After Tax Day: What To Do To Save Yourself A Huge Tax Burden.

Tax day has come and gone. So now you don't worry about it until next year, right?

Well that is what most people do. Then they don't understand why they are paying in as much or more every year. Instead of looking backwards, you need to look ahead.

This episode will have Rich sharing the mistakes most business owners make when it comes to tax planning and why your accountant may not be the best person for ensuring your tax burden is lower. He will give you a roadmap to follow for better preparedness for next tax season. Be sure to like, share, and subscribe!

[00:00:10.24] - Alice

Hello. Welcome to Books in the Biz, a podcast that looks at both the financial and operational sides of success. Please welcome our hosts, Dan Paulson and Richard Beltré. Dan is the CEO of Envision Development International, and he works with leaders to increase sales and profits through great cultures with solid operations. Rich is CEO of the Veltre Group and a financial strategist working with companies to manage their money more effectively. Now on to the podcast

[00:00:45.12] - Dan Paulson

Hello and welcome to Books and the Biz. We are back again for another exciting episode because today we are going to talk about taxes, or at least after taxes. Right, Rich?

[00:00:54.23] - Rich Veltre

I like the after taxes part, not the taxes part.

[00:00:59.18] - Dan Paulson

Yeah, because I am I'm sure you are happy that we have now crossed the threshold of April 15th, looking for more exciting stuff to do before you have to worry about end of year stuff, or at least deferred taxes for Anything that somebody had to put off, but that's more fun. So here we are, stay after tax season. You have noticed a common trend over the years of what business owners do. And I thought it would be good for us to talk about, there's what most people do and there's what people should do. And this is not looking at it from a tax accountant perspective, because you can explain why tax accounts typically don't worry about that. This is looking at it from a financial strategist, I'll call it. Because if I call you a financial adviser, well, then they confuse you with something that you're not. But really, either CFO or financial strategist should be looking at things starting today in a different way than they would have a couple of weeks ago. Is that correct?

[00:02:08.26] - Rich Veltre

That is correct. I have noticed a pattern, and I saw it a lot this year, where people are running around. And social media is fun now, because on April 15th, you go look at your social media and you'll see who's complaining about what happened to them. And I noticed two things. Number one, the post is on April 15th. It's at the last possible day. And then it's, we've owed every year. We constantly owe. We always owe. What's up with this government. Well, if you constantly owe and everything's consistent, then you know it's coming, and you know that something else is causing the problem. And that means that the government may not have changed anything that affects you, because you're consistent. You owe every year. Why do you owe every year? That's the question that has to be asked. Why do you owe every year? Are you not paying in enough? So that a dozen times this year, with various projects.

[00:03:16.05] - Dan Paulson

Well, it must be clear. There is no positive situation, where you are not going to pay the government money for taxes.

[00:03:23.27] - Rich Veltre

If you do not pay the government money for taxes, that usually means you lost money, and even what little you're getting back doesn't recoup how much you're upside down. Yeah. And the other piece of that is, remember, there's two parts to this, right? There's the tax and there's the withholding. So there's the government charges this much, you pay this much, if you pay short, it's on you. If they change the rules and it went up, it's on them, right? So understand who you're blaming, right? If you have to pay at the end of the year, it's because you didn't pay enough throughout the year, and now you have to pay, and you're telling me that you had to do it every year, then that seems to me to be, well, let's change something so next year we don't have to do that. I mean, unless you like going on Facebook and complaining, then go ahead, right? Then we'll go ahead and do that. But the rules are the rules. They really haven't changed all that much. Withholding tables have changed. Rates have changed a little bit here or there. They go up, they go down.

[00:04:30.01] - Rich Veltre

We all have to ebb and flow with that. But for the most part, things are relatively consistent. So if you owe every year, you're doing the same thing every year, maybe it's time to make a change. So as you were saying, with the business side of it, I would tell you, look, if you are running a business, and you have a CFO, and the CFO doesn't know taxes, then spend a little more time with someone who doesn't know the taxes. Your CFO should be looking forward. That's flat out, 100 % looking forward, setting strategy. If he's doing bookkeeping, he's not a CFO. He's doing your accounting function. That's fine. It's part of the job of the CFO. But if he's only doing that, so That's the wrong one.

[00:05:16.07] - Dan Paulson

You got to glorify the company for what you got.

[00:05:18.25] - Rich Veltre

Yeah, pretty much. And then great. Then he can tell you what's happening inside the business. But then you need someone who's going to tell you, this is the tax part of it. And then let's look forward about what we're going do. And by the looking forward part of it, I'm saying that on April 16th, don't just put the taxes in the drawer, and then say, I'll deal with it next year, April 15th. There's a rate. There's a way to look at it. I had a couple of clients that came in and they started saying, This looks wrong. And I started asking, Well, why does it look wrong? Please explain to me why you think it's wrong. And then I'm pointing out to them, You made more money. The tax rate is It's relatively the same. It's just the difference in what you have to pay is the increased amount of money you made times the same tax rate. So you're just paying on the fact that you made more money. Good for you. It's a great problem to have because you made more money. So it's not that somebody did something to you. It's not that it's wrong.

[00:06:20.08] - Rich Veltre

You think it's wrong because you have to write a check. But I had one where people made a heck of a lot more money, but the rate was the same, if not down a couple %. And I'm like, This is a win. This is not a problem. It's a problem that you have to write the check. And I apologize to you. I'm sorry that you have to write a check. But overall, you paid less taxes. As a percentage, you paid less taxes. You did very well this year. So make sure that someone is having that conversation with you. Now it becomes a little bit more of communication. It becomes a little bit more of, here's why you had to write that check. Can we Do something different for next year. Don't put the stuff in a drawer and then say a year from now, where are we? Know where you are now.

[00:07:11.02] - Dan Paulson

So this might feed into... Because I think people don't always understand the difference between a tax accountant and somebody that does what you do. But I hear this often. I pay my accountant a lot of money to make sure I'm paying as little in taxes as legally possible. But at the same time, they keep saying they're going to do tax planning with me. It never seems like they do any tax planning. It never seems like they tell me to do anything differently. But I do hear a lot of accounts say that, yeah, we'll do your taxes and we'll do some tax planning with you. But when they say some tax planning, I'm not really sure what they mean, because I don't know if I've ever been in a situation where they've helped minimize taxes early in the year. It's usually as we're getting closer to tax time, they then spend some time sitting down with you and say, okay, well, we need to do this or we need to do that. And we've talked about the whole car or truck thing. At the end of the year, they come back and say, well, if you want to cut your taxes, buy a truck, buy a car, buy a piece of equipment.

[00:08:11.11] - Dan Paulson

That'll save you on your taxes. But as we pointed out, now you're spending 50, 60, 70, 100 grand on a vehicle that maybe you don't really need. So from your perspective, what is really the difference between what a tax account says tax planning is versus what you're saying tax planning is?

[00:08:30.08] - Rich Veltre

What I'm saying tax planning is exactly what you just described. And I'll add one piece to it to help out a little bit. I totally agree with you. A regular tax accountant, most of the times I call them tax squatches. They're like Bigfoot. They come out of the woods, and all of a sudden, they're really busy from January to April. And then April 16th, they go back in the woods, and they go and they hybridate until next January. And they don't do anything with people because they've made the money they to make in the tax season because their goal is not planning its compliance. The difference is, compliance is you have a deadline, that you have to file something by a certain time frame. For you to be compliant, you have to file by that time frame. So most accountants that you're dealing with, because most accountants, when you say accountant, everybody thinks tax, right? But really, when you think accountant, you should just be thinking tax prep, because you have to They know you have to file it. They charge you to file it. They buy the software. They do all the things they have to do to file it.

[00:09:36.04] - Rich Veltre

And then that's where it stops, okay? What I'm telling you is, if they call up and say, I want to do tax planning with you on December 15th, there's not a ton of things that make sense to do between December 16th and December 31st to help you in the year that you're in. The benefit comes if I talk to you now. If we do tax planning now for 2025 and we say, do you need a new truck and it's over 6000 pounds and it's an SUV and we buy it now, you still get the deduction for 2025, but you also get the use of it for that many months. Okay? The payments are spread out over the course of 2025, right? You're not going to get to December 31st and say, Gee, can I find Can I buy a truck that's over 6,000 pounds? And can I get it in my door? And can I get it on the road and running and everything? Can I get all that done in 15 days because my tax accountant says I have to do that? Why does that make an ounce of sense? On top of that, as we've always said, you get a tax deduction for this 60, 70, $80,000 SUV.

[00:10:54.11] - Rich Veltre

And the tax deduction is what? A big portion of it, but it's not all of it. And that's times your tax rate. So even if you're in a 30 % tax rate, and you write off the whole truck, you're only getting a $30,000 write off on a $90,000 vehicle, and you had to pay $90,000 for it or take on the loan. The other thing, I talk to financial advisors about this all the time, too, because one of the other big things that people can do is maximize your pension. Here's the You buy a truck, $90,000, and you beat on it, and the value goes down. So why not take the same $60, $70, $80, $90, $1,000, if your financial advisor can find a way to do it for you off of your business? Why not put it in an account that grows in value? If you have to come up with that $90,000 in pension, and you can do it over the next nine months, or between now and next April before you file your next tax return, why doesn't it make more financial sense to take a little bit every month over the next nine months and put it in something again that the value is going up, as opposed to the value going down?

[00:12:16.06] - Rich Veltre

Because you know the old story, you buy that truck, you drove it off the lot, it lost $2,000 when you hit the curb. So you put a mile on it that wasn't the dealer's mile, suddenly it's lost $2,000. It's not worth anything anymore. It was a second ago when it was on the other side of the sidewalk. But today it's worth less. So financial advisors and I have been talking about the fact that we really need to continue to promote a simplified employee pension, which allows you every year right now to put 60, $5,000 away. But to do $5,000 a month, as opposed to $69,000 on December 31st.

[00:12:52.15] - Dan Paulson

Exactly. So all right, catch my breath.

[00:12:56.26] - Rich Veltre

I was on my soapbox there. I'm sorry.

[00:12:59.29] - Dan Paulson

No, No, that's all right. That's all right. So let's do this. So looking at it, we'll call it Tax Forward. So there's your trademark name. So Tax Forward. Nice. Looking ahead, not back. It's now, as you're listening to this, April 17th, what are you doing or what should you be doing as a business owner to prepare for the following year? Who should you be talking to? What should you be talking about? What should that person, that again, financial executive who's looking forward, be coaching you on? And it's going to be different for every situation. But give me some of the basic steps that you would follow.

[00:13:39.24] - Rich Veltre

Well, first off, if we're talking about a business, and let's not talk about the business owner yet. But if we're talking about a business, I would look at what's your budget for the year? Do you have one? If you don't, that might be step one, right? What do you think you're going to do for 2025? Okay, we're four months in. Okay, you're now into the spring. You're into a high point now, going into the summer. So what does it look like for you going to the end of the year? Are you affected by outside political factors, by cost factors? Have you considered that? Where do you think you're going to end up in 2025? For the most part, I think a lot of businesses are going to turn around and say, I'm going to do better in 25 than 24, regardless of the whole tariff thing, because I'm sure that's got some effect. But when you start diluting it out, small businesses, be focused on the big items. Don't let the minutiae sidestep you. Exactly. Pay attention. What's your budget look like? What do you think you're going to do for the rest of the year?

[00:14:39.29] - Rich Veltre

And then from there, decide, am I going to make some decisions? If I'm doing better, am I going to reward my employees? These are the types of things that I think going forward, you should think about, because that'll get you down to what's your net income going to look like? And then what then can you figure out would be your tax position? Do you have to put more money away? Should you be making payments on it? Is it going to flow through to the owner? Now we can switch the conversation to the owner. How is it going to affect the owner once the owner picks up that income? Do they have to pay more taxes? How do we deal with getting them more money to pay the taxes? How do we get the money paid in so they don't have those crying episodes on April 15th, if I have to write this check? And then how do we get them to see that we've got a handle on it, and we've got them covered for the rest of the year? How do we get it so that we don't get to the end of the year and say, we made all this profit, but we spent all the money.

[00:15:35.02] - Rich Veltre

We don't have it anymore, and we can't pay the taxes. That's the fastest way to make your owner say, what am I doing? So again, a little bit of the looking forward, understanding how this could go. And it's an ongoing process. So make it a part of what you're doing. I always say taxes are second. They're not first. Your first is go out, make money, right? I'd rather make money, have the money in my pocket, then say, oh, I have to pay the taxes. Okay, well, I still made the money, right? So taxes come second. But once you have a handle on the first, you can figure out if there's something you do on the second.

[00:16:12.21] - Dan Paulson

And I agree with you. That's why budgeting can be so important. If you know what you believe you're going to make and you know what you believe you're going to spend, you can also do some cost estimations on what you think you're going to pay in taxes. Now, again, talking with somebody like you, we can say, okay, well, this This is the worst case scenario right now. If we're going to lower that, now, do we need a new piece of equipment? Can we put more money in a retirement fund of some sort? You can start asking those questions and start looking at and say, okay, how much will this It might change things? It might only change things by a couple of grand. Do you really want to make that investment or is that investment needed? Is it better to just pay in taxes and call it a day? I think that's a lot of questions that just don't get asked right now because everyone just wants to forget about it, put it in the back of their mind. Don't want to deal with it. Let's just get back on worrying about going forward again.

[00:17:08.16] - Rich Veltre

I totally agree. And it is a mindset shift, and I call it that because Look, I came out of school. I was an accountant when I started. I have clients that recognize that I do things a little bit differently, so they've been with me forever, and they won't leave. Even if I asked them to, they'd be like, No, we're not leaving. We told you we're not leaving. Because we have that a relationship that I understand them, they understand me. I can tell them, No, you can't do this. This is why. And we come up with a different solution. So a piece of what I do is still tax-related, especially in small businesses, because it's such a big factor. You get into the much bigger businesses, the taxes have less of an effect. It's almost like it's just a percentage of what... The percentage is what matters more than anything else.

[00:18:03.29] - Dan Paulson

It's just calculating it as a cost, basically.

[00:18:06.10] - Rich Veltre

But small businesses, it's a huge piece. So the fact that I know it, and I can look at it and say, Guys, something's not quite right here, Is it benefit to me because I can really provide value to my clients? And the fact that I've been in the CFO world and done that looking forward issue, I can actually put the two in to the same perspective. I can put them into the same analysis. And so I think you need to find somebody like that. You need to have somebody who you can talk to about it. And don't make it one of these things where it just becomes that cost factor, right? Oh, I don't want to spend that. I don't want to spend that money. If you don't spend the money, then you don't know, and you probably shouldn't be complaining on April 15th, because you didn't have the conversation with anyone, because you wanted to save the dollar then, and you didn't have the conversation, and then it cost you probably more money later, on April 15th. So find someone you trust. Make sure your accountant is actually providing you the value, and not giving you just more cannon fodder for my accountant just charged me a fortune, and says we're going to do tax planning, and we don't.

[00:19:22.16] - Rich Veltre

Make them do it. That's the value. The value can't be in the forms. Everybody's out there looking for making the forms part of this business, the forms part of the accounting business, is under attack constantly by technology companies who say, we can do it bigger, better, faster, use AI. They may be 100 % right. But if they're able to make it cheaper for you, that's where you have the money to pay for the value. Pay for the advice that you need. Don't say, well, I saved money, so now don't do anything else, because that money is going to be in my pocket. The value is missing. You need the value in the form of, here's what we're going to do for next year. So I know I'm back on my soapbox a little bit, but that's what I'm trying to tell people. Look, for the few hundred dollars of sitting down with someone for a couple of hours and looking at your numbers and saying, here's what we're going to do and here's the plan, why not get the peace of mind and the value for understanding and then really feeling it when the plan comes true?

[00:20:30.16] - Dan Paulson

Yeah.

[00:20:31.16] - Rich Veltre

Okay. I mean, that's where I think people have to realize that a couple of hundred bucks is probably all you really need. You don't need massive amount of tax planning. You need even this much as opposed to thinking you're getting it and you're not.

[00:20:45.29] - Dan Paulson

Yeah. Well, but then there's the beyond tax planning, which, again, is making sure your accounting is set right. I think of an example I just heard recently from one client where their accountant made a mistake on how it was filed. It filed as accrual instead of cash, produced this huge... It made it look like they made a lot more money than they did. They amended it, which is fine. But guess what happened then? Irs came knocking, hey, we're going to audit you because we saw this significant change and we want to check your books. And then that led to a number of other things which I won't get into. But it was an extremely lengthy event then to correct that problem. But again, that's when you If you have somebody who's just looking at the numbers right now and looking at the numbers backwards, it's real easy to make mistakes like that, where if you got somebody who's looking forward and help preparing that, like you said, it might be a couple of hundred bucks for the tax planning part. But I also want to make sure that everything is going the right direction. We got the system set up.

[00:21:49.05] - Dan Paulson

That's the operations guy of me. And even on the financial side, you have to have the system set up financially to make sure that things are being recorded properly, things are being done properly. So that way, if there is a situation where somebody questions it, i. E. The IRS, there's a very quick answer to why you came to the conclusions that you did or why you came up with the numbers that you did. And time and time again, I see where that doesn't happen. And then that creates a whole number of other issues for the business owner or the company because they're not prepared for that. There aren't systems in place looking forward, predicting where potential problems could be, and then putting in systems to protect that.

[00:22:28.25] - Rich Veltre

I have client, similar situation that came to me. I was going to do some work for them, and it was a flow through thing. So the entity that we put money into, is giving us the results. And New client, barely looked at anything. They gave me the tax return and said, okay, we got to file. We got to file. It's April 12th. We got to file by the 15th. And I took one look at it and I went, you can't file. And they said, What are you talking about? You don't know what you're talking about. You're a brand new client. I said, Okay. I said, How much did my client put into your entity? Five million dollars. Okay. Show me where the five million dollars is on the on the tax return. You hear the silence right now? That's the silence that was on the phone. That was the same silenced that was on the phone. They looked at it and they went, well, okay, let's go take a look at this. So I'm like, okay, guess what? It's April 15th. I'm not going to worry about it until April 16th or 17th, because they're going to have to go back and prove to me that my money is accounted for.

[00:23:35.20] - Rich Veltre

You know where it's from. You know where it's going. How much more do you want me to tell you? I'm not going to do any more analysis because I can tell you right now, it's it's going to change. So again, it's one of those things that I don't want to walk in and be pompous about, oh, well, I know every return I'm ever going to look at is going to be wrong. But if it's clearly wrong, and I could tell, then everybody else could tell. And I was actually going to take all that money and flow it through to all the 20 investors that we had that added up to the $5 million. Do you think nobody was going to ask, well, how come I don't see my money in here? Exactly. I guarantee you that was going to be the first question. So really, it's not my question. I'm asking it on behalf of the investors who are going to ask me. So your point of know your books are right? Yes. I mean, it's really, sometimes it's as quick of an analysis of just taking a look at, does the form or the report that you're giving me tell me the story that I know is correct?

[00:24:43.26] - Dan Paulson

Right. That right there is the issue, right?

[00:24:49.10] - Rich Veltre

That's it.

[00:24:50.02] - Dan Paulson

Got to be able to tell that financial story. Yeah. Well, Rich, I think this has been a good informative session. Hopefully people will take your advice and prepare ahead, not just forget about taxes until probably about November, December this year, because that's when it seems like that happens. What's the best way to get a hold of you?

[00:25:13.01] - Rich Veltre

Best way? Email rich@xcxo.net.

[00:25:17.25] - Dan Paulson

Excellent. And you can get a hold of me at dan@xcxo.net. I strongly encourage you, if you have concerns about your taxes, contact one of us. I will not be doing it, but Rich will be able to help you out. We We can get you set up and hopefully save you some money along the way. Rich, thanks again. Have a great week. I know you will be probably destressing this weekend from all the tax work you've done. And we will talk to you next week.

[00:25:43.11] - Rich Veltre

All right. Sounds good.

[00:25:45.04] - Dan Paulson

All right, Bob, take it away.

[00:25:46.19] - Bob

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