Dental Financial Planning: Turning Chaos into Financial Freedom - Part 7

Welcome back. It's Wes. Let's carry on. Financial planning for dentists Turning financial chaos into financial freedom. I am doing, really part two of the tax side of this. I just got done talking a lot about the mechanics of the way the tax process works. Hope you follow that. I think it's important to understand that because sometimes you've got to direct your cpa. You have to be the one that's intentional about your tax return being done and your tax planning. Because a lot of CPAs are just so busy, they just don't stay ahead of it and it's all last minute and none of us like that. And then, boom, you get hit with a big tax bill unexpectedly, and it really sours relationships and turns a lot of CPAs, a lot of dentists a bit against their CPA. So in my perfect world at practice, CFO, if we do our tax planning right, you're gonna get a small refund. Ideally, perfect world, you're getting $1,000 refund. A lot of times our clients are getting a lot more than that. They're getting 5, 10, 15, $20,000 refund. Sometimes it's 80, $100,000 for a. For some of our bigger clients, it tends to be. Because I'm usually a little bit more aggressive at preparing for the taxes, at withholding a little bit more. Because if there's one thing we all hate, dentists, you hate this, and I hate it too. Is unexpectedly owing something at tax time. This is why as we meet three, four times a year with our clients, we are very on top of that and will withhold sufficiently so there aren't surprises. Every once in a while, something sort of sneaks up and maybe some tax document was, was missed or December collections popped out of nowhere and there was more income and a tax a little bit extra taxes were due from that, but for the most part, we are issuing refunds, small refunds around here. I don't mind it if you have to pay a little bit, you know, three, five, $8,000. That's not the end of the day. It's when you owe thirty, forty, fifty, eighty, hundred thousand dollars. That's what we really, really don't, don't like. Let's carry on with this. What we've talked about so far is you do something in the beginning to make sure you're withholding enough in taxes through payroll or an estimated payment in January, February as you get going in the new year. And then sometime around June, you want to do a forecast. Very easy to annualize. Take your Net profit divided by the number of months times 12. And now you have an annualized forecast of what your net profit is going to be. And then you can readjust your quarterly estimated tax payments and or your W2 tax withholdings in order to meet what is the projected obligation. Then I like to do a year end, a year end review. This is usually in October or November, sometimes early December. But we look, we do, we annualize it again. Now at this point we have nine or 10 months usually of financial statements to just do an easy forecast for the rest of the year. It's going to be fairly accurate at that point. And then you can make any final pivots or adjustments to your tax withholdings or payments before the end of the year. Now, estimated tax payments, the final fourth estimated tax payment is, is due by January 15 after the year is over in order to not be late. And W2 tax withholdings obviously have to be done inside of the payroll, which is going to be due by December 31st. Now, it's really important that that December 31st payroll, a lot of you are on first day and last day of the month. It's really important that you don't be late on that last one. If in your tax projection you were including that last payroll in December and the tax withholding toward your tax plan. And that's happened a few times, especially around the holidays, we get the hours in a little bit late. Next thing you know, the deposit is on January 2nd and not December 31st or December 30th. You want to get that in on time. Now at practice cfo, we really have all of our clients, as much as we can get them to do this, to change their payroll to be the 15th and the last day with a pay period end date a week before those points. So on the 8th is when the cutoff is for deposit on the 15th. Because when you have a week, it just gives you breathing room and time to collect the hours, review them, authorize them, get everything in, and then on the last day we'll usually do it, say on the 23rd.

Sometimes that's going to give you six days, sometimes that's going to give you eight days. But that usually gives you enough time. Sometimes February can get a little tight there. And it's very consistent. And the reason why I like that a lot better than every other Friday or every two weeks is because I know that every payroll, every month of the year there are two payrolls. And so when I do a tax projection, it's a lot easier to to plan how much to have per payroll because you don't have a month that has three payrolls. And if you're every two weeks you got two months out of the year where you got three payrolls and it throws off the whole cash flow forecasting. I like every month is the same amount going out for payroll pretty much and not having these spikes twice a year. And I think employees like that because they, they have a paycheck fresh on the first day of the month to cover rent or mortgage payments on the first day consistently. And then halfway through the month they have sort of a layover with the paycheck. And that is by far the most ideal from a cash flow planning standpoint to do your payroll. Now I bring that up, all that up to say that a lot of your taxes, your federal income tax and your state income taxes are going to be paid through your payroll. For most clients that practice CFO, this is going to be probably 90% of clients that practice CFO, we pay 100%, 100% of their federal and state income taxes as a payroll deduction on their W2. Are you looking to buy or sell a dental practice?

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T and so it flows through the profits, untaxed profits to you personally or again, if you're a partnership, it flows those out to your corporation that owns your interest in the partnership. So that K1 flows out. I'm going to assume you're an S corp. It flows out from your S corporation and it lands on your personal 1040 tax return. So now you got your W2 stacked on top of your K1. That's where the flow through profits is identified on your K1 and the sum of those two things unite to be what is your taxable income. Now add to that. Of course, if you have a spouse who has income, you're going to add that if you have interest, dividends, rental income, capital gains, other forms of income will also be layered on top of your W2 and K1 to arrive at taxable income. And then you'll have certain credits like the child tax credits and a few other things to ultimately arrive at what you're paying in taxes.

Now a lot of CPAs will have you do these quarterly estimated tax payments. Here's why I don't like quarterly estimated tax payments. There are two main reasons. Number one is it's manual work and you are already so busy that I don't like to have to send you instructions to create your IRS account or you don't necessarily even have to create an account, but you have to go online and make these payments or your state tax payments online or to write a check if you're a little bit more old school that way. It's a manual process and you can't you got to do this and if you forget to do it the then things are misaligned and sometimes we think you made the payment and maybe you said you were going to make the payments and we assume that you did. But then you forgot this happened a few times where we then file as if you made the payment but you didn't actually make the payment. And then the IRS sends you a letter saying you got that wrong, you have to make that payment plus a little bit of interest and penalty on that as well. And because we don't have visibility into your personal checking account, I don't know if you actually made the payment or not. Here at practice CFO we often like to have you make. If you have to make an estimated payment, we have you make it out of your corporation actually and we call it a draw. But if we do that, it gives us visibility into it that you made it. We have evidence because we have access to your business checking account for accounting purposes. And now we can see that. And the way that we do things here at practice CFO to be extraordinarily organized around this is we have on your QuickBooks set of account listings things like your supplies and your labor costs and your phone bill. You have this list of accounts that shows up on your profit and loss statement and balance sheet. We have in your distribution list. These are what are called equity accounts because they're not tax deductible. In your distribution accounts we will have different types of distribution accounts. We'll have one for designated distributions for things like a big trip to Hawaii or funding one of your kids tuition payments at college. It has a debt designated purpose when you pull that money out of your business.

Other ones are surplus distributions. Those are the ones we didn't know about it, we didn't plan about and can really throw things off. That's when doctors tend to overspend by using their corporate checking account as a backup atm. We don't like those, we try to prevent those and have a plan for every dollar. That's what good discipline and financial planning is and that's what accelerates financial independence. We will have a few others on there for different specified purposes of making payments. So a lot of times we'll say hey doctor, I need you to make a $15,000 federal income tax payments. Now truth is the only doctors who are doing quarterly estimated manual tax payments are big hitters. Doctors doing 3,4 million with taxable income above a million. The reason why is because there's not enough W2 for for us to deduct sufficient taxes to cover their tax liability. Keep in mind that the IRS doesn't care how they get their taxes from you either from a W2 tax withholding or from a quarterly estimated payment. It's all the same it's 100% exactly the same to the IRS. So that doesn't matter. And what we don't want to do is we don't want to pay you any more W2 to yourself as an employee of your corporation. Then we have to to prevent an IRS audit, because they will audit you if you don't pay yourself sufficient W2, which is how they get their FICA taxes. Or if you have a 401 care defined benefit plan, we may go all the way up to somewhere around 340, 350,000 as of 2025 in order to maximize your contribution into those plans. But we will never, ever want to go above. I can't think of any reason. Maybe if your net income was like $8 million, then a W2 relative to your net profits could be really low, even at 350,000. And we may bump up your W2 to 5 or 700,000. At the end of the day, your W2 never needs to be higher than what you would actually pay someone to do what you did. It really never needs to be higher than that. However, again, that 401 and DB plan, you want your W2 to go up. You're going to pay more in FICA taxes, but you're going to pay a lot less in income taxes. If you are maximizing these 401k safe harbor profit share plans. And if you're older with real good cash flow, maybe your debt's paid off, then you can fund this thing called a cash balance defined benefit plan. Gobs of money, hundreds of thousands of dollars, 2, 3, $400,000 or more each year into the defined benefit plan, knocking off 80% of your tax liability. And so when you're really making that much money and we, and let's say you have to withhold $300,000 in federal income tax because you're making $1.2 million a year taxable income. If that we can't get enough W2, it's going to turn your net W2 deposit negative because you have more withholdings than your gross W2. You don't want to go negative. So what we do is we sort of make a big chunk out of your W2 federal and state income tax payments. And then we'll have you make some quarterly estimated payments. So the first reason why I don't like you to have to do quarterly estimated tax payments and prefer to run all your tax payments through your W2 is because that relies a, relies on a manual process for you. And that's just kind of a nuisance to your schedule. And sometimes it's confusing. The second reason is if you are late on your quarterly estimated tax payments which are due by April 15, June 15, September 15 and then January, or I think it's October 15 and then January 15, if you don't make your quarterly estimated tax payments on time, then you're going to have a late payment penalty on that.

With the W2, there is no late payment penalty. You could run zero payroll the whole year for you and then you run one payroll deposit on December 31st. You process it around December 23rd to land before year end and let's say it's a $380,000. Actually like I said, you never go above that. It's a $350,000 W2. You withhold 200,000 federal income taxes and you withhold 50,000 state income taxes. Guess what? That 200,000 federal and $50,000 state income taxes are not late. They're not late. They're treated as if they were made evenly throughout the year. So where quarter payments, you can be late on those your W2 tax withholdings, none of those tax payments are ever considered late as long as your payroll is done by December 31st. This is why a lot of tax planning, the majority of tax planning has to be done. When I say the majority, I mean like 98% of the tax planning has to be done before December 31st. If you try to meet with your CPA in February, March, April, you sit down that your CPA is just trying to get the friggin tax return out the door because they got a million to do and there's a deadline and you're trying to sit down with them and do a tax plan. A, you can't really go back and adjust your payroll. B, there are payroll adjustments, amendments to W2s that could be made, but it's expensive and really a pain in the butt. Trust me, you don't want to do that. You can't go back and make estimated tax payments. You can't go back and buy that fixed asset like a dental chair or a cad cam before December 31st because those have to be bought and put in place by the end of the year in order to get the full tax benefits out of that. So there's just so many things you cannot do after December 31st. That's why tax planning has to be done in the year of. That is one of the most important things I'll say on this tax episode. Tax planning has to be done in the year of and ideally it's done twice. Ideally it's done twice. Sometime mid year and sometime in Q4 as sort of a final adjustment where needed. So that any of these strategies, and there's a lot more strategies, I'll go into a few of these. But all of these, any of these strategies are done and completed, executed by December 31st.

So that's why here at practice CFO we pretty much have most of our clients making their federal income estate tax payments through their W2. We structure that, we process payroll. We're providing payroll services to our clients to integrate the payroll into the business, financial planning into the accounting, into the tax work, into the 401k. It is an ecosystem that all interrelates. And this is why we brought payroll in house. It was less about an added layer of revenue. I don't know if we make hardly any money on our payroll after paying our payroll team. And 50% of our payroll revenue from clients goes to pay rippling the payroll technology provider that we use. The reason why we brought in house is because it's such a critical lever when it comes to cash flow and tax and financial planning. Because in your payroll determines how much you're funding into your 401k or defined benefit plan. It determines how much FICA tax you're paying. And FICA tax is 15.3%. That's a lot. It determines our ability to make your federal and state income tax payments through your payroll. It's how we determine how much is deposited into your personal paycheck, your personal checking account in order to meet your living expenses. It's where we can get kids and a spouse on payroll tax. Just so many tax planning strategies are going through payroll that we cannot have our clients on 30 different payroll companies. It would be an absolute nightmare, mechanically. Imagine if you had 30 different lab providers and every client that came in, every patient that came in, you were using sort of rotating through all these different lab providers or maybe you have like 30 different suppliers. It's just a nightmare. It's a nightmare to have a process around that. And so that's why we brought payroll in house. Because we're not just trying to file taxes returns. We were just a vanilla CPA firm filing tax returns and doing basic accounting. Probably not the end of the day, but because we're executing a plan for the future and forecasting and monitoring, the payroll needs to be in our operatory. So if you're a prospective client and you're with gusto or ADP or whatever, and you're like, oh, that's such a pain in the butt to uproot my payroll. Because it is. I get it. You just got to know this is for your benefit way more than it is for our benefit at practice cfo, for us to be doing your payroll. And if a CPA financial planning firm that you have doesn't do your payroll, trust me, there's going to be more inefficiency. No matter how much they try to coordinate a strategic partnership with that payroll company, there's not going to be the same efficiency and accuracy and execution when it comes to integrating these tax strategies that funnel through your payroll. So it's been a painful thing for us, an incredibly expensive thing for us. We're out of pocket probably half a million dollars over the past six months just trying to bring payroll in house because we have hired additional support to help through the conversion process, not wanting to really charge our clients as much. And so we've just sort of bit that bullet one step back to get two steps forward to really get our clients on our payroll processes to create better integration. And I'll tell you what, it gets a little bit rough when you adopt a new payroll system because there's a lot of layers to the payroll technology called rippling in there. And you got to learn, you got to set up authorizations. I could have a whole other podcast on this that when it comes to payroll, meet with your payroll company before processing payroll a number of times to make sure everything is configured in the payroll software that each of your employees payroll item your payroll items, that's their deductions. Everything is configured accurately, the paid time off, your accrual methodology is set up and configured accurately. Your benefits are configured accurately. You need to go through every single employee with a magnifying glass to make sure it's set up right before processing that payroll. What's been happening is a lot of clients don't show up for our training meetings when we switch over because of thinking it's not urgent. I'll get to that when I have to process payroll. And then suddenly payroll time comes and they have a very short period of window to get everything configured and in place. And it's chaos and the clients get really, really frustrated. And this is why we've been since the day we said we're going to bring over payroll, meet with our payroll team to do these trainings and get it configured so it's not a crisis when you go to run that first payroll that's so important, whether you're switching to us or Anybody that an ounce of prevention is a worth pound of cure. Take the time to configure it right in the beginning because our team will take the time with you to get that set up accurately. But we can't control ultimately what you're willing to do. You also got to have your two FA set up. We had a case where a client was embezzled, somebody phished and one of the employees clicked on it. 2fa was not set up. Created an employee. That particular practice did not have an authorization in place for the doctor to approve payroll before it could process as well. Or who knows, maybe they just were just kind of clicking on it. I don't think so because this is a wonderful doctor who's very intelligent. But when you don't have the controls in place and the configurations in place, you could be embezzled through payroll. It's a really unfortunate thing and it happens. So have your 2fa on and make sure that you, the doctor have it configured in there. That payroll cannot technically systematically in the software. It cannot be processed without you clicking a button to authorize it. And please review it for a few minutes before you do authorize. I don't want you doing all the payroll and taking up hours of your time. Should take no more than about 10 minutes, but that's what I highly recommend here. So on the payroll. That's why we brought payroll in house here at practice CFO and I think we have a great payroll function. And then we take the payroll data and we feed it into our client's QuickBooks accounts in order to give really rich reporting on the P and L and our CFO analysis about how much they're spending for their hygiene, for their assistant, for their front office and comparing that up to industry standards and how do you look? How healthy are you? Again, the integration of this whole ecosystem is just so vital. That's why I do not like an unbundled, fragmented, disjointed model where you have a financial planner over here and a tax planner over here and an accountant over here and a payroll company over there and a 401k over here. That disjointedness is going to. It's going to crush your ability to become financially independent because you're going to have so much money getting wasted inefficiently through proper management. You're going to have expenses you're paying that you shouldn't be. You're going to have an underfunding of 401k, you're going to be paying more in tax planning more in vendor fees, etc. Etc. The Integrated model is what is so valuable. It's what I use for my own company and it's what I obviously set up practice CFO for is to provide that level of model for you. Okay, so now back to the tax side of things. It was important to understand how payroll relates to your tax planning. Let's now go on to what are some of the things that you can do in your tax plan? Number one is.

You can do what's called timing. And I'm going to go through some things, not going to go through a much longer list. I'll do another podcast where I go through about 15 or 20 different tax strategies and explain those, but here are some key ones on the tax code that I talked about earlier the Set of stairs from 10 all the way up to 37 there are certain deductions you can get on your 1040 tax return that you lose as you get into the higher stairs. So once you get into roughly somewhere mid 35% tax bracket, somewhere around $600,000 of taxable income, or really the technical term is your adjusted gross income or your AGI. Your AGI determines certain other deductions you get between AGI, your adjusted gross income and your taxable income, which on your 1040 tax return those are two separate rows. The taxable income is lower or under the adjusted gross income because your adjusted gross income determines certain deductions you get between those two Practice Finances and how.

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That $600,000 mark where you lose things like your qualified business income tax, a deduction, which is a really nice deduction on your 1040, the child tax credit, certain dependent care credits, and there's a few others here that you can get as a tax credit, which is sort of like this bonus tax deduction if you can get your income tax lower. So not only are you getting your income tax lower to save in the income tax, but you're also layering on these extra credits. And it's like a two for one, you lower your taxable income by a dollar. And not only do you get the 40% tax deduction, normally because you get a credit, it bumps that up to 50 or 55% of a tax benefit on that dollar. That's why these incremental marginal tax planning around the edges here, and in this case, the Edge is about $550,000 to $600,000. You can really get a lot of these extra tax benefits back and compound your tax savings. Now, if your taxable income is over a million bucks, there's not a whole lot you could do to get down to 550. At that point, you got a big chasm that you got across. DB plans are the best way to do that because you can fund three $400,000 plus into these defined benefit plans. And it's the dollar for dollar tax deduction. And the vast majority of it, usually 95% or more, is going to you with a little bit going to your team. But these only work when you're making serious cash flow. Maybe you've paid off your practice debt a little bit older, your practice is humming along and you're older than your staff. The census data, the census around your age and your staff's age matters with these defined benefit plans. But bottom line is, once you get above a million dollars, we do what we can. It gets a lot more difficult at that point. But most dentists seem to. Dental practice owners tend to float somewhere around 350 to 700 to 800,000 of taxable income. And so those of you who are in that upper bracket, maybe you're a $2 million practice with a 40% profit margin, that's 800,000 profit margin. And that's where we can really get that 401k, really get the tax timing, really get kids on payroll, really try to run through a lot of perks. So on that note, let me go through some more of these. So tax timing, timing of deposits, timing of expenses near the end of the year can make a huge difference. Kids or spouse on payroll. For every kid you put on payroll, if you're in California, you're going to save about 2,500 to 3,000 a year. If you're in a different state, it might be less, maybe 1,500 to 2,500 per kid because you can pay them up to the standard deduction this year, that's 15,000 and they're not subject to income tax. So you shift that amount of income that would have been taxed at your highest bracket is now taxed at a 0 bracket on your kids. Now some things you got to think about there with kids college education, is it going to interfere with potential financial aid? A lot of our clients will also set up a Roth IRA account for the kid and they'll deposit that money into their kid's account. A lot of times you don't do that and the kid's payroll is literally deposited in the parents account. It's purely a tax planning strategy. You're not even actually paying your kids. But it does show up on their W2 as well. So there's a number of factors to consider there. But that's a great one we do for most of our clients with kids older than about five or six. The home office. I'm a big fan of home office. Again, it's not huge, it's stacking nickels, but they add up. And the home office deduction, it can end up saving you 4 to $7,000 during the year, depending on how much you can justify as cost to maintain your home office. Your home office. A lot of CPAs are really against this. I'm not and I've never had an issue with an audit on this. If you have documentation to show that you use that home office exclusively and regularly for business, the way I would look at that is that I call it your administrative office. That's where you look at accounting reports, that's where you look at billing, that's where you sort of prepare for things. And administrative stuff all happens there in your administrative office. And that allows therefore justifies any commute from your administrative office, that is your home to your practice. Now you can deduct the car related costs from that. You can't just deduct your car because you bought it and claimed it as a business cost. You have to prorate out what portion is it actually used for business and what Portion is used for personal and normal commute, is not tax deductible. So those thousands of miles you travel every year and all the gas and the maintenance and the car wash, all that stuff related to that is not tax deductible related to the commute. But when you have an administrative office out of your home office, now all of that is. And now you go from deducting maybe 25% of your car costs. Now you can get all the way up to, you know, 60, 70, 80% of your car costs. If you really want to push the envelope there, which we tend to do that around car costs because, again, we are the advocate for you, not the irs. And so we are going to toe that line. All right, so the home office, there's some rules around that, but that's a great one. Fixed assets. Fixed assets is the accounting term for the big tangible stuff you buy that provides benefit over a long period of time, like your dental chair, like your X Maverick machine, your cone beam, your CAD cam, maybe certain sensors, build outs. If you build out a new operatory, things like that, all that stuff goes on your balance sheet as an asset. It doesn't go on your P and L as an expense. And therefore it's only deductible, as you leak onto your P and L from the balance sheet, a piece of it called depreciation. So you buy that dental, that set of dental chairs for $50,000, some really nice dental chairs, and it goes on your balance sheet as this thing you own, this asset called your dental chairs. And then every year, you. You get to deduct $10,000 or so for five years. Boom. And that's your tax deduction. However, the IRS gives you certain controls where you can accelerate that depreciation. Instead of getting it over five years, you can essentially front load 100% of that through what's called a Section 179 deduction. You can get a lot through bonus depreciation, but you can, at your discretion, move a lot of that forward. Now, CPAs tend to just automatically do that by default without questioning it. Terrible, terrible planning. No, because if you're in a low tax bracket this year, for whatever reason, maybe you're younger, you just bought the practice, or you're going through something or whatever it is. You don't want to accelerate tax deductions in the year when you're in the lowest tax bracket. So you may want to spread it out as your taxable income goes up over time, for example. But this bonus depreciation, you could accelerate Some of this in order to get your taxable income down into those lower brackets in order to recapture those bonus deductions like child tax credit and the QBI deduction and a few others there. So depreciation around buying things. Now, a lot of times your suppliers will come to you and they'll say, hey, you need to buy us CAD cam. You need to buy this dental chair. You need to buy this stuff before year end so you can get this magical thing called a 179 deduction. Well, it's really not a magical thing. All it is is this, this thing that allows you again to front load all the tax deduction into the current year. Either way, either way, if you bought on January 1st, whatever, you're still going to get 100% tax deduction, but you're not going to get in the prior year. And really the tax deduction, the Section 179 deduction, how you depreciate these big fixed assets that you're buying, like dental chairs, X rays, CAD cams, et cetera, how you depreciate those should be a function of when you're paying the debt and it should be a function of the need to depreciate it in order to recover some of those bonus deductions in the current year. There's a few things to consider here with when and how to take that deduction. Also running perks through the business. Things like your meals, certain travel, certain things that are entertainment that maybe you could reclassify and call them marketing costs because you're with the. A potential patient. I mean, this is where it gets aggressive. It's where it's somewhat gray. I mean, the IRS auditor will say, no, it's not great, it's black and white. It has to be true business expense. It's got to be a customary, unusual business expense. You got to parse out what's used for personal. There's all these other things, but for the most part you're not going to be audited and there's at least a leg to stand on if for some reason you ended up in front of a tax judge, blah, blah, blah. Probably never, ever, ever going to happen unless you're completely egregious and do tax evasion. You know, it's usually these extremely complicated strategies that tax attorneys will come in the market at your state society and they'll tell you if you do these things, you're going to essentially eliminate your taxes. So much of that, honestly, it's tax evasion, it's tax evasion. But it sells so well. It sells extremely well because it's like, really, I can get $100,000 of taxes back in my pocket if I have you do this work and I sign at the, at the bottom of the bottom line and get to give this form to my tax epa. I mean, for example, I've done episodes on the.

R and D tax deduction, the research and development tax deduction. This is a tax deduction that's really created for people who are in innovating something through deep research that produces a new way of processing a new product, a new system, something that's new in the business, that's even potentially industry changing, but that has the risk of you never recovering the research expenses that you put in that. Now these guys will come to you and tell you, well, as a dentist, if you really read the rules closely, you can do this, this, this and this. And you can meet all the checkboxes inside of the RD tax law and you get this great tax deduction. The truth is the vast majorities, if you are audited, the IRS is going to overturn that. They will. Most of them won't. And so if you want to take that risk in this case, to me that's tax evasion. Because it isn't, it clearly isn't what a research and tax development is. Now if you're trying to truly create like a new toothpaste or a new technology, maybe some new loops or something like that. So that's, that are different and innovative. Yeah, that absolutely satisfies for the research and tax credit because that's what it was designed for. But you just milling crowns, I'm telling you, that is not going to satisfy the intent of the R D tax credit. So anyways, there's, there's that, that one I've allowed. I won't say allowed because I don't, at the end of the day, I don't dictate what you decide on your tax return, but remember your CPA's name. In this case, me goes on the bottom of your tax return as well. And so we have a certain amount of liability protection that we have to do for us. Because as I said, if the IRS is smart and they've done this and they may do it more in the future is they will find the CPA that allows tax evasion and then they will audit everybody on their tax book. So that's why we will try to toe the line. But we really also have this dual mandate. In addition of saving taxes, we really need to prevent you and our clients from tax audits, because those are nightmares and they will audit multiple years at one time and it will be very costly to you. So please avoid these different trusts or tax strategies. Here's another ridiculous one that was going around selling, saying, hey, doctor, you know, you have this goodwill in your practice. The book value on your balance sheet of your Practice may say $200,000, because you've amortized and depreciated all of the stuff that you bought, including the acquisition of the practice, the goodwill, all of that. So the book value on your financial statements is 200,000, but your practice could sell for a million dollars, that $800,000 spread. This is goodwill that you've created. There's this esoteric part of the tax code where you can capitalize that, put it on your balance sheet as $800,000 and start to deduct that through amortization on your PLL and dramatically lower your taxes. That, frankly, is just BS. No, you can't suddenly create an accounting journal entry for amortization without a transaction. The transaction occurs when somebody buys your firm for a million dollars, your practice, and then that does become an asset on the buyer's balance sheet. And when you bought a tax return, that's how you got that goodwill was capitalized as an asset on the balance sheet and then amortized over time. Now, this may sound fairly technical for you, maybe rewind listen to a few times. You may not need to understand this level of depth, but just be very cautious about what you're being sold from some of these sort of tax shelters because a lot of these things move past the gray area and into the tax evasion area. And I'm sure those attorneys are going to debate me, but I'm telling you they're not going to be the ones holding the liability in the bag when you're audited and have to pay mass amounts of taxes and, and penalties on that. Okay, so let's carry on the perks again. I'm a big fan of running as much stuff that we can sort of legitimize through the practice. A lot of you run a lot of Costco and a lot of Amazon through the practice, and a lot of that is probably for personal here at Practice Info. It's just impractical for us to ask what every Amazon cost is for. And so we just plunk it all to office supplies and it's 100% tax deductible. And we educate you that it should technically be for business expense. And then it's on you okay, now there are a lot of other things you can do, but I'm going to end there with just some of the examples of what you do. Now, a lot of this is just casting a wide net and you're pulling it in and you're getting a quarter deduction here, you're getting a dollar deduction here, maybe $2 over here. That's metaphorically speaking, they're much bigger numbers. But you're getting a lot of tax deductions layered on top of each other that then make a huge difference impact. And kind of the silver bullets, the big ones tend to be these 401k profit share plans. And also the defined benefit plan is an absolute silver bullet. They are delicate, they're a little bit of the prima donna in the ERISA retirement plan space, these defined benefit plans. But when managed and tended carefully, they are just amazing, amazing tools. And they are very safe tools as well when managed correctly. All right, now that we've done the forecast, in our process, we've done the forecast, we have determined what our tentative tax liability is. Then we start applying all these strategies to structure all the levers to get that tentative tax liability down to a much lower number. Then from there it's time to make sure that you've paid on time. And that's where you say, if I'm going to owe $100,000 during the year and I've got, let's say, let's say I've got 10 pay periods left, I need to withhold $10,000 per paycheck, maybe that's $7,000 fed, $10,000 state, whatever that is. But you just simply do the math about what you're going to owe, what's left to owe that you haven't already paid in, what's left that you're going to have to pay in, divided by the number of pay periods left equals the amount that you have withheld from each pay period, fed and staked. And now you have to sort of integrate that also or weave it in to the other planning items with your payroll. About how much net do you need to live on what your gross W2 should be to maximize your 401k and retirement plan contributions. So then you're now you're paying it throughout the year. By the end of the year, theoretically you will paid in 100% of your tax, your reduced through strategy tax liability. That's good tax process right there. Project annualize, determine your tax liability. Strategize to get it down. Put into motion your tax payments through payroll and or through an estimated tax payment program. Don't be late and you are good. All right, everybody, that is step three of business financial planning. Turning financial chaos into financial freedom. And in the next episode that I'm going to do, we are going to cover your payroll structure for the year. For us Corporations, this is critical. And there is a lot of unnecessary taxes and expenses paid because this is done absolutely wrong. I can't think of a single time when a prospect came to me that I looked at their W2 and I was like, yep, that was done exactly right, at least according to my clinical philosophy. Now, maybe there were some that were very, very close, or maybe there were some that were spot on, but the majority of the time, not necessarily. And though that's where we get our wheels turning. We get to work organizing all of the financial data, really good financial reports. Now we have our visibility, our financial X rays. Now we can do this tax process of forecasting, strategizing, and setting up a payment plan throughout the year and not being behind. All right, until next time, have a great day, everybody.