Episode Transcript
[00:00:00] Speaker A: Sam.
Foreign.
[00:00:32] Speaker B: And welcome to tonight's episode of Pivotal Change. I'm your host, William Kahn and we have a very exciting guest for you today. He's going to take me back to my old roots about tax planning advisory. But before we jump in with our fresh and new guest here, I want to remind you to get your pen and paper out. Watch this show with intention, take notes, take the wisdom from these guests and put them into your life so that you can make that pivotal change on your path to success. We want to make sure that you get as much as you can. Growth ideas in ways to change your life. So before I introduce this guest, I want to let you know that he's been in this game for over 25 years. He's a CPA. He's done a lot of different things, a lot of credentials. He's worked all the way from London, UK to Minnesota. He's managed large Price, Water House, Cooper groups and he has done Quickbook certifications, TurboTax certifications. He has been all over the place and he really is an expert in the field. And now he's kind of the Sun Tzu of tax planning advisory services, working with businesses, working with high net worth individuals and people that come to him with tax problems. And he is the man with solutions. So I want to welcome Kelly Coughlin onto the show tonight. He is the owner of the Everyday CPA Inc. Plus Apache O. Kelly, welcome to the show.
[00:01:49] Speaker A: Thank you, William. Man, I like that introduction. I'm the Sun Tzu of tax and accounting. Is that what you're saying?
[00:01:55] Speaker B: That's, that's what I'm trying to say. So we're expecting big things out of you today.
[00:02:00] Speaker A: Well, I would like to either be the Sun Tzu or the Alexander the Great or Julius Caesar, but I'm going to take Sun Tzu. Thank you for that very kind introduction.
[00:02:11] Speaker B: Any of those notable characters is fine by me. So let me do this. Let's talk about tax planning. That's obviously what you're into.
And there's a difference between. I don't think a lot of people see CPAs and accountants in this light. They just think tax preparation or accounting services versus proactive tax planning. What's the difference?
[00:02:34] Speaker A: Well, I know you know the answer. You're just, you're just teeing it up for me to give you the answer. You already know, I believe having been in this industry.
But William, as you know, most people, most, most people start asking questions about their taxes during tax filing period.
And by then it's, it's too late. There's only a one or two transactions that one can do after the tax year ends December 31st for most people and tax filing and that some kind of, if the company's set up right, they can make a big retirement plan contribution.
The only thing that's that you can do everything else is cash basis.
If you're going to take a deduction, it's got to be before December 31st. So because of that, you don't want to be doing your tax planning in the next calendar year. You want to be doing your planning in the prior year.
So that's really the difference is your tax planning. Tax compliance is just get the tax return completed. Right. That's the easy stuff and very hard for some people because their records are such a mess. Right, but, right, right. But the planning is where you're kind of doing some estimates throughout the year and saying, hey, I'm having a good year. Right.
What can I do to minimize this thing? And, you know, there's a handful of things that people do and taxpayers that are having a good year should certainly be be doing, unless they just love paying taxes. William and if they want to pay taxes, that's fine.
[00:04:27] Speaker B: I've only met one person that loved paying taxes, and he was a war veteran, family war veteran. He said, the United States gave me everything I've ever had. I have no qualms paying my taxes. But he's literally one in a million and had very, very unique life experience. He's an immigrant that then enlisted in the military and just loved America and said, I'll, I'll give the government a bunch of my money. That's fine.
So let me ask you this, Kelly, that when a business owner comes to you, they're probably feeling confused or frustrated by the numbers. What's usually really happening beneath the surface with that, with that owner?
[00:05:00] Speaker A: Well, you're saying when they come to me, tax time and they've got, they've seen the numbers and they're, they're seeing the tax results and they're saying, what's, what's behind that?
Well, yeah, it's, it's, it's because behind the surface of that is it tends to be, it's not an accounting problem.
It's not a, it's not really even a tax problem. It's like a, it's a clarity problem. It's a recognition of, of an issue in time to get it corrected.
I don't know. Could you say it's kind of like a, the, it's like a A fire in your home.
You, you, you don't start asking the questions when the, when the fires, you know, in your home and, you know, burning down your, your house, you kind of try to look at it as some sort of risk assessment, you know, beforehand to try to. And that's where the clarity comes in. And that's where, you know, financial records is, is, is the only way to get that financial clarity comes from a compilation of historical events, namely transactions, and putting them in a meaningful way that are timely, accurate and complete. You remember those three principles from your accounting word, timely, accurate and complete.
And it doesn't surprise you, I know, to if I say that SMB small businesses have a real tough time with that. And it's not because they're delinquent, it's not because they're stupid. It's because A, they work really hard and B, they don't want to put money into something that they kind of intuitively know a little bit if they're having a good year or bad year, but they don't know the granularity of it and they don't know the impact of it until.
Till that time.
[00:07:01] Speaker B: No, I like that answer. And so I'm going to try to maybe summarize a little bit of it up. So I'm catching a theme of these first two questions. If one of them is proactive and preemptive and you're looking to the future so you can change things before the year ends, before it's locked in stone, and the other one is getting a closer look and actually digging into your records to see your operational, your transactional history.
Once you understand the history, you have clear and complete numbers and you do things throughout the year instead of attempting to do it retroactively, you now have the ability to solve a lot of these frustrations. Does that sound fair?
[00:07:41] Speaker A: Yeah. And it's kind of the beginning of it. Once you get financial clarity for tax purposes, for instance, then if you do it throughout the year, monthly, quarterly, then you start to get financial clarity for the operations of the business. And that's the, that's really where you want to be. And our industry, I'm sure you've seen this, our industry hasn't done. It hasn't done a really good job of encouraging, enticing, incenting SMBs to do their.
Get their financial clarity throughout the year. We, we have an industry that is comfortable with just ticking the box. File your tax return, see you next year.
We try not to do it that way. I don't.
[00:08:31] Speaker B: It's a Disservice.
It's a disservice to our, to our clients are exactly right. And that's one thing. You know, we, we've tried to, we've talked a little bit off air about what we've tried to do in the past to proactively do that and incentivize the clients. You know, so a lot of people come in, you tell me if this is familiar. You have a business owner who has a feeling that business is going well, the bank account's going up. They're probably running their business off their bank account instead of their financials. That's, that's a pretty common thing. And then they get hit at tax time with some massive tax bill and they're like, what the heck happened? I didn't know, you know, you get these. I didn't know this was going to happen.
What are some of the warning signs that you like to talk with or point out to business owners, telling them that, like, hey, you've outgrown basic tax preparation and you need deeper financial guidance, hopefully before they get stuck with that big tax bill.
[00:09:19] Speaker A: Well, the best indicator is, as you just say, is like, once they get hit with that, whoa, this big tax bill. Keep in mind, I'm sure many of your, your, your listeners may not know this percentage, but they know the feeling that between 40 and 60% of their lifetime wealth and income go to taxes from all sources. Income, tax, payroll tax, self employment tax, capital gains tax, excise tax, property tax.
There's probably three or four of that. Estate tax, sales tax, state. Yeah, I mean, it's, that's a big number.
[00:10:07] Speaker B: Huge, huge, huge number.
[00:10:09] Speaker A: Half of your wealth is consumed by.
Yes, it's those services that your military vet said he's happy to pay. I don't know if he's happy paying 50%.
[00:10:21] Speaker B: Yeah, no, that. I don't think he's happy paying 50. Especially when you lay it out for everybody and say this is your actual tax footprint, your, your gross liability over time. I think, I think it would get most people into, almost into the spirit of revolution a little bit, knowing how much they're, they're taking out of their wallet.
But, you know, is there, is there a reason people don't see this with clarity? Is there anything that goes back to like, bookkeeping? You know, you work with both QuickBooks and TurboTax and other systems. What type of frustrations are you seeing, you know, on your side saying, hey, a client comes in here and they've got what we just simply call dirty books.
You know, is that what's affecting their pricing, their hiring, their taxes, their growth? Is that what's holding them away from the. The true enlightenment of their tax position? And I know we've only got about 30 seconds for an answer. I apologize.
[00:11:08] Speaker A: The 30 seconds I'm going to say I just am completing a book and I'm publishing it the end of the month. End of next month. It's called not your dad's accounting. It's because the double entry system that Pacioli set up in the 15th century. A beautiful system, great system. It's so cool and simple and wonderful. But it takes accounting expertise to know debits and credits. And it's easy for guys like us. Right? It's in our DNA. We learned it, but it's not intuitive to people. And that's the heart of it. We don't. We did not do a good job of moving that along. And what we're doing with. You mentioned the name Ipatio, and I don't want this to be a plug for Ipatio, but maybe I do.
Apacho is designed to be the next generation of double entry system that doesn't require expertise.
[00:12:04] Speaker B: Love it. Well, that's a perfect spot for me to put a pin in the conversation. We're going to keep this ball rolling and keep helping you business owners, entrepreneurs and people of influence in just a moment. Stay tuned for more Pivotal Change and more Kelly right after this break.
[00:12:19] Speaker A: That go. Okay,
[00:12:33] Speaker B: Sorry.
We are back from the break and before we get rocking and rolling with more of this excellent conversation, I want to make sure you know where to find Pivotal change and all of the other programming that Now Media TV has to offer. It's pretty straightforward. You go to NowMedia TV on the Internet and you can find the entire bilingual setup of this entire network. That's news, business. You got culture, you got politics, everything you want, including leadership and influence and shows just like this Pivotal change here. You can catch up anytime. It's on demand. And if you can't watch the show, you only have the opportunity to listen. Maybe you're on the treadmill or a road trip. Download the podcast version as well and stay caught up with all of the great insights that this network has to offer. Now we're going to jump back in with Kelly Coughlin. He's the owner of that CPA firm that is doing wonderful things for his clients. And we had a great conversation leading into what I want to maybe have this question off the bat for you. If you have a business owner come India and they come and they're just experiencing financial stress. Stress. What's the first pivotal change that you would recommend? What do they need to do to get financial clarity?
[00:13:58] Speaker A: Well, I guess the first thing I would do is try to get them to embrace the concept that accounting isn't just a burden.
It's not an annoyance. It's.
Yeah, I think it's important. I'm a cpa, of course I think it's important, but it is important.
And here's why. There's a couple of my favorite quotes out there. Peter Drucker, I believe. I think it was Drucker that said, what gets measured gets managed. He said some version of that.
And accounting is a way we measure it. And what we're doing is measuring what happened in the past.
Then the other one is a guy, Michael Porter, who's one of my favorite, from Harvard Business School years ago, and he, he gets that strategy. And the, the concept is that the essence of strategy is, is in choosing what not to do as much as choosing what to do. Again, numbers kind of tell you what you did wrong and what you did right. And it helped you choose. Certainly it helps you choose what to do, what you did right, but it also tells you, dang, that was a wrong, that was a wrong move and we didn't get the roi. The big thing today, William, is that you experience in your business and I experience is the, the money that we spend in digital marketing in getting our brand out there and calculate that roi. So I want to get to the heart of your question, but the first thing is that they need to first embrace the concept that this is a good tool to help them, yes, comply with the tax law. Okay. But that isn't the main reason. The main reason is to help them run the enterprise.
[00:15:57] Speaker B: Yes, I love that. So the compliance side, the requirement, yes, we must all report and file taxes and pay taxes, but that is ultimately, that is a byproduct of good tax planning, of good practices. And if you're going to start making bigger and heavier decisions in your business, they're going to have larger footprint activities. And you don't want to come up short because you made some wonderful ROI decision, but it's going to cut the legs out from underneath you when the tax bill comes due because you failed to plan, you failed to save, you failed to account for that, or you fail to take measures that could reduce that impact.
[00:16:34] Speaker A: Yeah, that's right.
[00:16:35] Speaker B: Yeah, that's great. So the, what types of decisions should business owners then be starting to think about? And Consider in working with somebody like you and having a plan throughout the year instead of doing what you said earlier, which is waiting until filing time during tax season.
[00:16:51] Speaker A: Well, you got two components of, of achieving financial clarity. That's, that's the goal, financial clarity for the purpose of running the business more effectively. You got two cost components, if you will. One is a technology component, software.
QuickBooks is certainly the, the, the leading player in that industry. Zero is another one. Unfortunately, we believe QuickBooks not to pick on them, but every double entry system out there, except for Apache requires the second component, which is human resources. You need a bookkeeper, you need the owner to do the accounting, to clear the bank fee, to reconcile the accounts. Because the weakness of the double entry accounting system designed in the 15th century is that it requires attention, it requires reconciliation, bank versus book. It requires in today's world, clearing the bank feed, categorizing things. It requires some attention.
[00:18:01] Speaker B: Yes.
[00:18:02] Speaker A: And, and a lot of companies just don't have that resource they want to pay for. They want to spend money on growing the business and they should be doing that. Right, right. They, they shouldn't be spending money on a, an accountant when they need to, number one, get revenue in the door. I fully subscribe to that concept.
But there are, there are ways that they can try to get this thing done as a, I call it, hack their way through it to get to a level where they can adequately resource the two components of accounting, the systems cost and the staffing costs.
[00:18:38] Speaker B: Yes. So that is great. So in that moment, I know there's no magic number. I've experienced that there's no magic number. But is there a mindset, an operational level or flow of when you see people come in and you say, hey, you need to really start considering professional services. You and your mother in law can't be doing your bookkeeping anymore. Right. You need, you need a professional to step in, run your payroll, run your booking, get all your reconciliations going. And you need to get out of your own way and let a professional take over so that you can truly climb up and to the right.
[00:19:14] Speaker A: Well, William, I could say there's a revenue number and if I, if you force me to pick a revenue number, I'd say it's probably like a $50,000 level. Right. That some might say that's crazy, that's a little rich, but there's a lot of people that, that have 50,000 in revenue that are paying. I've seen tax returns that have cleaned up where people took zero costs on 50,000. Well, $50,000 is going to cost you roughly 12,000, 13,000 in income and self employment tax easily. Yeah, I don't know. I don't think that's chump change.
[00:19:52] Speaker B: I don't either. No.
[00:19:54] Speaker A: If you get a good system slash staff resource, you can, you can easily cut that number generally speaking in half. I've found that so many misductions, mileage things, you know, things that, that people miss like not recognizing that they can take a mixed use of their personal business for their cell phone, their Internet. I mean there's, there's a lot of things they can do and we love doing that, that.
So that's the number I'd pick. But again it normally gets triggered when they get that first bill. They have a good year. But again what I don't like is that they miss some deductions during the year where they could take an operating loss and they have W2 income and they're using their, their tax that they've already paid on their W2 as a, as a refund then. And so there could be times where you have a five thousand dollar revenue and they miss twenty thousand dollars in deductions. That kills me when I see that happen.
[00:21:00] Speaker B: It hurts my feelings when I see that. Of course when, when we get our hands on them, we get to look like heroes in the next, in the upcoming next year. But that money effectively is already gone unless you're getting into the whole amended filing campaign.
So the, you know, I like you mentioning some of these deductions. You know, we talk to our clients and they're like well what's an accountable plan? And we're like oh boy. All right, let's have a conversation here. Let's talk about that. You know, what are some appropriate. It's not just all about deductions and stuff like that. That is heavy. There's so many people that are uneducated and just what are appropriate deductions. But how can a CPA like you help a business owner create and, or keep more of their income without just checking boxes on are you getting all your deductions?
[00:21:43] Speaker A: Well, what I like to do, I've got a couple, you know, self created quotes on, on taking deductions.
I, I say there's var variations on this. Pigs get fed, hogs get slaughtered. Yep.
The best example of that is, you know, create a business purpose to go to.
If you like going to Florida every year for, to get out of the winter, create a business purpose for it created and it could be if you're a real estate person you like looking at real estate. Every real estate person I know likes looking at real estate. Go look at real estate, price some deals out.
You know, there's tons of business purpose. You can meet vendors, you can meet suppliers, you can meet customers, you can meet prospects, you can employees. There's all sorts of reasons for you to go to Florida. Don't just fabricate it after the fact. Create a business purpose, note it in your file. And then the, the hogs part is don't try to deduct your kids trip to Marine world and see the killer whales there. Take your flight, maybe your wife is helping your business. Take that, a percentage of your hotel, that kind of stuff. Don't, don't be stupid about it. And, and you get a decent deduction there.
[00:23:10] Speaker B: Absolutely. No, that, that's, that's prime advice we always tell people is like you know, you need to go down there, you need to keep minutes, take notes like you said. File away what you did, keep records. We always provided a calculator for people to, to put things into and say bring the calculator back to us, we'll talk about it. But no, those are, those are absolutely perfect pieces of advice. So for just a, before we cut to the halfway point, people will probably already like what you're having to say and they probably want to get a hold of you. Where, where would we find you, look you up or get in contact with you.
[00:23:40] Speaker A: I think the best way is to go to our website everyday cpa.com there you can find me. There's a zoom, there's a calendar type thing where they can set up a Zoom meet or give me a call on my phone. I like connecting with people so if they feel like they need help they can set up a Zoom meet. We can talk about it or give me a call beforehand. We'll figure out whether what their need is and, but go to the website everyday cpa.com that's perfect.
[00:24:09] Speaker B: Everybody go visit that website while we're on commercial break. We'll be back right after this.
We are just past the halfway point and we're still having a wonderful conversation with Kelly Coughlin of Everyday cpa.
This is going to continue to help you and continue to shape your mind on how you run your business and your teams and what you should really be paying attention to and how important it is to get clean and stay clean with your books, to understand your financial position with clarity so that you can make real impactful decisions that reduce tax liability and also prop yourself up for future success. So Kelly Jumping back in here, we had a moment where we talked about getting clean books. That's very important so that you can actually understand your financial situation.
Once an owner does that, they get with you, they get their books cleaned, they have better reporting. What should they actually be looking at from there?
[00:25:34] Speaker A: All right, William, here's, here's how I look at this.
I like to go back to that. You remember that City Slickers movie with Robert Stack and Billy Crystal?
[00:25:46] Speaker B: Love it.
[00:25:47] Speaker A: And I can't remember what the question was, but it had something to do with what's important in life. I think Billy Crystal asked the old grizzled Robert Stack what's, what's important in life? Or you remember that thing?
And he goes, it's just one thing.
And then he said, really just one thing? What is it?
You got to find that out yourself.
[00:26:13] Speaker B: Yeah.
[00:26:15] Speaker A: And so the one thing that the CEO needs to have is find out what is the one thing that's going to drive success for his business. If it's a growth business, it's going to be revenue. If it's, if it's a business that is not yet monetizing, it's emails, it's some, some metric that the CEO needs to have in his brain.
And then downstream from that, each department head, each business area, whether it be a revenue area or an expense area, needs to have their one thing. And if they, in every meeting that question needs to be asked, how is your one thing doing? What is your one thing and how is that doing?
I don't think it needs to be any more complicated than that. And that one thing it depends on. Are you a growth business? Are you a survival business? Are you an asset rich business? Are you a service business? Everybody needs to know what their one thing is. And if they don't and you've given a chance to find out and they still don't have it out the door, they need to know the one thing.
[00:27:35] Speaker B: I like that. So you're, you're casting out the, the mission and the vision of like this is what we're showing up every day to achieve and become. You know that, that mission and that vision and say if you don't know your one thing that your division that you as the owner is, is working toward, then you're just wandering, you're wandering lost. And you need to find that one thing which you mentioned City Slickers. It's super great movie. Now I'm gonna have to go back and watch it, so thanks for that. The.
But that, that's such an important scene in that movie is that only you, the business owner, can answer that question. And even on a grander scale, that one thing may be, I want more financial freedom. I want more time with my family. I want more travel, I want a better culture at a workplace with these people I'm going to see every day. I want to enjoy them. Maybe I want a bigger community impact. And so you need to find your financial one thing based on where you are in your industry and then possibly that one thing that motivates your life that of course the business is hoping to support.
[00:28:35] Speaker A: Yeah. And I guess I would fine tune that a little bit, William, and say that one thing typically is in City Slickers. It was a vision thing. It was, what do you want to be when you grow up? The one thing that I'm talking about is a tactical thing. Right? Is, is not. Yes, everybody has to be aligned with that one thing. The vision, mission, etc.
That's the big, big one thing. Right, but the one thing on the tactical thing, each area needs to have their one thing. And to be clear, there's more than one thing, but there's only, there's only one big one thing for each of them.
[00:29:12] Speaker B: Right?
I, I agree with that.
The great clarification too, getting again narrowed down to the tactical side of things. This is your one thing. Go get it. I like that. So maybe a business is starting to figure that out. They're operating and you come in to teach and coach and mentor businesses just as much as you obviously crunch the numbers and do the filings.
How do you help owners understand when the business is actually generating like real profit or just making enough to get by, making enough to just keep status quo and survive?
[00:29:48] Speaker A: Well, there, you know, cash flow is, is the lifeblood of the company. So that's really important to see.
They can look at their bank accounts and see whether that balance is increasing every month. The ending balance is going up. Right. And they want to be able to make sure that they can determine is that balance if it's going up, is it going up because operating profit is contributing to that balance? Right. Or is it we're borrowing more money. Right. Or we got shareholder capital that comes in. So you want to make sure you've isolated what that is. And of course, you know, we do that through the statement of cash flow. But it's, it's really designed to pick up is, is the operations of the business increasing cash, net cash after expenses, or is it consuming net cash after expenses? So I guess, I guess, I mean, what do you think, don't you think that's kind of like the, the, the, the most important thing to get started with, to look at?
[00:30:51] Speaker B: I agree, I agree. Cash flow is super important. You know, that's one thing that we'd always help business owners understand.
We never did budgeting for our business owners. We cut it off there. You know, we'd give them recommendations, but you get into people that are very big into bidding contracts and they may lose bids for a season, or speaking of seasons, they may be a seasonal business in general and helping them understand the cash flow and the profits and the off season and maybe a secondary source of income. Income was always really important to us, but the bottom line is at cash flow. Is your cash flow steady and growing and what are you doing to grow it and looking at those expenses, are your expenses growing and you're not shifting with the inflation or, or with the changes in your industry?
So. Yeah, I think, I think that's a very fair question.
Well, let me, let me ask this, Let me flip it around on you. So let's say somebody is growing the cash flow seems pretty healthy. Do you ever help people realize any financial patterns that can reveal problems or, you know, maybe you get an orange or red saying, hey, there's an issue like how do they examine their pricing, their expenses and their cash flow that we just talked about to make sure their growth strategy is stable?
[00:32:02] Speaker A: Yeah, I'm glad you asked that question, because I wanted, I wanted to get in this concept of fully burdening their operating costs. Even a service business, you know, service business, you don't think you have cost of goods. You do. It's, it's. We all have a cost of goods, these variable costs that when a dollar comes in and we sold a product or a service and we have to fulfill that. Right. We have cost, direct costs related to those variable costs.
Absolutely. Capturing those.
Most companies kind of get that one done. What they don't get are kind of these, I believe it's called, like mixed variable fixed costs. Right. They don't pick up all those so fully. I loved cost accounting and CPA stuff when I.
[00:32:50] Speaker B: You're a rare breed. You're a rare breed.
[00:32:53] Speaker A: I loved it. I really did. I really liked it because it's so critical to understand what your real profit margin, gross profit is. And so in my financials and when my clients, I really load up that cost of goods thing, I really loaded up. I want, I really want to see what else is. What else is. I want it, I want to put in there SEC you know, segment it out. Right. So we can see what it is.
But God, I can't emphasize that thing enough fully. Burdening their cost of goods, cost of sales, even putting marketing dollars in there. Right. Because more companies are putting money into this digital marketing thing.
[00:33:37] Speaker B: Plans. Yep. Then the automated AI you know, the cold email systems and all that kind of stuff. Yeah. And those, those expenses are going way up and they're like, you're saying they're not tracking that, they're not putting that against that cost.
The cost of goods sold is, is going to be really important that they're going to get probably a pretty big slap in the face. And I'll even joke around for a moment. You see all these social media reels about like spending all of the AI tokens. And everybody's like, oh, how many tokens are you spending? And then the manager walks in and he's like, hey, did you know these tokens cost money and how expensive they are? And we're, we just blew our whole budget in a week. You know, and you know, people, people aren't doing exactly what you just told them to do. And of course that, that's a little bit of dark humor about it. But let me, let me ask you this one then. Okay? So if we, if we get to that point and we're making sure we have clean books or we're being timely and accurate.
[00:34:27] Speaker A: Right.
[00:34:27] Speaker B: And complete, and we're going through here and things seem to be going our way and we're paying attention.
Where does discipline come in versus complacency? And how does that change to where an owner can delegate some discipline without being complacent, without just putting their feet up and trying to let the business run itself.
Does that come in as there are times throughout the year they need to be talking with you?
[00:34:53] Speaker A: Well, they need to be communicating at least whatever the cycle of the business is. All of us run monthly. Right. That's the way it is.
So at least those, the people with those one things. Right. You used to be talking to them every month about the one thing. Right. And so that would be number one.
The other thing that you hit on, I just finished a book a while back called Checklist Manifesto. Have you ever heard of that book?
[00:35:22] Speaker B: I have not.
[00:35:23] Speaker A: No.
Great book. It talks about repeating whatever it is in your business, being able to repeat it with a rudimentary checklist.
It just, it establishes some sort of quality control. Like this is how we do business here. And so that, that C. C level guy, that CEO that wants to step away a little bit. That's fine. He should, right?
But he also should make sure that I believe to get his processes.
I memorialized for years. I used to say one of my favorite quotes, I drove people crazy. That worked for me. I think it came from Socrates. It was even a short pencil is better than a long memory.
[00:36:13] Speaker B: Oh, I know that one. That's actually Mark Twain. It's one of my favorite quotes, short
[00:36:17] Speaker A: pencil, but it's Mark Twain. Twain took it from one of these old guys.
[00:36:21] Speaker B: Now that's, that's very possible. But let me jump in real quick because I want to cut to the commercial break and I want to carry this question back over in just a second. We come back, sit tight for more pivotal change. More Kelly Coughlin, I sure hope you know where to find pivotal change. I'll tell you. You go to NOW Media tv. It is a bilingual network where you can find everything in English and Spanish like this. Your favorite pivotal change with me, your host, William Kahn. You can go down there and you can get it on Roku iOS. You can unlock it in real time. It's on demand. You go to NOW Media tv. You can download the app. You can get all of your lifestyle, culture, leadership, entrepreneurship, everything, your financial advice from that location. So find us there, get the podcast, get the episodes, stay caught up and rewatch all of your favorites. We're going to jump back into a thought in a conversation we were having about some discipline and Kelly had brought up the ability to keep a checklist and make sure you're writing things down. And if that C Suite individual really wants to start delegating and being able to take their hands off the steering wheel a little bit, they need to have these minimum rudimentary checklists that they follow. Can you finish explaining that to us, Kelly?
[00:38:07] Speaker A: Yeah, I guess. I don't want, I don't want listeners to think, oh, the way I can get out of my business is just by making a checklist and then I'm out of here.
The the idea is to have a culture not just when it's exit time, but especially during prime time, right. Production time, when you're delivering service to customers or making product or delivering meals into a restaurant. Right. Whenever you're doing what you do to get once you get the once you get it figured out, the secret sauce. Once you once you are producing and offering what customers want, you just need to don't screw it up by deviating from that.
And the only way that, you know, like this book that I mentioned, it's it kind of gets down to some basic fundamental stuff, memorializing what it is that you do and make sure that people do it. And, and so that, that's, that's the only concept there. But you do it.
You need to have done it all along so that that institutional, that yes CEO knowledge, that history is, is kind of embedded in the DNA of the enterprise.
And then there's no big, oh God, I want to exit here in a year, I got to scramble around, make a bunch of checklists, right? That's not what we're talking about.
[00:39:41] Speaker B: So all of that culture, all of that influence built up over the years is what makes that checklist statement viable in the first place, right?
[00:39:48] Speaker A: Yeah.
[00:39:49] Speaker B: It allows you to keep, keep the good healthy status quo that we have built, functioning and growing in, in, in, in balance with, with everything that you've built so that you can take a step back, take a step back, maybe look to the horizon for better opportunities or may back into succession planning and things like that. So I really enjoyed that clarity. That's, that's a very good point to have made. Yeah.
So let's talk about the foundations. Right. Because we have to have that foundation. We have to build, we have to do that. You work with a lot of small business owners, a lot of self employed people, high net worth individuals struggling with tax issues.
What does, if you're just going to say maybe there's a couple of key points, a couple of cornerstone pieces, what does that stronger foundation, that financial foundation look like for that category of people?
[00:40:37] Speaker A: Well, the category of people is, is different. So the foundation, the foundation for both of them is, is.
I don't know, William. This kind of probably just sounds like redundant stuff, but it's financial clarity is completeness, accuracy, timely. Right. That, that we have the full set of facts in front of us and that's the, that's the data part of it. Right. Good data, complete data, accurate data, timely data. And then you get the conversion of that data into information.
And that's the, that's what accountants kind of do. But that's what you can do with a pivot table. If you don't have an accountant, you can download your transaction CSV, you can do all sorts of fun things that way. But at some point they all need to convert data with those three principles, timely, accurate, complete, into information which influences and drives assists in decision making.
[00:41:46] Speaker B: Nice.
[00:41:46] Speaker A: Okay, they have different facts, but it all ends up onto decision making. Whether family trying to figure out is there money for the hockey budget, for the kids to do hockey, you know, or is it, you know, to run the, to hire the next W2 employee to grow the business and marketing.
[00:42:05] Speaker B: I like that. So if, if a person has the full reality of their tax situation understood, they understand, have clarity on what their bills are going to be, payroll is covered, operations are going smooth, they've got a good foundation.
How do they start building wealth at that point?
[00:42:24] Speaker A: Well, you start building wealth with, clearly you have constituents that have a claim and interest in, in the wealth that's created by the enterprise.
And if it's a sole owner, he gets it all.
So then you start looking at, he or she gets it all. Then you start looking at, well, how can I get wealth out of the enterprise and into my balance sheet? Off the business balance sheet, non to the individual balance sheet. Because that's, I don't know, I kind of look at it like we're all working. You're doing this, I'm doing this to get personal financial wealth.
Maybe we want personal financial wealth for our employees too. That's, that's fair enough. And some of us operate in a world where we even want our vendors to be. I'm a tough negotiator, but I want our vendors to like doing business with me.
[00:43:21] Speaker B: Right.
[00:43:22] Speaker A: I don't want to be the most expensive client. I don't want to be the cheapest one for them. Right. I want to be right in the middle, right where I get attention. But ultimately you got to get wealth off the business balance sheet and into the personal balance sheet. And you do that through many cool things that you're probably more involved in than, than I am in terms of investment and, and, and that kind of stuff.
[00:43:46] Speaker B: Right, Gotcha. So once you can establish the profits and the wealth in the company, then the owners, the shareholders, they can start putting that wealth outside of the business onto their personal financial statements, into their personal investments, retirements, college savings plans and that kind of stuff. So in, in understanding what you said, everything to this point today, I know you are not like a regular accounting firm or CPA that's just floating around the United States. What does everyday CPA help business owners solve?
In a real summary statement that just a traditional CPA or accounting firm does not or doesn't try to work to solve.
[00:44:27] Speaker A: Well, I tell you what, we do not want to be and we are. I've always tried to not be this. And I didn't, I actually didn't want to get into the accounting business because of this. I didn't want to just be a tax preparer guy. Right. That frankly that, that bores me. Right. It's important to do, but it, but it really bores me. It needs to get done. And yes, I, I do my fair share of them, but I try to get people that can get those things done. What I really like to do is help deliver value by identifying expenses that they haven't deducted. I really like to help business clarity, help these businesses that are kind of hacking their way through life and their business and their wives are stressed because they have to file a tax return, you know, extension or, you know, they didn't budget and so they've got IRS on them for budget for, you know, unpaid taxes. I really like solving those kind of problems because those are things that cause anxiety, stress, it manifests itself in, you know, you know, alcohol abuse, drug abuse. There's a lot of bad things that can come out of stress. And yeah, to me, I like doing that is, is de. Stressing. Helping people live sounds dorky, but live a happier, healthier life.
[00:45:53] Speaker B: That doesn't sound dorky at all to me. That's very servant minded. And you're, instead of just being a tax factory, right? Here's the numbers, crunch them, here's results. Send it off to the whatever government entity. Right. You're providing an actual service saying like, hey, I'm relieving stress and chaos and confusion out of your life. That doesn't sound dorky to me at all. So let me, let me ask this question. So you. We find somebody, let's say somebody in our life is behind on their books. They're frustrated because things aren't clean and clear. They're worried about taxes. What's the first step they should do in finding the right person or, or getting that, that, that situation resolved?
[00:46:31] Speaker A: Well, they find somebody they can trust. I certainly am the person they can trust. I don't know if you still help clients in that area. You, you help them find somebody you can trust that isn't just searching to make a buck off them. Right. And I'm 69 years old. I, I don't need to make a buck off everybody. What I need to do is do the right thing. Yes. Many times I, I, I have it paid, I look at it as paying it forward. Take care of people. Ultimately they or somebody in their ecosystem will take care of me in there. So you do the right thing. Start, you know, we, I like to get tax returns, like to say, well, where are they now? And no shaming, no none of that belittling over where they are. Life happens. People don't. People have unpaid tax returns, people have lousy books.
It's. It's the norm, frankly. Right.
[00:47:24] Speaker B: So find somebody they can trust. Find somebody like you. And if they want to find you in particular, how do they find you specifically?
[00:47:32] Speaker A: Best way is just go to everydaycpa.com that's the best way. There's a calendar function up there. They can set up a zoom call or they can just have a phone call if they want and we just kind of begin. Begin that way. There might be someone before that depends on what their issue is. That'll kind of vet them to see if. If I'm a. If I'm the right fit for them.
I try to. I like to stay as close as I can to all of that, but there might be somebody before that they talk to, but they can certainly, if there's a good reason that I should get involved, they can find me everyday
[00:48:10] Speaker B: cpa.com look, everybody, this has been Kelly Coughlin of Everyday CPA Incorporated. Thank you so much for coming onto the show. This has been a real blessing.
And then for everyone else out there, it's not always just about working harder. Get clarity.
Get the confusion and chaos out of your life. Take the lessons from this episode. We want you to go out into the world and see the change and beat the change. And we'll catch you right here. Next time on Pivotal Change.
