THE MILLIONAIRE DENTIST PODCAST

EPISODE 71 TRANSCRIPTION

Speaker 1:
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 it again in the Millionaire Dentist podcast. In studio today, we have Jarrod Bridgeman and a special guest, Mr. Steve Levy. How you doing, sir?

Steve Levy:
Hello. Hello.

Casey Hiers:
So Steve, we wanted to bring you in here for one of those public service announcements that unfortunately, a lot of dental practice owners don't get. And today we're going to talk about the employee retention credit, dental practice owners need to know about this. PPP affects it, and these are just some good details that you need to be aware of. Jared, what's the first question we should ask about?

Jarrod Bridgeman:
Yeah, I'm going to go right off the bat here and ask, what is it? What is the employee retention credit? What is it?

Steve Levy:
Well, it's a credit, it's a tax credit it's wage-based and it's available for any business that was adversely impacted by COVID-19. It can cover wages starting all the way back from March 12th, 2020, all the way through the end of 2021.

Casey Hiers:
Now, you said adverse, is there some fine print that says what adverse a business that was affected adversely, like would be if you're shut down for a month or two, would that defined it? What was that line?

Steve Levy:
That's a great lead into the eligibility questions. So if you're eligible, it depends on the quarter and the year you're actually trying to apply for the credit. So for 2021, and we're going to mainly focus on 2020, but wanted to quickly talk about 2021, you need either of the following. You need a decline of more than 20% in your gross receipts in any 2021 quarter compared to the same quarter in 2019. So this is either or, or you had business operations that were fully or partially suspended during your quarter due to a government order. Like we've been accustomed to know for 2020.

Casey Hiers:
Wow, so if any month is 20% lower, or if you were shut down, you are eligible.

Steve Levy:
For a whole quarter, really for the gross receipts.

Jarrod Bridgeman:
But a lot of people may really fall into that considering that most places kind of shut down from March, at least, on a month or two.

Steve Levy:
Absolutely, so it has a broad scope, but since we're mainly going to talk about 2020, because that's where many practices had the decline and maybe didn't have as much of a decline in 2021. So for 2020, the same rules apply. It's either during the government order causing businesses to shut down or decline in gross receipts. But for 2020, you need a little higher decline and has to be more than 50% in gross receipts in any quarter compared to 2019. So it's a little higher level for that. So if you had neither of those, let's say you were in a state that didn't have a shutdown, which there were some, or your receipts were just fine, then you are not eligible for the credit, but most had some kind of shutdown during that 2020, especially.

Jarrod Bridgeman:
And why is it called the employee retention credit? If you kept your business doing really well, probably assume you got to keep your employees retained to them.

Steve Levy:
Right

Jarrod Bridgeman:
How has that, I guess my question is why is it a credit for companies that didn't do as well last year.

Casey Hiers:
Steve, can I take a stab at this?

Steve Levy:
Yeah

Casey Hiers:
I don't know if this is right or not.

Steve Levy:
Go for it

Casey Hiers:
So you're a company and you either were closed down for a month or two or a quarter was down 20% from 19. Yet you didn't just clean house, you didn't get rid of your client or your employees as a desperate act to reduce your overhead. You stuck with it, you fought the good fight. They look at that and say, we're going to, we're going to reward that? Is that a.

Steve Levy:
Yeah, I would say that's the case. And at first, that was great. And at first, they said that if you receive PPP funds, which were supposed to cover that downturn, then you wouldn't be eligible. But as late as December of 2020, they said, Hey we're going to open it up to those that even got PPP. Now, the wrinkle there is that you can't use wages that were paid with the forgiven PPP proceeds. You can't use those same way wages for the credit. So it's no double-dipping. That was great, except nobody kind of knew how that calculation was going to work until actually early March of 2021. The IRS came out with some rules and examples. So basically it's wages not paid with the PPP. We're now eligible for the credit. And I'll give an example, let's say you had a PPP loan of $50,000 and you paid a $100,000 of wages during the PPP period. You have $50,000 of wages left over for this credit, which is great.

Casey Hiers:
Okay, Jarrod does this sound like a gateway drug to socialism? We'll move on.

Jarrod Bridgeman:
We'll see, let's not touch on that one, but let me ask you, here I am, I'm a practice owner, not really, I'm a practice owner and you know, this sounds great, let's try and work on that credit, but how do I get it? How do I, what do I apply for? What do I do?

Steve Levy:
Right, so since it's a payroll-driven credit that can be obtained by including that credit on your quarterly federal payroll filings, for those that want it, they would file an amended quarterly return to get it. And since the payroll company are the ones that do this, go ahead and tell your payroll representative that you're interested in claiming the credit. As each payroll company has different ways they want to see information to claim it, we can certainly help advise on the credit if the payroll company, and we've seen that come back to us and help us out what wages are included and what aren't. Some will just kind of run with it because they have the data, but that's really the first step. Talk to your payroll company saying, I want this money, and help me out with it.

Jarrod Bridgeman:
Now do our clients, do we proactively kind of reach out with that? Or as you're saying, it sounds like a lot of the companies it's up to the payroll company or the owner themselves to be like, hey, I just heard about this, but if they've never heard about it and the payroll doesn't say anything, they're kind of screwed.

Casey Hiers:
How are most dental practice owners hearing about this? Or are they?

Steve Levy:
It has been talked about and a lot of the payroll companies in their email have mentioned it in kind of their signature area saying, here's the employer retention credit tool to see if you're eligible so

Casey Hiers:
Beyond that is there much communication?

Jarrod Bridgeman:
Not necessarily.

Casey Hiers:
Okay

Steve Levy:
Cause we've even, cause we send out an email to our clients, announcing it, talking about it, and some are saying, this is the first time we've heard about it.

Casey Hiers:
And that's what I'm kind of getting at. I, a lot of times these things are great. How do I hear about it? When do you hear about it? Word of mouth, obviously we're want to help our listeners and their friends and obviously, for our clients, we're taking care of this for them. But I'm just curious.

Casey Hiers:
So, here begs the question. How much can people get? When will they get it? Like, what's that look like?

Steve Levy:
Okay. So for those that are, and I'll just quickly gloss over the 2021 since it might not apply as much, but for 2021 wages you can get a credit of 70% of employee wages per quarter. So, and those wages are capped at $10,000 per quarter. So you can basically get $7,000 per employee, per quarter of cash credit back to you for.

Casey Hiers:
Hold on 7,000 per quarter?

Steve Levy:
Per employee. So if you've got 10 employees and they were all paid up to $10,000, which many have sometimes not.

Jarrod Bridgeman:
So like 40,000 a year.

Steve Levy:
Right, exactly. So yeah, it's about that much. So it's, it can be sizable and that's per quarter for 2020. [crosstalk 00:08:21]

Jarrod Bridgeman:
So you had 10,000, every quarter, four quarters, and then 7,000 for a quarter.

Steve Levy:
Right, that's the yeah

Casey Hiers:
28K per employee.

Steve Levy:
Per employee.

Jarrod Bridgeman:
For all year.

Steve Levy:
Right, so that now for 2020, just like the eligibility rules, it's not as generous, but it can be sizable. So you can get a 50% credit of employee wages and that's a per-year calculation. So again, it's capped at $10,000 and that's a per-year cap. So you can get up to $5,000 per employee per year for 2020 wages. So for example, if you're applying for 2020 and you've 10 employees that have been paid up to $10,000 during the eligible period, you can get a credit of $50,000 not too bad.

Casey Hiers:
Any strings attached?

Steve Levy:
Well, keep in mind that wages pay to owners and related parties don't count for the credit, but that actually helps when you're comparing wages paid with forgiven PPP loans because those automatically you get $20,000 counted for PPP. So for example, if you had $50,000 in PPP loans, and that's the amount that was forgiven 21,000 can count for owner wages that don't factor into the employee retention credit. So you've got a little less than $30,000 for that, that can apply for the employee credit.

Casey Hiers:
I hope our listeners have firms like ours or at least people, how we help our clients because I'm kind of tracking with you. That being said, man, our listeners are producing dentistry, right? They're worried about all the, and this is a really good thing for them to be up on, but hopefully, they hear about it, hopefully, they're aware of it. Then they go to look at it, what's it mean? How's this affect my tax situation on multiple years situations sometimes. And if you don't have every, I dotted or T crossed.

Steve Levy:
Yeah.

Casey Hiers:
That's just more time spent away from the family and away from dentistry. Unfortunately, if you don't have a good team in place.

Steve Levy:
Yeah.

Casey Hiers:
And then did we cover when you get it?

Steve Levy:
Yeah.

Jarrod Bridgeman:
When do I get that fat money?

Steve Levy:
Well, that's the main drawback on, on all this.

Casey Hiers:
I knew it, I knew something was coming.

Steve Levy:
Yeah, that's the one. It's going to take a while. What we're hearing from payroll companies, the ones that are actually doing the filings that are going to do that work, they have a process turnaround time of 45 to 60 days because there's a lot of volume that there's a lot of companies that this can apply to. And then the delay from the IRS, they're saying six to 12 months. So

Casey Hiers:
I mean, they, they have 125,000 employees. So yeah. It takes them a while to figure this stuff out.

Steve Levy:
Yeah, so if you're not, if you want the money fast, not going to happen, but we really want you to get the money if you're eligible. Cause it can be sizeable, like I said, if you're paying 10 employees up to $10,000 and they're all eligible for this, then we're talking 50,000 bucks.

Jarrod Bridgeman:
Well, if it's money you hadn't even heard about before, it's a nice little surprise that I'd wait 12 months for $50,000.

Casey Hiers:
Hey, Santa Claus comes every once a year right? So we got to be patient.

Steve Levy:
You have to, you probably should expect your payroll company to charge her just a little nominal fee because they are giving an extra service that goes beyond kind of their normal.

Casey Hiers:
Do we charge our clients an extra fee for this?

Steve Levy:
No, we don't.

Casey Hiers:
All-inclusive.

Steve Levy:
That's right.

Jarrod Bridgeman:
No nickel-and-diming?

Steve Levy:
Nope we don't do that

Casey Hiers:
So then what does it mean for the 2020 taxes? I know you've alluded to it, mm-hmm (affirmative) but what, how does that change things? If people have to go back, I think you had said perhaps.

Steve Levy:
Yeah, So that it's another no double-dipping situation. So you can use the same wages for a tax deduction that you're using for this credit. So all you got to do is lower the deduction by the amount of credit you're going to get. So for example, you had a $100,000 wage deduction on your taxes and you had a $50,000 credit, you would lower your wage deduction to $50,000. Now, most have already filed their 2020 business in personal return. So this would be done via an amended return to reflect the change, mm-hmm (affirmative) which as we mentioned, we won't charge for.

Casey Hiers:
Gotcha. Anything else that our listeners should know about when it comes to the employee retention credit?

Steve Levy:
I would say just go for it. It's there, it's money waiting for you. You might not get it right away, but you should get it. So just go for it.

Casey Hiers:
Well, it is a nice carrot being dangled for again, some people get real reactive, right? Last year was crazy. You've got employees, some people just cut bait, right? Got rid of everybody, shut down, scared to death. Some of those that worked through it, this is a nice acknowledgment. And I don't want to say reward, but there's an incentive there that listen, we understand you may have been affected by this and, and knock on wood, hopefully, we don't have another one of these for another 100 years or what have you. But if there is one, this is a nice precedent to set. To potentially work through it, keep your employees just really try to fight, fight the good fight.

Steve Levy:
Yeah, and if something happens in 2021 where God forbid there's another government shutdown, the stakes are even higher as far as getting even a juicer credit.

Casey Hiers:
Very good. Steve, thank you for shining some light on this topic, and to our listeners, go get your employee retention credit.

Steve Levy:
Thank you, guys.

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