This is the restaurant technology guys podcast, helping you run your restaurant better.
Before we move forward with the show, I wanted to share about a product that I came across recently. We're in the middle of the summertime. And so you're going through dads and grads and I know the holidays are just as bad. But it's a product that's trying to become the OpenTable. for large parties. The name is restaurant rent. Nick and his team have created a online booking solution to allow restaurants to book large parties and do them online in such an easy way. It's
a brilliant solution. And having just gone through graduation for my son, I would have loved to have had a solution like this, check out Nick and his solution restaurant, when you get a few minutes after the show. Welcome back to the restaurant technology guys podcast. We thank our audience out there for joining us, as I say each and every time, I know you guys have got lots of choices on how you guys spend your time and energy. So we appreciate you guys
spending time with us. Today we are joined by a special guest that's going to educate us on all things restaurant accounting, which is everybody's favorite topic. The sad part is is as as JT and I were talking prior to the show, like everybody needs it, but But you know, oftentimes, it's one of those afterthoughts that people don't quite understand the difference in restaurant accounting and how things go. So JT, why don't you introduce
yourself to our audience? Let's talk a little bit about who JT is. And then we'll talk a little bit about why JT, you know, fells in the accounting services for restaurants or exists and how they make the world a better place? Yeah, well, actually, instead of me describing myself, I'll kind of use like, what a client told me and what I get a lot
that I'm either their tax angel or tax guardian. And also, another client, another accountant actually gave me this. He's a CPA as well. He said that working with you is like, everybody's payday, and you deserve 100 grand? Because well, people say, well, that's fine. You know, it's pretty, it is pretty high. I don't know if I would say it myself. But that's what other people say. So other people's data must be true. Right?
So so help me understand a little bit for our audience that's less familiar with kind of who you are. You know, you guys, you guys have an accounting firm your CPA, but, you know, is it just kind of your standard CPA firm? Talk a little bit about kind of, kind of what it is you guys do, and then we'll talk a little bit about the value of understanding tax and, and such as, especially as it relates to restaurants.
So one, I wouldn't say it's a traditional CPA firm, I would say it's more of a tax strategy tax advisory firm. Okay, and what I mean by that, I think I'm sure you've obviously been in restaurants, a lot of other people that listen to the show, they'll understand this, when you go to your CPA and the traditional model is you go to your CPA in April, April 14 at midnight and saying, Hey, can I file my taxes and it's a mad rush and and so you get this bill? I'm like, what the hell I
owe $10,000? Yep, see you next year. Next guy come in, it's like, ridiculous. Yeah, I work a little bit differently. So I work with people throughout the year, and actually help them save taxes, not just wait until April 15. And for me to say nap too late. Sorry, man. So like, we help people take advantage of strategies, you know, like renting out your home to yourself tax free and tax deductible, which is true.
Establish your home office, entity status, all the boring stuff, hope I'm not boring you guys with it. But in a short way to say it, we help people actually save money. And generally people save more money than they pay us. And that's when people are very happy. And it's why did the name tax Angel?
I'd say it's no doubt, I'll have to put the little tagline underneath your underneath your name, tax Angel. So I guess let's talk a talk about where where your history. I mean, talk to me a little bit about how you got into this world? Have you been a tax angel for the last, you know, 40 years? You know, for those that are on video, I'm guessing they're gonna they're gonna know that that that answer is not
correct. But, you know, talk to me a little bit about your background and history, schooling, those kinds of things.
know for sure. I'll tell everybody my age. I'm 35. So not quite 40 yet, but I've been a tax angel for about, oh, maybe about 10 years or so once I graduated college, got a job at an accounting firm. And this was not the plan. I did not plan to own my own business. After about seven or eight years, I think I actually got fired from my firm, because I was doing some bookkeeping and accounting on the side. And my firm said, You can't do that. That's
competing interest. You're done. And I was like, Oh, shit, like. So my original thought was to go, like, oh, go get another job. And then my thinking was, like, can't get another job because I just got fired from being insubordinate, nobody's gonna hire me. And then my face, I said, Well, I got to go out and get clients hustled, did everything, you know, Facebook, marketing, all that stuff. And then now I'm here and I think we have like over 170 clients or something like that. That's and
that was only two years. That was what was it two years ago about so or no, two and a half. So March 2021, right in the middle of pandemic and I just got a new girlfriend who is now my fiancee, and I thought, oh, boy, this isn't good. But she supported me the whole way. And she's been nothing but encouraging.
That's very cool. I always love those entrepreneurial stories where people you know, necessity kind of figured it out. And why restaurants I guess talk to me a little bit about the restaurant gig and and why have you found success and or, you know, I even focused on restaurants.
I think a lot of it. One is kind of same thing, they kind of came to me I didn't. This wasn't like anything I sought out. And so I need to help restaurants. I don't like you know, my family didn't own restaurants like EDM. But so I don't come from that world. But I found a lot of restaurant owners are actually as I call a treasure trove of tax deductions and tax credits, but nobody helps them take advantage of it. So for example, I see you writing some stuff down, you're gonna love this one.
I cannot wait to dig into some of the details. Because our audience is going to choose eat the stuff up at like, I'm, I can feel it. And I talked to a lot of our listeners that are like, that episode with XYZ was amazing. So I'm excited about it. So yes. Tell me more. For sure. Yeah. So
I just found that a lot of restaurants don't take advantage of tax deductions, they normally just get their POS system, you know, whether it's square toast, Aloha, there's all of them are out there, I can't name all of them. They would basically just print it out, you know, say year to date, go to their accountant and say, Okay, this is what I made. Give me a W two. And I'm like, that's the
least accurate way. And I when I where I would talk to these clients say hey, are you doing the FICA tip credit which you basically get a tax deduction on steroids for having tipped employees? Like no, I'm not. Oh, well, you know, I see here you brew your own beer. Are you taking advantage of this was called a research credit, where you can basically it's a tax deduction on steroids. That's the way I explain it. And they're like, No, I'm not. Because I noticed that you brew
your own beer, though. And yet we do it all the time. Oh, okay. Well, let me just help you save another 15,000 in taxes, you know, you're renting your home to yourself. And there were just all these things that most restaurant owners weren't taking
advantage of. And this is just my opinion, I've never asked a restaurant owner or restaurant manager this question, because it's kind of an odd one to ask, but I'll ask you, you'll know it is that I find that most restaurant owners like they're willing to invest in an accountant, when they know that somebody cares. And I think a lot of it is, especially in the virtual world today. Everybody's on their phone, everybody's
working from a computer. So like, I could just do QuickBooks Morty physically sitting down, I just, it's just one link. But if you're running a restaurant, you're on your feet, you're serving people, you're checking clients, you're checking on customers, you're putting out literal fires and figurative fires. So you're like, oh, like, I just need to like, I could just interest in somebody, but it is hard to find that person that will actually sit down and help you. Would you say that's true?
I would, I would fully agree with that. And I think all too often, I mean, part of where the show comes from is to help restaurant owners. I mean, I've been in this industry for 25 years. You know, I'm too I'm 35. Now, I'm teasing, a little bit older than you. But I've been in this industry for over 25 years. And I started the show truly to help restaurant owners, because they oftentimes have 1000 Different things competing for their time and energy. Oh, yeah. And they recognize they have to pay
taxes. So they have to have an accountant. And they have to run their reports and make sure that they submit them or they're gonna get in trouble with the government, you know, whether it's a sole proprietor or they've got to, you know, they've got an entity and they've got to do business taxes, they have to do it. But it oftentimes comes at the expense of potentially hiring a new person or coming up with a new menu or, or some of those
kinds of things. So they it comes as a last resort, and the dates come up, no different than you said, April 14, they go, Ah, I gotta go, I gotta go do this. And so in that, I guess, you know, part of the advantage and I love that you talk about JC is the fact that you you've uncovered some of these things that are that are often overlooked in the restaurant industry. So let's dig in a little bit about the tip edit, and why people either aren't aware of it, and they don't ever
take advantage of it. You know, as you're going through these conversations with people. Tips are a necessary part of a lot of businesses, especially in table service, even encounter service is becoming more and more prevalent. But talk to me a little bit about what is the tip credit? And why do people not exercise it? Why are their accountants that they are already having to do the books? Not even consider that?
I think it's a few things. One, I think most account, like kind of will go back to the example of April 14, that midnight, right? If you're waiting till, you know, the midnight hour and 25th hour, you just as an account, you can't think of everything you can't be like, you know, your main thing is, let me get this file, not let me get this extra stuff. And so I think that's one, I think to its most restaurant owners, right? You yourself, your job is
to make money, right? You want to make money you want to provide for your family, you want to help the community out. The last thing on your mind is let me take advantage of these tip credits. Right. That's the last thing. So I think it's one not knowing, and then to a lot of a lot of accountants. And I hate to say this because I kind of grew up in this world is I think a lot of it is they're not lazy. That's not the right word. They're just
not gonna they don't understand the different industries. It's that and I
think it's, it's like any industry, right? Like when you have a car that breaks down, like there's not some rule that says Every car is going to break down may 1 Like it's just like it's not going to happen. But like with accountant, everybody's looking for their guy April 15 is so it's just
that long line. But About the tip credit kind of what it is if you're a restaurant or any industry, but all spoken the restaurant specifically obviously come around here is if you pay a tipped employee, and you report their tips on their on their W two on their check, you actually get a tax credit at the end of the year. Now, I'm not going to go specifically what exactly a tax credit is, but just know this. It's a tax deduction way to explain it. It's a tax deduction on
steroids. Basically, when you spend $1, a tax deduction is like you say 10 cents. It's basically inverse. When you spend $1, you save 90 cents. So it's basically you know, nine times as good. That's the way I
would look at it. And yeah, if you're paying your your employees, your bartenders, your waiters or waitresses, your busboys, whoever it is servers, and you're reporting those tips, your payroll provider should be able to provide a report to you that says, Hey, your tip credit is x. And I'll give you an example of a restaurant client that opened, I think five or six or so for four days a week, they're open Thursday to Sunday, only for the dinner crowds, I think from like four to 10 or
four to 11. And, you know, they make about I'd say, a million million two and in gross revenue, not including what takes on. And their accountant was missing, like, I want to say with like a $10,000 credit, which is huge. Yeah, they were just flat out. Regardless, there were other stuff they were doing, but I was like, Hey, are you guys doing this? I notice you have tipped employees? Like
I don't think so. And I did their return this year, when I went from like 25,000, I think down to like five, and they made that same amount of money. There were some other things that we did. But just from knowing that, and I think that is just most people don't know, mostly he said most accounts don't specialize. And most business owners don't even know what
exists. That's amazing. I mean, that's amazing, because I quite frankly, I've been in this industry for 25 years, I'd never heard of it. I've heard a tip credits, where you don't pay full, you know, full minimum wage in certain states. And you know, the the, the tips have to make up at least a minimum wage, but I'd never heard of a tax credit for it. So the fact that this industry, I had never even had any idea that that was something that was applicable to our
audience. So that's amazing. You talked about the research credit, talk to me a little bit about the research, kind of brewing your own beer, making your own kombucha, making your own wine, you know, whatever those things might be. Talk to me a little bit. What is that? And yes, you know, I run a software company, and we take r&d credits all the time. Yeah, I'm assuming it's something
similar. But talk to me a little bit about that, because that's also something I'm pretty certain that most of our audience is not taking.
I'm pretty sure I've never seen I shouldn't have never seen anybody not doing it wasn't working with me. But it's very rare, I'll say that. Say it's very similar to the software company. So the IRS, you know, years ago, they said that if you are building your own products, services, product services, you get to take advantage of a tax credit, it's been it's been around for years, it just I'm pretty sure it's gonna be permanent, not going
anywhere. So if you were a restaurant, if you're making your own kombucha, if you're brewing your own coffee, beer, if you're making like if you have a restaurant, and you need to like make a new menu that counts. So if you're making new items, and again, it just has to be new to you, it doesn't have to be new to the world, right? Doesn't have to be new here.
There's there's a reason Belgium has been around since you know, whatever 1000 or whatever it was,
yeah. So if you if you're brewing your own beer, and you paste, let's say, you pay a brewer full time to brew beer. Again, I'm simplifying the version. But if that's all his job is is to like test new samples test, you know, recurring ones, improve them, and you pay him $100,000 A year. Normally your tax rate, you'd maybe save 20,000 in taxes for that. If that's his case, you'd say like 9080 to $90,000. That's and the reason why I like these credits, is you're not inherently changing the way you
do things, right. Because, you know, I'm sure you've been in this a long time, you know, you have to be an S corp, a C Corp, a partnership, all these that requires a big change, right? You have to do a payroll, you have to now if you're a C Corp, you can't take this. There's all these rules that you have to inherently change with the credits. You're literally not changing anything. You're just your account is going to ask you some questions. Some yes, no, we have a whole process as a yes,
no answer. And if you do, we just look at your books, and then we can retroactively go back and fix it. The nice thing is, there's so many restaurant clients that are probably not taken advantage of this. If you had tipped employees and 2020 2021 2022 we can actually go back and get you that money back.
Yeah, that's one of the things that that we actually did a little bit even in some of the the r&d credits, we went to a different CPA firm. And we're able to go back and get you know restated, restated tax returns, and oh, yeah, it was pretty amazing, you know, on that side and on the research
side. So, you know, do you have any success stories that you would want to share with our audience that that you're like, Oh, we went back two or three years and ended up getting people either a fat check or a big credit towards next year's taxes? Yeah,
it's actually the one we're talking about woman's open four days a week. So they're out here in the Midwest, we went back and they had some tip credits, I think one was for 10. It was 1012. And I think 2020 is a little bit lower because you know, obviously people were working as much. I remember off top my head, but I remember like, I think we ended up getting back like $30,000 in checks or something. I can't remember the number exactly, but they were like word never
leaving you. And then we also help them apply for the ERC credits. So they got what back like,
that was really where I was going next is we got a lot in the way of ERC credits. So talk to me a little bit about because I it feels like that's one of the most untapped resources that restaurants should have used. And because it was, I mean, I can tell you that the amount of effort that we went through as a business was pretty significant, because the government will make it easy back when we applied for it years ago. But it seems like
it's both gotten easier. And there's still money available. Talk to me a little bit, what is the IRS? You know, and why should restaurants consider applying for it.
One of the reasons number one is that if you're a restaurant, you're most likely going to qualify, as long as you stayed open and kept people on payroll between 2020, or basically, April of 2020 to September of 2020. ones about
six quarters. So basically a year and a half, give or take, you can get a reef of straight refund straight cash back to you for keeping those people on as long as their W two employees and they're not foreign, you actually get a credit, I think it's up to $26,000 per person. So I had one client, I want to say they have like Enam I think they're like 30 people on payroll. And I mean, they ended up getting back like, I don't know, four or $500,000, whatever the math came out to be. And
they were so happy. And the reason I think why a lot of restaurants like one, like you said it is cumbersome, is you know, I'm not gonna lie, it is complex. You gotta go back and get records of stuff that you don't want to deal with, who has time logs, payroll, returns, all that stuff. And the nice thing is, if you work with me, like I help you do it, like I'm gonna tell you exactly what to get. I'm not gonna is gonna give you a list of like, Alright, go home
and do homework. It's like, No, we're gonna sit on the phone, we're gonna sit on Zoom, and I will hold your hand and say, give me this form. No, no, share your screen with me click here, click this, I will sit right there with you and do it or somebody else on my team will. And then I think it's cumbersome. And I think that one other one is that people are listening to like tick tock videos, you know, countless
giving, just general advice. So the reason why most restaurant owners or restaurants will qualify is number one, the first test is you have to have a drop in revenue, which
have gone down which I guarantee you have
most in most it. And then another thing too is if you're if your business was affected or impacted, if you were shut down by a government, whether it's the city, the state, the fence, whoever, if you had to shut down, you're going to qualify. And then another one too, which a lot of people don't know, is if your logistics got interrupted. So for example, a lot of a lot of my restaurant clients, like they actually had to like they bought meat like and stored it in a
deep freezer. They're like, I don't know, if it's going up, there's logistics or supply chains. If your supply chain got disrupted, you would qualify. So just right there. I can't think of a restaurant that stayed open that didn't have one of those three. Yeah.
And obviously did better than others, you know, we you know, but many of them really, really struggled. You also brought up JT the home rental credit, That one seems like a little bit of a little bit of a different different approach. Talk to me a little bit about kind of that strategy and why you guys are considering taking that one? No. So
we love it every restaurant owner, if you own a home, personal residence, if you own a personal residence, and you own a business, you can actually rent your home to your business. 14 times per year tax free. So I think all the listeners are gonna be like, wait a minute, I want a home. I have a business and your timing get tax free income. Who doesn't like that? Right?
Yeah, I'm gonna say so I might, I might be looking that up. Even though I don't own a restaurant, figure out how to I want to
pose this could be any, this could be any business. If I just the way the reason why I like restaurants is typically for this to work, you have to have a place of business, which obviously everybody does. And then you have to have a home run. If you're working out of the home, it gets a little wonky. You know, solely out of the home, it gets wonky, but a very easy way for restaurant owners to do this. I'll show you how one of my friends are friends and clients how he does
it. He's an accountant, but it's the same thing. So if a restaurant hosts an event at your own home, it could be like a team party, it could be a shareholder meeting, it could be a networking event. So the way one of my friends doesn't use another account, he has a poker night, once a month with some of his accounting friends. I've been to a few times basically we just kind of go shoot the shit drink, you know, have a good time. We talked about work,
obviously. But you know, it's probably about 50% work, but there wasn't fun. He rents his house to his business to have an accounting network event. So restaurants could do the same thing. Here's another easy way for restaurants can do it. You've been in this a long time. A lot of restaurant owners have partners, right? You know, they're your friend, your brother or somebody else, right?
Yeah. Every month, you're you'd have a set time and you say, hey, once a month on the fifth, we're gonna meet at my house or your house, have our monthly board meeting or team meeting, and we're gonna go over the financials. You're gonna do that anyway, you could do it at the restaurant
or do it later Right now you're gonna, yeah, you're gonna
pay yourself anyway. Right? So the business gets a write off for a rent expense or meeting expense. And then you as the owner of the house, you don't have to pick up that income. So it's all tax free income?
I'd say it's, I mean, and I'm certain you know, you obviously your CPA, you talked about it earlier in the show, there's lots of these things. Are there anything else that's kind of sticks out in your mind that, you know, people aren't taking advantage of before we dig into some things that, quite frankly, I'm curious about? Because I've got a couple of things that are pure Max related questions that we've had
some restaurants ask about. But is there any other kind of advantages to different strategies that you've been able to use that you see? Yeah, under utilized within the brands?
I mean, there's a ton. I mean, I'm sure we'll jump into it. But one I think that people love and this is across industries, but restaurant, it works really, really well. Hiring your kids. Now, what do I mean by that? Right? If you can hire your kids, I mean, I'm sure you've been so many owners have had their kids like their bus boys, their host or whatever. If you pay your child out of the business, you can actually it's
called income shifting. So they're in a lower tax bracket, if they're paid under 13,000 a year, which is probably pretty easy for a 15 year old kid to get. If you pay them. That's a tax deduction for your business. It goes into their bank account, untaxed there under that standard deduction. So that's one. And you might think you can do this literally from the time they're born, to the time they
go to high school. So like, if you have a newborn, right, you put a restaurant onesie up and say, Hey, come to our family, restaurant, whatever, right?
You can pay them to be a milestone on Instagram while they're working for your business,
Instagram. Yep. Here's another one. If they're younger taste testers, it's a real job. Look it up. You can have you can have your kids who are four and five tastes of kids menu and be like, Oh, Dad, I don't like this, this tastes bad. Or this tastes good. You pay them to be your taste tester. And now, if you can pay them up to 13,000 a year for 17 years, tax free tax tax deductible.
That's paying for college, especially if you invest in college, it's paying for college
is paying for their retirement, it's it's literally whatever it is that you want, all because you just took some time to invest in a CPA that's going to help you not somebody that you're going to on March 15. Because again, if you guys want to do this, which all of your all of all the listeners are all serious business owners. These are things that you're doing like, like now, you're doing them six months ago,
you're not. You can't come to me Christmas like hey, JT, can we do those 55 things that we're on with the RTG? Guys know? Yeah, no, it's sorry, man. It's a Tonica.
That's funny. So I'm a little bit inquisitive about taxation as it relates to products, because we've had a lot of customers that struggle with how to tax items, different states have different things. Have you dealt with any of that? I know, you're really on the business side. But have you had to deal with, you know, prepared foods, unprepared foods, different states have any of those kinds of things? Do you give any advice to your to your restaurant tours on on those fronts?
I would say this is, again, every state is different. And I'm sure like I'm gonna say something that maybe like in South Dakota, it's different or like when I was this way, it's like, so I'm going to give us kind of some general advice in terms of like preparing unprepared foods is are you changing the original shape of the food? So for example, I have a coffee, I have a client and they own a cafe out in
California. A lot of their stuff isn't reheated they basically just buy it from their suppliers and
put it in. Okay, yep. So
it's all cold, they don't warm it up. They don't pay taxes on that. They've been through an audit and they're the City California is like, yeah, like you guys already taxes. Now the key is like when you start when you change the shape of it. Now, what does that mean? If you heat it up? If you toasted if you're frying it, that's generally the best. And even if it's so cold food doesn't mean
that right? Because if you're getting ingredients like you know, like a Subway sandwich, that's definitely taxable, because you're changing the shape of the bread you're putting tomatoes on. But if it comes prepackaged, that's generally not taxable. Again, I'm sure each state is going to have its different nuances. But I would say that's a very good rule of thumb is if you're changing the form, no sales tax if you're changing sales tax. Okay.
Another tax related question. And again, these are questions that I get from our listeners is third party delivery, and first party delivery. How do you deal with? I mean, it's impossible to figure out how to tax those things. How do you advise your clients on those things? Oh, like, like DoorDash, like DoorDash and Grubhub and UberEATS they're collecting tax on your behalf? Are you supposed to tax them or you're not supposed to tax them? You know, what do you deal with, with any
and all of those things? I guess, you know, it's just, it's something that I that I've continued to to get asked is how do you reconcile those things from an accounting level? It's a it's
a gray area, because those are all real, relatively new. So there's not a lot of like IRS guidance on that. Okay. The way that I tell people is, if you're paying it, or if you're if you're even UberEATS is delivering it. Typically you should be charging sales tax, because you kind of want to think of it as like you're selling it to to a regular consumer merchant Right? Exactly. It's just Uber Eats happens to be like your square.
Right? Like, like when somebody swipes the card if you have a square POS, right, like, technically squares delivering the funds to you, it's the same thing. Okay, so I would say that you should be, you should be charging sales tax that they walk into your restaurant.
Okay. And then the last question just again, and you're probably like, what the heck, how did I get on the show? And now I'm talking about all these random things. But these are real things that people ask is, as, you know, prepared foods, there's tools out there that continue to get plugged into POS is mobile AR is one that I've seen advertised quite a bit. Are you familiar with all the Laura? And they also got some of that was previously on the show Davo? Which does tax remittance, you
know, sales tax. But as far as even calculating cross state lines, and where was the product sold? Where was the product, you know, produced? All of those kinds of things? Have you had to deal with any of those pieces?
Um, not too many, because most of the restaurants, right, like what you're selling is like your tip, if you're like, we're I'll use Iowa's example, like, I have a brick and mortar restaurant, or sorry, they're in Wisconsin, they're typically not like, delivering stuff to like Minnesota, it's just like, not going to really happen. So most of the time, it's really just like single entity like in the state in the
county in the city. And then I actually want to hit on something you talked about, like, Oh, these are embarrassing questions. That's actually one thing I probably should have said earlier. I always tell clients, and when I first meet them, I always say, Guys, please ask me every single question. Do not feel embarrassed. I went to school for this, you didn't. And if you have to ask me a question 15 times, that's on me because that means I'm not explaining it. I'm saying something where
it's not many. So I have to figure out how to translate it to you don't ever feel like you have to translate it for me. So I always say
appreciate you that because again, these they asked me questions. I'm like, I'm the VLSI. Technology guy. Go call your gun. So now we've got an account on the on the line, I'm gonna ask you, because these are the kinds of questions that these guys come up with. The last piece that I really is, is related to to, I guess, personal income and business income.
Again, I know at times restaurants, you know, it's, it's, it's a pretty old business, a lot of times people will run some of their expenses through through the business, you know, their way and those kind of things. Talk to me about how you segregate those things, because I think it's just, again, one of those things that I've seen restaurant tours struggle with, because they don't understand how to how to balance that. And I guess I'd love a little bit of free advice
for our audience out there. That can that can help you know, how do you segregate those things? How do you build the firewalls to ensure that you're doing it properly, but you're also living on the line that you're being legal, but but you're maximizing your benefits? Yeah,
no, exactly. I always tell people that. And this is regardless of business. But for restaurant tours, what I always try to tell people is this why they like us is trying to make it easy as whatever is Business is business. Whatever is personal is personal. I know
that sounds simple. And it might sound counterintuitive, but it's if you if if you can, like let's say some of your wine club, right, let's say you have a restaurant, right, and you have a wine club, a bit to some of its personal some of the business, I would say that you could throw a name and say I would I do that is you could put that on the business card. Because and you want to have
separate cards for business. So that means if you're purchasing inventory, it goes on this business card, you know, make it put it put a sticker that says business on there. So you know, you know, something like that. And then you know that way in your head it's like is can I Is this a legitimate business
expense? Or is this personal? If it's all personal, personal card, if it's all business business cards, so the way we run things here in the way it's our clients is you have one business checking account, one business savings account, one business credit card, make it
super simple. And then like I said, if you can tie a business reason to it like the wine club, hey, if you're gonna put some bottles in your place, if you're doing research business card, if it's truly like Netflix at your home, probably personally,
yeah, that's probably not running Netflix up on on 40. TV. Exactly. Exactly. Yeah. A couple other mistakes from a tax benefit perspective that I've seen restaurants do or restaurant owners do is they pay themselves too much. They don't take it out in the form of distribution. So talk to me a little bit about tax bracketing and understanding what your income should look like and how you might take distributions from your business. If you're sole proprietor, you don't have
a partnership. Yet, but but I think it's again, I know, it's a silly question. But I think people oh, I need this income. So I'm gonna pay myself this versus paying yourself what what is market rate and then taking a distribution because it comes out differently. And your tax brackets are different, and your income tax on a personal level is different. Yeah,
I actually love that you asked that question, because you hear so many. It's like, oh, take 30% Do this, do that. And it's just as very confusing thing. So I actually asked, I learned this from a mentor, his name's Cameron. So if he sees this, he'll know who he is. I tell people and one of the one of the first questions I asked new clients when they're determining payrolls and like I say, what do you need to live every day? Like, what's your mortgage? How much do your kids
go to private school? Do you like I want to get real personal because I need to find out the best advantage. And if let's say Jeremy, you come to me and say, Jay See, I need $8,000 to live every single month, that's what I need. My mortgage, my kids, my wife, my cars, I 8000 hours a cool, Jeremy, here's what we're gonna do, you're gonna take. So if you need $1,000, you're gonna take a $4,000 distribution every single month, it's gonna be the
31st. Every single month, there's no negotiation, it's the last day, every single month. And then the other half of that 4000, you're gonna take a $4,000, net, take home check, go to your W two provider, I can do it for you and say, Hey, I need to take home $4,000 Yep. So now, it's a very easy way. Now, the accountant in me would say, No, you should be tracking it all year. But I realize you're a business owner, you're trying to make money, you don't have time to sit there and be like, Wait,
is it 35% This month? Is it 40%. So again, take what you need half as distribution half as payroll, and you're going to end up getting that market rate. I found that that works out more times than not?
Well, and I think that I mean, oftentimes, I know, I know, because I've got mentors that have talked to me about this, it's like taking it out that way, oftentimes those distribution, you're not getting taxed, and you don't get bumped into brackets, and it's just it's more tax efficient to do it that way. And so I appreciate you answering that. You're gonna get from our audience. How do you how do you know how to do restaurants? And how do you deal when you talked about the number
of clients? You guys had? You talked about Minnesota, you talked about Wisconsin, you talked about Iowa? Can you work out and you talked about a client in California? I know we talked about this pre show, but you're gonna have people that go, why should I work with some guy out of the Midwest that that's going to do tax accounting? I'm in New York, I'm in California, how the heck is he gonna know what to do there?
Talk to me a little bit about how you would combat that conversation if it came up to you?
Yeah, well, well, number one question I asked people is like, why are you talking to me? Clearly, you're unhappy with your current situation otherwise? Because believe it or not, I don't go out and poach people. I don't I don't go on Facebook. Hey, are you happy with your account? Yeah, cool. I don't do that. I do it by attraction, everybody comes to me. So for them, I'd say if you're coming to me from New York, like what can you do?
I'd say, Well, are you happy with the amount of your taxes and one thing that my clients love us, I generally ask people for their last tax return. And I'm pretty good at being able to pick out about 30 to $40,000 that most people miss. So if you're happy missing 30 $40,000, because you have a local guy in New York and California, and wherever you are. Cool, stay
there. But if you actually want somebody to proactively look, and like we said, about the FICA tip credit, you've been doing restaurants like I've never thought about that. So if you want to keep missing those cool, but if you want to come Come with me, come be the tax Angel. That's what I would say. Because I'm, like I said, I'm pretty good at being able to look at your return and be like, yeah, we're missing some things here.
Yeah, I think that's amazing. And I know that again, you and I talked about a pre show, you've got the ability to work in all 50 states. And so do you deal with brands, I guess, in general that go across multiple states? Have you dealt with that yet? You know, where they've got four different properties, one in Wisconsin, one in Minnesota one and you know, if you're able to deal with all of those kinds of things, yep.
Yeah. If you have, if you have restaurants in all states, as long as you have separate POS is and you can divvy up the data? Yeah. Because it's pretty much it's where you work is where you can't like say, Well, I have this restaurant in Texas, but that's a bad example. And especially in California, where I have to pay 13% state taxes. Can we just say it's in Texas? No, that's probably can't do that.
Yeah. That doesn't work that says, it probably worked for a short period of time, but somebody's gonna show up and knock on your door and go, yeah, yeah, not anymore. Yeah.
I always tell people, I'm actually the most conservative accountant. I'm just looking at the Internal Revenue Code, like the tip credit, that's in the tax code, r&d credit. That's the tax code, the Augusta rule with the home. That's right, in the tax code. So I'm just following that I don't go out of it. And if I've had people, or you know, who my partner Drew, who you guys are, you won't be on this, but you talked to him? I mean, I've turned them before and looked into like, we're not working
with them. Like, they seem shady. I'm not doing that. So yeah, but we could work in all 50 states, most states, the CPA license is reciprocal, meaning that if you're a CPA in California, you're gonna be a CPA, and I will you just have to, like, pay the $50 fee, or whatever it is.
Yeah. And I do tell a story from my very, very early days, like I was a teenager, where we had a customer say, Well, how do I how do I bring stuff into the POS without the government knowing about it? I'm like, you probably don't need RPOs you should probably go go find somebody else that's gonna be able to teach you how to cheat cheat the government, because that's not the way that's
No, no, no, no. Same way. Like when people like do I have to report cash or cash or like, yeah, like, Well, how would you know if I, if I don't tell you like, you're telling me right now. You don't have to report it. I'm going to report it goes through in your POS, so I'm reporting it. Yeah. So
oftentimes, there's actually a product that we used to sell back when I was still in high school that ultimately got shut down because they want on that somebody went in and they like, had a 2020 type reporter come in, and he was posing to be a restaurant tour, you know, show me how to how to cheat the system and the technology provider ended up getting shut down. Fortunately, that was So we don't deal with
them anymore. But ya know, it is a pretty common common thing that we get from restaurants where it's like, how do we cheat the government? It's like, you know what, go buy something else because they're gonna. Yeah. Oh yeah. I've
told people like, not doing that. Yeah. Love it.
I love it. So I guess GT what would next steps look like if somebody wants to engage with you? How do they how do they get connected? How do they deal with? You know, I guess what would you suggest that they go go look up? Because it sounds like it's a pretty no risk offer that you're putting out there? Yeah, tax refund. Let me go look at it, and I can help you. Yeah, well, and if not, then go go back and do what you're doing. Ya
know, so the easiest way, I know you guys are gonna put a link, it's a link to our email list. JT pels.com/rtg, the links gonna be in the video, it's gonna be a description of all of these. And when you sign up for that, that's actually
sign up for our email list. And then all of our listeners today that listen to this episode, right now, in the future, whatever it is, you're gonna get a restaurant owners tax savings, cheat sheets, gonna show you how to write off your home office, pick the right entity, your miles, your car, all that fun stuff. And that's all free. And then once you're on that you're on our email list. And then after like three or four minutes, wow, this is gold, I
need to talk to him. And I think like every fifth or seventh email, there's a call to action says, Hey, if you like what we're saying, go and book a call. And then once you get on that, like I said, there's going to be some question on there, you upload a copy, return back to your private information. I don't care what your name is, I don't care where you live, your address, all that stuff. I just need I need to see real hard numbers. And the reason is, you
guys get the best out of it. And then by the time you go through that intro call, you're like, Wow, I've never had a tax account. On the first call, say he could save me like $50,000 it does happen.
Well, and I think it's amazing because I and as silly as it sounds, all too often we get comfortable with people that we've been doing business with. And I mean, I talked about the ERC credit even for our own business and years ago, we had a CPA and nice enough guy and he took us out to dinner once a quarter and all of that, but we changed CFOs and our CFO was like this guy's not
doing his job. We won't find another CPA and you know, we ended up getting three or four points more to the bottom line within our own business because of finding a CPA that was focused on our business and was really focused on on understanding IRS tax laws and the state tax laws to be able to maximize those things that was huge. It was really really huge. So So I know that that's out there. I'm gonna I've got to ask just because I know our audience may hit me up on social what is
GT stands for? Where's the name come from?
There's one name I give but it's a joking one Jamal Thomas but it really is Joshua to carry Pels. That's what the initial stood for. I've been calling myself as far as I know as long as I can think my mom doesn't call me or calls me JT. So nobody calls me when my government name I won't give that out because now you got to pay for it. You got to pay for it.
Perfect. Well JC I appreciate you you know dropping as much knowledge as you have. I'm excited for our listeners to get this episode in their hands because I think there's a lot that you can do and I know we just scratched the surface on all of the things that you can do to help our listeners out and so guys you know again link will be in the description link will be up on the website to go download that white paper you know, help help
with tax strategies. To our listeners who haven't already subscribed to our newsletter that RTG newsletter please do so. You guys subscribe to the newsletter once a month you will get an email with all of the episodes JT you can give drew drew a hard time that that you got to be the star this time maybe we'll make him come on. Come on the next episode we all
love to do that's my bit for everybody that knows that's my business partner drew he's the one that put together the email was the email so all the non accounting stuff he does I do all the accounting stuff.
I love it. I love it and to our listeners guys, some I know that you guys have got lots of choices, as I said on the onset, and so we appreciate you guys listening. JT, thank you so much and to our listeners make it a great day.
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