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In this week’s episode of the Practical Tax Podcast, Steve and Cliff discuss how business owners can optimize their yearly profits by implementing Moskowitz LLP’s year-round tax planning strategies. Learn how you as a taxpayer can avoid ‘March Madness’ and no, we don’t mean the basketball tournament.
Listen to the full episode to learn more!
Episode Transcript
Intro:
You’re listening to the Practical Tax podcast with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz LLP, a tax law firm.
Steve Moskowitz:
Welcome to everyone, and we’re so happy to have you join us. We’re going to be talking about subscription services today. And what’s really important here, over the years there’s so many people that have said, “Wow, you really did a great job on that. Whether it was legal advice, tax advice, tax return, getting somebody out of a tax problem. I sure wish I could go ahead and see you on a regular basis.” And the answer is, why of course you can. And before I was a tax attorney, I was a CPA. And in our firm, we have both tax attorneys and accountants, and we do a lot of maintenance work. That’s advising, accounting. And what we’ve done is we go ahead and we offer this as part of our subscription services package, where we’ve taken the needs of various individuals and businesses, put together a package that covers everything. We have different departments in the firm, and the different departments work on your case. And then we talk to each other, and then we go ahead and coordinate it.
So it’s not just, well, your estate plan is really strong, but there’s a problem here or a problem there. We go ahead and we talk about everything, whether it’s financial planning, estate planning, tax planning, your accounting work. Another thing that we do, and I’ve always said my whole career, that the tax return, and that’s what all the people focus on. The tax return, the tax return. The tax return should merely be the summarization of a year’s worth of planning. And so many people don’t realize that, but that planning is so vitally important, and that’s why you see in the newspaper all the time where the Fortune 500 make billions with a billion profits, and don’t pay any taxes, because they do spend their entire year of planning. And that’s what we want to offer to much smaller businesses and individuals. And we’d like to go into the details, and now I’m going to turn the floor over to my friend and colleague, Cliff Capdevielle, who is the head of this, and is going to explain it. Cliff, take it away.
Cliff Capdevielle:
Thanks, Steve. So as you said, what we’re offering is business advisory services, which big companies have had access to forever, right? If you’re a Fortune 500 company, you can hire McKinsey, or Bain, or Boston Consulting Group, and they’ll come out with a group of four or five team members. You’ll put them up at the Ritz Carlton for a couple of weeks, and they will spend that time analyzing your business, and come back with some recommendations. Only a couple problems with that. For small, medium sized businesses, the typical consulting fee, minimum consulting fee from McKinsey and Company is about a $1,000,000. For most companies, and most of our clients who are in the $25,000,000 or less gross receipts category, they just can’t afford that fee. So what do you do? How do you get access to regular meetings with experienced experts, tax and legal experts, who can give you the kind of advice you need? And that’s what we’re offering, Steve, to these small and medium sized businesses who need regular consulting help, business advisory services. We’re going to talk in detail about what that means. And the advantage of working with a firm like Moskowitz, of course, is that we’ve got broad experience from a diverse number of industries. We work with construction, real estate companies. We work with restaurants and other hospitality businesses, and we also work with medical and dental offices. And we can offer services in the form of consulting. In addition to the tax planning, we offer budgeting forecasting. We help you with your three to five year business plan. We’ll review your structure and your entity selection. We’ll help you with workforce planning, strategy and governance, help you build that strategy, and implement that strategy over the course of the year.
So for many of our clients, we’re meeting with them monthly and helping them stay on track to meet their goals throughout the years. And as an outside business advisory service, we offer a couple of advantages. One, we’re less biased. We’re coming from the outside, so we don’t come in with the assumptions that a lot of the full-time employees have. We’re able to be a little bit more objective about our financial advice. And because we’re coming in with, or as you said, the strong accounting background, we’re going to be able to give you more financially accurate information about your own business. And that’s really helpful for our companies in trying to achieve these long term goals.
Steve Moskowitz:
I think that’s an important point, Cliff. I think we get drawn into this, because where some people come to us as a law firm with a problem, and we get to know them, we get to know the business, and then we have such a robust accounting practice that it’s just a natural fit for a lot of companies just for ongoing maintenance and steering that business ship, don’t you think?
Cliff Capdevielle:
Steering the ship is such an important part, because when we have these regular meetings with you, what we do is we compare what you’ve actually done with the forecast, and then we can adjust this month by month. And it’s very heartening to see how businesses come in and sometimes are doing fine, and sometimes they’re struggling, and then do things, and they get stronger and stronger. And each month they say, “Well, I can do a little more. I can do a little more.” And they have the appropriate guidance to make the decisions. For example, part of it can be looking at something like if you’re selling 10 different items and you’re making a profit, and you say, “Well, okay, I’m doing okay.” When we look at each item by itself, we might find that seven items are profitable and three are not. And then we either have to adjust the prices on those, or stop selling them. So we do more money with less work, and we use the time for something else. And we keep adjusting and adjusting. That’s true with measuring personnel performance, equipment performance, and planning. For example, a lot of companies will wait until the last minute to hire somebody, and then it’s a rush, and there’s a challenge. What we do is we measure things and we say, “Okay, look, it looks like in the future, you’re going to need to somebody else, and you’re progressing so much a month, about this time is when you should start looking so when you need them, then you can go ahead and choose the proper person, and he or she can fit into the job, not somebody that’s just put in because you needed somebody.” And we just see this time after time, and incident after incidents. It’s not just taking the time, but guiding you and showing you, look, change this, change this. You see the changes much like artillery. You take some shots, and it goes left and it goes right. We want to hit the target, and that’s what we do. And again, it’s just so rewarding to us when we see those profits going up and up and up. That’s why sometimes I call this profit optimization, because we go ahead and we just see the difference in clients’ results.
Steve Moskowitz:
To that point, yeah, just this morning we have a client that is a business that they’ve grown over the last 10 years, and they want to expand into another location. So we’ve been meeting with the city council. It’s in the city limits, they have a lease opportunity. And one of the things that we’re going to use by virtue of having the data at our fingertips, is we can actually show entering this new location, and the number of jobs for local people that’ll be likely be available. So from an advocacy perspective, it’s really wonderful to have this at my fingertips.
Steve Moskowitz:
And another advantage of the fingertips is that sometimes a business opportunity will come up, but you have to be quick. Because if you’re not, somebody else is going to get it, and you have to finance, and the bank says, “Well, I want all these things, and most people have to scatter and try to get it.” Whereas what we have is at your fingertips and say, “Okay, here’s everything the bank needs. Here you go, and you can act before your competitors.” And oftentimes the swiftness is what’s going to carry the deal.
Cliff Capdevielle:
Yeah, absolutely, Steve. And it is the ability to help your business stay ahead in the face of those challenges, including the competition, is really helpful to have that budgeting and forecasting. And as you said, the banks now require sometimes three to five year budgets and forecast before they will loan you money, or even extend your line of credit. So we’re finding that more and more businesses need budgeting and forecasting at a minimum to maintain those banking relationships.
Steve Moskowitz:
And here’s another thing that this can go ahead and help with the banks. A lot of times when people go to the bank, the bank says, “Okay, give us a business plan, exactly what you’re talking about over a three, five year period.” And people have to scramble to get that. Not only do you have it at your fingertips, you can impress the banker by saying, “Look, before you ask me, and I had to dream something up, look at what I have in place to grow my business, to make the money, to washing.” That would be impressive to a lot of bankers. And that could be, especially if you are on the borderline, that could be what pushes you over. The banker says, “Look how this person takes care of their business. This is somebody that is going to be successful. This is somebody we’re willing to do business with, and this person is safe to lend the money. Here you go, here’s your money.”
Cliff Capdevielle:
And what we’re doing that’s a little bit different. We’re not emailing spreadsheets back and forth, and using that kind of way of gathering information and getting it to the banks. We’re using a common resource, our portal, where all of these reports are available online. They can be online, available to your internal accountants. They can be available to your external outside CPA. You can make them available to the banks in real time. So if we make a change regarding an assumption, or a workforce matter, a change in assets, we’re updating those in real time. And those assumptions are flowing through in the budget. So if we make a change right now, your banker can see that change, your outside CPA can see that change. So these are very helpful reports, and it’s the way that banks like to work, and it’s the way that businesses find very helpful.
And you can show the bank or anybody else how you’re in control. It’s wonderful to have all these ideas, but you can actually show here’s how I control these things. Here’s how I watch them, along with growing and making more profit. And the other thing, too, is a lot of people wait until they’re in trouble. And they say, “Oh my God, what am I going to do?” If you do have a problem, this can catch it early. So you can fix it before there’s much damage as opposed to, oh my God, you’re in the final stages of some horrible crisis, and now you’re trying to somehow fix it. What we want to do is, if there are problems, find them and fix them, and then go ahead, increase your business. And by doing this, there’s no limit to what you can do in business. That’s one of the nice things about having a business. There’s no limit to what you can achieve.
Steve Moskowitz:
What would you say, Cliff? What do you think is the best? How do you get started? How do we get started with something like this? We’ve talked about the client journey, but functionally?
Cliff Capdevielle:
Well, we’re dealing with businesses at all different stages, right? We’re dealing with the startups, we’re dealing with people who have never really used any formal accounting system, and now they’re transitioning to QuickBooks, and after they’re up and running on QuickBooks they want to add some business financial planning, business advisory services in terms of budgeting, forecasting. Typically that’s how we get started. So if you’re a business that’s already using QuickBooks, great, if not, no problem. We can help get you set up with QuickBooks online. We’ll help you get set up with all of the budgeting and forecasting software, and then we’ll meet with you monthly. And we’ll help you update your planning, your strategy, setting business goals, et cetera. And all of these things go hand in hand, as Steve said at the outset. So some businesses do tax planning once a year, which is better than never, but it’s certainly not as good as a quarterly or monthly review. So we’re looking at your annual budget, your tax planning, as often as you need. If you want to meet quarterly or monthly, we’re available for those. We typically will pick a topic per month, and we’ll meet with you regarding that particular service. But if something comes up and you have an emergency, we’re here for you, too.
Steve Moskowitz:
Cliff, could you mention something about the strength of doing QuickBooks online? Because an awful lot of people watching this are thinking about the professional had to come to their office, or they had to drag to the professional’s office. Can you explain to us the power of QuickBooks online, where nobody has to leave their office?
Cliff Capdevielle:
Right, yeah, Steve. So now I think it’s obvious to most people how important the ability to work remotely is, so if you’ve got your bookkeeper in the Bay area, and you’re in Southern California, you can all work together real time with QuickBooks online. As I said, if you update a number in QuickBooks online, or in our budgeting and forecasting software, that change is going to be automatically passed through to the other software, and you’ll be able to see those updates in real time. That’s very helpful if you’re dealing with the bank, if you’re dealing with your bookkeeper.
Steve Moskowitz:
And also with the remote working, a lot of people have said, “Well, you know what? I can move to another jurisdiction and save state income taxes, have a lower cost of living, a better standard of living, or even move somewhere where I can save a lot of federal taxes.” And now with doing everything online and the remote services, you literally can move anywhere and have all these benefits. You don’t have to physically be near someone anymore.
Cliff Capdevielle:
Yeah, absolutely. It’s very powerful way to work. Not having to wait till everybody is physically in the same boardroom to make a decision.
Liz Prehn:
We should probably have a whole podcast just on that topic, right?
Steve Moskowitz:
Let’s do a podcast on that, and we can talk about different states. We can talk about foreign jurisdictions, and we can talk about Puerto Rico, which is all part of America and you remain an American citizen, but save a lot of federal taxes. Just talking about taxes, like picking sugar plums. That means, oh, that reminds me of something else, reminds me of something else. And that’s a benefit of tuning into these, because there’s just so many things that we know about and we want to share with you. And knowledge is power, and again, let’s take a lesson from the big boys, the Fortune 500. And I oftentimes ask a client, I say, “So do you make more or less than Apple computer?” And they all laugh, and say, “Oh, well of course I make less than Apple computer.” I say, “Well then why do you pay more taxes than they do?” That’s part of why we’re doing this.
Liz Prehn:
Yeah, pay less tax, increase profit, happier employees, succession planning, right? It’s all, and doing all that while running a business. It’s impossible to do it yourself anymore.
Steve Moskowitz:
And you wouldn’t want to.
Liz Prehn:
So Steve, how do people reach us if they want to talk more about this? We’ll have some more resources up on our website, but tell them your approach to meeting with clients, and new clients, and people that are interested or may just want to explore some options with you.
Steve Moskowitz:
That’s where the old school and the new school meet. I like to actually talk with people, and we can do that on Zoom or the telephone. In Zoom, not only can we see each other, we can share documents and share our screens. And of course the telephone. And as far as initially contacting us, you can just call us at 888 tax deal. That’s 888-T-A-X-D-E-A-L, 888 tax deal. Or moskowitzllp.com, M-O-S-K-O-W-I-T-Z-L-L-P.com.
Liz Prehn:
Great, thanks guys.
Steve Moskowitz:
Thanks to all.
Outro:
You’ve been listening to the Practical Tax podcast with tax attorney Steve Moskowitz. To hear more podcasts, go to moskowitzllp.com/practical-tax The information contained in this podcast is based on information available as obtained at the date of its release. Moskowitz LLP and its affiliates are under no obligation to update this information as changes occur. Applying this information to your specific situation requires careful consideration of all factors which may be applicable. And any information is not to be considered tax advice or legal advice. Further, this is attorney advertising, and the facts and circumstances displayed in this case are dependent entirely on the facts of that particular case. Please consult your tax advisor before acting on any matters discussed.