August 22, 2024 • 17 mins
Are you a profitable business owner paying more taxes than necessary? It's time to turn the tables with strategic bookkeeping, and I'm here to show you exactly how.
In this must podcast, I dive into the often-overlooked power of bookkeeping, not just as a means to keep your financial records straight, but as a critical tax-saving strategy every business owner should be utilizing.
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*Disclaimer This material & presentation content is for informational and educational purposes only. This material and presentation content is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this ...
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Episode Transcript
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Speaker 1 (00:00):
As a profitable business owner, I can tell you
right now that your bookkeepingsucks.
My name is Boris Mushaev.
I'm a CPA and a certified taxstrategist.
I will show you how you can useyour bookkeeping as a tax
strategy, where you can savetens, if not hundreds, of
thousands of dollars on taxessimply by using your own
(00:21):
bookkeeping.
Ready.
Let's go.
Speaker 2 (00:24):
Welcome to the Tax Reduction Podcast for
money-making entrepreneurs withBoris Mushaev.
Boris has helped entrepreneursacross the United States
collectively save millions ofdollars in taxes with the power
of tax planning and advisory.
The only way you, the businessowner, can save money on taxes
is by using proactive taxstrategies, and this podcast is
(00:44):
all about saving you money ontaxes.
Boris will share with youin-depth and easy to understand
tax reduction strategies thatyou can implement in your
business within 30 days or less.
Let's jump into today's episode.
Speaker 1 (00:58):
All right, awesome, let's get started over here.
So I've broken down to you inthree simple steps.
Right, we're going to first'regoing to talk about what is
really bookkeeping andunderstand it.
You probably don't have theunderstanding of bookkeeping
that you think you do, even ifyou have a bookkeeper.
Then we're going to talk abouthow can you use the bookkeeping
as a tax strategy and why a lotof business owners are actually
(01:18):
overpaying in taxes by nothaving a proper bookkeeping.
We're going to talk about howto stop that and we're also
going to talk about how to stopthat.
And we're also going to talkabout how to implement the
things that I'm going to giveyou in your business, in your
bookkeeping, to save money ontaxes.
All right, let's get startedover here.
First of all, let's really talkabout what is a bookkeeping.
Right, you are a business owner.
(01:38):
Right, you are a business ownerand you have a profitable
business, but you probably haveno clue what is going on with
your numbers, even if you have abookkeeper.
It could be that yourbookkeeping is getting done on a
quarterly basis or even annualbasis okay, and your
accountant's probably too busy,your bookkeeper is too busy
giving you that information, butit's not supposed to be that
way, because bookkeeping, bydefinition, is an organization.
(02:03):
Okay, it's an organization ofyour income and expenses.
All the income that is comingin gets booked as an income
right Sales income, grossrevenue, however you want to
call it.
All the expenses then getcategorized.
Okay, they get categorized byexpense category.
When you look at a profit andloss of financial statement, you
need to be able to see hey, howmuch money have I made and how
(02:26):
much money have I spent.
But, most importantly, whathave I spent my money on?
Okay, because bookkeepingmeasures the success of your
business.
If you're not looking at yourbookkeeping on a monthly basis,
if your financial reports,financial statements, your
balance sheet or your profit andloss, how do you know how to
operate the business?
A lot of business owners think,hey, I go by my bank statement,
(02:49):
so if I have the money in thebank, I'm profitable.
If I don't have the money inthe bank, then I'm not
profitable.
And then when the tax timecomes, they're like wait, what
do you mean?
They talk to their tax preparer.
What do you mean?
I made $500,000 profit.
The money is not in my bankaccount.
That's because the bookkeepinghaven't been done properly.
That's number one.
(03:09):
Number two when the bookkeepingwas not done, you had no idea
how much you actually paidyourself and because you didn't
know how much you paid yourself,you didn't pay the estimated
proper taxes.
So now you've got a big taxbill and on top of that you've
probably got penalty for notmaking estimated tax payments.
So bookkeeping is again anorganization of your income and
expenses.
(03:29):
At the same time, it measuresthe success of your business.
How else can you know howyou're doing in a business?
I've met a lot of businessowners, especially when they
start reaching a few hundredthousand dollars in gross
revenue and then up to half amillion, then to a million and
more.
It's so frustrating.
They're working all day long,money coming in, they have
(03:50):
enough to pay themselves right,they pay themselves enough and
they live you know whatevercomfortably, but at the end of
the day they have no idea whatthey're spending their money on,
what type of expenses they havein the business, because they
have no organization, becausethey do not measure their
financial statements, profit andloss and balance sheet.
Okay, that is the realdefinition of bookkeeping.
(04:12):
So you need an organization andyou need to be on top of your
numbers Now that we have definedwhat bookkeeping is.
Speaker 2 (04:19):
Let's talk about tax strategies and we'll be right
back right after this breakwrite-offs every S-corporation
(04:41):
business owner must know.
In this PDF you can find seventax strategies that you can
start using in your business toinstantly start saving money on
taxes.
Click on the link in thedescription below for a free
download.
Speaker 1 (04:54):
Welcome back.
Now let's talk about how to usebookkeeping as your tax
strategy.
Okay, so number one you have tounderstand some definitions and
some terms as a business owner.
Now you might say, boris, whydo I need to know these
definitions?
You need to know thesedefinitions as a business owner
because this way you will beable to question your accountant
, your preparer, your bookkeeper, whoever it is that you're
(05:15):
working with hey, was this andthis or that done in my business
?
For example, monthlyreconciliation.
What is monthly reconciliation?
You probably hear yourbookkeeper asking you a lot hey,
I need your bank statements tomonthly reconciliation.
The most, one of the mostaccurate ways to measure whether
your bookkeeping was doneproperly or not, or if the
information on the books iscorrect or not if you're using
(05:37):
quickbooks online or zero,whatever that may be is, if you
did monthly bank reconciliation,what?
What does that mean Basically?
You open up a bank statement oryour bookkeeper looks at the
bank statement, looks at thefinal number, the ending balance
of the bank statement, okay andit compares this ending balance
with the ending balance in yourbookkeeping software in that
(05:58):
bank account.
If those two match, theneverything that came in from
your bank into your bookkeepingsoftware is accurately recorded
and it's checked off and it'sreconciled.
That means it was reconciledand the month is closed.
Now, in order for yourbookkeeping to be properly
correct, you need to do this ona monthly basis, not annual
(06:18):
basis.
Okay, annual basis, everybodycan just do this.
Boom, boom, boom, get it doneand get it done, and here you go
, let's file your taxes andhere's your big tax bill.
Okay, no, you as a businessowner need to track of your
profit and loss every month.
You need to remember what Isaid Measure success of your
business.
One of the ways you can measuresuccess of your business is by
(06:39):
looking at financial statements.
Financial statements need to bereliable reliable, so you need
to do monthly reconciliationonce you open up your financial
statements.
The second, what I like to callthe tax strategy, is to measure
the, the financial stability ofthat month, so to speak.
Right, so you're going tocompare, or you should compare.
What I recommend to all of ourclients in our tax advisory firm
(07:02):
is to do month two-monthcomparison.
You pull up the month ofFebruary let's say this month is
February and then you pull uplast month, january, and then on
the report you can say you knowthe percentage change in
revenue of a certain expense, orby the number, you're like oh
man, how can we spend so much onthis month?
Oh wait, our sales are down.
(07:22):
Why is that?
And that is you measuring thesuccess of your business and
keeping track of it.
As a matter of fact, I want togo back to monthly
reconciliation for a second.
We have a tax advisory firm andwe also have a bookkeeping team
.
We're the bookkeeping.
When we're doing monthlyreconciliation, we're able to
catch $29,000 of fraudulenttransactions on one of our
(07:42):
clients.
So basically, what happened?
Somebody was cashing his checks.
He had no idea there's a lot ofmoney coming into the account
and a lot of money coming out tothe account.
So by doing monthlyreconciliation, we came up with
a list of questions like waitthese checks?
They seem questionable, wedon't know what they are.
We emailed copies in the listof those checks to the client
hey, can you confirm what theseexpenses are?
(08:03):
He's like oh, that's not me.
Call calls the bank, files afraudulent claim and gets the
$29,000 back.
All because it was beingmonthly reconciled and, as a
matter of fact, we give them amonth-to-month comparison.
So your accountant or yourbookkeeper, whoever it is that
you work with should be doingthese things for you.
Like people don't know.
They think, hey, when I savemoney on taxes, it's like IRS
(08:26):
writing me a check and gettingmoney in my pocket.
This is not an insurance claim.
A tax strategy is not aninsurance claim.
A tax strategy means reducingyour liability.
So if you would have owed$100,000 on taxes, well, now you
owe $45,000 on taxes, $55,000at the year's end saved.
That's why some people are like, like, well, how can
(08:49):
bookkeeping really help me?
Believe me, if you've got aproper team doing this for you,
there's a lot of money that'sbeing saved on a back end.
That is going to be reflectedon your tax bill at year end.
Okay, loan tracking so manybusiness owners that we, when we
bring them on for tax advisoryand like, hey, boris, can your
team do a bookkeeping and we dotheir book.
One thing we notice is thatthere is no loan tracking.
(09:11):
Business owners take out loan,right, they take out loan to run
to cover the operations.
It could be line of credit orit could be SBA loan or whatever
that may be, but very poor loantracking.
Why is this really important?
Let me tell you why.
Very recent case, we didbookkeeping for one of our
clients.
(09:31):
We took over from thebookkeeping from the previous
bookkeeper.
They received line of creditfrom American Express.
That line of credit wasreported as an income.
That is a loan money.
Okay, that is something that isan overly reported income.
That means higher tax liability.
So, number one you need to makesure you provide information to
(09:53):
your accountant or bookkeeper.
Hey, the money is coming intomy account, it's a loan.
If you cannot think of the factthat amex is sending me money,
it's a loan, okay.
The second thing is that whenyou take out a loan, you've got
that.
When you take out a loan,you've got interest.
When you take out a line ofcredit, there's bank fees,
there's documents fees andthere's interest.
None of that is being recorded,and clients and business owners
(10:13):
, just like you, miss out on alot of tax deductions.
The fourth tax strategy I wouldstrongly recommend is track your
shareholder basis.
Now, whatever business you have, whether you have an LLC, you
have an S corporation or a Ccorporation, right, I'm just
going to refer to this as aowner basis.
(10:33):
Okay, we're not going to sayshareholder basis, we'll say an
owner basis.
Track your owner basis how muchmoney you put in personally
into the business.
How much money did you take out?
Now, a lot of times, sometimes,business owners run short on
cash.
What they do is that theytemporarily fund their own money
into the business.
The bookkeeper doesn't knowthat right.
And then what happens?
The bookkeeper, of course, hasan income.
Or if you don't have abookkeeper, even worse, you give
(10:57):
them the bank statements tocalculate your income for the
year.
How do they know, for example,that you have deposited your
money?
That's because you haven't beendoing monthly reconciliation.
You haven't been measuring thesuccess of your business.
You don't have a profit andloss or a balance sheet.
You've got to stop with that.
You've got to get yourselfmonthly accounting and you have
to make sure you track yourbasis.
(11:19):
Now, if you don't properlytrack your basis, what could
happen is that there could be anexcess distributions or excess
owner draws.
So this is really reallyimportant.
Please take to heart what I'mtelling you right now.
You need to measure the successof your business by constantly
and when I say constantly, atleast monthly review your profit
and loss, review your balancesheet, work with somebody
(11:41):
competent, make sure that youhave those meetings scheduled on
the calendar.
And now we're going to talkabout how to implement the
strategies that I give you inyour business when it comes to
your bookkeeping right afterthis break.
Speaker 2 (11:53):
If all your accountant does is taxes, you
may be overpaying in taxes bythousands of dollars every year.
Every week, Boris releases atax strategy on his podcast so
that you, the business owner,can pay less in taxes every
single year.
Every week, Boris releases atax strategy on his podcast so
that you, the business owner,can pay less in taxes every
single year.
Be sure to subscribe to ourpodcast to be notified when a
new tax strategy is released.
If you're ready to work with atax advisor on your tax strategy
(12:14):
and planning, be sure toschedule your call by heading
over to wwwtaxplanningcallcom.
Again, that'swwwtaxplanningcallcom.
Speaker 1 (12:25):
All right, cool, welcome back Now that we're back
.
Now how can we implementeverything that you told us so
far, boris?
Let's talk about monthlyreconciliation.
First of all, make sure youhave a call scheduled on a
recurring monthly basis withyour accounting and tax team.
If you don't have an accountingand tax team doing your
bookkeeping and you don't havean accounting and tax team doing
your bookkeeping and you thinkthis is an extra cost to you, I
(12:46):
am telling you right now all thetaxes that you pay on improper
bookkeeping, that is probablytwo or three times more than
that.
So, definitely have that callscheduled.
If you have a bookkeeper thatyou want to hire, hey, I want to
work with a bookkeeper.
Don't just hire anybody who'sgoing to charge you $125 a month
to do bookkeeping.
Okay, somebody's charging youlike pennies to do bookkeeping.
(13:09):
They probably have so manyclients and they will not give
you the attention that you need.
On a monthly basis.
Give you, like I said, theprofit and loss balance sheet.
You will not be able to measurethe success of your company.
Okay, there will be no monthlyreconciliations.
There will be no month to monthcomparisons.
If somebody is doing abookkeeping on an annual basis,
you want to make sure you workwith a competent tax team and if
(13:32):
you have a strong tax advisor,most likely your tax advisor is
providing bookkeeping services.
We at our firm, we providebookkeeping services to our tax
advisory clients.
But for whatever reason, if youdo have, let's say, for example
, a strong tax advisor but youwant to hire an outside
bookkeeper, I would make surethat those two talk.
Okay, I would strongly makesure those two talk and you have
(13:55):
a call scheduled on a calendarwith whoever is doing your
financial statements so that youcan request this information
that we talked about.
It's really, really important.
You as a business owner I canstress enough, doing this for
many years I know how muchbusiness owners overpay in taxes
by not having properbookkeeping at the end.
Now, always make sure you viewreports, profit and loss and
(14:18):
balance sheet.
Do month-to-month comparison.
When you have scheduled callson a monthly basis with your
bookkeeper, that bookkeeper willbe held accountable by you
because you will be expectingthat month.
Monthly reports are ready forthe previous month.
Okay, view reports.
Now, loan tracking if yourbookkeeper does not have access
(14:38):
to your loan documents, youeither give them an online
access or send them loandocuments on your own.
If you say, well, that personis my bookkeeper, they need to
know all of this stuff.
It takes two to tango, I'msorry to say it.
I know you're a business ownerand you're super, super busy
with running a business, amultimillion dollar organization
but if you hired accounting andtax professionals, they can't
(15:00):
just do things for you in thebackground.
They need to work together withyou.
Now, sometimes it hurts forbusiness owners to hear that,
but it's true.
So if you've got a tax advisoryteam or you've got an
accounting team or bookkeepingteam, you make sure you provide
them everything that they needright away.
Why?
Because by providing themaccess, they will be able, for
example, to track all of youryour accounts, any interest that
(15:22):
you pay on that.
If loan was deposited into youraccount, it will not be
accidentally recorded as anincome okay.
The last thing is owner basismonitor it monthly.
Sometimes, when you go out to arestaurant okay, and it's a
business meal and you put it ona credit card, your your
bookkeeper will be oh, this isan excessive dinner.
(15:42):
It's like $500.
It's a personal expense,owner's draw.
What do you mean personalexpense?
I had like five people at thatdinner.
It was all business meeting,for example.
I've seen this happen a lot whennew clients came to us and we
take a look at their books.
So make sure you review yourowner distribution account on a
monthly basis with yourbookkeeper.
(16:03):
And hey, why is this account,why is this expense there?
Well, this, this is a cvspharmacy.
You know the bookkeeper whilesaying there's like 300, I
figured you bought somethingpersonal.
No, I bought supplies for theoffice, right, and like things
like that.
Travel could be booked intoshareholder basis by mistake.
So there could be some expensesthat are booked as personal,
(16:25):
like I said, but they're notpersonal, they're business, like
these things.
I'm telling you right now, ifyou just give a little bit of
your attention on a monthlybasis to your financial
statements, to your bookkeeping,you will save not even just
cents, but even hundreds ofthousands of dollars on taxes.
Ladies and gentlemen, thismessage probably resonates with
you and you have a profitablebusiness.
(16:45):
When you have a profitablebusiness, I guarantee you right
now, you're most likelyoverpaying in taxes.
Why?
Well, you probably don't have atax advisor, you're probably
not doing tax planningstrategies and your bookkeeping
probably sucks.
And if you say, boris, mybookkeeping doesn't suck, I've
got a bookkeeper, well, thequestion I want to ask you how
often do you speak to yourbookkeeper?
Do you have calls scheduled ona monthly basis?
(17:06):
Do they do monthlyreconciliations?
Do they provide you withmonth-to-month comparison?
Do you measure the success ofyour business, of your profits,
by reviewing your profit andloss and balance sheet?
Do you track loans?
Do you track own distributionson a monthly basis?
If the answer is no to all ofthose questions, you are
overpaying in taxes.
So, ladies and gentlemen, untilthe next time.
(17:27):
Thank you so much.
Speaker 2 (17:28):
That's it for today's episode.
Be sure to check out thedescription below for some free
tax reduction resources thatBoris put together for you.
If you're ready to work with atax advisor on your tax planning
, be sure to schedule your callby heading over to
wwwtaxplanningcallcom.
That's wwwtaxplanningcallcom.
And be sure to subscribe to ourpodcast to be notified when the
(17:49):
next strategy is released.
As a profitable business owner, I can tell you
right now that your bookkeepingsucks.
My name is Boris Mushaev.
I'm a CPA and a certified taxstrategist.
I will show you how you can useyour bookkeeping as a tax
strategy, where you can savetens, if not hundreds, of
thousands of dollars on taxessimply by using your own
(00:21):
bookkeeping.
Ready.
Let's go.
Speaker 2 (00:24):
Welcome to the Tax Reduction Podcast for
money-making entrepreneurs withBoris Mushaev.
Boris has helped entrepreneursacross the United States
collectively save millions ofdollars in taxes with the power
of tax planning and advisory.
The only way you, the businessowner, can save money on taxes
is by using proactive taxstrategies, and this podcast is
(00:44):
all about saving you money ontaxes.
Boris will share with youin-depth and easy to understand
tax reduction strategies thatyou can implement in your
business within 30 days or less.
Let's jump into today's episode.
Speaker 1 (00:58):
All right, awesome, let's get started over here.
So I've broken down to you inthree simple steps.
Right, we're going to first'regoing to talk about what is
really bookkeeping andunderstand it.
You probably don't have theunderstanding of bookkeeping
that you think you do, even ifyou have a bookkeeper.
Then we're going to talk abouthow can you use the bookkeeping
as a tax strategy and why a lotof business owners are actually
(01:18):
overpaying in taxes by nothaving a proper bookkeeping.
We're going to talk about howto stop that and we're also
going to talk about how to stopthat.
And we're also going to talkabout how to implement the
things that I'm going to giveyou in your business, in your
bookkeeping, to save money ontaxes.
All right, let's get startedover here.
First of all, let's really talkabout what is a bookkeeping.
Right, you are a business owner.
(01:38):
Right, you are a business ownerand you have a profitable
business, but you probably haveno clue what is going on with
your numbers, even if you have abookkeeper.
It could be that yourbookkeeping is getting done on a
quarterly basis or even annualbasis okay, and your
accountant's probably too busy,your bookkeeper is too busy
giving you that information, butit's not supposed to be that
way, because bookkeeping, bydefinition, is an organization.
(02:03):
Okay, it's an organization ofyour income and expenses.
All the income that is comingin gets booked as an income
right Sales income, grossrevenue, however you want to
call it.
All the expenses then getcategorized.
Okay, they get categorized byexpense category.
When you look at a profit andloss of financial statement, you
need to be able to see hey, howmuch money have I made and how
(02:26):
much money have I spent.
But, most importantly, whathave I spent my money on?
Okay, because bookkeepingmeasures the success of your
business.
If you're not looking at yourbookkeeping on a monthly basis,
if your financial reports,financial statements, your
balance sheet or your profit andloss, how do you know how to
operate the business?
A lot of business owners think,hey, I go by my bank statement,
(02:49):
so if I have the money in thebank, I'm profitable.
If I don't have the money inthe bank, then I'm not
profitable.
And then when the tax timecomes, they're like wait, what
do you mean?
They talk to their tax preparer.
What do you mean?
I made $500,000 profit.
The money is not in my bankaccount.
That's because the bookkeepinghaven't been done properly.
That's number one.
(03:09):
Number two when the bookkeepingwas not done, you had no idea
how much you actually paidyourself and because you didn't
know how much you paid yourself,you didn't pay the estimated
proper taxes.
So now you've got a big taxbill and on top of that you've
probably got penalty for notmaking estimated tax payments.
So bookkeeping is again anorganization of your income and
expenses.
(03:29):
At the same time, it measuresthe success of your business.
How else can you know howyou're doing in a business?
I've met a lot of businessowners, especially when they
start reaching a few hundredthousand dollars in gross
revenue and then up to half amillion, then to a million and
more.
It's so frustrating.
They're working all day long,money coming in, they have
(03:50):
enough to pay themselves right,they pay themselves enough and
they live you know whatevercomfortably, but at the end of
the day they have no idea whatthey're spending their money on,
what type of expenses they havein the business, because they
have no organization, becausethey do not measure their
financial statements, profit andloss and balance sheet.
Okay, that is the realdefinition of bookkeeping.
(04:12):
So you need an organization andyou need to be on top of your
numbers Now that we have definedwhat bookkeeping is.
Speaker 2 (04:19):
Let's talk about tax strategies and we'll be right
back right after this breakwrite-offs every S-corporation
(04:41):
business owner must know.
In this PDF you can find seventax strategies that you can
start using in your business toinstantly start saving money on
taxes.
Click on the link in thedescription below for a free
download.
Speaker 1 (04:54):
Welcome back.
Now let's talk about how to usebookkeeping as your tax
strategy.
Okay, so number one you have tounderstand some definitions and
some terms as a business owner.
Now you might say, boris, whydo I need to know these
definitions?
You need to know thesedefinitions as a business owner
because this way you will beable to question your accountant
, your preparer, your bookkeeper, whoever it is that you're
(05:15):
working with hey, was this andthis or that done in my business
?
For example, monthlyreconciliation.
What is monthly reconciliation?
You probably hear yourbookkeeper asking you a lot hey,
I need your bank statements tomonthly reconciliation.
The most, one of the mostaccurate ways to measure whether
your bookkeeping was doneproperly or not, or if the
information on the books iscorrect or not if you're using
(05:37):
quickbooks online or zero,whatever that may be is, if you
did monthly bank reconciliation,what?
What does that mean Basically?
You open up a bank statement oryour bookkeeper looks at the
bank statement, looks at thefinal number, the ending balance
of the bank statement, okay andit compares this ending balance
with the ending balance in yourbookkeeping software in that
(05:58):
bank account.
If those two match, theneverything that came in from
your bank into your bookkeepingsoftware is accurately recorded
and it's checked off and it'sreconciled.
That means it was reconciledand the month is closed.
Now, in order for yourbookkeeping to be properly
correct, you need to do this ona monthly basis, not annual
(06:18):
basis.
Okay, annual basis, everybodycan just do this.
Boom, boom, boom, get it doneand get it done, and here you go
, let's file your taxes andhere's your big tax bill.
Okay, no, you as a businessowner need to track of your
profit and loss every month.
You need to remember what Isaid Measure success of your
business.
One of the ways you can measuresuccess of your business is by
(06:39):
looking at financial statements.
Financial statements need to bereliable reliable, so you need
to do monthly reconciliationonce you open up your financial
statements.
The second, what I like to callthe tax strategy, is to measure
the, the financial stability ofthat month, so to speak.
Right, so you're going tocompare, or you should compare.
What I recommend to all of ourclients in our tax advisory firm
(07:02):
is to do month two-monthcomparison.
You pull up the month ofFebruary let's say this month is
February and then you pull uplast month, january, and then on
the report you can say you knowthe percentage change in
revenue of a certain expense, orby the number, you're like oh
man, how can we spend so much onthis month?
Oh wait, our sales are down.
(07:22):
Why is that?
And that is you measuring thesuccess of your business and
keeping track of it.
As a matter of fact, I want togo back to monthly
reconciliation for a second.
We have a tax advisory firm andwe also have a bookkeeping team
.
We're the bookkeeping.
When we're doing monthlyreconciliation, we're able to
catch $29,000 of fraudulenttransactions on one of our
(07:42):
clients.
So basically, what happened?
Somebody was cashing his checks.
He had no idea there's a lot ofmoney coming into the account
and a lot of money coming out tothe account.
So by doing monthlyreconciliation, we came up with
a list of questions like waitthese checks?
They seem questionable, wedon't know what they are.
We emailed copies in the listof those checks to the client
hey, can you confirm what theseexpenses are?
(08:03):
He's like oh, that's not me.
Call calls the bank, files afraudulent claim and gets the
$29,000 back.
All because it was beingmonthly reconciled and, as a
matter of fact, we give them amonth-to-month comparison.
So your accountant or yourbookkeeper, whoever it is that
you work with should be doingthese things for you.
Like people don't know.
They think, hey, when I savemoney on taxes, it's like IRS
(08:26):
writing me a check and gettingmoney in my pocket.
This is not an insurance claim.
A tax strategy is not aninsurance claim.
A tax strategy means reducingyour liability.
So if you would have owed$100,000 on taxes, well, now you
owe $45,000 on taxes, $55,000at the year's end saved.
That's why some people are like, like, well, how can
(08:49):
bookkeeping really help me?
Believe me, if you've got aproper team doing this for you,
there's a lot of money that'sbeing saved on a back end.
That is going to be reflectedon your tax bill at year end.
Okay, loan tracking so manybusiness owners that we, when we
bring them on for tax advisoryand like, hey, boris, can your
team do a bookkeeping and we dotheir book.
One thing we notice is thatthere is no loan tracking.
(09:11):
Business owners take out loan,right, they take out loan to run
to cover the operations.
It could be line of credit orit could be SBA loan or whatever
that may be, but very poor loantracking.
Why is this really important?
Let me tell you why.
Very recent case, we didbookkeeping for one of our
clients.
(09:31):
We took over from thebookkeeping from the previous
bookkeeper.
They received line of creditfrom American Express.
That line of credit wasreported as an income.
That is a loan money.
Okay, that is something that isan overly reported income.
That means higher tax liability.
So, number one you need to makesure you provide information to
(09:53):
your accountant or bookkeeper.
Hey, the money is coming intomy account, it's a loan.
If you cannot think of the factthat amex is sending me money,
it's a loan, okay.
The second thing is that whenyou take out a loan, you've got
that.
When you take out a loan,you've got interest.
When you take out a line ofcredit, there's bank fees,
there's documents fees andthere's interest.
None of that is being recorded,and clients and business owners
(10:13):
, just like you, miss out on alot of tax deductions.
The fourth tax strategy I wouldstrongly recommend is track your
shareholder basis.
Now, whatever business you have, whether you have an LLC, you
have an S corporation or a Ccorporation, right, I'm just
going to refer to this as aowner basis.
(10:33):
Okay, we're not going to sayshareholder basis, we'll say an
owner basis.
Track your owner basis how muchmoney you put in personally
into the business.
How much money did you take out?
Now, a lot of times, sometimes,business owners run short on
cash.
What they do is that theytemporarily fund their own money
into the business.
The bookkeeper doesn't knowthat right.
And then what happens?
The bookkeeper, of course, hasan income.
Or if you don't have abookkeeper, even worse, you give
(10:57):
them the bank statements tocalculate your income for the
year.
How do they know, for example,that you have deposited your
money?
That's because you haven't beendoing monthly reconciliation.
You haven't been measuring thesuccess of your business.
You don't have a profit andloss or a balance sheet.
You've got to stop with that.
You've got to get yourselfmonthly accounting and you have
to make sure you track yourbasis.
(11:19):
Now, if you don't properlytrack your basis, what could
happen is that there could be anexcess distributions or excess
owner draws.
So this is really reallyimportant.
Please take to heart what I'mtelling you right now.
You need to measure the successof your business by constantly
and when I say constantly, atleast monthly review your profit
and loss, review your balancesheet, work with somebody
(11:41):
competent, make sure that youhave those meetings scheduled on
the calendar.
And now we're going to talkabout how to implement the
strategies that I give you inyour business when it comes to
your bookkeeping right afterthis break.
Speaker 2 (11:53):
If all your accountant does is taxes, you
may be overpaying in taxes bythousands of dollars every year.
Every week, Boris releases atax strategy on his podcast so
that you, the business owner,can pay less in taxes every
single year.
Every week, Boris releases atax strategy on his podcast so
that you, the business owner,can pay less in taxes every
single year.
Be sure to subscribe to ourpodcast to be notified when a
new tax strategy is released.
If you're ready to work with atax advisor on your tax strategy
(12:14):
and planning, be sure toschedule your call by heading
over to wwwtaxplanningcallcom.
Again, that'swwwtaxplanningcallcom.
Speaker 1 (12:25):
All right, cool, welcome back Now that we're back
.
Now how can we implementeverything that you told us so
far, boris?
Let's talk about monthlyreconciliation.
First of all, make sure youhave a call scheduled on a
recurring monthly basis withyour accounting and tax team.
If you don't have an accountingand tax team doing your
bookkeeping and you don't havean accounting and tax team doing
your bookkeeping and you thinkthis is an extra cost to you, I
(12:46):
am telling you right now all thetaxes that you pay on improper
bookkeeping, that is probablytwo or three times more than
that.
So, definitely have that callscheduled.
If you have a bookkeeper thatyou want to hire, hey, I want to
work with a bookkeeper.
Don't just hire anybody who'sgoing to charge you $125 a month
to do bookkeeping.
Okay, somebody's charging youlike pennies to do bookkeeping.
(13:09):
They probably have so manyclients and they will not give
you the attention that you need.
On a monthly basis.
Give you, like I said, theprofit and loss balance sheet.
You will not be able to measurethe success of your company.
Okay, there will be no monthlyreconciliations.
There will be no month to monthcomparisons.
If somebody is doing abookkeeping on an annual basis,
you want to make sure you workwith a competent tax team and if
(13:32):
you have a strong tax advisor,most likely your tax advisor is
providing bookkeeping services.
We at our firm, we providebookkeeping services to our tax
advisory clients.
But for whatever reason, if youdo have, let's say, for example
, a strong tax advisor but youwant to hire an outside
bookkeeper, I would make surethat those two talk.
Okay, I would strongly makesure those two talk and you have
(13:55):
a call scheduled on a calendarwith whoever is doing your
financial statements so that youcan request this information
that we talked about.
It's really, really important.
You as a business owner I canstress enough, doing this for
many years I know how muchbusiness owners overpay in taxes
by not having properbookkeeping at the end.
Now, always make sure you viewreports, profit and loss and
(14:18):
balance sheet.
Do month-to-month comparison.
When you have scheduled callson a monthly basis with your
bookkeeper, that bookkeeper willbe held accountable by you
because you will be expectingthat month.
Monthly reports are ready forthe previous month.
Okay, view reports.
Now, loan tracking if yourbookkeeper does not have access
(14:38):
to your loan documents, youeither give them an online
access or send them loandocuments on your own.
If you say, well, that personis my bookkeeper, they need to
know all of this stuff.
It takes two to tango, I'msorry to say it.
I know you're a business ownerand you're super, super busy
with running a business, amultimillion dollar organization
but if you hired accounting andtax professionals, they can't
(15:00):
just do things for you in thebackground.
They need to work together withyou.
Now, sometimes it hurts forbusiness owners to hear that,
but it's true.
So if you've got a tax advisoryteam or you've got an
accounting team or bookkeepingteam, you make sure you provide
them everything that they needright away.
Why?
Because by providing themaccess, they will be able, for
example, to track all of youryour accounts, any interest that
(15:22):
you pay on that.
If loan was deposited into youraccount, it will not be
accidentally recorded as anincome okay.
The last thing is owner basismonitor it monthly.
Sometimes, when you go out to arestaurant okay, and it's a
business meal and you put it ona credit card, your your
bookkeeper will be oh, this isan excessive dinner.
(15:42):
It's like $500.
It's a personal expense,owner's draw.
What do you mean personalexpense?
I had like five people at thatdinner.
It was all business meeting,for example.
I've seen this happen a lot whennew clients came to us and we
take a look at their books.
So make sure you review yourowner distribution account on a
monthly basis with yourbookkeeper.
(16:03):
And hey, why is this account,why is this expense there?
Well, this, this is a cvspharmacy.
You know the bookkeeper whilesaying there's like 300, I
figured you bought somethingpersonal.
No, I bought supplies for theoffice, right, and like things
like that.
Travel could be booked intoshareholder basis by mistake.
So there could be some expensesthat are booked as personal,
(16:25):
like I said, but they're notpersonal, they're business, like
these things.
I'm telling you right now, ifyou just give a little bit of
your attention on a monthlybasis to your financial
statements, to your bookkeeping,you will save not even just
cents, but even hundreds ofthousands of dollars on taxes.
Ladies and gentlemen, thismessage probably resonates with
you and you have a profitablebusiness.
(16:45):
When you have a profitablebusiness, I guarantee you right
now, you're most likelyoverpaying in taxes.
Why?
Well, you probably don't have atax advisor, you're probably
not doing tax planningstrategies and your bookkeeping
probably sucks.
And if you say, boris, mybookkeeping doesn't suck, I've
got a bookkeeper, well, thequestion I want to ask you how
often do you speak to yourbookkeeper?
Do you have calls scheduled ona monthly basis?
(17:06):
Do they do monthlyreconciliations?
Do they provide you withmonth-to-month comparison?
Do you measure the success ofyour business, of your profits,
by reviewing your profit andloss and balance sheet?
Do you track loans?
Do you track own distributionson a monthly basis?
If the answer is no to all ofthose questions, you are
overpaying in taxes.
So, ladies and gentlemen, untilthe next time.
(17:27):
Thank you so much.
Speaker 2 (17:28):
That's it for today's episode.
Be sure to check out thedescription below for some free
tax reduction resources thatBoris put together for you.
If you're ready to work with atax advisor on your tax planning
, be sure to schedule your callby heading over to
wwwtaxplanningcallcom.
That's wwwtaxplanningcallcom.
And be sure to subscribe to ourpodcast to be notified when the
(17:49):
next strategy is released.
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