLA Iactually was an English major at
UCLA, okay, but at the sametime I took accounting classes
at SMC Santa Monica and Ithought, you know, that's kind
(06:26):
of like just a practical thingthat you should know, maybe, and
agreed could potentially begood if you ever did want to
start a business or you knowanything like that.
So it was kind of just likealmost out of an interest or
kind of like a desire to say youknow, this is a good skill to
have overall.
So I did that and I did workfor a bank for a while and then
my first job out of college, Idid do some accounting for a
(06:49):
what is it?
The aerospace company?
Oh, over in Vernon, andunfortunately it didn't last
very long.
It was about six months or so.
Speaker 1 (06:58):
But not because they had tax problems, right?
Speaker 2 (07:00):
No, they actually had financial problems that you
can't help with.
So they actually shut down thebusiness after that and so you
know I was out of work doingaccounting.
So then I did a number of otherthings and you know, just at a
point where I was looking foreven just some additional
part-time work, I startedgetting back into it and that
was 98 when I started doingtaxes and, you know, got
(07:23):
certified in California to dotaxes.
It was actually kind of justwhen actual computer software
was starting to be more likefamiliarized and popularized.
So before I didn't, I didn'thave to actually grind it out by
hand in those days, Just so wefinally got on to computers,
which is nice.
Speaker 1 (07:45):
It's funny we have our little Alexa thing in here.
It responds to the wordcomputers.
So that's kind of funny how itheard you and when it responded
to you Okay.
So let's face it Everybodyneeds their taxes.
I can imagine how swamped youmust have been from March into
April every year.
That you probably don't evenget to sleep at night.
(08:06):
It's probably a minimal sleepat time and just nothing but
work, work, work.
Speaker 2 (08:12):
Sometimes, yeah, it feels like that and for the, you
know, for most of those yearswe had pretty much that kind of
idea that you know we're goingto be busy February, march,
april and then kind of ease offthe rest of the year till around
now, you know, with thisextension season, but because of
so many different, I guess,things, events that happen, we
(08:35):
have seen many times in the lastthree, four, five years just
the extension of time for peopleto file where, like we were
filing all the way throughNovember last year.
You know, sometimes some yearsit was like they gave an extra
month, some years they gave likeall the way to the end of the
year.
Speaker 1 (08:56):
Well, the pandemic kind of changed everything for a
while.
It kind of changed all therules.
So let's talk about deadlines.
So everybody has, of course, weknow April 15th.
I know that date very wellbecause my dog was born April
15th.
So that's a little good withbad, I guess.
But you can file for asix-month extension, yes, and
that is going to be due, I guess, october 15th.
(09:18):
So that's the first question isis it too late to file?
And what if you missed in April?
Talk about the filing deadlinesnow and everything sure?
Speaker 2 (09:29):
so, uh, definitely, you can file for an extension.
So hopefully that's what youdid if you were not able to file
back in april, and if you did,then as a an individual or a c
corp you do have until October15th, so that's coming up soon.
We're going to hit Octobertomorrow, so you got two weeks
basically to get everythingtogether and filed.
(09:51):
So that means getting it donewithout any kind of penalties or
anything like that.
Right, if you were an S-Corp ora partnership, you actually
missed your deadline.
If you haven't filed yet, thatwas last month.
Speaker 1 (10:05):
Well, thank goodness we did ours back in april.
Speaker 2 (10:08):
You took care of me back then, so thank goodness
that's right, so yeah, so itreally depends who you are as to
when you have to filenon-profits actually have all
the way until, uh, november ifthey filed an extension, so it
kind of staggered out, so noteverybody is due at the same
time.
I guess that kind of helps asthey're processing everything.
Speaker 1 (10:28):
But yeah, you can help you too, you know help.
Speaker 2 (10:30):
Yeah, it helps us too that we don't have to do
everybody all at the same timeand, uh, you just have to, you
know, make sure you know whatyour due dates are.
Speaker 1 (10:45):
So let's say you missed the deadline.
Okay, you just miss it.
You didn't, you know, forwhatever reason.
There are probably legitimatereasons you missed the deadline
besides just forgetting, or Idon't want to do it, but you
missed the deadline.
So is it still worth filingafter the deadline?
And what happens if you fileafter the deadline?
Speaker 2 (11:00):
Right.
So the biggest reason you wantto file by the deadline is what
I mentioned was penalties andinterest.
So there's going to bedifferent penalties for
different things and if you havea balance due there's going to
be interest that kind of justaccrues until you finally pay it
off, Kind of like a credit card.
If you charge something youhave to keep paying the interest
(11:21):
, even though you might startpaying it down a little bit.
Whatever's left, you keeppaying what's the government
charges for interest.
So right now it's somewherearound like 6%, 7%, Okay.
Not terrible, then it's not ashorrible as some credit cards,
you know, but you know it justkeeps going, though it could
keep forever until you pay,though could keep forever until
(11:48):
you pay.
Now the the the thing that'sreally more kind of um harsh is
when you don't file, you get apenalty failure to file and
that's a five percent on whatyou owe for every month or part
of the month that you didn'tfile, and it goes up to 25
percent, right, wow.
And you get another one ofthose for failure to pay.
So, like, if you didn't file,you didn't pay.
You got two of those, and thenthe state comes in and they'll
(12:10):
give you another one.
Of course they will.
So so, yes, definitely it's.
The most important thing istrying to get in on time, either
april or with an extension, soyou could stop that big penalty.
The other stuff, not paying ontime.
There's ways to work it out andit's a much smaller fee, you
(12:31):
know.
So the really big one is whenyou don't file.
But you know, let's say, you'rein that situation, you don't
want more stuff to add up on topof it, and so you do want to
kind of get your informationtogether, organize, work with
somebody If you've got to getbookkeeping together.
Do that and get it filed assoon as possible, so that you
(12:53):
can kind of stop the bleeding assoon as possible and figure out
.
Then you're on a track to be,you know, on time again.
Speaker 1 (13:00):
Okay, so somebody listened to this and they
haven't filed in a couple ofyears and they've gotten some of
these this and they haven'tfiled in a couple years and
they've gotten some of thesenotices and they're starting to
kind of panic a little bitbecause who knows what the
government could basically everdo to you.
And they come to you and theysay, hey, frank, I haven't done
this now in a couple years andcan you help me?
Do you not only help them withtheir get filed again and get
(13:23):
back on track, but do you helpnegotiate with the IRS as far as
any penalties or payments andthings like that to help them
out?
Speaker 2 (13:31):
Sure.
So, yeah, the first thing isobviously we want to get
whatever years haven't beenfiled done and we want to start
from the furthest back in casethere's things that might affect
, you know, the next returngoing forward.
If you have any like, forexample, losses that are going
to go forward, um frominvestments or business or
(13:52):
something like that, or maybecredit you couldn't use that one
year, you're going to forwardthem over to the next year.
So we want to do that in in theright order so you can maximize
everything that you can deductand take and then um with
penalties.
There there is a good thingthat, let's say, you've been on
time.
Most of the time.
You got a good track record,you know whatever, like you said
(14:13):
, just something happened.
This time you can ask forabatement of penalties and
usually as a first time request,they'll go ahead and do that
like, like, if everything elsehas been filed, all the other
past years were paid for, if youhad anything due, they'll help
you out and release you of thosepenalties that you know.
Speaker 1 (14:32):
So the government is not unforgiving and cruel.
The government can actuallywork with you then and they want
to help you, in other words,the IRS is willing to help and
they're somewhat flexible.
Speaker 2 (14:43):
If you can communicate with them, you know
you could probably work outsomething, you know, at least to
lessen the load.
And yeah, that first time onewill almost automatically be
approved, but you do have torequest it.
Now the state they're not asflexible.
You know it's going to take alot more work and, like you
(15:03):
mentioned, though, like ifthere's something legitimate
that happened, you know, uh like, for example, some of the
reasons were why we moved thedeadlines were floods and other
natural disasters that thatcould be a reason why you
actually just really couldn'tfile.
So that could be an argumentlike, hey, I really wanted to,
I've done everything I could,but you know, because natural
disaster, because of illness orhaving to take care of somebody
(15:26):
in your family, right, couldthat could be a reason.
So there could be differentactual things that happen.
Well, they'll consider thatlegitimate?
things, legitimate things, andthey'll consider that and get
rid of the penalties.
What they won't get rid of,though, is the interest, so if
you didn't pay, you didn't pay.
You know we're not going to addthe extra penalties, but the
interest will stay, and that'sjust how the tax code law is
(15:51):
written.
It says they have to chargeinterest, so they will charge
the interest, even if they getrid of the penalties.
Speaker 1 (15:58):
At least they are willing to work with you, though
.
So does that?
Have you had to deal with thata lot in your time, or?
Speaker 2 (16:05):
Sure, definitely these things come up.
You know there's people thathave these issues and you know
that's one of the things as anenrolled agent.
Speaker 1 (16:14):
we get on the phone, we can talk to the IRS directly,
we can make those arrangements,you don't have to wait on hold
for 30, 40 minutes before youcan actually get a hold of
somebody.
Speaker 2 (16:28):
We do have to wait on hold, but we'll eventually get
online with somebody.
You know.
Get on on the phone with themand we can work it out.
And you know, like I said, withthat first time it requests,
most likely it's going to gothrough If it's, you know, I do
have.
I have had people where theysay this is my first time.
I tell them it's the first timeand she's like well, it looks
like the last three years youhaven't filed on time and you're
still paying on these.
So the first time this year,yeah, the first time this year.
(16:49):
So it's gotta be, you know,some something legit like that.
Speaker 1 (16:53):
But uh yeah, we can get through we can work with
them and we can of having anaccountant, you know, personal
and professionally for thebusiness is that you are now
familiar with me on a year basis, but how you know.
But once you file, howimportant is it to review any
previous year's tax returnswhich now I think if they come
(17:15):
to you and they're with you yearafter year, you're kind of
doing that for them.
But if not, how important isthat?
Speaker 2 (17:22):
Yeah.
So it is useful, both on yourown or with a professional
that's helping you, to go backand look at the return that you
filed, and it's going to be fora couple of reasons.
You're going to look at whatdid I do last year and what did
I do this year.
Is there differences that I'mgoing to have some expectations
(17:45):
about?
Did I make more money, lessmoney?
Did I go from being an employeeto an independent contractor or
vice versa?
Did my business change in someway?
Did I hire employees?
Did I have specific expensesright?
So you want to really kind oflook at what happened before, to
compare it with what happenednow, and that way you're getting
(18:07):
prepared so that when youactually do file, you know
what's going to happen andyou're also kind of trying to
make some decisions too.
So it's going to be just also aeither a thought exercise or
really like a review forplanning to say are there some
actions I might be able to takenow that would help me out when
(18:28):
I do file?
And some of those kind ofobvious things like for a
business might be I was planningon buying some equipment or I
had these expenses that arecoming up.
Should I try to squeeze them innow, at the end of the year, or
should I push it off till thenext year?
If you have some control overwhen income might come in, you
(18:49):
know, if you want to limit yourincome, you may want to not
invoice or get it to come inJanuary or something like that.
If you want to, you know, maybequalify for a loan or something
you want the income to comedown right.
So it's a good time to look ateverything that's going on and
plan to see what's going tobenefit you.
Speaker 1 (19:12):
I think there's a lot of small businesses like myself
out there and you know, ofcourse taxes are always daunting
and you look at it as anotherexpense, the cost of doing
business.
But it's something that I thinkyou were saying.
You've got to kind of think itout a little bit and and and you
know what are your plans, andthat's why it's good to have a,
(19:34):
to have a tax professional,somebody who you can call and
say, hey, give me some advicehere on what you think I should
do here.
So do you get a lot of phonecalls during the year?
Speaker 2 (19:44):
Oh sure, definitely.
And again, part of that processis then you actually come up
with questions.
So if you have someone that youcan call, this process helps
you to come up with a questionyou want to ask, and so we do
get a lot of questions about.
You know, what should I do?
What am I able to do?
You know, some of the typicalthings that people can do is
(20:06):
look at what kind of retirementaccounts they have and what
contributions are they going toput in, right?
So everybody is probablyfamiliar with IRAs and 401ks.
These are two types of fundsthat you could put into to save
for retirement, and the typicaldifference between the two kind
(20:27):
of categories of those funds isit's either a Roth or a
traditional.
Where one the traditional,you're going to try to take a
deduction in this year that youput the money in and that could
help you to pay less taxes.
Now the other choice is a Roth.
Whether it's a Roth IRA or aRoth 401k, you're going to put
(20:48):
tax dollars that have alreadybeen taxed into the fund and
they're going to grow tax-freeand as long as you, you know,
wait this specific time to takethem out, you won't ever pay tax
on it.
So obviously the younger youare, the longer you can leave it
in the fund.
That's definitely a lot morebeneficial than maybe just
(21:10):
getting a tax savings right now.
So you have to look at you knowwhere you are financially and
in your life and kind of make adecision.
What do I want to do?
Speaker 1 (21:21):
You're not a financial advisor, You're a tax
expert.
Do you try to counsel people alittle, saying, hey, you know
what You're making this kind ofmoney you know.
I really recommend you put thisamount into one of those types
of accounts you know each year.
I mean, you try to recommendthat to people and give that
option, because I didn't knowthere was a difference between
the two different types ofretirement accounts.
Speaker 2 (21:43):
Oh yeah.
So we definitely talk to peopleabout where they're at and you
know, one simple idea is let'ssay you had a bad year.
Okay, you made a lot less thanyou normally might make.
Uh, if you already have an IRA,that's a traditional IRA you
may want to convert to a Rothduring that year because then
you'll pay less taxes.
(22:04):
When you convert, you have topay the taxes.
Can you have both types ofaccounts?
You can have both types ofaccounts, but the actual
contribution limits account forall accounts per year.
But let's say you had already.
Because Roth is newer, maybe youalready had put some money away
.
It's built up a little bit inyour traditional IRA and, like I
(22:26):
said, maybe you had a bad yearor maybe you're taking some time
off to go to school or forwhatever, or maybe you're taking
some time off to go to schoolor for whatever reason.
You're going to make less, soyour tax rate is going to go
down.
So if you transferred the moneyinto a Roth this time you would
pay the tax at a low rateinstead of at your normal rate
that you would be making.
You know fully employed or youknow whatever's kind of like
(22:47):
standard for you.
So that would be a good optionduring that year.
So you want to kind of look atwhere you're at.
Another reason could be likeyou're maybe right on the edge
of going into the next taxbracket, where you're going to
go up from 10 to 15 or 15,whatever you're on the edge of
(23:08):
and if you can put, you know,the $7,000 into the IRA, that
brings you back away and itkeeps you in the lower tax
bracket.
So these are.
This would be another reasonwhy you want to do that because
you're going ahead and savingyourself from moving up into a
higher bracket.
Speaker 1 (23:25):
Once again, another great reason that you need to
have an accountant and not justan accountant, but somebody who
is your accountant, becausehopefully you're learning what
I'm learning right now andhopefully this is something
meaningful to you and you'reseeing the benefit of having
somebody that you cancommunicate with and get some of
(23:45):
these questions answered,because you know a typical
person just doesn't know thesethings.
So I appreciate it.
Questions answered because youknow the typical person just
doesn't know these things, so Ireally I appreciate it.
You know, I think and, like Isaid, you've done a great job
for me.
I mean, there's no doubt aboutit.
You know your company andyourself personally I've been
(24:08):
very, very happy with.
So here we come.
You know we're going to comenear the end of the year, pretty
soon, and what can you do atthe end of the year to start
getting prepared for next year'sfiling, and do you always?
Well, let me just ask you thatfirst.
So what can you do at near theend of the year?
Because a lot of people waittill you know April 10th and
they'll start trying to findevery seed in the world and this
(24:29):
and that, and they're in panicmode, right.
So a good time to start isprobably, you know, in January
to start laying stuff out.
So what do you suggest?
Speaker 2 (24:37):
Right.
So actually I would say evennow to the end of the year or
maybe right before the holidays,it's a good time, cause you
know you're going to get busy atthe very end.
But if you can start lookingover as simple as your bank
statements, your credit cardstatements, to see what kind of
expenses you had, what kind ofthings that you did, remind
(24:59):
yourself you kind of forget, youknow the stuff that happened
earlier in the year.
Remind yourself what happenedpersonally, financially, or if
you have a business in yourbusiness, and kind of start
gathering that information, soit's not really a big rush at
the end.
You know, like you said inJanuary, maybe you're like, oh,
now I got to go back and findeverything.
Definitely you're going tostart getting documents in
(25:20):
January that are official andcompanies are sending out to you
, so you can't have those yet,but you can start looking at
your mortgage statements, yourinvestment statements, those
kind of things to kind of getprepared for it.
If you are a sole proprietor,for example, you kind of now
have a pretty good idea how theyear is going to end.
(25:41):
You might already know whatincome is going to come in for
that last quarter or have atleast a really solid idea and
you can make your finalestimated payments, which is
what you're paying in lieu ofwithholding, because you're not
an employee.
You're getting just directpayments to yourself.
Nobody's taking money out andsending it off on your behalf,
(26:02):
like when you get a W-2.
Same goes for landlords who arecollecting rents.
Same goes for people that aremostly making money or making a
good portion of their incomefrom investments.
They're starting to see howthose investments turned out.
You may not know exactly allthe way till the end of the year
, but definitely with soleproprietors landlords you pretty
(26:23):
much kind of have a good ideaon the year.
So you can determine those lastestimated payments, which we
have one in September, we havethe very last one in January, so
you can kind of get ready to gopay some stuff in so that it
will lower the amount you'llactually end up paying.
You know, in April when you,when you do file, if you filed
that on time.
And then, besides that, uh, youcan do, um, the things I was
(26:50):
mentioning about retirementaccounts.
Think, if you're going to putmoney in, for example, 401ks,
you got to put those in by theend of the year.
So if you get to alert youraccounting department where you
work or with your company tomake that happen.
With IRAs you do have a littlemore leeway because you have all
(27:10):
the way through the deadline,usually April 15th, to make
those contributions.
So that could be a last minutedecision, but you at least start
thinking about what you want todo.
Another kind of benefit thatsome companies have is an HSA,
which is a health savingsaccount, and that means you kind
of make a hack on medicalexpenses where you can itemize
(27:34):
them.
You can deduct them if youitemize, but across the US only
about 10% of people taxpayersitemize.
In California it's a little bithigher, about 15% of the people
itemize, but that means themajority of people don't.
So if you have this available,you're able to essentially put
money into account for yourmedical expenses, especially
(27:58):
things that you already know forsure are going to happen your
insurance payments or if youalready have some treatment
that's going to go on for somany months or so many visits
that the kids are going to go,you know, so many times a year,
and then you're going to deductthat out of your income without
having to itemize.
So it's a really great benefitif it's available to you to take
(28:19):
advantage of, to have tax-freedollars.
Speaker 1 (28:23):
You were saying that only about 15% of people in
California itemize.
Speaker 2 (28:27):
Yep.
Speaker 1 (28:27):
Do you think a lot more people should be doing that
?
I mean because 15% is not a lotof people and I'm sure that by
itemizing you get a lot moredeductions and the longer you
pay, a lot less money.
Do you think a lot more peopleshould be looking at that to do
that?
Speaker 2 (28:53):
So 100% of people should find out if they can
itemize.
Not everyone can, becausethere's a comparison you're
going to make between whateverthe standard deduction might be
that year for your filing status.
So for single, there's going tobe a certain one, around 12,000
.
For married filing joint,there's going to be one about
24,000.
So you need to have itemizeddeductions higher than that
standard deduction for it tohelp you.
(29:14):
But you should take a look andfind out.
So that's one of the reason whyyou go to an accountant to ask
you know, what is it actually Ican itemize and through a
discussion you can find outthings that you might be able to
.
And through a discussion youcan find out things that you
might be able to that you didn'tknow.
Speaker 1 (29:32):
Let me ask you this so you're a homeowner and you're
making, let's say, $100,000 ayear and you really don't
itemize.
What are the three or fourdifferent?
Speaker 2 (29:50):
items that you could, probably that people have no
idea.
That could probably reallylower your taxes down.
So obviously, being a homeowneris one of the main reasons why
you're going to start itemizing.
You're going to have mortgageinterest and you're going to
have property taxes, and sodefinitely historically that's
been like.
When you become a homeowner youstart itemizing Right Because
those things are going to bedeductible and they're large
(30:11):
expenses.
In addition to that, you couldhave charitable donations,
whether it's cash that you gaveto nonprofits or maybe like
furniture or items you give toGoodwill, those kinds of things.
Those are going to be the threemain areas.
Speaker 1 (30:29):
So let me interrupt you real fast, because I've
dealt with a lot of non-profits,and if you take stuff over at
Goodwill or you donate to yourlocal sports, whatever it is any
non-profit, you can ask for areceipt from that organization.
It's nice, you give them stuffand you should give them stuff,
but you can also get a benefitfrom that too, which you
probably didn't realize, correct, that's right.
(30:50):
So definitely.
Speaker 2 (30:51):
They'll give you a receipt and you're going to kind
of estimate you know what theymight sell that Like, say, if
it's Goodwill or Salvation Army,they're going to sell it.
So you're going to estimatewhat is it worth now?
Okay, once you gave it to them,what's the value?
And be honest and be honest yeah, so but yeah, and be honest,
(31:14):
yeah, but yeah definitely isgoing to be beneficial to you to
add to that total.
So, besides the property tax,mortgage interest and charitable
donations, you do have medical,which kind of how we got into
this with HSA but the medicalhas a floor of 7.5%.
So you're going to take thetotal cost that you had like,
(31:39):
say on your insurance, yourco-pays, if you had to go to the
hospital, whatever anythingthat you had to pay deductibles
and you look at your AGI.
So it's going to be a differentnumber for every single person.
That's not a standard number.
We look at your specific AGI,take 7.5% of that, then
whatever's above that amount,then you're going to be able to
deduct that amount and that'sgoing to go towards your total.
We are trying to beat thestandard deduction.
So it's a process that you gothrough.
(32:00):
Not everybody will be able to,but definitely, being a
homeowner, it puts you morelikely into that camp.
Now, the thing that kind ofchanged the game a little bit
was on the last um tax taxpolicy change.
We um limited uh state taxes toten thousand bucks so you may
(32:25):
pay more than that, but you'reonly going to get to take 10,000
.
Now, on the other hand, theydid double the deduction.
They did double the standarddeduction, so it weighed out a
little bit and nationally itkind of is even.
But obviously in places whereproperty values are high, like
(32:46):
California, it's going to affectus adversely, more so than you
know most of the other places inthe country.
So you will see that Now it'sstill worth it, because
sometimes you may not be able toitemize on the federal return
to the IRS, but you may be ableto itemize on the state return,
because there's going to bedifferent limits and there's
(33:08):
going to be things that getadded back in or taken back out,
like those property taxes taxes.
They'll add back in thedifference maybe you weren't
able to take before.
So, um, one other kind of itemthat you can't have on the
federal return but you do haveon the state is if you're an
employee and you haveunreimbursed employee expenses,
(33:31):
meaning you had to pay for stuffto do your job.
And so a classic thing issalesman right.
Salesman goes out, does a lotof meetings, have lunches, buys
gifts for people you know,promotes the company.
A lot of times it's on theirdime and they may not get
reimbursed for everything ormileage driving around.
You have a job where you haveto drive around a lot right, or
(33:53):
use your own phone or internetor whatever those types of
things.
So again, in the last taxpolicy change those were taken
out of the federal but itremains on the state of
california.
Not every state has that, so youhave to go state by state.
Each state has their own rulesand some may say nope, nope, you
(34:14):
can't have any of it.
Some may say, oh, you couldhave certain ones.
So they're all different whenyou get to the state level.
So that's why it's definitelyworth it to find out.
You know, can I itemize?
Can I itemize on the IRS?
Can I itemize on my state?
It'll make a difference.
You know you want to savewherever you can.
So if you can save on state tax, you know that's great.
Speaker 1 (34:34):
Once again the reason you need to have your own
accountant and have your ownaccountant the same guy year
after year, because he'll reallyknow these kinds of things for
you.
So let's talk a little aboutdepending on who the person in
power is.
Talk a little about dependingon who the person in power is.
You know, sometimes you reportwell, I'm going to hire 5,000
(34:56):
more IRS agents and they'regoing to come back to everybody
and other people say we're goingto cut back the IRS and stop
hiring everybody.
So are they actually?
What's the status right now?
Speaker 2 (35:10):
And are they actually auditing people right now?
Yeah, so the status is, yes,they did get funded, you know,
to hire a lot of more new staffto go out, and their focus is
obviously it's going to be tocollect money and they have
started so, uh, potentially,right now, the estimate is
there's about 15 milliontaxpayers that have balanced
dues that are outstanding, sothat's a lot of people.
(35:33):
They want to go find that moneyand bring it in.
There's around 11 millionpeople that have not filed for a
given year that the IRS knowsof and they want to go track
those people down.
And there's about 3 millionpeople that they owe money and
the IRS is ready to levy, mean,take some money away from them,
(35:54):
whether that is garnish theirwages, get into a bank account
and take the money.
There's about 3 million peoplein the situation where the IRS
is ready to do that.
So they have started hiring.
They're not done, but they gotat least their first wave or so
of new recruits in there, beingtrained and going out, and the
(36:16):
first thing, uh, is that duringthe pandemic, a lot of cases
where people owed money, uh, wejust stopped collecting.
So the irs said, okay, look,you know, everything is going on
right now.
Uh, you know it's a burden oneverybody, we're not going to
collect.
We're not saying, wait, wait.
Does the irs have a heart?
Well, you know, uh, sometimesthey do.
(36:38):
And you know, sometimes,politically they pass laws that
say you know you can't do itright now.
Right, so, for whateverintention or reason, they put a
pause on collecting.
Okay, they didn't get rid of it.
They said we're just not goingto collect, it's still there.
We're just not going toactually keep sending you
letters or call you or doanything.
We will keep charging youinterest.
(36:59):
They may even have someportions that they stop the
interest, but essentially it wason pause.
But now, starting this year,earlier this year, they send out
letters.
So probably, if you're in thatgroup, you've already received
the first letter that was justlike hey, this is a friendly
reminder.
You know you had this bill acouple of years back.
(37:21):
We just paused, but we'recoming back now, so you've got
to start thinking about paying.
And you may have alreadyreceived another letter that
said okay, now you're in thecollection process, so you
really do need to pay, or elsewe're going to start moving
forward in this collectionprocess.
And you know irs does take takeits time, so it's not going to
(37:41):
be like overnight boom, all of asudden you um they're going to
start taking your stuff.
So they do give you a lot oftime they have that power.
They do have the power, but theygive you a lot of time in this
buildup period that we're inright now, and so, for example,
I've seen cases more like from2017, 2018, where people owed
(38:02):
from those years or maybe didn'tfile from those years.
That's what they're startingwith going back to those, but
it's going to be like on amonthly cycle now, so they're
going to just keep working theirway closer and closer to the
present more letters going outand more people moving down that
process.
So that's why it's veryimportant if you get a letter,
(38:25):
you need to respond to theletter and you like we kind of
mentioned a couple of times IRSis reasonable, you know, and you
can work with them, but theywill kind of accelerate if they
don't hear from you.
So you want to be able to, evenif you like, say, look, I know
I have this, I can't pay, andhere's reasons why.
(38:45):
Okay, that that's a start.
They're not going toautomatically just get rid of
everything, but it could, youknow, buy you some time.
You can have a workaround, youcan figure out some way to solve
it, there could be options foryou.
It could be as simple as apayment plan, right, where you
just go.
Well, I can afford to pay you Xamount every month.
(39:06):
All right, that could work, andthen it just depends how long
does that last right.
All right that that could work,and then it just depends how
long does that last, right.
So, um, the other thing that ispossible, though, for example,
like, say, you didn't file in2018, irs also has the power to
go.
You know what we're going tofile for you.
We say this is what you made,based on whatever information
(39:26):
they have, and let me guess-they don't do itemization either
.
Speaker 1 (39:30):
They just say here's the raw one, and this is what
you got yeah.
Speaker 2 (39:34):
So they do the least amount of any deductions or
credits that you can get so theycan have the biggest balance
due.
And then they send you thatbill to go.
You owe us twenty thousanddollars, whatever you know some
amount and you just get scaredwith it and you didn't even file
.
So that's why we're back tofiling is important, because it
(39:56):
gives you it protects yourrights one, it gives you the
ability to have the say of whatgoes on that return, because
they're not going to look outfor you, they may not have
correct information also.
So you want to be able tocontrol or have the input to
make sure it's correct, and thatway you're protecting yourself.
(40:20):
You know your interests and thatway the starting point of any
collection you know if you, ifthey're saying 20 and you're
saying 10, you know the startingpoint in 10 is a lot better
than 20.
Absolutely.
So you want to have thatcontrol.
And also, then you know again,california is going to say, hey,
we saw that IRS filed thisreturn for you, so we're going
(40:42):
to go by what they said.
Monkey, see, monkey, do right.
Yeah, we're going by what theysaid.
And and they also have rulesand laws that cover that.
Well, if the IRS said it, weare going to assume that it's
true, unless you prove to usthat it's not true.
So they're going to base theircollection also on that number.
Speaker 1 (40:59):
So, in other words, their policy is you're guilty
until proven innocent.
Speaker 2 (41:02):
That's correct, yes, and so one other kind of thing
that stems from if you didn'tfile and the IRS filed for you,
the time frame that they have tocollect extends.
So normally, if you had abalance due, they have 10 years
to collect.
So once you get to that 10years like if they didn't
(41:23):
collect they can't collectanymore.
So, however you get there, it'spossible, you get there and
then that's it Whatever.
If they've got some paymentsfrom you, that's what they got,
but if you didn't file a return,they have unlimited amount of
time to collect from you.
Okay, so again, by you filing,you're kind of putting a clock
on how long do they have to comeafter you?
Speaker 1 (41:48):
And get those questions Right.
Yeah, that's interesting.
I never knew that.
Once again, another reason.
I hope you guys are listeningto this podcast and learning,
because this is good stuff.
So.
So my Burbank is a business.
I use QuickBooks.
Now, I do not think QuickBooksis going to solve any of my
(42:10):
problems.
It does help me keepcategorizing things like that,
but that's all it does.
I mean, there's ways that youcan say, okay, pay my taxes and
file this tax.
I don't trust it.
I still want to come to anindividual and say here's what I
got and you know, please reviewthis, find things that it does,
(42:33):
because it's a computer.
I want the human touch,somebody who actually knows what
they're doing.
So what should you know as abusiness?
I use QuickBooks, but at theend of the year I have you go
through the QuickBooks for me.
So if you're a new business oryou're now an existing business,
what should you really considerdoing and how do you prepare?
(42:56):
You know how do you kind of putthings together, especially a
newer business.
Speaker 2 (43:01):
So definitely for business, both starting,
existing and especially at theend of the year.
The bookkeeping is veryimportant One.
You know that's going to bewhere the tax return comes from,
so that's going to be helpfuljust on a practical level.
Speaker 1 (43:17):
You need that in order to file, but not to
interrupt you, but I willinterrupt you.
I sent you the QuickBooks stufflast year and then you got
ahold of me a couple of timessaying, well, what about this,
this and this things I had notconsidered and were not in the
QuickBooks stuff last year.
And then you got a hold of me acouple times saying, well, what
about this, this and this?
Things I had not considered andwere not in the QuickBooks.
Speaker 2 (43:37):
So without having a true professional things would
have been missed completely.
Yeah, do the accounting so thatyou have accuracy.
And obviously you got tocategorize things as you are
putting them in right, Whetherthey're revenues or expenses or
whatever they might be.
And sometimes you may have achoice, like, for example, with
(44:01):
depreciation.
You may have a choice todepreciate more upfront or, you
know, put it on the normalschedule of whatever that item
might.
Speaker 1 (44:09):
Talk about depreciation for a second.
What do you recommend is like adollar threshold, usually.
Okay, now just write this alloff this year, or we need to
depreciate over a couple ofyears.
Do you have any suggestions onthat?
Speaker 2 (44:24):
Yeah, so basically how it works is that if your
item, whatever you purchase onyour expenses is going to last
more than a year, there's goingto be a useful life to it.
So, whatever sound equipment, acar, you know, real estate,
whatever something you're using,your business, the IRS already
(44:45):
has a life for it.
It might be seven years, itmight be 10 years, might be,
like real estate, 27 and a halfyears.
So there's already somethingassigned to it and what the irs
says is you should depreciate itover that time.
But there's a couple ways that,let's say, you have, you've had
a great, so you want to havemore expenses, right, you want
(45:06):
to reduce that profit, um, orfor whatever reason it could you
know it could be other businessreasons but you want to
appreciate more.
There's two things that youhave Um, we've gone back and
forth over the last 10, 15 yearsor so with, uh, accelerated
depreciation, bonus depreciation, those things where it says you
(45:29):
bought it.
Now it should go over 10 years.
But we'll allow you to take itall today, right, or some
version of that 80% of it today,60% of it today.
So you could make a choice togo.
I'm going to do that, I'm goingto take up to whatever the
limit might be.
There's also a thing calledSection 179, where we've had
(45:50):
that for a long time where youcan always have an option to
take the full amount up to alimit of whatever you paid on
depreciable items specific kindsusually, things like this, like
computers and cell phones andcars, those kind of ideas
businesses usually are using soyou can do that.
(46:12):
It will then depreciate now,become an expense now and lower
your profit.
So where you come into even haveto think about it a little bit
more is like, say, a business isgoing to have a loss but let's
think they think they're goingto have a big year the next year
, so they can do thatdepreciation.
(46:34):
It won't show up now becauseyou don't have anything to
depreciate against, but now itbecomes on reserve so you can
take it next year when you knowI have these big clients that
are coming in next year that Iknow I'm going to have this
revenue.
It's going to move forward,carry over, and now you'll take
it then instead of waiting overthat 10 year period.
(46:54):
So it's definitely a thing youwant to look at.
Uh, it's definitely a thing.
As a business owner, you got tohave in mind.
What do you think is going tohappen like this year, next year
, you know when do you thinkyou'll need those expenses, and
so definitely being able to talkto your accountant about that
is a good idea so you can have aplan and time it correctly.
Speaker 1 (47:15):
So you ran a new business, though, and, let's
face it, this might be the firsttime you've ever gone into
business.
So what do you recommend rightfrom day one?
Instead of waking, you know, oh, I should have done this or
that or something else.
Anything you recommendimmediately people should start
doing, or at least thinkingabout.
I mean, what about contactingan accountant like yourself just
(47:37):
before they even start to gointo business, to help them
through the process?
Speaker 2 (47:41):
Sure.
So it's definitely helpful toget an accountant, a
professional, involved whenyou're even planning to start a
business, to have a discussionabout how to do that, so we
actually can help you set upyour business as well, choosing
what kind of entity you're goingto be, so that that can be
(48:04):
clearly explained to you whathappens if you choose the S-Corp
, the C-Corp and LLC, those kindof things, which is another
kind of item on the list at theend of the year here.
Let me ask you a question,though.
Speaker 1 (48:16):
Did I make the right decision on which letter I
picked.
Was that a good?
Speaker 2 (48:19):
decision.
It's a good decision, okay.
So here's the thing I was goingto mention.
It's on the list here at theend of the year.
Among other things is if you'rean llc, for example, you can
choose to be an s?
Corp or c corp.
Right, these are options youhave, and so understanding how
(48:43):
the revenues will flow throughand who's going to get taxed,
that that's important.
So you can make a choice.
You can't, like, go back andforth every other year but,
let's say, you've been an S-Corpfor a while, you could make a
choice to change.
So there's still an option todo that.
You just can't do it like allthe time, like if IRS says, oh
look, you've done an S-Corp, aC-Corp, s-corp, you got to stop
(49:05):
now.
You got to wait for like fiveyears and then, well, you're not
going to talk about that latertoday.
Then you know you can maybethink again, but you got to at
least stick with something for awhile.
But yeah, so it's not set instone 100%.
You can make some changes.
And definitely dialogue withyour accountant is important.
So, yeah, getting set up.
So yeah, getting set up, that'sone thing, kind of projecting
(49:29):
what you think is going tohappen, understanding what is
going to be deductible andwhat's not deductible, um,
understanding about setting upan office in your home or
renting an office or whatever,what your different approaches
might be.
So definitely all those thingsare important.
And having a system in placefor the, the bookkeeping or the
accounting, whether it's goingto be yourself with QuickBooks,
(49:51):
whether you're going to hiresomebody to work in your company
or you're just going to hire anaccounting company, which we do
bookkeeping for smallbusinesses also.
So we definitely can help inthat on that subject, to keep
your books correct and make surethat they're they are ready for
(50:12):
you to file at the end of theyear.
And but besides that, havingclear accounting helps you
understand where your businessis at.
Um, when is the cash coming in?
How does the cashflow look?
Do you have high times, peaktimes and low times?
So that in the future.
Obviously the first year youcan't really tell.
(50:33):
You can make a plan, but itwill.
It will show you what actuallyhappened so you can kind of
start trying to look at it andgo, well, why did it happen this
way?
That's another thing.
It tells you what happened soyou can kind of say why did it
happen?
And that's what the businessowner is trying to do.
So there's a lot of benefits tohaving that bookkeeping or
(50:54):
perhaps getting someone to helpyou with the bookkeeping, to
make sure it's clear, efficient,on time, accurate, all those
things, and that you can askquestions to like why, why is it
?
Why is this in this column, notthat column?
You know simple things likethat Understanding, depreciation
, understanding.
You know how revenues come in.
So it's very helpful to do thatfrom the very beginning because
(51:18):
if, let's say, you let a yeargo by and you kind of didn't
have a system, it's a lot harderto go back and now implement a
system with all the stuff thathappened with no system.
So as long as you picksomething, at least you can be
consistent going well.
I know I did it this way overthis time period and so if you
(51:39):
do change, then you at leasthave consistency, that you'll
understand what happened up tothat point.
Speaker 1 (51:43):
The theme that I have gotten out of today more than
anything else.
The theme that I have gotten outof today more than anything
else and while I knew this Inever realized it is how
accounting is a very fluid thing.
It's just not a.
Every April you call youraccountant and then you don't
talk to them again until night.
In all honesty, in the old dayswe had the old H&R blocks and
these corporate places They'dhire 1,000 guys to come in March
(52:06):
and April and do the taxes, andthen they're all gone.
After that They'd hire athousand guys to come in March
and April and do the taxes, andthen they're all gone after that
.
They're not permanent employeeswhen when you have a firm, like
we do with you with CBIS,you're there all the time, I can
call you anytime and you have afamiliarity with my business
and myself, and I think it's ahuge benefit of having a firm
(52:27):
who's there all year round,because things do come up all
year round and I'm sure you geta lot of calls all the time from
businesses saying what should Ido here?
Speaker 2 (52:39):
Yes, definitely, you have questions just in general
over the year about things youmight be thinking about.
You get correspondence.
So I've had people getcorrespondence that um, trying
to think of who it's sent by.
One person sent me a letterthat and it was telling them
they had taxes to pay on thesecomputers that they leased.
(53:01):
Uh, it was a property tax.
It almost looks like, um, whenyou get your property taxes for
your house, it's the samedepartment that does that, but
this is for stuff that you don'tactually own, you're just
leasing.
And they asked me, like, isthis real, is this a scam or
what?
And so, yeah, I looked throughit.
I'm like, oh, yeah, it actuallyis.
For businesses there is thistype of thing.
Speaker 1 (53:30):
If you're leasing this, the county will tax you
for some amount.
Speaker 2 (53:31):
they all want a piece of the pie, don't they use tax,
right?
So I'm like, yeah, it doesn'thappen a lot, but yeah, that
it's, it's a legitimate thing.
You, you should pay the theamount, right?
That's that's a true kind ofbill.
Other times it's uh, it is ascam.
Sometimes I've had clientswhere they go hey, I got this
letter.
It says I should pay this, andI'm like, nope, it is a scam
100%.
(53:51):
These are just companies thatare sending you something that
looks like a bill, hoping you'lljust write a check and send it
off to finance department,whatever they something they put
on it that sounds like, oh yeah, that's probably real like oh
yeah, that's probably real.
Speaker 1 (54:08):
Yeah, we all, we all see those emails all the time
from you know, uh, best buy it,it's not really all right.
Or your credit cards this orthat, and it's it's all a scam
and yeah, things get mailed out.
So that's, once again, anotherreason it's good to have an
account you can call orcommunicate with or just drop an
email to sing hey, does thissound all right to you?
And I'm sure you get a lot ofthose on probably a weekly basis
.
Speaker 2 (54:28):
So we definitely hear a lot of them and what happens
actually is when you first startyour business.
Now that you register with thecounty, there's a lot of
companies that pay to get theinformation of whenever you
first registered.
Now they're offering.
Some are legit companies thatare offering you things that you
might need insurance, whateverbut a lot of them are just scams
.
Like they're like hey, you dothis, we'll do this for you, you
(54:49):
need to do this and it seemslike the government is telling
you you need to do it, butreally they're just gonna take
your money yeah and um in a lotof areas, you got to be very
alert.
Now, one thing I did want tomention about new businesses is
that which there's informationout there and so some people are
(55:11):
concerned whether it's true ornot.
Is that based on the CorporateTransparency Act that was passed
a couple of years ago, there'sa new registration for brand new
and existing businesses thatare happening this year, and
what they call it is abeneficial owner's information
(55:33):
registration.
A lot of words, and you file itwith FinCEN, which is an agency
that's supposed to fightfinancial crime.
The purpose they say it's foris to kind of stop money
laundering.
Okay, that's the reason thatthey're stating we're going to
do this.
But essentially, if you're abusiness that existed before the
(55:54):
beginning of the year, you havetill end of the year, december
31st, to register with Vinsonand you are supposed to give
information about the owners andperhaps other people that have
control of the company.
Maybe you have officers of thecompany or a board or something
like that.
So it's a requirement and theyhaven't.
(56:16):
The government has not put alot of information out there.
A lot of effort to promote likethis is what you have to do,
but I have had clients towardslike the beginning of the year
calling me like hey, is thistrue?
Because one thing they do putout there is the penalty if you
don't file it on time 500 bucksa day and up to two years in
(56:40):
jail so they put that big youknow penalty to say it's a pain
point.
You know you guys need to dothis and, um, it's true.
So currently that's the law.
Uh, you need to do it and youhave a certain time for those
companies that existed before.
You have till the end of theyear.
If you started a company thisyear, you have 90 days from the
(57:02):
time you got your paperworkstamped that you're a company.
So if you did in january, youmight be behind that 90 days
already now, right, all right,okay, and then next year they're
going to move it to 30 daysafter you get stamped as a real
company.
So you know we could definitelyhelp you with that.
But it's a thing that's outthere that there hasn't been a
lot of official announcement andyou know advertisements so that
(57:26):
people know clearly what theyhave to do and there's
definitely that penalty, um thatthey're promoting.
That's going to happen and, uh,I'm sure there's still some
leeway on it.
But you know you don't want topush it and be in a predicament
if you don't have to be if youalready pass a date.
You pass a date.
You know you still want to.
(57:46):
Same thing like filing.
You already passed a date.
You passed a date.
Same thing like filing.
You still want to register.
You want to avoid the penaltiesas much as possible.
Speaker 1 (57:54):
Another reason you need an accountant and a firm
Because I guarantee you that guyworks for one month for H&R
Block doesn't probably know itor going to tell you about it,
and if you start your, anotherreason to start to talk to an
accountant actually is you'restarting your business, because
there might be things like thisthat you have no idea about and
(58:15):
they can at least advise you Agood accounting firm.
Frank Gomez, I can't tell youhow much I appreciate you coming
in.
I said we're doing this becauseI think for the simple reason
look at how much I learned todayand I'm sure there's a lot of
people in the same boat too thatdidn't you know.
They think they're on top ofthings, and they probably are,
(58:36):
but there's a lot they don'trealize because this is an area
of expertise and, let's face it,you screw around with the
government.
You know you're probably goingto lose because they don't
really care.
They don't have the feelingthat others do.
Thank you for coming in.
Anything else you want to sayin closing?
Speaker 2 (58:56):
Yeah, there's one actual other thing that I did
want to mention is when you aresetting up a business, if you
have a choice of where it can be.
Obviously sometimes you don'thave a choice it's going to be
at your house or it's going tobe at a specific location that
you need.
The city that you choose alsocan make a difference on how
(59:17):
much you get taxed.
For example, city of LosAngeles, they tax you on your
gross revenue, so gross receiptsthat come in Right, and then
it's based on what kind ofbusinesses.
City of burbank doesn't do that.
So you know, if you have achoice and you want to start a
business, city of burbank is agreat place to start it.
Uh, not only is it really justa great business community where
(59:40):
people enjoy working with eachother, promoting each other,
working with local people, butyou're relieved from that city
tax that you might have in thecity of Los Angeles and most
other cities in SouthernCalifornia.
So think about it when you'restarting.
Speaker 1 (59:57):
Boy, the Burbank Chamber of Commerce and the
Development Department love youright now.
It's true, though it is trueI've heard businesses talk about
that and you get outside ofBurbank.
There's a lot of things that, alot of hidden fees and a lot of
taxes in a lot of cities.
Okay, well, that's kind of it,everybody.
Once again, I really want tothank Frank for coming in CBIS
(01:00:21):
Data Tax.
They are the officialaccountant of my Burbank and
myself, and that's why we'redoing this.
Okay, this is not a paidpodcast or a paid announcement.
This is because I think it'simportant and it's something
that you really need to consider, whether you're in a business,
even if you're just individually.
(01:00:41):
Give Frank a call.
I'll put his number on thescreen and his information on
the description so you can get ahold of him and get ahold of
them there.
I'm sure, um, frank, how manypeople you have working in the
firm there?
Speaker 2 (01:00:54):
Oh, so we have about five people working Okay.
Speaker 1 (01:00:57):
So there's a lot of people who knows that.
You know, I get Frank and I'mvery lucky to have.
Speaker 2 (01:01:01):
Frank.
From deep in the Burbank Media District.
It's time for another editionof my Burbank Talks, presented
by the staff of my Burbank.
Now let's see what's on today'sagenda as we join our program.
Hello Burbank.
Greg Schubert here with you onceagain, and we're going to do a
very different type podcasttoday than we usually do.
(00:20):
I think it's something that,hopefully, is going to help you
a lot.
I know it helps me a lot.
So I figured I had questions.
So I got to figure you're goingto have questions too, and
while the subject matter, yousay, oh, there's a little bit
more.
No, it's only boring if youdon't take care of your business
(00:41):
here.
So knowledge is information.
Knowing what you're going totalk, knowing what is going on
in your life, is important and,let's face it, if it's you
versus the government, guesswho's always going to win.
So one thing we're talking hereis taxes, yes, taxes, and we
have a great accountant in withus today.
(01:03):
He works for CBIS Data Tax, andI hate the word transparency, I
hate that word.
Okay, full disclosure.
Cbis Data Tax is the my Burbankaccountant and Frank, who
you're going to be in a second,is actually our accountant, who
(01:26):
has done a great job for me, whoI highly recommend, and the
reason he's on this podcasttoday.
Okay, he's not paying for this.
This is something that I wantedto do, and I think it's
something that's important forpeople to have a perspective on
what's going on, especially, youknow, sometimes you're just
nervous about this stuff.
It's good to have somebody whocan talk you through it.
(01:47):
So, once again, I want towelcome Frank Gomez to the
podcast.
Frank, how are you doing?
Speaker 2 (01:55):
Very good.
Thank you, I appreciate comingon and also like to mention we
just recently celebrated our25th anniversary here in Burbank
, so we do appreciate, you know,the city of Burbank, our
clients, everybody, the businesscommunity.
It's a lot of fun to havepeople come out and, you know,
celebrate that with us just afew months ago.
Speaker 1 (02:19):
And I know my Berwick was there at the function, rick
was there at the function.
Now we had some people fromCBIS, data tax on before and the
question we had and we don'tknow if it's been answered yet
what?
Speaker 2 (02:38):
does CBIS stand for?
Speaker 1 (02:41):
I don't believe it has finally been answered.
Speaker 2 (02:42):
People have guesses, but there's no for sure
statement as of yet.
We're still doing research intothat topic.
Speaker 1 (02:49):
that's great you know , um, but anyhow, if anybody out
there knows the origins of cbis, please let us know, because
it's a mystery that needs to besolved.
Um, but they're really goodpeople.
They're located over at Alamedaand Hollywood Way and, like I
say, I really enjoy working withthem.
They've really taken care of us.
(03:09):
They've made me feel at easebecause, let's face it, I'm not
a tax guy.
I don't know about taxes, Idon't know about finance, I just
know about doing what I do andthat's where my expertise goes.
Well, let me give you a littlebackground on Frank here.
He's worked in the tax industrysince 1998 in both Los Angeles
(03:29):
and San Diego a tax professional, multi-unit manager and
independent enrolled agent.
What?
Speaker 2 (03:39):
does an enrolled agent mean?
Yeah, so an enrolled agentdefinitely means you have some
additional studies that you doin broad topics.
So it goes from individuals tobusinesses, other entities and
also kind of the I guess, theinteraction process with the IRS
.
They call it representation.
You know what can you do tostand in the place of a client,
(04:03):
help them out.
A lot of of times it's during,maybe, a collection process,
some kind of trouble they mightbe in, but it could be just on
day-to-day issues, and you takea number of tests in order to
certify that knowledge andexperience and you become an
enrolled agent, which is anational certification, so it
(04:23):
means you can practice in anystate across the country.
Normally taxes are kind of likestate-based, each with their
own either certification orrules or what it takes, and this
way you can deal with IRS onany issue for anybody across the
country.
Speaker 1 (04:41):
All right.
Well, there you go.
You work with both individualsand business entities and I
should know, because you workwith me individually as well as
my business, knowledgeable ofthe state and federal tax
returns for individuals,including expatriates,
nonprofits, s&c corporations,llcs and partnerships.
(05:01):
And, in all honesty, we we aremy burbank is a c corporation or
this s corporation scorporation.
See, I don't even know whatthat entails and what that means
.
I just know, when we firstsigned up for it, that they was
recommended to us, so we wentthat way.
What it means?
The difference?
I have no.
That's why I have people likeyou to help me.
(05:23):
So, um, you're client orientedand you're uncovering meaningful
deductions, absolutelymaximizing tax refunds and
minimizing balances due.
Once again, I will attest tothat.
You're also a UCLA graduateSorry about your football team
lately, I know it's a struggleright now and you have
(05:44):
additional experience inemployee benefits, group
insurance and direct eventmarketing.
Speaker 2 (05:50):
That is right Okay so there's the bio.
Speaker 1 (05:52):
So let me ask you this what got you into
accounting?
What was the draw?
You know effectively.
Let me start before that.
Where did you grow up?
Speaker 2 (06:01):
Oh yeah, so I did grow up here in Los Angeles and
I went to school at UCLA Iactually was an English major at
UCLA, okay, but at the sametime I took accounting classes
at SMC Santa Monica and Ithought, you know, that's kind
(06:26):
of like just a practical thingthat you should know, maybe, and
agreed could potentially begood if you ever did want to
start a business or you knowanything like that.
So it was kind of just likealmost out of an interest or
kind of like a desire to say youknow, this is a good skill to
have overall.
So I did that and I did workfor a bank for a while and then
my first job out of college, Idid do some accounting for a
(06:49):
what is it?
The aerospace company?
Oh, over in Vernon, andunfortunately it didn't last
very long.
It was about six months or so.
Speaker 1 (06:58):
But not because they had tax problems, right?
Speaker 2 (07:00):
No, they actually had financial problems that you
can't help with.
So they actually shut down thebusiness after that and so you
know I was out of work doingaccounting.
So then I did a number of otherthings and you know, just at a
point where I was looking foreven just some additional
part-time work, I startedgetting back into it and that
was 98 when I started doingtaxes and, you know, got
(07:23):
certified in California to dotaxes.
It was actually kind of justwhen actual computer software
was starting to be more likefamiliarized and popularized.
So before I didn't, I didn'thave to actually grind it out by
hand in those days, Just so wefinally got on to computers,
which is nice.
Speaker 1 (07:45):
It's funny we have our little Alexa thing in here.
It responds to the wordcomputers.
So that's kind of funny how itheard you and when it responded
to you Okay.
So let's face it Everybodyneeds their taxes.
I can imagine how swamped youmust have been from March into
April every year.
That you probably don't evenget to sleep at night.
(08:06):
It's probably a minimal sleepat time and just nothing but
work, work, work.
Speaker 2 (08:12):
Sometimes, yeah, it feels like that and for the, you
know, for most of those yearswe had pretty much that kind of
idea that you know we're goingto be busy February, march,
april and then kind of ease offthe rest of the year till around
now, you know, with thisextension season, but because of
so many different, I guess,things, events that happen, we
(08:35):
have seen many times in the lastthree, four, five years just
the extension of time for peopleto file where, like we were
filing all the way throughNovember last year.
You know, sometimes some yearsit was like they gave an extra
month, some years they gave likeall the way to the end of the
year.
Speaker 1 (08:56):
Well, the pandemic kind of changed everything for a
while.
It kind of changed all therules.
So let's talk about deadlines.
So everybody has, of course, weknow April 15th.
I know that date very wellbecause my dog was born April
15th.
So that's a little good withbad, I guess.
But you can file for asix-month extension, yes, and
that is going to be due, I guess, october 15th.
(09:18):
So that's the first question isis it too late to file?
And what if you missed in April?
Talk about the filing deadlinesnow and everything sure?
Speaker 2 (09:29):
so, uh, definitely, you can file for an extension.
So hopefully that's what youdid if you were not able to file
back in april, and if you did,then as a an individual or a c
corp you do have until October15th, so that's coming up soon.
We're going to hit Octobertomorrow, so you got two weeks
basically to get everythingtogether and filed.
(09:51):
So that means getting it donewithout any kind of penalties or
anything like that.
Right, if you were an S-Corp ora partnership, you actually
missed your deadline.
If you haven't filed yet, thatwas last month.
Speaker 1 (10:05):
Well, thank goodness we did ours back in april.
Speaker 2 (10:08):
You took care of me back then, so thank goodness
that's right, so yeah, so itreally depends who you are as to
when you have to filenon-profits actually have all
the way until, uh, november ifthey filed an extension, so it
kind of staggered out, so noteverybody is due at the same
time.
I guess that kind of helps asthey're processing everything.
Speaker 1 (10:28):
But yeah, you can help you too, you know help.
Speaker 2 (10:30):
Yeah, it helps us too that we don't have to do
everybody all at the same timeand, uh, you just have to, you
know, make sure you know whatyour due dates are.
Speaker 1 (10:45):
So let's say you missed the deadline.
Okay, you just miss it.
You didn't, you know, forwhatever reason.
There are probably legitimatereasons you missed the deadline
besides just forgetting, or Idon't want to do it, but you
missed the deadline.
So is it still worth filingafter the deadline?
And what happens if you fileafter the deadline?
Speaker 2 (11:00):
Right.
So the biggest reason you wantto file by the deadline is what
I mentioned was penalties andinterest.
So there's going to bedifferent penalties for
different things and if you havea balance due there's going to
be interest that kind of justaccrues until you finally pay it
off, Kind of like a credit card.
If you charge something youhave to keep paying the interest
(11:21):
, even though you might startpaying it down a little bit.
Whatever's left, you keeppaying what's the government
charges for interest.
So right now it's somewherearound like 6%, 7%, Okay.
Not terrible, then it's not ashorrible as some credit cards,
you know, but you know it justkeeps going, though it could
keep forever until you pay,though could keep forever until
(11:48):
you pay.
Now the the the thing that'sreally more kind of um harsh is
when you don't file, you get apenalty failure to file and
that's a five percent on whatyou owe for every month or part
of the month that you didn'tfile, and it goes up to 25
percent, right, wow.
And you get another one ofthose for failure to pay.
So, like, if you didn't file,you didn't pay.
You got two of those, and thenthe state comes in and they'll
(12:10):
give you another one.
Of course they will.
So so, yes, definitely it's.
The most important thing istrying to get in on time, either
april or with an extension, soyou could stop that big penalty.
The other stuff, not paying ontime.
There's ways to work it out andit's a much smaller fee, you
(12:31):
know.
So the really big one is whenyou don't file.
But you know, let's say, you'rein that situation, you don't
want more stuff to add up on topof it, and so you do want to
kind of get your informationtogether, organize, work with
somebody If you've got to getbookkeeping together.
Do that and get it filed assoon as possible, so that you
(12:53):
can kind of stop the bleeding assoon as possible and figure out
.
Then you're on a track to be,you know, on time again.
Speaker 1 (13:00):
Okay, so somebody listened to this and they
haven't filed in a couple ofyears and they've gotten some of
these this and they haven'tfiled in a couple years and
they've gotten some of thesenotices and they're starting to
kind of panic a little bitbecause who knows what the
government could basically everdo to you.
And they come to you and theysay, hey, frank, I haven't done
this now in a couple years andcan you help me?
Do you not only help them withtheir get filed again and get
(13:23):
back on track, but do you helpnegotiate with the IRS as far as
any penalties or payments andthings like that to help them
out?
Speaker 2 (13:31):
Sure.
So, yeah, the first thing isobviously we want to get
whatever years haven't beenfiled done and we want to start
from the furthest back in casethere's things that might affect
, you know, the next returngoing forward.
If you have any like, forexample, losses that are going
to go forward, um frominvestments or business or
(13:52):
something like that, or maybecredit you couldn't use that one
year, you're going to forwardthem over to the next year.
So we want to do that in in theright order so you can maximize
everything that you can deductand take and then um with
penalties.
There there is a good thingthat, let's say, you've been on
time.
Most of the time.
You got a good track record,you know whatever, like you said
(14:13):
, just something happened.
This time you can ask forabatement of penalties and
usually as a first time request,they'll go ahead and do that
like, like, if everything elsehas been filed, all the other
past years were paid for, if youhad anything due, they'll help
you out and release you of thosepenalties that you know.
Speaker 1 (14:32):
So the government is not unforgiving and cruel.
The government can actuallywork with you then and they want
to help you, in other words,the IRS is willing to help and
they're somewhat flexible.
Speaker 2 (14:43):
If you can communicate with them, you know
you could probably work outsomething, you know, at least to
lessen the load.
And yeah, that first time onewill almost automatically be
approved, but you do have torequest it.
Now the state they're not asflexible.
You know it's going to take alot more work and, like you
(15:03):
mentioned, though, like ifthere's something legitimate
that happened, you know, uh like, for example, some of the
reasons were why we moved thedeadlines were floods and other
natural disasters that thatcould be a reason why you
actually just really couldn'tfile.
So that could be an argumentlike, hey, I really wanted to,
I've done everything I could,but you know, because natural
disaster, because of illness orhaving to take care of somebody
(15:26):
in your family, right, couldthat could be a reason.
So there could be differentactual things that happen.
Well, they'll consider thatlegitimate?
things, legitimate things, andthey'll consider that and get
rid of the penalties.
What they won't get rid of,though, is the interest, so if
you didn't pay, you didn't pay.
You know we're not going to addthe extra penalties, but the
interest will stay, and that'sjust how the tax code law is
(15:51):
written.
It says they have to chargeinterest, so they will charge
the interest, even if they getrid of the penalties.
Speaker 1 (15:58):
At least they are willing to work with you, though
.
So does that?
Have you had to deal with thata lot in your time, or?
Speaker 2 (16:05):
Sure, definitely these things come up.
You know there's people thathave these issues and you know
that's one of the things as anenrolled agent.
Speaker 1 (16:14):
we get on the phone, we can talk to the IRS directly,
we can make those arrangements,you don't have to wait on hold
for 30, 40 minutes before youcan actually get a hold of
somebody.
Speaker 2 (16:28):
We do have to wait on hold, but we'll eventually get
online with somebody.
You know.
Get on on the phone with themand we can work it out.
And you know, like I said, withthat first time it requests,
most likely it's going to gothrough If it's, you know, I do
have.
I have had people where theysay this is my first time.
I tell them it's the first timeand she's like well, it looks
like the last three years youhaven't filed on time and you're
still paying on these.
So the first time this year,yeah, the first time this year.
(16:49):
So it's gotta be, you know,some something legit like that.
Speaker 1 (16:53):
But uh yeah, we can get through we can work with
them and we can of having anaccountant, you know, personal
and professionally for thebusiness is that you are now
familiar with me on a year basis, but how you know.
But once you file, howimportant is it to review any
previous year's tax returnswhich now I think if they come
(17:15):
to you and they're with you yearafter year, you're kind of
doing that for them.
But if not, how important isthat?
Speaker 2 (17:22):
Yeah.
So it is useful, both on yourown or with a professional
that's helping you, to go backand look at the return that you
filed, and it's going to be fora couple of reasons.
You're going to look at whatdid I do last year and what did
I do this year.
Is there differences that I'mgoing to have some expectations
(17:45):
about?
Did I make more money, lessmoney?
Did I go from being an employeeto an independent contractor or
vice versa?
Did my business change in someway?
Did I hire employees?
Did I have specific expensesright?
So you want to really kind oflook at what happened before, to
compare it with what happenednow, and that way you're getting
(18:07):
prepared so that when youactually do file, you know
what's going to happen andyou're also kind of trying to
make some decisions too.
So it's going to be just also aeither a thought exercise or
really like a review forplanning to say are there some
actions I might be able to takenow that would help me out when
(18:28):
I do file?
And some of those kind ofobvious things like for a
business might be I was planningon buying some equipment or I
had these expenses that arecoming up.
Should I try to squeeze them innow, at the end of the year, or
should I push it off till thenext year?
If you have some control overwhen income might come in, you
(18:49):
know, if you want to limit yourincome, you may want to not
invoice or get it to come inJanuary or something like that.
If you want to, you know, maybequalify for a loan or something
you want the income to comedown right.
So it's a good time to look ateverything that's going on and
plan to see what's going tobenefit you.
Speaker 1 (19:12):
I think there's a lot of small businesses like myself
out there and you know, ofcourse taxes are always daunting
and you look at it as anotherexpense, the cost of doing
business.
But it's something that I thinkyou were saying.
You've got to kind of think itout a little bit and and and you
know what are your plans, andthat's why it's good to have a,
(19:34):
to have a tax professional,somebody who you can call and
say, hey, give me some advicehere on what you think I should
do here.
So do you get a lot of phonecalls during the year?
Speaker 2 (19:44):
Oh sure, definitely.
And again, part of that processis then you actually come up
with questions.
So if you have someone that youcan call, this process helps
you to come up with a questionyou want to ask, and so we do
get a lot of questions about.
You know, what should I do?
What am I able to do?
You know, some of the typicalthings that people can do is
(20:06):
look at what kind of retirementaccounts they have and what
contributions are they going toput in, right?
So everybody is probablyfamiliar with IRAs and 401ks.
These are two types of fundsthat you could put into to save
for retirement, and the typicaldifference between the two kind
(20:27):
of categories of those funds isit's either a Roth or a
traditional.
Where one the traditional,you're going to try to take a
deduction in this year that youput the money in and that could
help you to pay less taxes.
Now the other choice is a Roth.
Whether it's a Roth IRA or aRoth 401k, you're going to put
(20:48):
tax dollars that have alreadybeen taxed into the fund and
they're going to grow tax-freeand as long as you, you know,
wait this specific time to takethem out, you won't ever pay tax
on it.
So obviously the younger youare, the longer you can leave it
in the fund.
That's definitely a lot morebeneficial than maybe just
(21:10):
getting a tax savings right now.
So you have to look at you knowwhere you are financially and
in your life and kind of make adecision.
What do I want to do?
Speaker 1 (21:21):
You're not a financial advisor, You're a tax
expert.
Do you try to counsel people alittle, saying, hey, you know
what You're making this kind ofmoney you know.
I really recommend you put thisamount into one of those types
of accounts you know each year.
I mean, you try to recommendthat to people and give that
option, because I didn't knowthere was a difference between
the two different types ofretirement accounts.
Speaker 2 (21:43):
Oh yeah.
So we definitely talk to peopleabout where they're at and you
know, one simple idea is let'ssay you had a bad year.
Okay, you made a lot less thanyou normally might make.
Uh, if you already have an IRA,that's a traditional IRA you
may want to convert to a Rothduring that year because then
you'll pay less taxes.
(22:04):
When you convert, you have topay the taxes.
Can you have both types ofaccounts?
You can have both types ofaccounts, but the actual
contribution limits account forall accounts per year.
But let's say you had already.
Because Roth is newer, maybe youalready had put some money away
.
It's built up a little bit inyour traditional IRA and, like I
(22:26):
said, maybe you had a bad yearor maybe you're taking some time
off to go to school or forwhatever, or maybe you're taking
some time off to go to schoolor for whatever reason.
You're going to make less, soyour tax rate is going to go
down.
So if you transferred the moneyinto a Roth this time you would
pay the tax at a low rateinstead of at your normal rate
that you would be making.
You know fully employed or youknow whatever's kind of like
(22:47):
standard for you.
So that would be a good optionduring that year.
So you want to kind of look atwhere you're at.
Another reason could be likeyou're maybe right on the edge
of going into the next taxbracket, where you're going to
go up from 10 to 15 or 15,whatever you're on the edge of
(23:08):
and if you can put, you know,the $7,000 into the IRA, that
brings you back away and itkeeps you in the lower tax
bracket.
So these are.
This would be another reasonwhy you want to do that because
you're going ahead and savingyourself from moving up into a
higher bracket.
Speaker 1 (23:25):
Once again, another great reason that you need to
have an accountant and not justan accountant, but somebody who
is your accountant, becausehopefully you're learning what
I'm learning right now andhopefully this is something
meaningful to you and you'reseeing the benefit of having
somebody that you cancommunicate with and get some of
(23:45):
these questions answered,because you know a typical
person just doesn't know thesethings.
So I appreciate it.
Questions answered because youknow the typical person just
doesn't know these things, so Ireally I appreciate it.
You know, I think and, like Isaid, you've done a great job
for me.
I mean, there's no doubt aboutit.
You know your company andyourself personally I've been
(24:08):
very, very happy with.
So here we come.
You know we're going to comenear the end of the year, pretty
soon, and what can you do atthe end of the year to start
getting prepared for next year'sfiling, and do you always?
Well, let me just ask you thatfirst.
So what can you do at near theend of the year?
Because a lot of people waittill you know April 10th and
they'll start trying to findevery seed in the world and this
(24:29):
and that, and they're in panicmode, right.
So a good time to start isprobably, you know, in January
to start laying stuff out.
So what do you suggest?
Speaker 2 (24:37):
Right.
So actually I would say evennow to the end of the year or
maybe right before the holidays,it's a good time, cause you
know you're going to get busy atthe very end.
But if you can start lookingover as simple as your bank
statements, your credit cardstatements, to see what kind of
expenses you had, what kind ofthings that you did, remind
(24:59):
yourself you kind of forget, youknow the stuff that happened
earlier in the year.
Remind yourself what happenedpersonally, financially, or if
you have a business in yourbusiness, and kind of start
gathering that information, soit's not really a big rush at
the end.
You know, like you said inJanuary, maybe you're like, oh,
now I got to go back and findeverything.
Definitely you're going tostart getting documents in
(25:20):
January that are official andcompanies are sending out to you
, so you can't have those yet,but you can start looking at
your mortgage statements, yourinvestment statements, those
kind of things to kind of getprepared for it.
If you are a sole proprietor,for example, you kind of now
have a pretty good idea how theyear is going to end.
(25:41):
You might already know whatincome is going to come in for
that last quarter or have atleast a really solid idea and
you can make your finalestimated payments, which is
what you're paying in lieu ofwithholding, because you're not
an employee.
You're getting just directpayments to yourself.
Nobody's taking money out andsending it off on your behalf,
(26:02):
like when you get a W-2.
Same goes for landlords who arecollecting rents.
Same goes for people that aremostly making money or making a
good portion of their incomefrom investments.
They're starting to see howthose investments turned out.
You may not know exactly allthe way till the end of the year
, but definitely with soleproprietors landlords you pretty
(26:23):
much kind of have a good ideaon the year.
So you can determine those lastestimated payments, which we
have one in September, we havethe very last one in January, so
you can kind of get ready to gopay some stuff in so that it
will lower the amount you'llactually end up paying.
You know, in April when you,when you do file, if you filed
that on time.
And then, besides that, uh, youcan do, um, the things I was
(26:50):
mentioning about retirementaccounts.
Think, if you're going to putmoney in, for example, 401ks,
you got to put those in by theend of the year.
So if you get to alert youraccounting department where you
work or with your company tomake that happen.
With IRAs you do have a littlemore leeway because you have all
(27:10):
the way through the deadline,usually April 15th, to make
those contributions.
So that could be a last minutedecision, but you at least start
thinking about what you want todo.
Another kind of benefit thatsome companies have is an HSA,
which is a health savingsaccount, and that means you kind
of make a hack on medicalexpenses where you can itemize
(27:34):
them.
You can deduct them if youitemize, but across the US only
about 10% of people taxpayersitemize.
In California it's a little bithigher, about 15% of the people
itemize, but that means themajority of people don't.
So if you have this available,you're able to essentially put
money into account for yourmedical expenses, especially
(27:58):
things that you already know forsure are going to happen your
insurance payments or if youalready have some treatment
that's going to go on for somany months or so many visits
that the kids are going to go,you know, so many times a year,
and then you're going to deductthat out of your income without
having to itemize.
So it's a really great benefitif it's available to you to take
(28:19):
advantage of, to have tax-freedollars.
Speaker 1 (28:23):
You were saying that only about 15% of people in
California itemize.
Speaker 2 (28:27):
Yep.
Speaker 1 (28:27):
Do you think a lot more people should be doing that
?
I mean because 15% is not a lotof people and I'm sure that by
itemizing you get a lot moredeductions and the longer you
pay, a lot less money.
Do you think a lot more peopleshould be looking at that to do
that?
Speaker 2 (28:53):
So 100% of people should find out if they can
itemize.
Not everyone can, becausethere's a comparison you're
going to make between whateverthe standard deduction might be
that year for your filing status.
So for single, there's going tobe a certain one, around 12,000
.
For married filing joint,there's going to be one about
24,000.
So you need to have itemizeddeductions higher than that
standard deduction for it tohelp you.
(29:14):
But you should take a look andfind out.
So that's one of the reason whyyou go to an accountant to ask
you know, what is it actually Ican itemize and through a
discussion you can find outthings that you might be able to
.
And through a discussion youcan find out things that you
might be able to that you didn'tknow.
Speaker 1 (29:32):
Let me ask you this so you're a homeowner and you're
making, let's say, $100,000 ayear and you really don't
itemize.
What are the three or fourdifferent?
Speaker 2 (29:50):
items that you could, probably that people have no
idea.
That could probably reallylower your taxes down.
So obviously, being a homeowneris one of the main reasons why
you're going to start itemizing.
You're going to have mortgageinterest and you're going to
have property taxes, and sodefinitely historically that's
been like.
When you become a homeowner youstart itemizing Right Because
those things are going to bedeductible and they're large
(30:11):
expenses.
In addition to that, you couldhave charitable donations,
whether it's cash that you gaveto nonprofits or maybe like
furniture or items you give toGoodwill, those kinds of things.
Those are going to be the threemain areas.
Speaker 1 (30:29):
So let me interrupt you real fast, because I've
dealt with a lot of non-profits,and if you take stuff over at
Goodwill or you donate to yourlocal sports, whatever it is any
non-profit, you can ask for areceipt from that organization.
It's nice, you give them stuffand you should give them stuff,
but you can also get a benefitfrom that too, which you
probably didn't realize, correct, that's right.
(30:50):
So definitely.
Speaker 2 (30:51):
They'll give you a receipt and you're going to kind
of estimate you know what theymight sell that Like, say, if
it's Goodwill or Salvation Army,they're going to sell it.
So you're going to estimatewhat is it worth now?
Okay, once you gave it to them,what's the value?
And be honest and be honest yeah, so but yeah, and be honest,
(31:14):
yeah, but yeah definitely isgoing to be beneficial to you to
add to that total.
So, besides the property tax,mortgage interest and charitable
donations, you do have medical,which kind of how we got into
this with HSA but the medicalhas a floor of 7.5%.
So you're going to take thetotal cost that you had like,
(31:39):
say on your insurance, yourco-pays, if you had to go to the
hospital, whatever anythingthat you had to pay deductibles
and you look at your AGI.
So it's going to be a differentnumber for every single person.
That's not a standard number.
We look at your specific AGI,take 7.5% of that, then
whatever's above that amount,then you're going to be able to
deduct that amount and that'sgoing to go towards your total.
We are trying to beat thestandard deduction.
So it's a process that you gothrough.
(32:00):
Not everybody will be able to,but definitely, being a
homeowner, it puts you morelikely into that camp.
Now, the thing that kind ofchanged the game a little bit
was on the last um tax taxpolicy change.
We um limited uh state taxes toten thousand bucks so you may
(32:25):
pay more than that, but you'reonly going to get to take 10,000
.
Now, on the other hand, theydid double the deduction.
They did double the standarddeduction, so it weighed out a
little bit and nationally itkind of is even.
But obviously in places whereproperty values are high, like
(32:46):
California, it's going to affectus adversely, more so than you
know most of the other places inthe country.
So you will see that Now it'sstill worth it, because
sometimes you may not be able toitemize on the federal return
to the IRS, but you may be ableto itemize on the state return,
because there's going to bedifferent limits and there's
(33:08):
going to be things that getadded back in or taken back out,
like those property taxes taxes.
They'll add back in thedifference maybe you weren't
able to take before.
So, um, one other kind of itemthat you can't have on the
federal return but you do haveon the state is if you're an
employee and you haveunreimbursed employee expenses,
(33:31):
meaning you had to pay for stuffto do your job.
And so a classic thing issalesman right.
Salesman goes out, does a lotof meetings, have lunches, buys
gifts for people you know,promotes the company.
A lot of times it's on theirdime and they may not get
reimbursed for everything ormileage driving around.
You have a job where you haveto drive around a lot right, or
(33:53):
use your own phone or internetor whatever those types of
things.
So again, in the last taxpolicy change those were taken
out of the federal but itremains on the state of
california.
Not every state has that, so youhave to go state by state.
Each state has their own rulesand some may say nope, nope, you
(34:14):
can't have any of it.
Some may say, oh, you couldhave certain ones.
So they're all different whenyou get to the state level.
So that's why it's definitelyworth it to find out.
You know, can I itemize?
Can I itemize on the IRS?
Can I itemize on my state?
It'll make a difference.
You know you want to savewherever you can.
So if you can save on state tax, you know that's great.
Speaker 1 (34:34):
Once again the reason you need to have your own
accountant and have your ownaccountant the same guy year
after year, because he'll reallyknow these kinds of things for
you.
So let's talk a little aboutdepending on who the person in
power is.
Talk a little about dependingon who the person in power is.
You know, sometimes you reportwell, I'm going to hire 5,000
(34:56):
more IRS agents and they'regoing to come back to everybody
and other people say we're goingto cut back the IRS and stop
hiring everybody.
So are they actually?
What's the status right now?
Speaker 2 (35:10):
And are they actually auditing people right now?
Yeah, so the status is, yes,they did get funded, you know,
to hire a lot of more new staffto go out, and their focus is
obviously it's going to be tocollect money and they have
started so, uh, potentially,right now, the estimate is
there's about 15 milliontaxpayers that have balanced
dues that are outstanding, sothat's a lot of people.
(35:33):
They want to go find that moneyand bring it in.
There's around 11 millionpeople that have not filed for a
given year that the IRS knowsof and they want to go track
those people down.
And there's about 3 millionpeople that they owe money and
the IRS is ready to levy, mean,take some money away from them,
(35:54):
whether that is garnish theirwages, get into a bank account
and take the money.
There's about 3 million peoplein the situation where the IRS
is ready to do that.
So they have started hiring.
They're not done, but they gotat least their first wave or so
of new recruits in there, beingtrained and going out, and the
(36:16):
first thing, uh, is that duringthe pandemic, a lot of cases
where people owed money, uh, wejust stopped collecting.
So the irs said, okay, look,you know, everything is going on
right now.
Uh, you know it's a burden oneverybody, we're not going to
collect.
We're not saying, wait, wait.
Does the irs have a heart?
Well, you know, uh, sometimesthey do.
(36:38):
And you know, sometimes,politically they pass laws that
say you know you can't do itright now.
Right, so, for whateverintention or reason, they put a
pause on collecting.
Okay, they didn't get rid of it.
They said we're just not goingto collect, it's still there.
We're just not going toactually keep sending you
letters or call you or doanything.
We will keep charging youinterest.
(36:59):
They may even have someportions that they stop the
interest, but essentially it wason pause.
But now, starting this year,earlier this year, they send out
letters.
So probably, if you're in thatgroup, you've already received
the first letter that was justlike hey, this is a friendly
reminder.
You know you had this bill acouple of years back.
(37:21):
We just paused, but we'recoming back now, so you've got
to start thinking about paying.
And you may have alreadyreceived another letter that
said okay, now you're in thecollection process, so you
really do need to pay, or elsewe're going to start moving
forward in this collectionprocess.
And you know irs does take takeits time, so it's not going to
(37:41):
be like overnight boom, all of asudden you um they're going to
start taking your stuff.
So they do give you a lot oftime they have that power.
They do have the power, but theygive you a lot of time in this
buildup period that we're inright now, and so, for example,
I've seen cases more like from2017, 2018, where people owed
(38:02):
from those years or maybe didn'tfile from those years.
That's what they're startingwith going back to those, but
it's going to be like on amonthly cycle now, so they're
going to just keep working theirway closer and closer to the
present more letters going outand more people moving down that
process.
So that's why it's veryimportant if you get a letter,
(38:25):
you need to respond to theletter and you like we kind of
mentioned a couple of times IRSis reasonable, you know, and you
can work with them, but theywill kind of accelerate if they
don't hear from you.
So you want to be able to, evenif you like, say, look, I know
I have this, I can't pay, andhere's reasons why.
(38:45):
Okay, that that's a start.
They're not going toautomatically just get rid of
everything, but it could, youknow, buy you some time.
You can have a workaround, youcan figure out some way to solve
it, there could be options foryou.
It could be as simple as apayment plan, right, where you
just go.
Well, I can afford to pay you Xamount every month.
(39:06):
All right, that could work, andthen it just depends how long
does that last right.
All right that that could work,and then it just depends how
long does that last, right.
So, um, the other thing that ispossible, though, for example,
like, say, you didn't file in2018, irs also has the power to
go.
You know what we're going tofile for you.
We say this is what you made,based on whatever information
(39:26):
they have, and let me guess-they don't do itemization either
.
Speaker 1 (39:30):
They just say here's the raw one, and this is what
you got yeah.
Speaker 2 (39:34):
So they do the least amount of any deductions or
credits that you can get so theycan have the biggest balance
due.
And then they send you thatbill to go.
You owe us twenty thousanddollars, whatever you know some
amount and you just get scaredwith it and you didn't even file
.
So that's why we're back tofiling is important, because it
(39:56):
gives you it protects yourrights one, it gives you the
ability to have the say of whatgoes on that return, because
they're not going to look outfor you, they may not have
correct information also.
So you want to be able tocontrol or have the input to
make sure it's correct, and thatway you're protecting yourself.
(40:20):
You know your interests and thatway the starting point of any
collection you know if you, ifthey're saying 20 and you're
saying 10, you know the startingpoint in 10 is a lot better
than 20.
Absolutely.
So you want to have thatcontrol.
And also, then you know again,california is going to say, hey,
we saw that IRS filed thisreturn for you, so we're going
(40:42):
to go by what they said.
Monkey, see, monkey, do right.
Yeah, we're going by what theysaid.
And and they also have rulesand laws that cover that.
Well, if the IRS said it, weare going to assume that it's
true, unless you prove to usthat it's not true.
So they're going to base theircollection also on that number.
Speaker 1 (40:59):
So, in other words, their policy is you're guilty
until proven innocent.
Speaker 2 (41:02):
That's correct, yes, and so one other kind of thing
that stems from if you didn'tfile and the IRS filed for you,
the time frame that they have tocollect extends.
So normally, if you had abalance due, they have 10 years
to collect.
So once you get to that 10years like if they didn't
(41:23):
collect they can't collectanymore.
So, however you get there, it'spossible, you get there and
then that's it Whatever.
If they've got some paymentsfrom you, that's what they got,
but if you didn't file a return,they have unlimited amount of
time to collect from you.
Okay, so again, by you filing,you're kind of putting a clock
on how long do they have to comeafter you?
Speaker 1 (41:48):
And get those questions Right.
Yeah, that's interesting.
I never knew that.
Once again, another reason.
I hope you guys are listeningto this podcast and learning,
because this is good stuff.
So.
So my Burbank is a business.
I use QuickBooks.
Now, I do not think QuickBooksis going to solve any of my
(42:10):
problems.
It does help me keepcategorizing things like that,
but that's all it does.
I mean, there's ways that youcan say, okay, pay my taxes and
file this tax.
I don't trust it.
I still want to come to anindividual and say here's what I
got and you know, please reviewthis, find things that it does,
(42:33):
because it's a computer.
I want the human touch,somebody who actually knows what
they're doing.
So what should you know as abusiness?
I use QuickBooks, but at theend of the year I have you go
through the QuickBooks for me.
So if you're a new business oryou're now an existing business,
what should you really considerdoing and how do you prepare?
(42:56):
You know how do you kind of putthings together, especially a
newer business.
Speaker 2 (43:01):
So definitely for business, both starting,
existing and especially at theend of the year.
The bookkeeping is veryimportant One.
You know that's going to bewhere the tax return comes from,
so that's going to be helpfuljust on a practical level.
Speaker 1 (43:17):
You need that in order to file, but not to
interrupt you, but I willinterrupt you.
I sent you the QuickBooks stufflast year and then you got
ahold of me a couple of timessaying, well, what about this,
this and this things I had notconsidered and were not in the
QuickBooks stuff last year.
And then you got a hold of me acouple times saying, well, what
about this, this and this?
Things I had not considered andwere not in the QuickBooks.
Speaker 2 (43:37):
So without having a true professional things would
have been missed completely.
Yeah, do the accounting so thatyou have accuracy.
And obviously you got tocategorize things as you are
putting them in right, Whetherthey're revenues or expenses or
whatever they might be.
And sometimes you may have achoice, like, for example, with
(44:01):
depreciation.
You may have a choice todepreciate more upfront or, you
know, put it on the normalschedule of whatever that item
might.
Speaker 1 (44:09):
Talk about depreciation for a second.
What do you recommend is like adollar threshold, usually.
Okay, now just write this alloff this year, or we need to
depreciate over a couple ofyears.
Do you have any suggestions onthat?
Speaker 2 (44:24):
Yeah, so basically how it works is that if your
item, whatever you purchase onyour expenses is going to last
more than a year, there's goingto be a useful life to it.
So, whatever sound equipment, acar, you know, real estate,
whatever something you're using,your business, the IRS already
(44:45):
has a life for it.
It might be seven years, itmight be 10 years, might be,
like real estate, 27 and a halfyears.
So there's already somethingassigned to it and what the irs
says is you should depreciate itover that time.
But there's a couple ways that,let's say, you have, you've had
a great, so you want to havemore expenses, right, you want
(45:06):
to reduce that profit, um, orfor whatever reason it could you
know it could be other businessreasons but you want to
appreciate more.
There's two things that youhave Um, we've gone back and
forth over the last 10, 15 yearsor so with, uh, accelerated
depreciation, bonus depreciation, those things where it says you
(45:29):
bought it.
Now it should go over 10 years.
But we'll allow you to take itall today, right, or some
version of that 80% of it today,60% of it today.
So you could make a choice togo.
I'm going to do that, I'm goingto take up to whatever the
limit might be.
There's also a thing calledSection 179, where we've had
(45:50):
that for a long time where youcan always have an option to
take the full amount up to alimit of whatever you paid on
depreciable items specific kindsusually, things like this, like
computers and cell phones andcars, those kind of ideas
businesses usually are using soyou can do that.
(46:12):
It will then depreciate now,become an expense now and lower
your profit.
So where you come into even haveto think about it a little bit
more is like, say, a business isgoing to have a loss but let's
think they think they're goingto have a big year the next year
, so they can do thatdepreciation.
(46:34):
It won't show up now becauseyou don't have anything to
depreciate against, but now itbecomes on reserve so you can
take it next year when you knowI have these big clients that
are coming in next year that Iknow I'm going to have this
revenue.
It's going to move forward,carry over, and now you'll take
it then instead of waiting overthat 10 year period.
(46:54):
So it's definitely a thing youwant to look at.
Uh, it's definitely a thing.
As a business owner, you got tohave in mind.
What do you think is going tohappen like this year, next year
, you know when do you thinkyou'll need those expenses, and
so definitely being able to talkto your accountant about that
is a good idea so you can have aplan and time it correctly.
Speaker 1 (47:15):
So you ran a new business, though, and, let's
face it, this might be the firsttime you've ever gone into
business.
So what do you recommend rightfrom day one?
Instead of waking, you know, oh, I should have done this or
that or something else.
Anything you recommendimmediately people should start
doing, or at least thinkingabout.
I mean, what about contactingan accountant like yourself just
(47:37):
before they even start to gointo business, to help them
through the process?
Speaker 2 (47:41):
Sure.
So it's definitely helpful toget an accountant, a
professional, involved whenyou're even planning to start a
business, to have a discussionabout how to do that, so we
actually can help you set upyour business as well, choosing
what kind of entity you're goingto be, so that that can be
(48:04):
clearly explained to you whathappens if you choose the S-Corp
, the C-Corp and LLC, those kindof things, which is another
kind of item on the list at theend of the year here.
Let me ask you a question,though.
Speaker 1 (48:16):
Did I make the right decision on which letter I
picked.
Was that a good?
Speaker 2 (48:19):
decision.
It's a good decision, okay.
So here's the thing I was goingto mention.
It's on the list here at theend of the year.
Among other things is if you'rean llc, for example, you can
choose to be an s?
Corp or c corp.
Right, these are options youhave, and so understanding how
(48:43):
the revenues will flow throughand who's going to get taxed,
that that's important.
So you can make a choice.
You can't, like, go back andforth every other year but,
let's say, you've been an S-Corpfor a while, you could make a
choice to change.
So there's still an option todo that.
You just can't do it like allthe time, like if IRS says, oh
look, you've done an S-Corp, aC-Corp, s-corp, you got to stop
(49:05):
now.
You got to wait for like fiveyears and then, well, you're not
going to talk about that latertoday.
Then you know you can maybethink again, but you got to at
least stick with something for awhile.
But yeah, so it's not set instone 100%.
You can make some changes.
And definitely dialogue withyour accountant is important.
So, yeah, getting set up.
So yeah, getting set up, that'sone thing, kind of projecting
(49:29):
what you think is going tohappen, understanding what is
going to be deductible andwhat's not deductible, um,
understanding about setting upan office in your home or
renting an office or whatever,what your different approaches
might be.
So definitely all those thingsare important.
And having a system in placefor the, the bookkeeping or the
accounting, whether it's goingto be yourself with QuickBooks,
(49:51):
whether you're going to hiresomebody to work in your company
or you're just going to hire anaccounting company, which we do
bookkeeping for smallbusinesses also.
So we definitely can help inthat on that subject, to keep
your books correct and make surethat they're they are ready for
(50:12):
you to file at the end of theyear.
And but besides that, havingclear accounting helps you
understand where your businessis at.
Um, when is the cash coming in?
How does the cashflow look?
Do you have high times, peaktimes and low times?
So that in the future.
Obviously the first year youcan't really tell.
(50:33):
You can make a plan, but itwill.
It will show you what actuallyhappened so you can kind of
start trying to look at it andgo, well, why did it happen this
way?
That's another thing.
It tells you what happened soyou can kind of say why did it
happen?
And that's what the businessowner is trying to do.
So there's a lot of benefits tohaving that bookkeeping or
(50:54):
perhaps getting someone to helpyou with the bookkeeping, to
make sure it's clear, efficient,on time, accurate, all those
things, and that you can askquestions to like why, why is it
?
Why is this in this column, notthat column?
You know simple things likethat Understanding, depreciation
, understanding.
You know how revenues come in.
So it's very helpful to do thatfrom the very beginning because
(51:18):
if, let's say, you let a yeargo by and you kind of didn't
have a system, it's a lot harderto go back and now implement a
system with all the stuff thathappened with no system.
So as long as you picksomething, at least you can be
consistent going well.
I know I did it this way overthis time period and so if you
(51:39):
do change, then you at leasthave consistency, that you'll
understand what happened up tothat point.
Speaker 1 (51:43):
The theme that I have gotten out of today more than
anything else.
The theme that I have gotten outof today more than anything
else and while I knew this Inever realized it is how
accounting is a very fluid thing.
It's just not a.
Every April you call youraccountant and then you don't
talk to them again until night.
In all honesty, in the old dayswe had the old H&R blocks and
these corporate places They'dhire 1,000 guys to come in March
(52:06):
and April and do the taxes, andthen they're all gone.
After that They'd hire athousand guys to come in March
and April and do the taxes, andthen they're all gone after that
.
They're not permanent employeeswhen when you have a firm, like
we do with you with CBIS,you're there all the time, I can
call you anytime and you have afamiliarity with my business
and myself, and I think it's ahuge benefit of having a firm
(52:27):
who's there all year round,because things do come up all
year round and I'm sure you geta lot of calls all the time from
businesses saying what should Ido here?
Speaker 2 (52:39):
Yes, definitely, you have questions just in general
over the year about things youmight be thinking about.
You get correspondence.
So I've had people getcorrespondence that um, trying
to think of who it's sent by.
One person sent me a letterthat and it was telling them
they had taxes to pay on thesecomputers that they leased.
(53:01):
Uh, it was a property tax.
It almost looks like, um, whenyou get your property taxes for
your house, it's the samedepartment that does that, but
this is for stuff that you don'tactually own, you're just
leasing.
And they asked me, like, isthis real, is this a scam or
what?
And so, yeah, I looked throughit.
I'm like, oh, yeah, it actuallyis.
For businesses there is thistype of thing.
Speaker 1 (53:30):
If you're leasing this, the county will tax you
for some amount.
Speaker 2 (53:31):
they all want a piece of the pie, don't they use tax,
right?
So I'm like, yeah, it doesn'thappen a lot, but yeah, that
it's, it's a legitimate thing.
You, you should pay the theamount, right?
That's that's a true kind ofbill.
Other times it's uh, it is ascam.
Sometimes I've had clientswhere they go hey, I got this
letter.
It says I should pay this, andI'm like, nope, it is a scam
100%.
(53:51):
These are just companies thatare sending you something that
looks like a bill, hoping you'lljust write a check and send it
off to finance department,whatever they something they put
on it that sounds like, oh yeah, that's probably real like oh
yeah, that's probably real.
Speaker 1 (54:08):
Yeah, we all, we all see those emails all the time
from you know, uh, best buy it,it's not really all right.
Or your credit cards this orthat, and it's it's all a scam
and yeah, things get mailed out.
So that's, once again, anotherreason it's good to have an
account you can call orcommunicate with or just drop an
email to sing hey, does thissound all right to you?
And I'm sure you get a lot ofthose on probably a weekly basis
.
Speaker 2 (54:28):
So we definitely hear a lot of them and what happens
actually is when you first startyour business.
Now that you register with thecounty, there's a lot of
companies that pay to get theinformation of whenever you
first registered.
Now they're offering.
Some are legit companies thatare offering you things that you
might need insurance, whateverbut a lot of them are just scams
.
Like they're like hey, you dothis, we'll do this for you, you
(54:49):
need to do this and it seemslike the government is telling
you you need to do it, butreally they're just gonna take
your money yeah and um in a lotof areas, you got to be very
alert.
Now, one thing I did want tomention about new businesses is
that which there's informationout there and so some people are
(55:11):
concerned whether it's true ornot.
Is that based on the CorporateTransparency Act that was passed
a couple of years ago, there'sa new registration for brand new
and existing businesses thatare happening this year, and
what they call it is abeneficial owner's information
(55:33):
registration.
A lot of words, and you file itwith FinCEN, which is an agency
that's supposed to fightfinancial crime.
The purpose they say it's foris to kind of stop money
laundering.
Okay, that's the reason thatthey're stating we're going to
do this.
But essentially, if you're abusiness that existed before the
(55:54):
beginning of the year, you havetill end of the year, december
31st, to register with Vinsonand you are supposed to give
information about the owners andperhaps other people that have
control of the company.
Maybe you have officers of thecompany or a board or something
like that.
So it's a requirement and theyhaven't.
(56:16):
The government has not put alot of information out there.
A lot of effort to promote likethis is what you have to do,
but I have had clients towardslike the beginning of the year
calling me like hey, is thistrue?
Because one thing they do putout there is the penalty if you
don't file it on time 500 bucksa day and up to two years in
(56:40):
jail so they put that big youknow penalty to say it's a pain
point.
You know you guys need to dothis and, um, it's true.
So currently that's the law.
Uh, you need to do it and youhave a certain time for those
companies that existed before.
You have till the end of theyear.
If you started a company thisyear, you have 90 days from the
(57:02):
time you got your paperworkstamped that you're a company.
So if you did in january, youmight be behind that 90 days
already now, right, all right,okay, and then next year they're
going to move it to 30 daysafter you get stamped as a real
company.
So you know we could definitelyhelp you with that.
But it's a thing that's outthere that there hasn't been a
lot of official announcement andyou know advertisements so that
(57:26):
people know clearly what theyhave to do and there's
definitely that penalty, um thatthey're promoting.
That's going to happen and, uh,I'm sure there's still some
leeway on it.
But you know you don't want topush it and be in a predicament
if you don't have to be if youalready pass a date.
You pass a date.
You know you still want to.
(57:46):
Same thing like filing.
You already passed a date.
You passed a date.
Same thing like filing.
You still want to register.
You want to avoid the penaltiesas much as possible.
Speaker 1 (57:54):
Another reason you need an accountant and a firm
Because I guarantee you that guyworks for one month for H&R
Block doesn't probably know itor going to tell you about it,
and if you start your, anotherreason to start to talk to an
accountant actually is you'restarting your business, because
there might be things like thisthat you have no idea about and
(58:15):
they can at least advise you Agood accounting firm.
Frank Gomez, I can't tell youhow much I appreciate you coming
in.
I said we're doing this becauseI think for the simple reason
look at how much I learned todayand I'm sure there's a lot of
people in the same boat too thatdidn't you know.
They think they're on top ofthings, and they probably are,
(58:36):
but there's a lot they don'trealize because this is an area
of expertise and, let's face it,you screw around with the
government.
You know you're probably goingto lose because they don't
really care.
They don't have the feelingthat others do.
Thank you for coming in.
Anything else you want to sayin closing?
Speaker 2 (58:56):
Yeah, there's one actual other thing that I did
want to mention is when you aresetting up a business, if you
have a choice of where it can be.
Obviously sometimes you don'thave a choice it's going to be
at your house or it's going tobe at a specific location that
you need.
The city that you choose alsocan make a difference on how
(59:17):
much you get taxed.
For example, city of LosAngeles, they tax you on your
gross revenue, so gross receiptsthat come in Right, and then
it's based on what kind ofbusinesses.
City of burbank doesn't do that.
So you know, if you have achoice and you want to start a
business, city of burbank is agreat place to start it.
Uh, not only is it really justa great business community where
(59:40):
people enjoy working with eachother, promoting each other,
working with local people, butyou're relieved from that city
tax that you might have in thecity of Los Angeles and most
other cities in SouthernCalifornia.
So think about it when you'restarting.
Speaker 1 (59:57):
Boy, the Burbank Chamber of Commerce and the
Development Department love youright now.
It's true, though it is trueI've heard businesses talk about
that and you get outside ofBurbank.
There's a lot of things that, alot of hidden fees and a lot of
taxes in a lot of cities.
Okay, well, that's kind of it,everybody.
Once again, I really want tothank Frank for coming in CBIS
(01:00:21):
Data Tax.
They are the officialaccountant of my Burbank and
myself, and that's why we'redoing this.
Okay, this is not a paidpodcast or a paid announcement.
This is because I think it'simportant and it's something
that you really need to consider, whether you're in a business,
even if you're just individually.
(01:00:41):
Give Frank a call.
I'll put his number on thescreen and his information on
the description so you can get ahold of him and get ahold of
them there.
I'm sure, um, frank, how manypeople you have working in the
firm there?
Speaker 2 (01:00:54):
Oh, so we have about five people working Okay.
Speaker 1 (01:00:57):
So there's a lot of people who knows that.
You know, I get Frank and I'mvery lucky to have.
Speaker 2 (01:01:01):
Frank.
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