Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:03):
Hello, everyone, welcome to theMillionaire Dentist podcast, brought to you by
Four Quadrants Advisory. On this podcast, we break down the world of dentistry,
finances and business practices to help youbecome the millionaire dentist you deserve to
be. Please be advised we dospeak with an honest tongue and may not
be safe for work. Hello andwelcome to the Millionaire Dentist. I am
(00:27):
Jared Bridgeman. I'm your host.Today. Casey Hires is out and about.
He's at He's done in Dallas doingone of our top golf events.
Today, I have special guests KevinRotten. He is our CPA and he
is also at MBA. He isan onboarding specialist here at Four Quadrants Advisory.
Kevin, how are you? I'mdoing great? Thanks for having me.
(00:47):
Kevin. Can you explain to mewhat an accounting onboarding specialist is and
what you do? Yeah. So, specifically, with our new clients after
they come on board, I workwith them very closely with getting all of
their accounting, all their taxes,you know, quick books, banking,
credit cards. I work with themon getting all of that information transferred over
(01:11):
to us. Let me ask youon average, when you're when you're bringing
all that in and onboarding this newclient, how long does that take?
It's usually about three months. Someclients the transition goes a little bit quicker.
Some maybe takes a little bit longer. But a lot of that would
be because we were so thorough.Yes, right, and in the past
(01:33):
several years that you've been here,every new client, every clients has had
to go through you at some point. That's right. That's right. You're
the gatekeeper, an gatekeeper, andI'm the key master. So this all
works out. So Kevin, todaywe wanted to bring you on and talk
about you know, it's very appropriate. Taxes were due last week. We
(01:53):
talked about this oftentimes on this podcastof a tax surprise being plus our minus
ten thousand that you either owed orrefunded. But I wanted to get your
opinion on can you dive a littlebit more into that, Like it's it's
not just owing ten thousand, right, that's correct. With our clients,
a lot of times we have thequarterly estimates things like that. So what
(02:15):
we key in on is when taxday comes, like just happen. You
should not be having a surprise ofmore than ten thousand dollars that you're not
expected. Yeah, so it reallydoesn't matter. You still have to pay
taxes, right right, right,it's not at the end of the year
you're like, oh, I'm onlyowing a thousand dollars, it's not going
(02:36):
to happen. Yeah, So wedefinitely don't want our clients to owe more
taxes than the mainteen too. Right, So we're going to look for every
deduction, every credit that we can. But at some point, if you
make money, the RS is wantingtheir share of it. So, yeah,
we see so much in the practiceowners the prospects that come across my
(02:58):
desk of their taxes that come through. It would this be even before their
clientses this part of the consultation process, like yes, I'll see you know
in prior years they'll owe you know, fifty thousand dollars or get a seventy
thousand dollars refund. Has that actuallyhappened? It has happened. You know.
In a lot of these practice owners, they don't have a dedicated dental
(03:23):
specific CPA that works with them throughoutthe year. They may have someone they
know or might be a part ofa bigger yeah firm. Yeah, you
get, you get. You havethe major CPA firms and and they're pretty
much just ten forty factories or eleventwenty yes factories where you talk to them
(03:46):
two three times a year. Yousend them all your stuff. At the
end of the year, they churnout your tax returns. They maybe churn
out estimates. Okay, there's nocustomization, there's no analysis throughout the year.
But they'll basically they'll look at thepractice almost like any other business,
not really dive into what specific towardswhat they need. Right. You know,
(04:09):
as we said, every every clientand every prospect comes across your desk.
Yep, Are there any let's say, when you're looking at their their
previous taxes? Are there? Isthere anything you've noticed a trend, like
an issue or a problem that you'veseen multiple practice owners out there kind of
come across. Yeah, there's there'sprobably two or three of them that generally
(04:31):
will see this as common. Oneis their income structure, and what that
is is based on their indie type. Their income structure being their W two
wages and their distributions. That's whatwe consider their income as a practice owner.
Um, what they get through Wtwo earnings and what they bring home
(04:54):
through tax three tax free distributions.Okay, with that, we see that
they don't maximize their income through there, and they also don't maximize their deductions,
whether it's retirement savings, maximizing theirfour one K, maximizing their company
match. Most of these guys will, well most of people listening would know
(05:16):
this on some level. But forexample, when you're putting your money to
a four O one K that's takenout before taxes, so that lowers your
is it tax base? Your taxbase at tax time? Right? Yeah,
you're you're a tax file income andlowers your taxable income. Yes,
yeah, so uh. And theneven for practice owners that implement profit shares,
(05:40):
you know, that's an expense tothe business. That's money that's going
into your retirement for retirement savings,and an expense for the company itself,
which then flows through lowers your taxableincome. And so some people may not
be utilizing all the maximizations of thesedeductions and things like that and are essentially
(06:00):
paying more than they That's exactly right, and that could add up. You
could be tugging thousands of dollars ayear, tens of thousands of dollars over
many of you are you know,a practice owner for thirty years? Yeah?
Wow, yeah, I mean thatreally that can really add up.
And that's part of what we dohere is find ways to well it gives
(06:21):
you more of that money. Yeah, and it's a double whammy where you're
not maximizing those that tax break andyou're not maximizing that retirement savings. Does
any of this have to do Esaid with income structure? Is that the
same or related to I believe it'slike S corp And Uh, I know
(06:41):
it's not. I know it's nota C section, but it's uh,
there's C corps, the corps,there's sole proprietorships that file a Schedule C
on the ten forty. There's partnershipsand each one of those can vary on
your your what you write pay right. And there's there's different tax laws.
There's different tax benefits to each typeof entity. And that's also something that
(07:05):
we look at as well when wethat is uh, and is that your
second point? That is steal yourthunder? That was my second point.
Is in fact, over the pasttwelve months or so, a few of
the ones that come across my deskthose prospects. Looking at their taxes,
you know, we see ways thatthey can change, maybe their entity type,
(07:26):
maybe their sea corp make an selection. We look at what would be
the most beneficial to them. Maybefor this client it would be this certain
plan. Another one would be thiscertain type of entity. Now you said
there was two or three things?Is there? Do you have a third?
Uh? Do you have a thirdkind of point for me here?
Yeah? Actually, um, canyou get to the point, Kevin.
(07:50):
Something else that we see is justdownright errors on prior tax returns. You
know, we'll have to carry theone to carry the one. Sometimes that
does happen. Now, things likeyou know, some of these the practice
owners again that we talk to,that we see unless they'll say yeah it's
(08:13):
a family friend, or yeah theydid my dad's my parents' taxes, or
yeah it's a family member of oneof my employees that's helping me out.
You know, I don't want toput them down or anything, but just
a little bit out of their league. You need more detail oriented dental specific
(08:35):
tax advice. Text your your lineof business and understands the laws that tie
into that. And that's exactly right. I've seen things where there's a deduction
called the Qualified Business Income Deduction.You know that's filed wrong. They've made
mistakes there. There's something called thenet investment tax. I've seen that where
(08:58):
that was implement it wrong. Isthere a do you have a nice point
of like, Hey, here's areally cool case where we were able to
recoup or save you know, identistsa large amount of money or a decent
amount of money. Yeah, goingback to that entity type, there's one
(09:18):
whereby reorganizing will actually be able tosave them in income taxes over nineteen thousand
dollars in just one year, injust one year. Someone's listening to this,
they just filed their taxes or they'repretty close to it. I know
there's a couple of cases out therewhere they may have to file an extension
because they haven't gotten all the stuffthey need from everybody else. Yes,
but let's say they filed, theyknew they were going to pay something and
(09:41):
ended up being oh, nice,I have to I'm paying ten twenty thirty
thousand more than I thought. Isthere something we can do to help help
somebody out? Yeah? I believewe are implementing a free tax assessment.
What free? Just call and saywhere's keV Dog something like something like that.
Yeah, sure, here's the deal. Here's the deal is that I'm
going to all repeat it again laterat the end of the episode. But
(10:03):
if you go to four Quadrants Advisorydot Com slash taxes, we're gonna have
information on there as well as aform and a phone number you can call.
And you know, it's not goingto be as a deep of a
dive as I say, our fullon consultation is, but we'll take a
high level of view and maybe maybeable to point out some things. So
Kevin, can you kind of walkme through the process of what this tax
(10:24):
assessment is and kind of what we'relooking for. It's just a fresh set
of eyes. You know, sometimesyou get into that rut if you've had
a CPAU doing your or an EAor whoever doing your tax returns for a
few years, they get into thatrut of this is just this is just
what we do, not asking questions, not If you want that fresh set
(10:46):
of eyes, just take a look. Many of these examples that we talked
about was for our prospects. Isaw I took a look at those tax
returns and right off the bat,saw those areas that we could make changes
too, and they could say ontaxes, what's what can someone expect if
(11:11):
they sign up, you know,I fell out the forum and we can
get in contact with them. Whatare some things they can expect to have
to send in their practice tax returnsand their personal tax returns really and just
therefore, most of the time welook at just their federal um. You
know, a lot of times juststates have a lower tax rate and kind
(11:31):
of deal, and many states justpiggyback up off of what you report to
federal. You know, they Federalyou do all your adjustments to your income
adjustments off credits and things, andthen they'll be like, okay, just
tell us what your AGI was forfederal and we'll go from there. So
(11:52):
there's not as much low hanging fruiton state returns, but for federal,
you know, for sure, Sodefinitely look at federal, uh, personal
and practice tax returns, you know. And these prospects that have come across,
I would say three quarters of themat least where I can say we
(12:16):
could go back amend find some money, or there's some changes you can make
going forward that would save you ontaxes and help with the cash flow.
Uh, it's there's a lot that'sthe big chunk of people that you've you've
talked to that have had Yeah,it's just as that at the end of
(12:39):
the day, make different thousands ofthousands, tens of thousands over over years.
Another horror story that one that Ihate to see is this kind of
gets into distributions and shareholder loans thingslike that that that we've talked about shareholder
loans for what those can be anIRS red flag really and a lot of
(13:03):
times we'll see these practice owners belike, what what shareholder a loan?
I have a fifty thousand dollars onehundred and twenty thousand dollars shareholder alan,
Yeah, you on your balance sheetsays you owe your practice one hundred No
I don't, Yeah, yeah youdo. And that without getting into the
weeds I RS red flag. Wedon't like to see that. We also
(13:26):
don't like to see things like capitalgains on distributions and that just comes from
lack of dental specific accounting. Maybethe account not explaining, not explaining what
we're clearly happening. What's going onif distributions for an S Corp owner practice
(13:48):
owner distributions should be tax free ifif they plan right, if they have
somebody like us to help them,you can pull that money out tax free.
If you don't do it the rightway, it can be tax And
that's something I see from time totime. That's like, you know,
it's one thing to defer taxes andthat's great, but to pay taxes on
(14:13):
money that you shouldn't have to justbecause of not getting great, not getting
advice at all from your accountant CPA, it just hurts. Well, Kevin,
I really appreciate you coming on here. This was your first time I
believe being a guest on here.Were you nervous? I was a little
bit of it? Yeah? Isthat what you're holding my hand right now?
(14:37):
Anyways, thank you Kevin for beingon here. I really appreciate all
the time and effort you put intothis. Folks, don't forget we're gonna
be all over the country all summerlong and the rest of the year.
Go to four Quadrants Advisory dot comslash events and check out where we're gonna
be. Thanks Kevin. Thanks,that's all the time we have today.
(15:01):
Thank you to our guests for theirinsight and for sharing some really great information
and thank you to you the listenerfor tuning in. The Millionaire Dentist podcast
is brought to you by four QuadrantsAdvisory to see if they might be a
good fit for you and your practice. Going over to four Quadrants Advisory dot
com and see why year after yearthey retain over ninety five percent of their
clients. Thank you again for joiningus and we'll see you next time.