110: Everything DSOs Need to Know About ERCs (Employee Retention Credits)

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You have this natural talent, this unique ability. Hello everyone and welcome to another episode of DSO Secrets. I am Ken Kaufman, your guest host today, filling in for the ever illustrious Emmett Scott. I'm very excited to introduce our two guests today. First is Mark Rudolph. He's a CPA and currently the leader of the DSO Focus Group at Elliott Davis, which is a top 50 accounting firm in the United States. Prior to this role, he was the managing partner and CEO of a CPA firm that grew from six to 26 partners and did it rapidly and created all types of complexities. And because of that, he actually relates to DSOs and some of the challenges of growth in managing teams and organizations very, very well. He just understands the complexity and the pains and winning the hearts and minds of people along the way. So he brings a phenomenal perspective to this. Also his colleague JJ Littrell, also a CPA at Elliot Davis. She leads the outsourced accounting and consulting for the firm to DSOs, to those who are either trying to create the structure or those who have become a dso. She works with a lot of emerging DSO groups. She also became the practice group leader for employee retention credits, which is the main reason why we've got her on today. That's going to be our subject. She has supported over 200 companies in helping them determine if they qualify for the ERC or the employee retention credit. So far, 60 of those companies have qualified and have actually received the credits. Mark and jj, welcome to the show. Mark, why don't you kick us off and then we'll throw it over to JJ for a quick intro.

Thank you so much. We appreciate the opportunity to be with you. Ken. It's been a great time to be in this marketplace within a consolidation in DSO industry and what an unusual year we've had. It's just been phenomenal to see the response to something that everyone was dealing with globally. And all of our customers and friends in the industry have been seeking and overcoming obstacles and Using everything available to get better and better. And just really proud of JJ and the team that we work with and our response to that and looking for opportunities like the erc. Just another way to make something good out of a bad situation. So looking forward to hearing more about JJ's approach and hopefully it will help others. And we're certainly available, ready and willing to help anyone any way we can.

Outstanding. Thanks, Mark. So, jj, let's go ahead and kick this off with a question here to get this going. Why should dental practice owners, group practice owners and leaders and DSO leaders, why should they care about this employee retention credit?

Thanks, Kenna. That's a great question and a perfect place to start because I think understanding the magnitude of these credits can really help get people excited and interested about learning more. So the punchline is this. These. These credits are available to businesses, depending on a number of things that we'll walk through today. But the big news is that if your business qualifies, you can get up to $5,000 per employee that you paid in 2020 and and up to $7,000 per employee that you paid per quarter in 2021. So essentially up to 28,000 in 2021 and up to 5,000 per employee paid in each of those years. So a lot of money on the line here. You guys are probably quickly doing the math of what that might mean for your practices and just important that this program gets out there. I feel like PPP stole the limelight. Everybody knew about PPP and the HHS funds and all that, and this program has just kind of been lesser known, but still really, really powerful and can be used alongside these other programs to really maximize the COVID relief that's available to businesses. So it can be. Can be really impactful for practices. And that's why we want to talk about that today.

Oh, that's great. Thank you. And we really appreciate you being with us and sharing your expertise. So can we jump into. And I know there's a few layers to this, but can we start to jump into how. How do I know if I'm a DSO leader or a dental practice owner? How do I know if I qualify?

Yeah, that's a great question. So the first place you start is as an employer, do you qualify? So that's the first kind of threshold that you have to pass is as an employer. So as a business owner, do you qualify? There are affiliation conversations that need to be had. So depending on your structure, you've got to look at potentially each of your locations or each of Your entities can be looked at separately or together, depending on your structure. So really important to understand that there are affiliation rules that are different than the rules for ppp. So a lot of folks are familiar with ppp. That was an SBA program, this is an IRS program. So they made it really challenging for business owners and have two completely separate sets of rules. So looking at your eligibility as an employer is the first place to start determining what affiliations need to be brought in together. Oftentimes, having a management entity that may manages each of the locations or each of your entities can qualify you as an affiliated employer. But essentially you're looking at your business and one of two things happening in your business in 2020 and or 2021, this is an or, this is not an and either your business was fully or partially suspended by a government order or you had a decline in gross receipts that in 2020, any calendar quarter you had a decline that was more than 50% of your gross receipts. In that same CalendarQ19 or in 2021, you had a decline of 20% of gross receipts as compared to that same calendar quarter of 2019. So we're looking back to 19 when we look at gross receipts and then we're looking at the dates of government orders. So I know a lot of folks, depending on what state you're in, your practices may have been shut down by a government order where you're only allowed to do emergency procedures that happen to a lot of our practices. So that's where a lot of our practices will qualify as under the government order. But certainly if you had a situation where your practice or your business as a whole declined by those amounts, then you can qualify there as well.

Great.

So just to clarify, then that's an either or, that is you don't have to have both. You don't have to have been suspended or shut down in some way and seen the 50% reduction. If I was shut down and I only saw a 20% reduction, the beans shut down under government order still, still gets me past this first threshold of does my business qualify?

Right.

Exactly. That's right. So the gross receipts gets you a much longer period of time. You essentially, through a number of different ways and circumstances, you end up with a six month window of your eligibility, minimum six months if you qualify under gross receipts. But most of our DSO practices are looking more to that government order. And so the good news, and I use that very loosely in this whole conversation, it's never good that your practice is shut down by government order, that we were in this situation that we found ourselves the last 15 months or so. But good from a standpoint of qualifying for the credit. If you have one or more of your practices locations, depending on your affiliation structure can make your entire organization eligible. So if you have practices that are in states, let's just for example say Tennessee and North Carolina. If you've got practices in Tennessee who are affiliated with practices in North Carolina, as long as your Tennessee practices are large enough, they can qualify your North Carolina locations for the credit even though North Carolina did not have a government order to shut down. So there's really, there can be some really, really good opportunities if you have multi location practices where you can pull in these different locations and qualify the entire entity, which is great.

JJ maybe can you share with the group? I know we've asked you and your team a lot of questions around gross receipts. Again you mentioned this is an IRS program. So first of all, it doesn't matter. The stimulus doesn't impact whether you qualify for this or not, whether or not you got a stimulus package. Secondly, do any of the stimulus funds count toward the reduction of gross receipts or they excluded and treated as a loan?

Yeah, that's a great question. So the I have to use this disclaimer that it depends on the program and it depends on the entity. I'm assuming we don't have any nonprofit DSO folks listening. If you happen to either maybe have a, you know, a passion project that's a nonprofit or something in your life, it's nonprofit. This doesn't apply to that. But speaking to for profit DSO and dental practices, then yes, that's correct, Mark. So the PPP funds for example, are not considered part of your gross receipts when looking at that decline from 19 to 2020 or 2021. So those are able to be excluded from the gross receipts calculation. So it truly is the gross receipts that you're generating from your business. Also, you know other interest income things like that are included. You do not include discounts. So if you have a discount program, etc. Then that would not be included. But there's the gross receipts definition is about this long. The good news is you can use income tax basis or GAAP depending on what you typically are using for your internal financial statement. So if you are a cash basis tax filer, but you use accrual statements internally, you can certainly use those. You just can't pick and choose your different periods and your different methods. So if you are tax cash basis filer for tax purposes and you don't have accrual statements otherwise. And you need to use cash in all periods. You can't use accrual in 2019 and then cash in 2020. To make the numbers work, you have to be consistent throughout.

That's actually really helpful to understand. I'm actually grateful, Mark, you called that out because that gross receipts term, you've got to get that right. And if you don't, that could throw the whole submission off, I'm sure. What other elements of qualification then do these DSO leaders need to be thinking about in terms of if they actually qualify? Because I understand there's the business element and then I think there are other elements. So can you start to unpack that a little bit for us?

Absolutely, yep. So to kind of wrap up. So the high level is it's your gross receipts decline or your government order, one or the other. Something else to consider that I think probably impacts a lot of practices that are listening is there are some really, I'm going to say generous because sometimes we don't see things in the favor of the taxpayer. We see some of these programs come out, but we do feel like they were generous when it comes to acquisitions. So if you acquired a practice during 2020 that if you were to obviously include that revenue in your 2020 gross receipts and you don't have it in 19, that would obviously throw you way off from your gross receipts calculation. You are able to do some kind of normalizing inside of those financials. Assuming that you have 2019 data from your due diligence, you are able to use that to get an apples to apples comparison. So we were happy to see that, didn't expect it, but glad that it's there because we do know that some practices were acquiring existing practices last year, even throughout the pandemic. So important to know that if you are acquiring either this year or last year, you are able to normalize that with 19, assuming you have that information. So that's the most important thing for qualifications, one or the other. It doesn't have to be both. Gross receipts qualifies you much longer. Government order is just for the time of the government order and you have to exclude other programs that paid for payroll during that time. So what we've seen is that a lot of practices qualified during the same period they were using ppp. So there's less wages available there. But there still could be meaningful credits depending on your situation.

Okay, great. Very helpful. So being considered a quote unquote small business is also an important element of this. So can you walk us through what does it mean to be considered a small business for the purposes of this employee retention credit. And why, why does it matter where you fall in that analysis?

That's a great question and it's really important. It means the difference between very, very small credits and very, very large credits. And the definition of course changes from 2020 to 2021 to keep small business owners on their toes. So in 2020, the number, and I'm going to get into what this number means because it of course means something different than what we're used to from some other programs. But in 2020, the number that we're looking for is 100 fewer than 100 full time employees. In 2021, we're looking for 500 or fewer full time employees, being very careful not to say FTEs, because that is not what is written. It is actually full time employees. And we're going back to 2019 to look at this number. So I tease a lot that this is a really poorly named program. Employee retention credit leads us to believe that there's probably some measure of how many people you had versus how many people you still have. That's not true. The only time we're ever looking at headcount is in 2019. So we're looking at your 2019 headcount for all affiliated entities. So whatever affiliation you figured out in step one, now we're looking at all of those groups to see headcount in 2019, that is done by month, by person. So what they're looking for is 130 hours worked in each month per person. So for example, if Mark was to work 128 hours in January and I was to work 140 hours in January, that's one full time employee. Mark is zero and I am one.

So your part time. So because the FTE stands technically for full time equivalent, where you can just divide the total block of hours that have been worked by everybody and get the number access. Be an employee that works at least 130 hours in the month.

Exactly. Which is great. That can be very favorable, especially for practices that have a lot of folks, you know, maybe if you're closed on Fridays or if you have a lot of folks who work kind of split shifts and also split jobs. So if you have, you know, maybe your front office folks are working, you know, six hours a day and they split those days throughout the week, etc. You can end up with really favorable. The most favorable outcome is to have the fewest number of full time employees so that you can qualify as a Small business. The reason that's so important to whether or not you qualify as a small business, a small business is allowed to have all wages paid be considered for these credits. If you are a large business. So in 2020 that's having more than 100 full time employees back from 19 when you did the credit or more than 500 in 2021, then you are only able to take the credit on wages paid to individuals who were not providing services. Typically what we found is a lot of practices used PPP wages, PPP funds to pay for that kind of payroll. So oftentimes there's not much left for large employers, particularly in 2020 because threshold is so low, we're not seeing a lot of kind of meat left on the bone. If you've already used your PPP for those payroll wages, there's not much left to take ERC credits on. So that's what we're seeing for large businesses. But if you qualify as a small business either in 2020 or 2021, then all of the wages that you pay could potentially be eligible and that includes certain health care expenses. If you're paying health or dental benefits or vision benefits for your employees, then those premiums that you're paying also are considered qualified wages.

Great. So helpful. So yeah, and of course they didn't make it easy. 100 employees in 2020 and then 500 in 2021. Can you walk us through? I want to jump back just really quick to the affiliation element because this is something that can get a little bit confused and possibly convoluted amongst DSOs where you've got practice owners who sometimes are the same or different than a management type of a company that may or may not be the same as the ownership or there might be commingled ownership all the way up at a DSO type of A level or a MAST company or mso. Can you walk us through or give us some of the tips and tricks you've seen for as people have tried to figure out what should I and shouldn't I count as affiliations based on, you know, I've got these different practices and different management companies and so on?

Yes. So this is a situation I do recommend phoning a friend here. Typically this is going to be something you need to walk through with a tax advisor or someone that's doing these credit regularly because these affiliation rules are so specific and they are very different than ppp. So we've even found some practices who have a legal opinion on their PPP affiliation can't even use that opinion on erc because the rules are so different. But things to think about and consider any ownership that has identical ownership, and that includes constructive ownership. So that's through your family. So if you I own something with a spouse and let's say we own one entity 70, 30 and then we own another entity 50, 50, we're considered constructively owning 100% of each entity which is considered identical ownership anytime. Identical ownership. I feel confident saying even on the Internet, if you see identical ownership, those entities are affiliated. Outside of that, it gets a lot more tricky to depending on how each of the locations are kind of subdivided, who owns what, and then also looking at what their relationship is with any kind of management company. So if there is a management company, that's another pretty good indication that you're going to have affiliation. Even though the ownership, the owners may be different. If there is that final management company, then oftentimes that can affiliate you as well. So one of the things we'll talk about throughout this is phoning a friend when appropriate, whether it's an attorney, an accountant, et cetera, particularly if you have a more complex structure or situation, just to make sure that you're dotting T's and crossing I's, because we haven't really talked about this yet, but this is facilitated through your payroll tax return. And my personal opinion is that that was partly because there's already a lot of teeth in that regulation. So if you make mistakes in your payroll tax filings, there are really significant penalties, interest, etc. That can accrue even personal liability on the owner. So really important that you work with someone. And please don't just take advice from a podcast and go get millions of dollars of credit. Work with someone on what your actual structure looks like and how those affiliate to make sure that you're doing that correctly.

I really appreciate you sharing that. That's, I think, really important for our listeners to understand the places where a judgment call on their part could end up costing a lot of money or maybe even an IRS tax lien on their house at some point down the road or bank accounts levied and things like that. So I think that's a very meaningful warning. So we've talked about what the small business definition is. Walk us now into how these wages are calculated, like the eligible wages, and how you end up getting to this 5,000 or 7 $5,000 for 2020 or $7,000 per quarter in 2021.

Absolutely. So I'll give you just kind of a quick and dirty way to look at it just. If you're just in the car and you listening to this and you want to know what could it look like for you? Think about your employee population in two segments. Those who make more than $40,000 a year and those who make less. If you make more than $40,000 a year on average, whatever part of your population is, you'll probably be able to max out credit. There's an asterisk there around the other programs that you're working with. If you've had PPP or HHS funds paying for payroll, et cetera, but that can give you an idea of you're going to have the highest likelihood of success there. And then you have your population that is under $40,000 a year and then you can kind of segment that and say, okay, most of those folks make X percentage and kind of give you just a quick and dirty idea of what you might be looking for. Something else to think about. If you have a generous health benefits program where you're paying a large percentage or all of your health benefits for your employees, that can kick up your under 40 folks to over 40 pretty quickly. If you've got 800, $900 in health expenses for each of those folks per month that gets, you'll get to that eligible wage number really quickly. So I kind of like to do that as just that gut check of is this worth the time and paperwork that it's going to take to go through this? So kind of starting there, but the way that ERC works, and I keep comparing this to PPP because I think that's a program folks are really comfortable with and have spent a lot of time on in the last year. So PPP you were able to kind of take a really broad brush across number of pay periods and you could look in total the exception of some of your high income earners and things like that, but you could take kind of a broad brush. ERC is actually done by person, by pay period. So it is a much finer detail that you go through to get to these maximum wage limits. So you would go through, for example, Ken and Mark, if you were on Payroll, this is W2 payroll. So you cannot use 1099 wages. This is all W2. But if you all are both on payroll, we would look at each pay period that you were paid and as soon as you got the $10,000 in all of 2020, then you would max out. You'd get your $5,000 credit and you would stop. If you have individuals who make less than 10,000, you'd continue to look at each of their pay periods and get as much credit as you could. Essentially 50 cents on the dollar until you get to 10,000 or you run out of time, depending on what your, your time period is. Which is why it's so important to think about that gross receipts versus the government order. The longer time period you can have, the more eligible wages that can be brought in. Something else to think about is this is paid, not incurred. So for example, we have a lot of practices who went under a government order back on March 18th, 19th or end of March. And then, you know, they have only six weeks or so until their PPP kicks in. So they've got kind of a limited space that they were able to use erc. But the good news, again, air quotes there, because it is just related to this program. Oftentimes there were payrolls that hit in that last week or two of March that were for time incurred before the practice was closed. And all we're looking at here is when it was paid, not when it was incurred. So if you have a government order that hits on the 18th, but you had a payroll hit on the 20th, that whole payroll is eligible for these credits. So that can be really, really important. The pay date, especially looking at 2020 versus 2021, if you have a pay date on December 31st, that's still part of your 2020, the maximum $5,000 per person per year versus a payroll that hits on January 2nd, that pay would hit for your Q1, $7,000 credit opportunity.

So really, because the payroll tax, the payroll tax forms, all of those are done based on when paid and where it's, you know, this is an IRS run program that this retention credit is, is handled by the irs. That that makes sense, that that that lines up because it's not about what pay period they worked, it's just about when those paychecks were cut and left your bank account as an employer.

Exactly. Yeah. Gold star for you, Ken. Most folks really struggle with that concept because they just don't think it feels right. But you're absolutely right. That's exactly why.

Yeah. Well, what synced it up for me is at the beginning, when, when you clarified this is an IRS sponsored program versus an sba, the SBA would have probably it would be more complicated than this.

That's right.

The irs, everything's about when paid. So. Okay, so do you feel like, have we covered all the way what wages qualify or. There are some more details that we need to unpack here to make sure our listeners are confident with about what actually qualifies as wages.

Yeah. So something else I'll share that we see a lot in dental practices is around family members wages paid and owners whose wages are paid. So whether this is good news or bad news, any owner that owns more than 50% of a business and this is looking at your affiliations and their direct family members, it's a long list. It's about 14 direct is very generous. It includes step brothers and sisters and daughters and grandparents and spouses, etc. Even if they are legitimately working in the business. It's not about that. This is just if you own more than 50% of the business, then your, your W2 wages and your family's W2 wages are excluded from these credits. So that is something that we've run into quite a bit with practices. So I just like to highlight that.

Yeah, that's a great point. Okay. Anything else around what qualifies?

I don't think so. I've said it before. I'll just say it again. You just can't double dip. You can't get paid for one payroll dollar more than one time. So if you use ppp, you can't also use erc. If you had FFCRA is another great program where people got paid. It's also people refer to it as Covid sick pay. If you had Covid sick pay, you can't take those wages for ERC as well. Those have to be excluded. So just remember $1 gets reimbursed one time. You can't use multiple programs on the same dollar, but you can use multiple programs on the the same employee, just not the same dollar.

Yeah. So. Oh yeah, go ahead Mark, please.

I was just going to say. I know another thing that we've talked to you quite a bit about is the timing of forgiveness and the way forgiveness was being calculated. Are there any opportunities to revisit or to strategize around that to maximize the opportunity from each program?

Yes. So Ken, I'm going to just give some free value right here to your customers. Those of you who have not filed for forgiveness yet, whether that's 2020 or 2021, obviously maximizing PPP forgiveness is going to be your first priority. Because of that being a dollar for dollar versus this being, you know, 50 cents or 70 cents. But to the extent that you can use the longest period possible up to 24 weeks and maximize your non payroll expenses on your forgiveness application, you're going to put yourself in the best position for maximizing the employee retention credits. If you are able to qualify. So if I have rent, like if

I had enough rent to qualify for the PPP forgiveness and other, what were called, you know, fixed expenses, if I could get all of my PPP forgiveness based on that and leave all this payroll alone, then that allows me to then come behind with this employee retention credit. Again following all the eligibility requirements that you just identified.

Exactly.

Am I following that? Right?

Yep. There's still a 60, 40 for PPP where you do have to have some payroll. But yes, if you can maximize your non payroll expenses and use the longest period of time possible, which feels counterintuitive. It's not what we thought they were going to come out with with this guidance. When they said we could do the two programs together, we thought they were going to go a very different way and they didn't. They actually were again, generous in air quotes but allowed for these programs to work really well together. And the way, the best way to maximize that is take as long as you can with your payroll and as many non payroll expenses as you can put on there because of how they allow you to layer. And I will also clarify, PPP doesn't care about erc. ERC cares about ppp. So you can go ahead and do your forgiveness for PPP and not have even considered ERC yet. And then you can go back and look at ERC and file that and PPP doesn't care. PPP is okay with whatever you do with erc. ERC cares what you did with ppp. So give yourself time to go through this calculation, to go through this process, to figure all this stuff out. But give yourself the best. Set yourself up for the best scenario you can with using the longest period possible with as many non payroll expenses. You may have gotten a million dollar loan and you might put $6 million of expenses on your forgiveness application. That's great. That's what you want to do. Counterintuitive. But it is the way that you can layer these programs together. If you get down the road and realize you did have an opportunity to take erc.

Outstanding. So do you feel like at this point, jj, we've successfully educated the listeners in the audience on how to go about calculating the credit or is there a little bit more to unpack there? Do you feel like we've gotten as far as we can with it?

Yeah, I think that's the most important thing to think about is this has to be W2 wages. Exclude any owners or their family if they own more than 50% of the business and then just you do have the health, dental or vision insurance. If you're covering those premiums for your employees, then you can include those as well. And just don't double dip. Just know taking any payroll dollars that you've already taken somewhere else, I think that's probably the most important thing to consider too. Any other if you have WOTC credits, not a lot of our practices do, but if you have, you're getting any work opportunity taxes, credits and things like that, R and D credits, any of these payroll credits, you just can't double dip.

Perfect. So one last area to cover here before we jump into the lightning round, and that is what is this process to get the money? It was really interesting with PPP how all of a sudden everybody in America seemed to become an expert in the process of applying for an SBA loan and getting certain numbers assigned to you and what that meant and what time was left. So because there's been so much focus on PPP like you mentioned before, and not as much on this employee Retention Credit or erc, can you maybe educate the listeners a little bit on what they can expect this process to look like in order to go through? And then obviously getting the credits on your payroll tax forms is a very different way than I think anybody's used to getting credits. And could you walk us through the process a little bit and help our listeners get their arms around that?

Absolutely. So, unfortunately, this is not as cash flow friendly as programs like the PPP or even HHS funds were. The process is you are actually utilizing your payroll tax forms to file these credits. For quarters that have closed and you've already filed your 941s. You're going to have to file what's called a 941X. At the time of this recording, those were only allowed to be done by mail. So unfortunately, it's a very slow process. The rumor is that the IRS is about 90 days behind on opening its mail. So it's unfortunately a very slow process. It is a manual mail in the form, and then once they actually record that form, then they process it and then they will send you a check in the mail, an actual check in the mail for these credits. So unfortunately, for periods past, it's just going to take a long time. We've been tracking the timing of our customers and then the credits that they've been getting, and unfortunately it's looking like 16 plus weeks from when they mail their forms until when they actually get their checks. So I only expect that process to get longer if they don't Change the process now. Again, at the time of this recording, it could only be done via mail. We're hopeful that maybe they will make a better process or allow you to use credits in other ways so you don't have to wait on a check in the mail.

Real quick before you keep going. It's something we missed earlier, but if, if I haven't filed for my employee retention credit and I let's say back to Q1 or Q2 or you know, back in 2020 I did, at what point when is the statute of limitations or when can I not go back and amend prior payroll tax forms?

Great question. That is currently a three year statute of limitations from when you filed your original 941.

So. So somebody could sit on this for a couple years and then go back and file this and receive their employee retention credit. Is that accurate? Okay, that's right. Sorry to get us off track. I just wanted to clarify because I knew somebody would have that question.

Of course. Yeah, no, it's a great question. So 941X and amended 941 is how most folks are going to get these credits. The good news is I lovingly refer to this as buy one, get one free quarters. So in 2021, you are able to use your eligibility in any 21 quarter to automatically qualify you for the following quarter. So if you qualify based on Q1, so let's say you had a gross receipt and this is gross receipts, this isn't government order, but gross receipts decline in Q1 there was a 20% or more decline compared to Q1 of 19. You automatically qualify for Q2. So if you file electronic 941s and you've got 30 days to do it based on when we're recording this, then you are able to, if you can get your employee retention credit on your original 941 and E file it. That is the fastest way to get a full quarter refund. If you can get it on the original 941, you've got to move really quickly to do that. You've got to work with your payroll company and be comfortable that you've worked through this whole process. But if you could do that in the next month, then that's great. The other good news is if you qualify in a quarter the following quarter, you obviously know you qualify because you have the previous score to qualify on. You can actually short pay your federal payroll tax liability in anticipation of these credits. Typically, the credits are far greater than your payroll tax liability. So you're still going to end up where they owe you in the end, but it at least helps that cash flow immediately. And I believe that's part of why they allowed you to get this buy one, get one free is to kind of associate that cash flow a lot faster than having to wait on them to open their mail.

So wait, so you're saying waiting for 16 weeks to get a check from the IRS versus just reducing your payroll tax liability immediately when due, you're saying you'd prefer the latter.

I agree, yes. And people can't believe this, but you are able to reduce your entire payroll, federal payroll tax liability. So even the taxes that we withheld, let's say from Mark's paycheck, we can reduce our liability by that as well.

That's significant. So it's not just the fight, it's not just Social Security and Medicare, but it's actually the income tax withholding as well at the federal level.

That's right, yeah. So that's, that's a good, that can, that can be a good cash flow. Again, it's usually not even 80% of the credits that you're able to get, but at least it's some cash flow while you wait on the government to open their mail. So that's, that can be important as well. There is, you'll hear some talk about a Form 7200 which is intended to speed up the process. It didn't go well. They tried that and they have actually stopped accepting those forms now while they try to make that better. So the good news is that by stopping those forms now, I'm hopeful that that means they're creating a program to get this cash faster. The bad news is that that form isn't available right now. So if you are trying to get this to speed up, you're kind of out of luck until they figure out what to do next.

All right, Mark and jj, this has been a phenomenal session. This is high density value packed information that I think our listeners are really, really going to benefit from. I'm going to jump now to our lightning round. This is where we have a little bit fun and then we'll take a minute or two to wrap up at the end. So, Mark, we're going to start with you on each of these questions and you throw out your answer first and then j. And we'll just, we'll work our way through these few questions. The first one is what are you currently working on, Mark?

So we're modeling, you know, through all the change it's been through that we went through in the last year and all the transitions and transactions at the end of the year. Normalization has been the key. What in the world do you budget for? How do you project? How do you model for 2021? But we're so we struggled through that, got to where we needed to be. But more importantly, what's 2022 and beyond look like? I mean, obviously there's a threat of higher taxes, threat over inflation, there's supply chain constraints both on actual supplies, equipment expansion, et cetera. But more importantly, people, the labor market for professionals and all staff has been challenging. So the thing that we're spending the most time on is continuing to monitor current year activity against what we had hoped to see and what we're planning around, but more importantly the long term planning. So that's, that's a big part of our world right now.

Awesome. Jj

the number one thing I'm working on is trying to tell as many business owners as possible about these employee retention credits. I just, I think the communication has been terrible and there's money out there for businesses and it's not as subjective, but there's nothing. It can't run out. It's just related to whether the math works. So just trying to get that into as many people's hands as we can. We do support these credit calculations for a lot of our customers, but biggest thing is just education, making sure folks know that this could be something that they could tap into and getting folks to know what's out there for them.

Great, great point. All right, Mark, what are you the most proud of?

So you know me well enough to know Ken, I'm a big basketball nut. I've always been a team sports. When I was a freshman in college, I had a professor who I thought was ancient. He was probably in his late 40s. He suggested that the best, the happiest people in the world and happiest business people in the world were those who made sure everyone around them on either side of the table was a little bit happier than they were. If everybody else was a little bit happier, you'd be a very happy person. I've been very proud of teamwork in family and business and every that I do. And some people accuse me of being too optimistic, but I absolutely love the people I work with, both within the organization and the customers we work with and really just enjoying life around that.

Outstanding. Jj.

Oh, mine's a little less deep than that. I was going to say that I am proud that I read over a hundred books last year even with Everything going on with two small kids and school clothes and work being busy. I was still able to read 100 books last year.

Dr. Seuss.

Yeah, I did read a lot of Dr. Seuss.

Also business or do you have a genre that you're really into?

Both. So I like just the beach reads. Kind of easy, silly, you know, kind of comedy type books. But then also I'm a fanatic about business development books and books where we can kind of think about how we run our business and how our customers run their business. So love the one thing is my favorite the Gary Keller Jay Papasan. I really think that that is life changing and I read it probably once a quarter.

Oh, that's amazing. That's great advice. All right, Favorite sports team, Mark?

Unfortunately, it is the Washington football team.

Okay.

Grew up in the DC area and so been a fan without a name.

Jj.

Mine's more unfortunate than that, I think. University of South Carolina, my alma mater. I went there for undergrad and I just have a soft spot for underdogs, so.

All right. Go Gamecocks.

That's right.

All right, Mark, favorite hobby?

Tennis.

Tennis. And jj, besides reading.

I know I was going to say reading obviously, but playing with my two kiddos. I've got a five year old, a seven year old and being able to hang out with them.

Nice. Mark, favorite app on your phone?

It's still Google. It's how I do all my tax research.

And jj, mine is Instagram. I am a scroller, not a poster, but I get a lot of value from the context posted there. So Instagram.

Outstanding. And then this is for our accounting, the accounting nerd that's in us a little bit. Mark, favorite spreadsheet function.

Mine is share my screen so the analyst can help me do it. Right.

JJ's reaction tells me that that's exactly right.

I love it. Yes. That's so good. I tried to take something a little bit different. So mine is go to special visible cells only. I love being able to, you know, sort and filter and all that and then grab just that information in that filter and do something else with it.

So nice.

O2 special invisible cells only.

All right, well, this has been fantastic, Mark and jj. This is the place where we're about to wrap up any last advice, parting advice you give to these dental practices groups. DSOs around the employee retention credit.

From my perspective, it's just that this is an incredibly exciting time in this industry. It's a wonderfully opportunistic time. We're far enough into the consolidation and the Change to have a good foundation and have a good feel. But we got enough Runway that we've got tremendous opportunity and great people to work with and a lot of traction. So I just think enjoy every day. Ignore all the obstacles and hurdles and have some fun and let's make things happen.

Awesome, jj.

I think for me it's just lean on your network, lean on your support group, lean on other folks who have done this and gone maybe before you or beside you. I think sometimes, especially in light of the pandemic, we try to maybe do it all and know it all and see it all. And I would just say phone a friend. Lean on other folks that have done this. Lean on professionals and experts in each of these areas, whether it's employee retention, credit or PPP or any number of things that we may see. You know, lean on your network and have a great group of folks that you can lean into, from HR professionals to attorneys to accountants. Bring that group together so you don't have to do it all.

Teamwork.

All right. Oh, go ahead, Mark.

I just said teamwork.

That's right. So besides being on the DSO Secrets Facebook group, what would the other methods be that you prefer for folks to reach out if they've got questions for you?

Yeah. So Mark and I will both be in that group if there's questions. Happy to share. And then I think probably just emailing Mark is a great way to get into our DSO group and into our communications and that sort of thing.

Happy to be the air traffic controller there and connect anybody with whatever member of the team is best suited to answer questions and help through. We love to do that. So, Mark Rudolph at Elliot Davis.

Very good. And that was a dot com, in case you missed it.

Yeah.

Foreign.

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