How Rich People Avoid Paying Taxes Legally (For Business Owners)
Brian Moncada and Casey Chohan break down tax strategies wealthy business owners use legally: private foundations, asset protection structures, and estate planning tactics that cut tax bills and build lasting wealth.
For every million dollars of net profit you earn, you could probably save about 400k in taxes on it.
Wow.
No way, dude. I did not know that.
That's really true. Key difference between being rich and being wealthy.
Yeah.
So if you're a business owner, you're going to watch this entire video in full because I'm with Casey here, who's going to show you exactly how the elite of the elite protect their assets and stay rich. Not just get rich. Let' well, at one of the most prestigious cigar lounges in all of Los Angeles, California, with Casey here, who I've known for almost three years now.
Yeah, it's crazy how quickly it goes, right, Casey?
And the reason why we're doing this video is because everybody thinks that in order to make more money, okay, you need to start another business, launch a new product. Right. Partner with that, or buy a business, for example. Or actually talking to Casey today because Casey is known for helping entrepreneurs like myself, like you watching this, who already make a lot of money but need help with their finances and more importantly, save on taxes and create trusts. And what we were talking about earlier, which is private foundations, this is the secret of the wealthy, the true rich private foundations. And I've. I don't know how this works. I don't have a clue on how it works. That's why we're going to do this episode together and talk to Casey and listen to his story, how he got into this and also just learn from him on this advanced level of wealth and how to protect the money you make. So, Casey, dude, why don't you introduce yourself to the audience?
Hey, guys, I'm Casey Chohan, founder of Together, cfo. And today we're going to break it all down for you. We're going to get so deep that you know exactly what to do and how to do it. On saving money, on taxes, protecting your assets and creating a lasting family legacy.
So let's just roll right into it. Got the drinks, the cigars. What a perfect place for a podcast. And I don't drink often, but if I do, that's what I'm learning. Nine figure tax strategy and savings of the rich. So cheers to that, Casey, once again, cheers. Appreciate you for coming on, dude.
Anytime, dude.
To walk me through, because I, I personally am curious, too. But take me back to, you know, how you first started, right? So, like, how did you get into it? And, like, did you even know you.
Wanted to be an entrepreneur from a very young age? Always knew that I was going to own multiple companies and Be a businessman, whatever that was back then, because my father was a businessman, he had many companies, worked around the globe and kind of instilled that curiosity into me, along with my uncles who traveled, worked for British Airways and always brought back amazing stories instantly. Growing up, I had this desire to see what was out there in the world and not just to stay in my hometown and be comfortable, but just to explore and push boundaries mixed with a sense of business and the lifestyle that can come with that. This is before entrepreneurship was a cool phrase and AI was here. And all of this is like 20, 30 years ago. Right. So a long time ago. So I always knew that I would get into it somehow. I didn't know how that would pan out. But we'll get into that now.
In college, did you study finance? Did that just kind of happen? Did you take it to naturally with numbers?
Yeah. So I didn't know what I wanted to do. I loved playing sport. I was quite academic, but not really applying myself. So I'd kind of just cruise by with the least amount of effort to get to the next level. But that's a smart thing to do, right? Because the people that get an A's and a stars, they're going to be employees for people like us. So it's this level of intellect, knowing that about you. But yeah, generally I didn't know what I was gonna do, but my dad was a smart guy and he made me do different internships. So every summer I would go to a different business, usually a family friend or one of his friends, and work for free for like a few weeks or a few months at a time to see what I was good at, what I liked and what I could see a future in. So the one that stuck the money.
Yeah.
Like we talked about earlier, before, when we last met up when we were here, it's like getting people's buy in. So I think it's their idea. It's a good idea, but it's not your idea, so they can't attack you for. And like their ego comes involved.
Right. And that's all it was. It was because these guys had just always done things in a certain way, always un. Unlocked a pump in a certain way, or always done it in this order, rightly or wrongly. That's just what they were taught.
Yeah.
It doesn't mean it was the best process. It doesn't mean it was the most efficient. We could make more money doing it a new way or buying a new piece of equipment, but they weren't educated on that.
Okay.
So it was a little bit of ignorance.
Yeah.
But getting them to buy into being open minded to see, hey, do you think there's a better way to do it? Tony Robbins uses this all the time in the way he frames things. Tony Robbins uses this a lot in his frameworks. I didn't realize this back then, but as I progressed through my personal development journey, you see the patterns form and right. So if you can leave your ego at the door, you've won half the battle instantly. So that was one, one thing I learned. And then I moved with the company.
Yeah.
So my hometown is a small town in the northeast of England called Middlesbrough. I then moved to the head office in Nottingham.
Yeah.
And a lot of people aren't willing to move.
Interesting.
So if you're willing to move and you're flexible, then you can get an edge on the person that isn't.
Yeah.
Go to where the opportunity is. And you were the young guy when all these guys had, you know, they were older, like you said, 50s, and they were so used to doing things. So that gave you the unfair advantage. So then, okay, you go up the company, you move and then when did it come to the point where you're like, I have to now switch to do my own thing? Maybe, maybe it was then, maybe it wasn't then, but, like, what was the pivotal moment where you were like, I'm going to go do this and open my, open up my own, you know, business.
That happened when I moved to America.
Okay.
So I did eight years with the company in total.
Okay.
Four of them were in Europe. And then I transferred to North America and region, which is based here in la. And when I got to la, I was like, oh, my God, I've made it. The sun shining, the T shirts and the shorts, not as cloudy as all the beautiful women. It was awesome. Right. Playing volleyball every weekend. But I wasn't happy at work.
Oh, wow.
So it was a huge juxtaposition. Whereas in Europe, Yeah, the weather sucks, but we got on really well. Like all the managements of all of the different regions, we'd go out golfing together, drinking, dinners. It was really, it was a good environment that then switched to America. It's like Shark Tank.
Wow.
Everyone was at each other's throats trying to score points and kind of very.
Corporate competitive versus collaboration.
Yeah, 100%. So I was like, shit, this is, this is not where I want to be, but I've just literally left my whole life behind in Europe.
Yeah.
Is me on my own in la. And it's like, all right, I got to make the most of this.
Okay.
So it took me four years of being here. I knew very quickly that I was going to set up my own business.
Yeah.
But I couldn't for, like, Visa reasons.
Yeah.
Go full out on my own thing.
Yeah.
So I started small. So I started by personal development, reading books, getting ready, because I didn't know anything about sales or marketing or this whole world of running a business. All I know is what these numbers mean. So show me a P and L balance sheet and a cash flow, and I can make it into something really tangible that anyone can understand.
Yeah.
And we just created a software that does that now, so we'll talk about that later. But it's really very different to running it. Well, you know, you start your business from scratch, right?
Yeah.
It's. You've got to have a 360 approach to running a business. And that's all areas. Right. It's sales, marketing, operations, finance, and everything in between. HR culture. The list just keeps going on. I didn't have virtually all of those skill sets. The only thing I knew how to do was take these numbers and understand what it means. So that's what I did. So I started a fractional CFO company called Together cfo, where I help business owners take their financial statements and say, hey, this is what's going on. Point into this direction or this product or this service is making more money. Double down on that. Or why is this so expensive? What's the working capital cycle like? You spent $10,000 in month one. You're not getting it back until month four. How long can you keep doing that for? So there's all these, like, blind spots in other people's areas that. Finance is a blind spot for a lot of people, right?
Yeah.
They don't like the numbers. They don't really understand them because they're not educated.
Exactly.
Yeah.
So I was. So I was able to fill that whole on a fractional basis for people. And then we. We hit it big with one of our clients.
Okay. Yeah.
So let's. Let's talk about that, because what you just said is so true. It's like when I first started, right. I had no idea about accounting bookkeeping. Like, I knew I was making more than I was spending. That's all I knew. But I was using a simple Google sheet and, like, I was doing my own stuff. Yeah.
Like, cash basis.
Yeah, yeah, Cash basis. And like, every month. Okay. It's more than what I spent. Okay, great. And now you're Essentially doing that for business owners like myself and for other businesses out there that need help with that. What's the biggest mistake that you see most entrepreneurs make on their journey that are, you know, let's say someone is already making seven figures, Right? Like making seven figures. They're not a total beginner. They're already making seven figures and you go in to help them. Like, what's the biggest mistake that those entrepreneurs are making?
Okay. So there's two sides to the game. And I'll use an American analogy. Let's use American football. There's an offensive side and there's a defensive side. So translated into business, the offensive side is when you go and you bring in more money. Right. So you're going to get a new client, it's 100k or whatever and away you go. The defensive side is where you are spending 500k, but now you can spend 400k. That's still making $100,000 in your business.
Yep.
You added an extra 100k.
It's not sexy because no one's giving you a ClickFunnels award saving 100k. Right?
Yeah. Yeah.
But it's actually more beneficial for you because you're running a leaner ship and it's got your systems and processes, it's more sellable and it's less stress. If you get really good systems and processes and you get a stress free life, you can go live wherever you want, do whatever you want and the company can run on autopilot or as close to as possible. Right. So the biggest mistake I see is people focusing too much on the top line growth and not enough on increasing the net profit, which is the real number. I'll give you an example. I had a prospect come in. He was making over $25 million a year, but his net profit was 1%.
Jeez.
So my first question is, what are you doing? I've never seen a business make so little.
Yeah.
But on paper he's Barry Big balls. I'm making 25 million, you know.
Yeah.
But he was just a broker.
Wow.
So he was brokering deals and his specific niche was nuts bit for big farms and he was making 1% behind every big number. There's got to be a net profit percentage.
250K. Right. There's nothing literally 250k a year for all that work.
Yeah. And in California getting taxed really high. So literally a $25 million business is making nothing at the end of the day. And you're like, why am I going through all this Hassle and stress.
Yeah.
If the bottom line isn't worth it. So if you don't understand how to ultimately maximize that bottom line, regardless of which way you do it, whether you go offensive and increase the top line revenue, or whether you go defensive and sharpen up the operations and the systems and the processes and the people and the tax structures.
Yeah.
Because people often overlook that they'll put a nice new AI system in place or whatever the trend is. But if you're still paying a high tax rate, that could be. If you reduce your tax rate by 10%, it's lot easier to do that than go increase the revenue by 25, 30% because the margins would eat out, Right?
Yeah.
So if you understand the relationship between the numbers, the low hanging fruit always starts with create a structure that's tax efficient.
Yeah.
Then make sure you have the right people, the right processes in place, and then you can maximize the business. Because if you think of it as a bucket of water with holes in it, if you'll just keep adding revenue at the top.
Yeah.
But you're leaking water everywhere, you're still left with nothing at the end.
Yeah.
So plug it in the right way, like kind of reverse build the funnel if you want to use like marketing speed so that it's solid and the foundation strong. And then when you put fuel on the fire, you can blow up really quickly.
So you.
Okay, the guy, he plugs a little bit of holes. Maybe he goes from a LLC to, you know, like an S corp, let's just say.
Right.
S Corp. Right. Because that's a lot of what, what, you know, where I was taught to, it's like, okay, you can save an extra 15 grand this year, you switch to an S Corp. Right. Yeah. Obviously I'm still on an S corp right now, but I want to get into the tax strategy stuff too, because like, let's. The advance. Right. Like, I remember I was at a Quantum Mastermind with you. I met Casey at Sam Oven's Quantum Mastermind and he did an entire presentation for an hour on tax strategy and, you know, setting up trusts, but most importantly the private foundation stuff. So, like, when should they go to another tax structure that's going to help.
Them when they're paying more than six figures in taxes? So if you're paying over 100 grand, that means you should be using multiple loopholes like the one that you said. Whether you go from an LLC to an S corp, whether you're hiring your kids, whether you're using the Augusta loophole, like there's so many loopholes that change constantly. Right. Some new ones come in, some old ones go out. Accelerated depreciation, one of the most recent ones where you get 100% year one. If you have a car that's over 6,000 pounds in weight, then it went down to 80% and then it's going down in increments of 20% year on year. And then there's hub zones, opportunities on. There's lots of different things coming in and then going out. The risk with them is like with easements were maybe three years ago now there was conservation easements that the government was pushing everyone do this. So many people bought into that as a tax deduction and abused it. And then the government changed the rules and then audited everyone that did them.
Dang.
So there's a lot of risk involved in loopholes as well. Okay, so we want to reduce the risk.
Yeah.
That's why we look at structures that have been around a long time versus loopholes that are temporary. So if you look on one side, you got loopholes versus structures. Everyone at any level can use loopholes and should.
Yeah.
Simple thing like if you've got kids, hire your kids, pay them $13,000 a year, it's tax free. And then the kid can pay for their own tuition fees or whatever.
Yeah.
Because it's tax free money.
Right. Wow.
Or you can hire them as a social media, put them in your posts. Like people do this. It's very easy to do. You can rent your house back to yourself for 15 days. There's loads of things like that that you can use. But that doesn't help you once you get into multiple seven figures.
Yeah.
That's where you transition and you need a structure similar to switching from an LLC to an S corp in your case because then the 15% self employment tax reduces. But then there's other restrictions with that because now it's a share based system rather than an ownership percentage. Right. So there's pros and cons of each structure.
Yeah.
But the one that nobody really knows about or talks about is the private foundation.
And so the 100k profit. Right. That's the loopholes. That's when you're like, you know, you're rich to most of your family and friends. Right. And like you got 100k in taxes that you owe Augusta rule, employ your kids, you know, S corp. Those are a few things that's. But now what I'm hearing is like, that's like, you know, basic. But then to go to the next level. Right. It's like a million dollars in profit. I think I remember heard you say once, that's when like varies.
Because a million dollars in profit, you could still be paying half a million in tax.
Yeah.
Or you could be paying 100k in tax if you've got a lot of write offs and deductions. Right. So every case is different. There's no one size fits all. But generally speaking, if you're paying over 200,000 a year in taxes and you can back into that however you wish, that means you've probably used as many loopholes as you can and you're still paying 200k in taxes. So instantly at that point, when you look at a foundation, you could probably save between 30 and 60% on top of what you're already doing.
Okay, so let's talk about the tax structure then. So how do you do that specific structure? Because I think a lot of people watching right now, they're doing the loopholes. Right. My audience especially probably they're making money, but now they're trying to get wealthy. Right. They're trying to hit the, they're trying to hit the eight figure mark. Like how do they go into that structure?
Well, first let's frame what wealth is.
Yeah.
Because a lot of people get misunderstood by this. So being rich is. First thing that we talk about is when you're working really hard, you've got a good business and it's generating money for you. Right. But you have to do the activity in order to create that money. If you stop doing that activity, the money dries up.
Yeah.
That's when you're rich.
If you're too busy looking at tax loopholes and tax strategies. But you're not growing after you fix the leaky bucket.
Yeah.
And then when you become wealthy, it's when you're. When you've created the machine and the machine is generating money while you sleep.
Yep.
That's really key. But his net profit was 1%.
Jeez.
So my first question is, what are you doing? I've never seen a business make so little.
Yeah.
But on paper he's Barry Big balls. I'm making 25 million, you know.
Yeah.
But he was just a broker.
Wow.
So he was brokering deals and his specific niche was nuts bit for big farms. And he was making 1% behind every big number. There's got to be a net profit percentage.
250K. Right. There's nothing literally 250k a year for all that work.
Yeah. And in California getting taxed really high. So literally a $25 million business is making nothing at the end of the day. And like, why am I going through all this hassle and stress.
Yeah.
If the bottom line isn't worth it. So if you don't understand how to ultimately maximize that bottom line, regardless of which way you do it, whether you go offensive and increase the top line revenue, or whether you go defensive and sharpen up the operations and the systems and the processes and the people and the tax structures.
Yeah.
Because people often overlook that they'll put a nice new AI system in place or whatever the trend is. But if you're still paying a high tax rate, that could be. If you reduce your tax rate by 10%, it's a lot easier to do that than go increase the revenue by 25, 30% because the margins would eat out. Right?
Yeah.
So if you understand the relationship between the numbers, the low hanging fruit always starts with create a structure that's tax efficient.
Yeah.
Then make sure you have the right people, the right processes in place, and then you can maximize the business. Because if you think of it as a bucket of water with holes in it, if you just keep adding revenue at the top.
Yeah.
But you're leaking water everywhere, you're still left with nothing at the end.
Yeah.
So plug it in the right way. Like kind of reverse build the funnel. If you want to use like marketing speed so that it's solid and the foundation strong. And then when you put fuel on the fire, you can blow up really quickly.
So you. Okay, the guy, he plugs a little bit of holes. Maybe he goes from a LLC to, you know, like an S corp, let's just say. Right, S Corp. Right. Because that's a lot of what, what, you know, where I was taught to, it's like, okay, you can save extra 15 grand this year, you switch to an S Corp. Right.
I did that.
Obviously I'm still on an S corp right now, but I want to get into the tax strategy stuff too because, like, let's. The advanced. Right. Like, I remember I was at a Quantum Mastermind with you. I met Casey at Sam Oven's Quantum Mastermind, and he did an entire presentation for an hour on tax strategy and, you know, setting up trusts, but most importantly the private foundation stuff. So, like, when should they go to another tax structure that's gonna help them?
When they're paying more than six figures in taxes. So if you're paying over 100 grand, that means you should be using multiple loopholes like the one that you said. Whether you go from an LLC to an S Corp. Whether you're hiring your kids, whether you're using the Augusta loophole, there's so many loopholes that change constantly. Right. Some new ones come in, some old ones go out. Accelerated depreciations. One of the most recent ones where you get 100% year one. If you have a car that's over 6,000 pounds in weight, then it went down to 80% and then it's going down in increments of 20% year on year.
Yeah.
And then there's hub zones, opportunities on. There's lots of different things coming in and then going out. The risk with them is like with easements were maybe three years ago now. There was conservation easements that the government was pushing everyone do this. So many people bought into that as a tax deduction and abused it. And then the government changed the rules and then audited everyone that did them.
Dang.
So there's a lot of risk involved in loopholes as well.
Okay.
So we want to reduce the risk.
Yeah.
That's why we look at structures that have been around a long time versus loopholes that are temporary. So if you look on one side, you got loopholes versus structures. Everyone at any level can use loopholes and should.
Yeah.
Simple thing like if you've got kids, hire your kids, pay them $13,000 a year, it's tax free. And then the kid can pay for their own tuition fees or whatever.
Yeah.
Because it's tax free money.
Right. Wow.
Or you can hire them as a social media, put them in your posts like people do this. It's very easy to do. You can rent your house back to yourself for 15 days. There's loads of things like that that you can use, but that doesn't help you. Once you get into multiple seven figures.
Yeah.
That's where you transition. And you need a structure similar to switching from an LLC to an S corp in your case, because then the 15% self employment tax reduces. But then there's other restrictions with that because now it's a share based system rather than an ownership percentage. Right. So there's pros and cons of each structure.
Yeah.
But the one that nobody really knows about or talks about is the private foundation.
And so the 100k profit. Right. That's the loopholes. That's when you're like, you know, you're rich to most of your family and friends. Right. And like you got 100k in taxes that you owe Augusta rule, employ your kids, you know, S Corp. Those are a few things that's. But now what I'M hearing is like, that's like, you know, basic. But then to go to the next level. Right. It's like $1 million in profit. I think I remember heard you say once, that's when like varies.
Because a million dollars in profit, you could still be paying half a million in tax.
Yeah.
Or you could be paying 100k in tax if you've got a lot of write offs and deductions. Right. So every case is different. There's no one size fits all. But generally speaking, if you're paying over 200,000 a year in taxes and you can back into that however you wish, that means you've probably used as many loopholes as you can and you're still paying 200k in taxes.
Yeah.
So instantly at that point, when you look at a foundation, you could probably save between 30 and 60% on top of what you're already doing.
Okay, so let's talk about the tax structure then. So how do you do that specific structure? Because I think a lot of people watching right now, they're doing the loopholes. Right. Like my audience especially probably they're making money, but now they're trying to get wealthy. Right. They're trying to hit the seven, they're trying to hit the eight figure mark. Like how do they go into that structure?
Well, first let's frame what wealth is because a lot of people get misunderstood by this. So being rich is. First thing that we talked about is when you're working really hard, you've got a good business and it's generating money for you. Right. But you have to do the activity in order to create that money. If you stop doing that activity, the money dries up.
Yeah.
That's when you're rich.
If you're too busy looking at tax loopholes and tax strategies, we are not growing after you fix the leaky bucket.
Yeah.
And then when you become wealthy, it's when you're, when you've created the machine and the machine is generating money while you sleep.
Yep.
That's really true. Difference between being rich and being wealthy.
Yeah.
So when you get into that stage or getting close to that stage, a quicker way to accelerate into it is by creating a foundation. Because what you can do right off the top in Most company structures, L.L.C. s Corp, C Corp. Is you can donate between 30 and 60% tax free into the foundation.
Yeah.
Now it has to be the right type of foundation. There's many subsets. We'll get into that in a second. But generally speaking, for every million dollars of net profit, you Earn. You could probably save about 400k in taxes on it. So 40% saving.
Yeah.
And it's the person's foundation that they set up.
Yeah.
It's not another foundation. You're just donating money.
Exactly. This is the kicker, right, is that you're donating from your left hand into your right hand. And this is where all the billionaires do. So you look at the Bill and Melinda Gates foundation, the Buffett foundation, the Bezos, found all of these people, all these elite people have the very same structure and it goes three to four levels deep, where it's a private foundation, it's non operating and it's a family foundation.
Wow.
So when you put all of these subsets together, it means that you can be the only board member of that foundation if you wish.
Yeah.
So you fully control it.
Yeah.
As long as you stick to the rules, you can get a tax exemption, which opens a whole new bucket of stuff up. As an example, Google gives you $10,000 of free ad spend if you've got a foundation.
Wow.
No way did I did not know that.
Microsoft Azure for 1000 or 2000amonth and the emails for free. And there's so many benefits from these big corporations if you have a foundation.
Interesting. Just to recap is you're already doing, you know, you're going to be taxed $500,000 or $200,000, $300,000 plus, and you owe that. That's when you should think about starting a foundation.
Yeah. That's when it starts to make sense. Because what you're going to do is in your business, you'll do a donation every year, every quarter, however frequent you want to the foundation. And that is ultimately you protecting your assets because it's. You don't own it anymore. The foundation owns it.
Yeah.
So now as you accumulate wealth, you get a bigger target on your back. People want to sue you. This is America. Like you sneeze in the wrong direction here and you're getting sued.
Yeah, yeah, yeah.
So it helps you from an asset protection standpoint and it helps you from a longevity standpoint because now whoever controls that foundation controls those assets. So let's say year one, you put 400k into your foundation and you buy some stocks, some real estate or whatever, that's just going to grow over time. Right. And then let's say you have kids. Now if you have kids and you haven't set up a will or a trust or a proper structure, which can still be contested.
Yeah.
You could lose up to 40% of your wealth.
Interesting.
So the guy from Black Panther. So he passed away recently from cancer. So he knew he was dying. He didn't set up his affairs properly.
Wow.
So his net worth was about $3 million at the time of his death, and probate courts took over 2 million of it.
No way.
So his family lost out on $2 million because it didn't set up. Because he wasn't set up. Right.
So how do you start the process to set that up? Right. Obviously, you can help everybody with that. That's obviously why I talk to you all the time about this, because we're eventually going to do that for us as the foundation very soon. How do you start setting up that. That structure to avoid losing out on $2 million and that going to the government?
So for him, he. He should have known better because he knew he had cancer. Right.
Yeah.
For us, we're young, healthy guys.
Yeah.
You don't think about that. Right.
Don't think about it.
Even. Even a will, to me right now, it's kind of like, transparently, I'm gonna have to go home and start putting that as a rock for me because, like, I gotta set up a will.
Have to.
Yeah.
But, like, that's the thing is, like, that's why this conversation is so important. I'm genuinely asking because most people don't even think about that. Like you said, we're healthy, we're young, we're making money, but then we don't think about that kind of stuff because.
It'S a morbid thing to think about. Right?
Yeah.
Because think about it. You're thinking about a will and how you want to disperse your assets.
Yeah.
That means you're thinking about dying.
Yeah.
And no one likes to think about themselves dying.
No. Yeah.
But we owe it to ourselves and our families not to squander the well.
Yeah.
And at least do not want to give it to the government so they can start more wars and all this other bullshit that they're into. Right.
Yeah.
So it's really important at the lowest level. Anyone listening? Speak to a lawyer. Get a will. Get a simple trust set up if needed. But two action items. Right. And then if you're at the levels that we talked about where the loopholes are running out and you're still paying a lot, then look into a foundation.
Foundation. So the structure, the trusts, and then the foundation comes after. Yeah, yeah, the will. Okay. Is there anything else that, like, most entrepreneurs don't even look at when it comes to setting up their foundation or structure that, like, you Know, when it comes to just protecting their wealth that they don't even know. Like, because these, these are things people don't even know that the foundation was even a thing. Like you always see, oh, people donate to their foundation. It's like, oh, they're good people. Right. It's like, yes, they are. Obviously they're helping out some people, but it's really a tax loophole.
It's, it's 100% tax strategies, what they're doing. But you're right, the billionaires want to be seen as regular people and they want to help others. And to a certain degree they do that.
Yeah.
But then also at that level, it's about control.
Right.
So they also want to control the masses. If you look at Bill Gates as an example, what right does Bill Gates have being the guy who's pulling the strings on Covid?
Yeah.
He's got no medical background whatsoever, but he controls all these organizations because he donates to them.
Wow.
Gives you the power too.
Exactly. So he has influence and power and control. Now that's at a billionaire level. We're talking at the millionaire level now. So the precursor to all that is tax benefits. So in this foundation, it's tax exempt. So that means you get a direct letter from the IRS saying that this entity, let's just call it the Brian Moncada foundation. Right?
Yeah.
Has a tax exempt status. 501C3. So it's not due to paying tax. Yeah, so that's not coming from me.
That's like almost like starting a religion like a church. Right. Because they're tax exempt as well.
This is. Good job. Great question. So that is an operating foundation. The difference being the church is seeking donations. So from all the people that attend the church and they donate when they go to service on a Sunday or whatever.
Right.
They are seeking donations. These private foundations are non operating, so they are not seeking donations. They are not soliciting the people. It is one family or a couple of individuals that are donating solely into this foundation. And that's the difference between a non operating private foundation and an operating public foundation. It's a huge difference. Because now on the church you have to have multiple people on the board, multiple subcommittees. There's a lot of paperwork that goes along with that.
Right.
And if it's set up right, not one person has full control. The collective board, us.
Yeah.
In a private foundation, a non operating one, you can have a one person board member, you, the person that set up the foundation, or you and your wife, or you and Your family, whoever you wish. But you can have one person, board member, which makes all the difference now. Right. Because now that 400k that we put in earlier, you can decide, hey, are we going to invest this in stocks, real estate? Are we just going to donate it all? And the beauty about it is that investment, let's say you invest it in stocks and you make some money and you cash it out. There's no capital gains to be paid, so zero capital gains tax because it's tax exempt. And instead of the capital gains, you pay a tax which is called a net Investment income tax, NII. And it's only 1.4%.
Wow. Yeah.
So that's how you get people at the single digit tax rate.
Yeah.
Because you donate the money into the foundation.
Yeah.
And then you. Operating out of the foundation.
Yeah.
Whether it's jets, yachts, cars. Oh, the foundation can own all these types of assets.
Yeah. Dang.
I'm so just glad we talked about this. You have loopholes. Like, I just think, I just keep thinking about this analogy. Like loopholes are for the rich, but how you get wealthy is through the foundation. Like, that's how the wealth, that's how the wealthy and the elite structure their, their, their assets long term to avoid taxes and to also set themselves up for future success. That's interesting, man.
What's going on in your head now? Get all the questions out.
One of them that I looked into as well, and I think I hit you up about this was too, was like the, the actual car, like the 6000 car. Right. Because that's a loophole. But then when I talked to my team about it, they were like, oh, like this is a good chance you're still going to get audited no matter what. Because like it's not for business purposes. Right. But like, I know a good friend of ours, like Cole, right. He drive, he has a 6000 Lamborghini Uris. Right, like the, the tax deductible one.
Yeah.
But like he doesn't have an office. Right.
Like he works from home.
Yeah, yeah.
So I'm saying. But like, but he's doing it. So like how do you structure it to where you can have the least possible chances of getting audited?
In a way, you know, I wouldn't worry about audit. Getting audited if you're not doing anything wrong.
Well, that's the thing. It's like we're not. You're just doing the loophole that they set up so you can do. So like for example, okay, perfect example, this Rolex, right. Technically, it is for business purposes because I use this in multiple marketing ads, videos. I made a whole video on my YouTube channel talking about how I got this Rolex. But when I went to go, obviously file it, they were like, no, there's no way. But I've talked to people that said, no, you can definitely do.
But this is about team. We're talking now, Right?
Okay. So now we're talking about skill of the person.
Yeah. So we talked about how to optimize your strategy internally to reduce your overhead and your expenses. But a subset of that is having the right people in the right place. So you can have 2, 3, 5 CPAs and ask them that same question.
They're gonna say no.
They'll all have different answers to it because they have different risk thresholds.
Gotcha.
Which will also be different to your risk threshold.
Yeah.
So if you're legitimately saying, hey, this is a business purpose watch and I only use it for business, so therefore it should be a business expense or an asset of the business. And it's also appreciating because this is a very specific gold on gold, Rolex Digest or whatever it is. And it's going up in value.
Yeah.
So some people would be like, okay, well that's legitimate. That's actually an asset on the books that you spent about 50k on it and now it's worth 70, 80k.
Yeah.
So it's going up in value, not down.
Yeah.
So they might be. All right, that's okay. Rather than. The other conservative person said, no, it's a watch, it's personal use. It's not really business, or it's a little bit business, but more personal.
Yeah.
How do you prove it either way?
Yeah, exactly.
If in an audit, how do you prove that you wear that for personal use? Is anything you do personal? Are you always talking about business or at business or at events or traveling?
Yeah.
So therefore, how it's business, I'm saying.
Yeah.
So I would go with this.
Yeah.
Yeah. Okay. So now let's talk about, like you talked about the guy that had 25 million. Right. But he only had 1%. What is the craziest sort of situation you've walked into with a potential client or current client that, like when you first got in with them, like, tell me a story about someone that, you know, you took from, like, for example, that guy. How did you get him out of that at that 1%?
If anything, like, I didn't take him as a client. He wasn't qualified to work with me.
Okay.
So yeah, so firstly, we don't take anyone as a client. We're boutique firm. We only bring on maximum 10 clients a month because we want to keep the quality really high. Right. So we made a decision very early on. Do we want to go wide.
Yeah.
And bring in tens of thousands of clients, or do we just want a handful of clients but white gloves? Yeah.
Yeah.
And we chose that. It's like less stress, small reward. It's a win win for everyone. Right. So we turned down maybe 8 out of 10 people that come through.
Yeah.
Just because if I can't hit a home run for them.
Yeah.
I don't feel good about it.
Yeah.
I want to be able to sign up a client day one and know for a fact we're going to hit the home run.
Yeah.
100%. So how did you get into working with these private clients? Hands on like 10. Talk about how you got into that.
So we started as Together, CF4 fractional, CF4 services. And one of the first clients we brought in was an old friend of mine because, you know, you hit up your friends first. Hey, I'm doing this thing. And we took him from $5 million a year to $120 million a year in year one.
Okay. Talk about that.
It was really easy, actually. And it was. He bought the next vertical, simply put. Oh, so he was in the medical space. Yeah, he was doing marketing for the medical space. And then he would market. He would get stuck swabs, and then he would send the swabs off to a lab and the lab would run tests on them. And the lab had contracts with the government.
Yeah.
They were making so much money, you wouldn't believe it.
Yeah.
He was doing all the hard work.
Wow.
So it took us about six months to clean his books up to see what was going on, where the margins were and what was happening. So we looked at both. We looked at his vertical, we optimized it. Then we took an outward look at both sides. Sides. What happens before you get involved and what happens after? All the money was being made after.
Wow.
So then we looked for a lab that had these government contracts in place. He bought one.
Wow.
So the first month in that business, he made $10 million that month. And that created a tax problem for him.
Yeah.
So now he's like, oh, my God, I'm over the moon. He's buying three, four cars a month. He's going wild party. Like it's a big deal. $5 million a year is good. $10 million a month is ridiculous. Right?
Yeah.
So he Goes through a bit of lifestyle change, as you would imagine.
Yeah.
And then he settles down and now he's like, hey, K, so you need to help me with taxes.
Yeah.
I'm like, dude, I don't know anything about taxes. I'm like a strategy guy. I'm not a tax guy. And especially American taxes, because I'm from England.
Yeah.
So I came in, I was working a W2 job, which is the simplest tax return you'll ever do in your life.
Yeah.
And then going from that to a guy who's like, on Track to make $120 million a year.
Yeah.
Like, it's way beyond my comfort zone. Like, how do I deal with it?
Yeah, yeah, yeah.
And he just had so much belief in me because I'd helped him in this transition to all this wealth.
Yeah.
And he's like, you'll figure it out. Just casual like that. I'm like, no, dude, I won't. We'll find someone to figure it out. No, you'll figure it out. He believed more in me.
Okay.
Than I believed in myself at that moment in time.
So then you added the actual tax to the strategy, which made the entire operation go really to the next level.
Yeah. Well, it is a lot of learning in the media. Right. So I went a lot of courses, but I ended up hitting up my old company. So Floorserv, the company I used to work for, they're a $4 billion company, so that Treasury Department deals with globally huge numbers. And they're based in Dallas, in Texas. So a couple of guys in the Treasury Department there knew some guys in Dallas that were oil money, family office type guys and introduced me to those guys. So they. Then I went out and schmoozed them. Golf, dinners, all the rest of that stuff. But no one gives you their secrets, right?
Yeah.
And it's like, you gotta figure this out yourself, kid. And they'll give me little breadcrumbs here and there. But then we just did a lot of research and hired a lot of people. And we figured out the one common trend amongst all these elites was this private non operating family foundation.
Wow.
And it's like, there's something to this.
Yeah.
And then when you read. It's all there.
Yeah.
To be read on the IRS website and books and literature. But it's so boring and dry that no one's going to read it.
Yeah.
But I had to read it because I had 120 million reasons to. Right. So we read it, we figured out what the structure was, and we're like, okay. It all ends in this private foundation. Now, there's multiple levels before that, depending on how you're structured, what needs to happen. Like you said, if it's L.L.C. s Corps, it's a million different inputs into that.
Yeah.
But the end that the juice in the orange is all in that private foundation.
Yeah.
Because it could literally be the difference of him keeping, you know, 9.5 or more obviously 10. 10 of that 10 million a month to again getting tax.
We ended up serving him 10, I think 10 and a half million in that first year.
Geez, dude.
Yeah.
So that, that, that client's very happy. That client's very happy. It's just so funny, man. Because most people just don't have any idea that the private foundation is a thing.
So what not taught it.
Yeah, I know. I didn't learn about this stuff.
Well, they don't teach you taxes. They've just started teaching a little bit of entrepreneurship in school, but not really. You've got to figure all that stuff out yourself, right?
Yeah.
Because you also talk to a lot of entrepreneurs that are almost like they just made their first six, you know, six figure month or whatever. Right. And they're like looking at tax strategies. It's like, dude, you got to make more, set up the foundation, like you said, in terms of the machine, the.
Actual business, set it up before you make it.
Yeah, exactly. Because like there's no point in even having this tax, you know, strategy unless you have a machine that's working operationally. So that way you can actually scale it and then be able to continue scaling it. Right. So for you, you come in and you're like, man, you're making all this money. I'm gonna help you make even more by doing these things that are right there in the tax code for you to do. You don't have time to do it, but I'm gonna do it for you.
We do the execution.
Yeah.
So there's a two step strategy for us. One, everyone's different. So we do a plan. We say, hey, audit.
Basically.
Yeah.
Yeah. We call it roadmap. So you come in, we take your previous tax return so we can see what you have taken and what you haven't and where you can save most money. Some people don't need the full thing.
Right.
Hey, you're missing these five loopholes. You can go do them, tell your CPA why haven't they done it already? And that's the other thing we uncover. You don't have to change your CPA to work with us, but Once you realize that the person you've been working with isn't working for you, they're working for the government. And you've been overpaying for all these years because your team isn't strong enough.
Yeah.
And what we've seen happen so many times is that the team that you start with doesn't grow with you because you use Uncle Bob. CPA firm down the street when you started, but now you're doing multiple seven figures.
Yeah.
And Uncle Bob isn't doing any research on what you can be doing and what the next level is.
Yeah.
Because he's got a handful of clients, he wants to stay in his little box. But you've broken out the box and you need the next level.
Yeah.
So if you're not upgrading your team, including internal and external, then you're losing out on money Again, back to the bottom line. Right. If you're overpaying on taxes by 100k a year, what margin are you at? You need probably make a million dollars to get a hundred dollars net profit.
Yeah.
Give or take.
Yeah.
So how hard is it to go make another million dollars in revenue just to save that hundred grand that you could have saved if you use better loopholes or structures.
So if anything, get an outside opinion immediately on what you're currently doing with taxes and how your current team's doing it by an outside opinion and see what you could be missing out on.
And we even have free, like, flyers with all of the checklists in our school community with all the loopholes listed. And all you have to do is download it, send it to your CPA and say, hey, of these 50 loopholes, what are we using and what are we not using? And tell me why we're not using it.
Yeah.
And that then gives you. You don't have to do anything. It puts the emphasis on the CPA to say, hey, we could hire your kids. We haven't. I don't have a good reason why we haven't. Yeah, well, the reason is you've outgrown your professional.
Yeah, yeah, exactly. Now, this is a perfect transition for the software. Talk to me about the software and how it helps speed up this entire process for. For you and for the clients.
Yeah. So the software is called Financial Fusion.
Okay.
And it's an AI CFO that we've built. So over the years, we used to get the same questions every month and, hey, what's good? What's bad? What's going on?
Yeah.
And I wasn't a thing back then. So we would sit with our clients for hours, going through the QuickBooks, clicking through this, that and the other and getting down to, hey, this expense is really high compared to last month, compared to last quarter, compared to last month, year. Why? Yeah, and they wouldn't know. So they then have to bring their team in and explain it. The revenue was down in this one line item versus the other. Like you can see it when you chart it out over time very easily. But then you also need an explanation.
Yeah.
And that's the harder piece.
Yeah.
The strategy, like the explanation, what you've been doing with the communication, everything we've just been talking about.
So we built my brain into an AICFO.
Wow.
And now you just plug in your QuickBooks or whatever account and software you're using and it produces a month end performance report that tells you, hey, this revenue has gone up because of these two line items or expenses have gone up because of these. And it gives you in a traffic light system. So it's red, yellow or green depending on if it's good, middle or bad. And then you get a summary. You get summary, you get action points and you get key findings. So that's it. It's really simple. 10th grade reading level, so it's not too confusing for non finance people. And then the next version above that is where you can log on to the platform and you can talk to it as if it's your cfo.
But they. So most people can start downloading and using that software right away, paying for it obviously through the subscription. And then they still. The next level will be working with you on obviously the structures and everything.
We'll give your viewers a cord so they can get a discount.
Yeah, perfect.
I like that. Yeah.
So that's, that's awesome. Okay, so we've talked about loopholes that most people can start doing right now, 50 of them that they can download from the school community that you can give to, you can have them give to their cpa. They can just give it to them and say, which ones are we using, which ones are we not? And why they can do that. We talked about private foundations. Most people, including myself, have never heard about that. And that's the elite of the elite. That's why they have all the money and ultimately have a lot of control. Right. To protect their assets. Assets and obviously switching from different things there and structuring. But what would be the number one thing you would give actionable to a business owner watching right now to immediately start making more money through savings and playing defense while they continue playing Offense. Because like me, Right. I'm always playing offense. Marketing, sales, always trying to grow big vision, you know, more, more, more upside. What would be the one piece of advice you would say to do immediately?
Well, hire a better team.
Right.
Because a subset of that is do the audit. Get an audit and you'll see where the holes are. Because it's back to the bucket analogy. Right. You've got multiple holes in your bucket.
Yeah.
But if you don't know where the holes are, you can't even patch them up.
Yeah.
Right now you're focusing on putting more water in.
Yeah.
But the holes are everywhere. So if you can patch one or two of those up by doing financial audit.
Yeah.
CFO review of your books. Because then you can see, hey, these two, two services that we provide are really doing well. But these four are not.
Yeah.
So if you stop doing those four and focus on the two that are working, you can blow up the offensive game.
Yeah.
On the defensive game, you've got to look at your cash flow cycles, your budgets, your forecast, all the finance stuff. So the software can help with that instantly. But the real long term play on that is get a financial audit done on your tax returns. Because you can see you can save so much more money instantly. Day one, if someone good is doing that review and saying, hey, if I could save you 30 or 60% just by doing a review.
Yeah.
That's like, that's adding millions to the top line or the equivalent of.
Yeah.
Because you've just got a better team doing a better analysis and a better review. As you scale, your team needs to scale with you. Right. So one of our core values is lift as we grow. So we're growing, but we're lifting as we climb, right?
Yeah.
We're bringing everyone with us. Because you don't want to be sat on the yacht on your own. Want to be sat with your friends having a good time.
Right. Yeah.
So if you're helping each other grow. So if you know someone that's got a good CPA that's paying little in taxes, whether it's using a loophole like the car one that we talked about, all the other ones that we talked about, but then if they're still using them and they're still paying a lot, you need something more advanced. Right. So it's like if you look at any NBA all star team, they didn't start out like that started off with maybe a LeBron James and then they keep adding players to it until they become that all star team.
Right.
They don't buy all five, six players at the same time. So it's an accumulation over time, as you grow your business, different issues will come up as you grow well.
Right, man. Okay, well, look, everyone watching this right now. Where could they find you, Casey? Like, if they wanted to get in contact with you, get the free audit, get the analysis, get the tax review. How are they building in contact with you?
Yeah, just hit us up on the website. It's together cfo.com and you can get all the information on that beautiful dude, Casey.
Thank you, my friend.
Appreciate it.
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