Business Planning Podcast (Clip 6 of 8) – Tax Planning early on for growing Businesses
No content on this page or website should be taken as legal, financial, tax, planning, or other advise. Even in our endeavor to keep the conversation accurately transcribed, there may still be errors or inaccuracies. We apologize if some of the written transcription is not accurate relative to the spoken word. This content is provided ONLY for entertainment and is intended as general informational/conceptual content. A transcript is endeavored to be provided below.
Business Planning Podcast – With Strategic Capital
Adam D’Acierno speaks to the important topic of business tax planning, and how often client intake at Strategic Capital requires a full examination of business tax planning, and strategy going forward.
Founding Partner - Financial Advisor
I specialize in helping businesses and business owners identify their needs, define success, and implement strategies to accomplish those goals.
Founding Partner - Financial Advisor
My comprehensive process embraces investments and insurance as an asset so that your whole financial life is magnified.
Founding Partner - Financial Advisor
I believe this combination of independence and teamwork is the best way to serve clients. It lets me provide you with the highest quality financial planning services, built for life long relationships with you.
Holistic Wealth Management
We are a Fiduciary – your financial well-being is our focal point. We integrate with your needs, and plan holistically so you get risk management built into realistic portfolio management and other important features that can enhance peace of mind and potential. You get more choice, better focus, stronger customer service and access to world class institutional-level resources with Strategic Capital
AI in Investing & Innovative Resources
Waterloo offers significant opportunity through innovative products and platforms that allow our clients better understanding of trends, better options for investing, and insights on a full-portfolio level. In addition to this exclusive offering we also have resources that some financial advisories don’t have access to. Call us and let’s see what’s possible.
Business Planning, Insurance, and access to Capital
Our practice was built for you. Traditional service offerings in the financial services sector leave a lot to be desired. We wanted to give our clients the best potential for growth in all ways, always. Our approach takes a new look at not just the usual suspects in financial planning, but also brings other resources to bear as well.
Meet our Team of Professional Registered Investment Advisor Representatives
This Team makes it possible to do what we do – Right here in Austin
Our partnership with Waterloo and our incredible team at our Registered Investment Advisory Firm in Austin allows you to continue what you do best and leverage our talents, our time and our resources to help grow, protect, and transfer wealth, no matter where you are in your investing journey. We have access to tooling and resources that opens up options and improves risk management, without giving up potential for growth or stopping you from doing the things you love to do. We should Talk!
Find the right fit with our Registered Investment Advisors today
We’d love to work with you on your planning for the future, because what’s possible shouldn’t be feared due to the unexpected – get a real plan in place and work with the right Registered Investment Advisor in Austin.
Below is a transcribed version of the podcast – it may contain errors, and may not be an exact replication of the audio of the above clip. Regardless of any inaccuracies between the audio and written variant of this episode/audio/video track, all discussion is for general informational purposes and entertainment only. None of this content should be misconstrued as investment, legal, financial or tax advice. We apologize for any inaccuracies in the written content. You may contact us to notify us of anything you believe to be inaccurate.
Episode 2 Podcast/audio/video Clip
Businesses need Tax planning – Adam D’Acierno talks about what he sees with businesses from a needs perspective more often than not – Tax Planning is important!
With Adam D’Acierno – Business Planning at Strategic Capital
Adam D’Acierno reinforces the importance of tax planning from a business perspective, and how often Strategic Capital sees important strategic value with tax planning in businesses
Moderator: (I want to…) step back just a little bit. But let’s talk about something that I think is important for people to understand – and that’s the workflow of starting to work with an advisor like yourself or like Strategic Capital. Because sometimes people… every business owner is pitched 50 times a day on something. Whether it be SEO for your website, or you know, uh, “I’m a consultant that does this…” or “Let us run your PPC, or your ads”, or whatever it is. And: including insurance and other things, and you guys dabble in a lot of those arenas just by default, because so many things are connected with the finances of a business and the planning of a business.
Moderator (continued): When you’re meeting with someone in the first instance, what are some of the things that you commonly see that might be left on the table at that point, or things that people aren’t necessarily aware of, and as you start meeting with them once or twice, you start identifying those things… What are some of those commonalities across most of the clients you work with as you go in? What do you see that’s really a deficiency, generally? Are there things that kind of stand out to you? (Such as) a lot of the people in the Austin area can benefit from XYZ, or you know: “Here’s something that people in this threshold – at the starting level of working with us (Strategic Capital) might be looking at, as business owners, prior to even meeting with us, so that we can be more efficacious when we meet.”
Adam D’Acierno (Business Planning – Strategic Capital): I think the all-encompassing answer on that is: taxes. Not only from a business perspective, but also from a personal perspective. I’ll just ask you a question: If you had to kick something would you rather kick an empty can, or would you rather kick a rock?
Moderator: (laugh) Right, for sure, I definitely don’t want to break a toe!
Adam D’Acierno (continued): That’s what our America is about to, and is currently dealing with. Whenever we meet with… whether it’s a business owner, or a participant inside of a retirement plan that we help advise, our goal is to help them – well one of our goals is to help them have as much income as possible while having their taxable income as low as possible. Taxes: everybody doesn’t really like taxes; well it’s a necessary evil gotta pay taxes at one point in your life on money that you earn whether you pay what you owe or whether you pay more than what you owe – that’s your decision – but you have to pay that amount so everybody dislikes paying taxes.
Adam D’Acierno (continued): Taxes are very very low relatively to where they have been in history. Most of the time we see people trying to take advantage of these tax deductions in real time, what they’re doing is they are instead of kicking the can, they’re letting it roll down further down the road, and that can is eventually going to turn into a rock.
Adam D’Acierno (continued): And what happens is when people put their money into these plans on a pre-tax basis they’re very, very surprised when they go to pull all their money out in retirement and they have significantly less money than they expected. Well, it’s because all of the money inside of those accounts were taxable to them, and they’re taxable at whatever tax rates are: at that time. And, if we look at where we are as a country, taxes probably are going to have to go up in the future in order for us to bridge this deficit that we’re in. So, a lot of the times what we’re doing is we’re looking at what people are currently doing – their current path, and we’re plugging into our software to see: “Okay, well, what if we decided that we were going to, instead of taking this tax deduction today, foregoing that tax deduction, put our money into the Roth account and then pulling those Roth dollars out in the future – does that give us a higher likelihood of success in retirement?” Okay. If the answer is yes, well then, let’s look to implement these changes so a lot of the coaching that we’re doing is: inside of a business, if a business has a match associated with it, well if you put your money into the 401K – most plans have the ability for you to decide if you want to put your dollars in on a Roth, or a pre-tax traditional basis. If that company has a match, well, regardless of where you put your money Roth or traditional pre-tax, the company is going to match their dollars into that pre-tax traditional bucket for you so a lot of times we see people putting money into the pre-tax bucket and then being matched additionally on those dollars in the pre-tax bucket. And what we’re coaching them is: “Hey let’s, if it makes sense, identify and start putting our contributions into the Roth bucket and having the employer contributions still go into the pre-tax bucket.”
Adam D’Acierno (continued): Now we have both buckets of money working at our disposal: pre (tax) and Roth dollars. Just said earlier: taxes ebb and flow they go up and down throughout history. If taxes go up in the future and we have all of our money or some money inside of a Roth 401k option that we’ve already paid taxes on, well, when I go to pull my money out in the future and create income for me it’s all tax free income as long as my dollars have been in the the 401K plan for the amount that they need to be in, to satisfy those provisions. But I have then increased my income without increasing my taxable income by having those dollars in the Roth bucket. Now if taxes go down in the future, well, instead of pulling from my Roth bucket I’m going to start pulling from my pre-tax bucket, and pay taxes at a lower rate.
Adam D’Acierno (continued): So, as we sit right now with America’s legislation, that match that gets put in can only go into the pre-tax bucket. Hopefully in the future the participants will be able to direct if that match goes into either the pre-tax or the Roth bucket, but really what we’re showing them is: if you’re putting all your money inside of this traditional 401K, and we know that taxes are probably going to go up in the future you’re just pushing this problem of taxes down the road and it’s just going to keep accumulating, kind of like an avalanche, eventually you’re going to get to the point where you’re paying so much in taxes, that it’s just eroded all of your savings, and so, that’s really where we’re able to come in a lot of the times and make the biggest impact.
Adam D’Acierno (continued): And then, on a business owner perspective, when we’re doing the planning for them… obviously business owners are always trying to find deductions. But again, you’re kicking that can down the road, and that can is eventually going to turn into a rock so the planning that we do for our solopreneurs and putting in those solo 401Ks the coaching we give them is: “Okay, you have the ability to put your dollars into the plan as an employee of your company and you also have the ability to match and put in dollars on behalf of yourself as an employee by your company.” So, the dollars that you yourself, as an employee – I call that my “EE hat” versus the “ER”. EE is employee ER is the employer. When I put on my EE hat, and I’m contributing dollars out of my own paycheck, let’s put those in on the Roth basis, so that we can… unfortunately have to pay taxes once… or depending on your view of that, you have to pay taxes once; let’s pay taxes. But now, in the future we get everything out tax free. Now, we don’t want to forego all the business deductions that we could get, so that’s where we then utilize, and put on our ER hat, and now we’re able to put in additional dollars from the company on behalf of the employee and those are the dollars that we utilize to get the tax deductions.
Adam D’Acierno (continued): So, for our business owners that do have the ability to set the their plans because the discrimination rules that go out the window when you’re the only person in the plan – that’s what we’re coaching them to do is put your money in on into the plan as an employee on a Roth basis so that you can pull those dollars out in the future on a certain tax preferred basis and then match yourself or put in additional contributions by the business those as we sit today have to go into the traditional bucket that gets your business the tax deduction, and now everybody’s getting the best of both worlds. The business owners getting the deductions in real time, and the employee – you, yourself, inside your business – are now starting to accumulate Roth dollars – that, again, if they’ve been in for the certain time length thresholds you’ll be able to access those in the future: tax-free.
Moderator (continued): Yeah.
Adam D’Acierno (Business Planning – Strategic Capital): So, really it all boils down to taxes. That’s where we see America having one of the biggest issues in the future.