In this episode, Casey and Jarrod tackle the issue some practice owners have of relating their poor cash flow to their tax problems. While fixing your tax situation is a good start there is an entire world of steps to get you on the right path to fixing your cash flow.
Announcer:
Hello, everyone. Welcome to The Millionaire Dentist podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry finances and business practices to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.
Casey Hiers:
Hello and welcome. This is Casey Hiers back at The Millionaire Dentist podcast in studio with co-host Jarrod Bridgeman.
Jarrod Bridgeman:
Casey, how are you?
Casey Hiers:
We didn't have to ice skate in here today. We thought we'd have some slick roads, but the temperature is just high enough that it's just puddles.
Jarrod Bridgeman:
Still a crappy day. Because last night I was looking at my phone at the weather and there was severe weather warnings and stuff like that.
Casey Hiers:
Oh, weather fear porn?
Jarrod Bridgeman:
Yeah.
Casey Hiers:
Lots of it.
Jarrod Bridgeman:
I only like one of those words you just said, but that's fine.
Casey Hiers:
Weather?
Jarrod Bridgeman:
Weather. Casey, you came in today fired up, ready to chat with me, and it was about CPAs and taxes and tax planning and all that stuff. Lay it on me, brother.
Casey Hiers:
Well, the great philosophers TLC... No, that's, "Don't go chasing waterfalls."
Jarrod Bridgeman:
Yes.
Casey Hiers:
The great philosophers the Spice Girls, "Tell me what you want, what you really, really want." Practice owners want more money, more income, better and consistent cash flow and advice and guidance. I think that's what they really, really want.
Jarrod Bridgeman:
For sure, deep down
Casey Hiers:
And surface.
Jarrod Bridgeman:
And surface.
Casey Hiers:
Yeah, and it's interesting, what we found is a lot of times, one of the catalysts of why people want to come to our CE events or have conversations with us is something happened tax wise. For example, this Saturday morning we're presenting at the Yankee Dental Congress for two hours.
Jarrod Bridgeman:
Yeah, are you stoked for that?
Casey Hiers:
Yeah. Who doesn't like Boston at the end of January? It's going to be great. 30 hours, I'm in and out, man.
Jarrod Bridgeman:
That's right. But I mean, you've been to the Yankee before and I heard it's a great event.
Casey Hiers:
Oh, it has historically been a very, very good national conference, very well run. Looking forward to going to the north end, getting some third generation Italian food and sharing with practice owners how to master the business side of dentistry. But so often a catalyst for that is tax, tax management, something tax related, "I pay too much in taxes," "I got a tax surprise," "My CPA is not giving me any advice," or, "He is, but it's bad advice." Those things get people to move. But then when I peel the onion back, tax is is important and you have to master it, but they're almost giving a CPA too much credit for all that they do or don't do.
Jarrod Bridgeman:
Correct.
Casey Hiers:
And so here, good accounting can make you money, but if you just have a traditional-
Jarrod Bridgeman:
A proactive accountant.
Casey Hiers:
Right. But if you just have a traditional CPA who 15 of your dental friends use, most likely they're not looking at your practice and giving you really good proactive advice, it's more transactional.
Jarrod Bridgeman:
Right. You are potentially just one of how many ever clients they have who all have different businesses and different types of industries and all that stuff, so they're not super into knowing exactly what you can do.
Casey Hiers:
Yeah. They've got a couple tricks here and there, but it's fascinating that yes, your taxes and tax management personally and in the practice needs to be mastered and mastered well. And it's common for us to help reduce practice owners' tax liability by 10, 20, 30, 40, 50, $60,000. We see it all the time. We don't hang our hat on that, "Hey, come to us because of this," that's just what you get as part of it. But mastering that is one thing. Then you go into, "Okay, how do we double your income? How do we get your overhead down?" One person I'm talking to, their overhead is in the high eighties, but they're attributing the majority of their frustrations with taxes.
Jarrod Bridgeman:
Okay, so this particular person, owner, thinks they're hanging their head on the tax part of it. If that all got cleaned up, let's say, how much of a drop in the bucket is that for that overhead?
Casey Hiers:
Yeah, it's a crucial and very important aspect that might cover 25%, and so there's so many more things that need addressed. But yeah, it's interesting. Even here sometimes our tax team, which they're great-
Jarrod Bridgeman:
Steve Levy, Pipes.
Casey Hiers:
Pipes, yeah. They get a ton of the credit for some of the success that actually our planning an advisory team that's looking at all the things in the practice and all the systems and processes and all the nuance. What do I get asked? "How? How? How? What do you do? Give me three ideas." Well, the 50 things we do in a year, I mean the tax team is doing a lot of them, but there's dozens that the other side of the house is doing, but there's almost a misconception of, "Well, I just need a new tax person and they're going to fix it all."
Jarrod Bridgeman:
Now it's not going to hurt if they get a new tax person that actually knows what they're doing. But let me ask you this, when you do your presentations, when you go out there and speak, I've often heard you mention silos and talking about people's external teams being siloed from each other. Where here we work together. Can you kind of go through how that may help an owner?
Casey Hiers:
Yeah, I think the same principle of that tax management silo sometimes can get too much of the blame or too much of the credit, right? I guess maybe it's like the quarterback of a team where in reality it's incredibly important, but these other silos really matter. So once tax is mastered, then you have to look at all these other areas for opportunity, insurances, business model. Gosh.
Jarrod Bridgeman:
And then when you get into the finance planning side where you get into investing and all that, you need to know how much money you can put into it. And if your investment specialist is not speaking with your accountant, speaking with everything else, they don't know, right?
Casey Hiers:
Well, yeah, you just hit on something. So okay, let's say we double your income. Let's say you're making 350 and you should be making seven.
Jarrod Bridgeman:
Sure.
Casey Hiers:
That's double, right?
Jarrod Bridgeman:
Yeah, just about, you're not an accountant.
Casey Hiers:
Okay, well, that's going to affect your tax situation.
Jarrod Bridgeman:
Correct.
Casey Hiers:
And then what are you going to do with that?
Jarrod Bridgeman:
Right.
Casey Hiers:
How are you going to utilize this better cash flow?
Jarrod Bridgeman:
Sticking to savings account, right?
Casey Hiers:
Under the mattress.
Jarrod Bridgeman:
Under the mattress.
Casey Hiers:
No. What debt do we need to reduce? Let's start saving more. It cracks me up people want to retire at 60 and they're saving 30 or 40 and they've got a couple hundred, well, there's no magic wand, how are you going to get there?
Jarrod Bridgeman:
I mean, that's probably a great number for a layman, someone not making X amount of dollars. But if you're already used to a certain lifestyle, when you retire, you're probably not going to spend that much less.
Casey Hiers:
Well, and it's just easy to look at this and go, "I'm frustrated. I pay too much in taxes," to just think that that singular thing is the reason.
Jarrod Bridgeman:
Well, and I think that's psychologically that is just because they can see and feel that, "Oh crap, I owe $75,000 this year," versus, as you said, the dozens and dozens of things that we do all add up to a hell of a lot more, but on their own, they may not be huge, right?
Casey Hiers:
Yeah. Well, I get the benefit of talking to them, and most people I talk to are really, really nice, but it typically starts with tax and then it gets to all this down the road and they're like, "Oh, there's so many other areas that I need help with that matter."
Jarrod Bridgeman:
Right. I'll say it's easy to get hung up on the biggest, baddest thing that you can see.
Casey Hiers:
Everybody wants one to three things to just fix everything, "My back's sore. Well, I hope that if I get an adjustment and soak in a tub, it's better. Well, maybe I need to work on my core strength. Maybe I need to stretch. Maybe I need to be a little more active."
Jarrod Bridgeman:
And take me up on my back massage offers.
Casey Hiers:
And so it's not just one or two things, I probably need to do five things, same thing in a practice. But when practice owners don't know, and it's hard for people to admit sometimes, "I just don't know," that's when they kind of go to that tax lane and go, "Well, it must be taxes. I'm paying too much, my CPA is not telling me anything. And unfortunately, a lot of times they're not. And my basis is all screwed up." What's basis? Well, we've got a handful of podcasts on that.
Jarrod Bridgeman:
We've got one coming out next week about that.
Casey Hiers:
Beautiful timing. But yeah, it's more complex typically than just one thing. And typically tax is the one thing people don't understand as much. And so they think, "If I can just fix it, everything's better." It's a great catalyst to get them engaged with our firm to see if we can help them, but ultimately they quickly or sometimes not so quickly learn that, "Oh, that is very important. However, there's all these other areas that also need to be improved on."
Jarrod Bridgeman:
And the thing is, when you have a good CPA, a good accounting team, you shouldn't hear much in terms of they're doing their job and they're doing it right.
Casey Hiers:
Well, so if you're not working with us, perhaps, but a good accountant talking to our planning and advisory team, they're able to connect everything.
Jarrod Bridgeman:
Yes, you're just not getting a phone call at the tax time being like, "Well, shit, you owe money."
Casey Hiers:
Yeah, this is the time, man as a practice owner, end of the year, and then these next three and a half months that you're having those meetings, conversations, emails, frustrations and things of that nature. But yeah, the answer is more than one thing can be true. Yes, you most likely need a more proactive, better guidance and somebody that understands you and your practice and your vision and your business model and all that, but there's so many other areas to do it.
Jarrod Bridgeman:
And these other areas, you talk about these in your presentation, don't you?
Casey Hiers:
I do.
Jarrod Bridgeman:
So people who are going to be at the Yankee can hear this?
Casey Hiers:
Yeah.
Jarrod Bridgeman:
Oh man. You know where else we're going to be?
Casey Hiers:
Hopefully somewhere warm. The Midwest is cold this time of year.
Jarrod Bridgeman:
I know we're going to be in San Antonio. We're going to be in Tampa soon as well.
Casey Hiers:
Well, that sounds nice.
Jarrod Bridgeman:
That's in Florida.
Casey Hiers:
Geographical wizard over here.
Jarrod Bridgeman:
Listen, real quick, I just wanted to plug this, go to fourquadrantsadvisory.com/events and we've got places where you can register if you're in those areas. Even if you're not in San Antonio, feel free to fly in, get your ticket, come see Casey from anywhere in the country.
Casey Hiers:
Now we're going to get an influx of Wisconsin and Minnesota people coming out.
Jarrod Bridgeman:
Yes, yes. Casey, I really appreciate you coming in and imparting your wisdom on me. It really is, everything we do really encompasses everything. It takes all of us, it takes everybody working and looking into things and being proactive to really make these practices shine. And it's just like anything else in life, one thing's not going to fix it.
Casey Hiers:
Sounds like a T-shirt.
Jarrod Bridgeman:
That's right. Thanks, Casey.
Announcer:
That's all the time we have today. Thank you to our guests for their insight and for sharing some really great information. And thank you to you, the listener, for tuning in. The Millionaire Dentist podcast is brought to you by Four Quadrants Advisory. To see if they might be a good fit for you and your practice, go on over to fourquadrantsadvisory.com and see why year after year they retain over 95% of their clients. Thank you again for joining us and we'll see you next time.
