Talking FREE MONEY
Today we’re talking all about free money with tax professional Catherine Tindall. There is money out there that belongs to you and you’re leaving it on the table. Trust me she explains exactly how to go get it.
There’s an old saying that goes something like this, “You’ll only find three kinds of people in the world: those who see, those who will never see and those who can see when shown. This is Restaurant Strategy, a marketing podcast for anyone who’s looking.
Hey everyone! Thanks for tuning in. My name is Chip Close and this is Restaurant Strategy. A weekly podcast all about helping chefs and operators build more profitable restaurants. Each week we toggle back and forth between monologue style format and an interview but the goal is always the same. To take complicated concepts both on the marketing side and the operation side. Put them together, make them both understandable and actionable, why? Because like I always say information is only as valuable as the action it inspires. Now my guest on today’s show is a woman by the name of Catherine Tindall. She is a CPA and she is here to talk about free money. She’s an accountant and she’s here to talk to us about taxes and money in accounting and she’s promised me that she’s gonna make it interesting. Catherine, welcome to the show!
Thanks so much for having me Chip. I always promise we’re gonna try to keep it as light and fun as possible if that’s something you could do with taxes and accounting.
That’s great! Here’s the thing, I was really hesitant talking about taxes on this show for the fear that people would say, I don’t want to talk about taxes. So why should we talk about taxes and why are you so passionate about it?
I think for a lot of small business owners. It’s one of those things where it’s so complicated and such a new environment for people when you’re self-employed that you kind of want to stick your head in the sand about it. But once you start making money, running your business and you’re starting to get those paychecks, having to deal with it can then become one of your biggest cash flow headaches that goes on. Especially once you start getting into the higher levels and depending on what state you’re operating out of, you could be losing like 40% of your take home to taxes. What are things that I can actually do to reduce how much I’m paying? Is this stuff all structured right? Are there ways that I can actually get this number lower because I always tell people. You don’t want to spend the first four or five months of the year working for the government because that’s what happens basically if that’s how much you’re losing to taxes. It’s one of those things where once you’re starting to turn a profit in your companies and you’re starting to feel that pain, it’s worth doing some more exploration on other ways that we can actually reduce this. Because once you write those checks out it’s really painful.
I think everybody listening to the show can certainly feel that. Here’s the thing here, what happens is that something that hurts, you don’t wanna go towards it, right? If there’s anybody left actually still listening to this episode, thank you! This is the hot stove and we’re going to learn how to touch it properly and make more money because of it. I was joking around with Catherine before we hit record and I certainly set this on the show but I firmly believe that the small business owners, restaurant owners, deserve a business that works as hard as they do. I would like to split this conversation up into two main chunks and before we hit record Catherine and I were talking about what she does a lot of. Which is sort of tax planning and especially over the last two years with Covid is really working through some of these credits that are available through the government. I wanna spend the first big chunk really talking about that because I think things are going to be very actionable. This is what’s out there, this is how you go get it or this is what you should ask your CPA about or this is what you should be looking at. We’re gonna spend the first little bit on that and I think it’s about how you recover money that belongs to you. Then I want to spend the second half of the conversation really talking about things like financial literacy, cash flow, forecasting, how we build budgets in pro formas or how we build pro formas that will allow us to build budgets for the different departments with the understanding that most of the listeners of this show are small business owners. They’re independent operators. They’ve got one, maybe two or three locations that cover the majority of the listeners here. This is their passion project. It’s their lifeblood. It’s the business that provides their house, their food, and provides for their families. I think all of that stuff I just want to make sure all the listeners know that this is going to be very actionable. It’s going to be stuff that’s really going to help you out and Catherine has promised that light and fun and to make it interesting to all of you guys listening. Because again, tax planning does not sound sexy, we’re going to make it sexy.
How does free money sound?
Free money, that’s going to be the title of this podcast episode. So that it gets downloads so that people actually won’t zip right past it . Free money, so talk to me about free money.
For my firm one of the big things we’ve been dealing with a lot of people is taking advantage of the COVID aid. Because a lot of the programs that were around had a limited window but some of the programs didn’t and so the one that we’re doing a lot with currently with restaurants is the Employee Retention Credit. I’m sure a lot of your listeners have heard of it. Many probably have gotten it already but it’s one of those credits where it’s up to $26,000 per employee, potentially which is for how many employees that restaurants have. That’s a lot of money! We’ve been seeing kind of small to mid sized operations, anywhere from a quarter of $1,000,000 and that’s actual cash that they get back from the government. The nice thing with the program is it’s unlike with the PPP money where they only had so much funds to give out. This is a tax credit and what that means is you’re legally entitled to that money. It’s like filing a tax return for a refund. It’s yours to claim, it’s just up to you to go after it and have somebody help you with the claiming.
You said this is a big part of what you’ve been doing for the last year or two. Is this just a particular area where people are just not aware of this or they don’t know how to do this? How did you slip into this and why is this sort of like front and center in your mind?
For me, my background has always been tax. But over the years I got really much more focused on the planning work and just really interested in how I can actually make the knowledge that I have work for people’s businesses in a way that’s going to move the needle and reduce how much they’re paying, increase their cash flow and really benefit their business in a way that’s substantial. ‘Cause filing forms is great but it’s not as satisfying as being able to cut a tax bill in half or get somebody a big credit that’s gonna make them able to finance a bunch of new equipment that they want or whatever it is. Our firm was founded around trying to find ways to actually help business owners beyond just filing forms. For us the real focus has always been how do we take this esoteric tax knowledge and convert it into something that’s actually going to help people in a substantial way. I found that using the knowledge that we had to do things like reduce peoples tax bills or get them actual money back from the IRS was a lot more fulfilling for me as a professional. So during the pandemic watching what was unfolding especially with a lot of the credits, like the Employee Retention Credit, a lot of other CPA firms were just so bogged down in trying to just meet the basic filing requirements of getting tax returns done. They missed out on a lot of these credits and because a lot of these are one time programs, there’s a lot of legislation around it and so for a lot of smaller CPA firms it was really hard for them to really take this on and tackle it and do it justice. Basically what my firm did, we decided really early on that if we’re in for a penny we’re in for a pound and so if we’re going to do these we’re going to be kind of an expert firm to do them. I do a lot of them for other CPA firms and other institutions just because we’ve basically built an automated system to do a lot of the data cleaning that’s involved and just have a really high quality output product because I know for the kind of dollar volumes that are involved with these and like I said it’s up to $26,000 per employee that really adds up quickly. We try to make the process kind of idiot proof and where you’re not going to run into issues with the IRS or anything like that.
So tell me then. Somebody is listening to the show and they say hey I love this free money. Talk to me and I didn’t know anything about the Employee Retention Credit or I heard people talking about it but I didn’t know it was available to me. How do people know whether it’s available to them? Just as a first step.
As a first step, there’s a couple different people that can do them. I’ve seen those kinds of four main people that will do them. Your tax practitioners, like your CPA or whoever is doing your taxes, could do it. Payroll providers could do it. There’s specialty companies that aren’t CPA firms that do them and then there’s companies like mine where we’re a CPA firm but we specialize in it. So those are kind of the four different places you can go. Pretty much anybody that you work with is going to be able to give you an estimate of eligibility. I think the one area where I try to tell people is a red flag is for restaurants, they tend to be more complex claims because you have things like the tips and you have multiple rounds of PPP, other grants or other aid that was available that a lot of restaurants took advantage of and those all interact with this. I’d recommend you go to somebody who’s going to be a CPA to deal with it because they are complex and because it’s just such a big dollar volume. You don’t want to have the IRS coming back to you in two years and having an issue with your claim. I joke with people that it’s like getting Botox. You’re not paying for the Botox, you’re paying for the placement, like you’re paying for that expertise. Nobody wants to get a bad Botox job done and it’s the same thing with tax credits. It’s one thing to get the checks in the mail and that’s great but what you’re actually paying for is the correctness, right? And the ability to make it through an audit, if that happens and that’s not to say that the IRS is gonna go crazy auditing these or something like that. But just when you get a check in the mail from the IRS for 300 grand, you wanna know that it’s yours and you’re not going to have any problems with it. I usually say if people are interested in getting an assessment, it’s something that my company does complementary and especially for anybody who’s in the restaurant industry. You’re gonna qualify for something, it’s just a matter of how much?
You sound so confident there. I’m sure there are people sitting here listening and going like oh I’m not going to get it I already got this money and that money and this money I bet you I’m not gonna get it’s not worth going down that road but you sounded so confident. Talk to me about that. Why is it that you feel so confident? Where does that come from?
Having done so many of these. I’ve not had a restaurant that I had to turn away from yet. There’s two ways you can qualify. One is having certain revenue declines and then the other is government shutdown orders or government interference in their operations and for the most part every restaurant out there had government interference in their operations. So even if you got things like PPP money or other grants, it tends to be because the duration of those government interferences were so long for so many people that you’re still going to end up qualifying for some wages. I haven’t had a single one come across my desk where it was Oh no sorry you don’t qualify or oh it’s not gonna be worth pursuing. If you’re running a very small operation with say under five regular employees then that’s probably not going to be worth your while but for most operations where you’re at least ten,15, 30-40 it’s going to be a pretty substantial credit for you.
How does that process work again to make text sound really light. How does the process work? Walk me through a couple of steps here to just shine a light on it.
The basic process is we ask for a couple reports that usually take an hour to put together. Once we have that, we just run a napkin calculation. OK looks like you’re qualified for $100,000 -$150,000, here’s the credit. We work really nicely with outside CPA firms. We loop in the existing CPA to let them know what’s going on and then just make sure any questions that you have answered because there are some complexities with it and we want to make sure you have the full scope of what goes on with them. For the most part, once you’ve got that estimate, then talked fees and that sort of thing, we just get the credit processed and in five months you get that check back from the IRS in the mail that’s basically the process.
Is that literally a physical check?
Literally a check that comes. It’s usually multiple checks that come back in the mail to you from the IRS.
That’s great! So it sounds so easy. Why are people so afraid of it?
I think most people just don’t really know about it and a lot of CPAs have kind of spooked their clients off of it because they know enough to know that it’s complex and that if they haven’t invested the time into really mastering it, they think that, “OK well it’s just not gonna work”. Usually what happens with us is when we work with the client with their existing CPA. they’re like oh great you know we usually talk shop with the other CPA. Then they usually start sending us more of their other clients because it’s a unique specialty thing to be able to do for them. They’re not going to have the ability to handle these or handle the high ticket ones like restaurant claims usually are so it’s good to work with a company like ours.
That’s specific to what’s going on right now in the world like you said this is a one time credit and this is gonna disappear eventually. When will this disappear?
It’s gonna start phasing out in about nine months to a year. It’s one of those things where you want to take advantage of it as soon as possible especially if you’re a restaurant and you know very likely could be getting over $100,000 back, do you really wanna sit on that for another year or what could you be using that money for now?
There is some urgency here. Let’s broaden the conversation then if we may, from just this employee retention credit to some of the other stuff you do and some of the other things that might be available out there to small business owners.
Sure! I’m always happy to share some of my best tips and tricks with people and see if they could take advantage of things.
Listen, it’s all about keeping it actionable. So that people can listen here, not just nod their head and say that it was really great. I learned a lot but like I learned a lot now I’m going to go get money, now I’m gonna go drive more sales now, I’m gonna go find better employees now. So the whole point of the show is to keep things out actionable so in this part of that keep things make things actionable for the listeners.
I’d say for the most part ,if you’re a self -employed person you don’t really need to know how taxes work. You just need to know enough to have the right people working for you. I always tell people you know the main action items that I always see in business owners mess up on is they expect their CPA to be proactive with them. My firm is a little different there’s some other firms that are different out there but for the most part I’d say the biggest action item that I tell most business owners is don’t expect your CPA to check in on you, don’t expect them to find you opportunities. You have to become your own advocate. You want to at least be meeting with your tax professional like four times a year or at least two times a year outside of tax season because a lot of the planning things that you can do to actually try to pay less in tax, you have to do before the year is over. If you want to do strategies like buying equipment so that you can get the write-offs to reduce how much you’re paying in tax and trying to arbitrage on those kinds of things you have to do during the year. Really getting into a good habit of keeping your numbers updated too is really important. So you can actually have data that you can do forecasting off of. It’s important to get that kind of stuff in place.
So then let me pause here and just say that the listener to the show and I know because I’ve been in this industry for 22 years and I’ve worked with a lot of small business owners. They’re really good at what they do and the nature of being a restaurant owner is that you’ve got to be an expert in a lot of other things that you weren’t really good at. Like you gotta be good at marketing, you gotta be good at basic bookkeeping, you gotta be good at plumbing and in culinary and HR and leadership and you gotta be good at so many things. I’m sure there’s some pushback from the listeners now they’re driving in, probably saying, I don’t have any more bandwidth to become an expert in tax planning. Your point was don’t leave it to the tax professional, their CPA. So how are they supposed to go and educate themselves about this stuff so that they can approach their CPA?
It’s not so much that you have to educate yourself. It’s just that you have to be your own advocate so with bookkeeping like the the usually the first piece of advice I give people is pay somebody else to do it. Don’t even try to do it yourself. Pay somebody else to do it because it’s for you to lose that headspace to having to take on something that’s easily delegated to somebody else, not worth it. Pay the 400 bucks, pay the $1000 whatever it is a month to get that headspace back because if you can be spending your time in your business doing things that are going to drive revenue and or things that you actually like doing that’s a much better use of your time than trying to learn how to do bookkeeping. Especially where from what I’ve seen people do you’re just not going to do it correctly and it’s going to be frustrating for you, you’re going to hate it you’re going to start to hate your business because you hate it just pay somebody else to do it, and find ways that you can get that. You can drive revenue instead of just trying to reduce an expense that’s going to serve you better. I’d say that and then with the CPA question, if you’re gonna have a CPA relationship you just tell that person on the front end when you go meet with them, say “I know I’m going to need help during the year. I want to pay you to do meetings and not just file my tax return and I will pay you for your time but I want you as a partner, as an advisor and to help me payless in taxes. That’s the goal of my relationship with you, not just meeting my filing requirements.” People think that that’s what they’re paying the CPA for but unless you’re really explicit about the nature of this relationship. I want somebody that’s going to help me payless in taxes.
It’s about managing the expectation of the relationship and just “hey, this is what I need from you and so we’re going to put four meetings on the books over the year and in advance of that I’m going to send you a reminder email. I’m going to expect that you come in with here are the 10 questions you’re going to ask me or here are the six things that I think you need to know about or whatever that is.”
I think that’s a good place to start.
Talk to me about bookkeeping and maybe we start transitioning over to the other part of the conversation. Talk to me about what a good bookkeeper can do for the business because I agree with you. I find that a lot of small business owners, for example, don’t forecast. They don’t build pro formas so that they can’t budget and they just build their weekly schedule and the way that they think it should be. They only know looking backwards in this element we ran really high labor last week but you didn’t project. You should have looked back at the last three years and seen what the first week in May was and made the decision, like oh it’s going to be crazy, oh it’s going to be a little bit slower, whatever that is. For me that’s usually something that you can expect a bookkeeper to do. To not only take charge of the books like what’s going on, what’s going out, but to look forward and do some planning on behalf of the business owner.
So most bookkeepers are not going to be able to handle that. It just depends on who you work with and what you need and what your own skill set is coming into it. If you’re not a finance person, just like to be on the battle lines with trying to get operations through and trying to get people in and out and that’s what I like doing and I don’t like dealing with any of this finance planning stuff. Find somebody else who can do that for you. Because if that falls onto your plate and you don’t like it, you’re just going to keep procrastinating it and not dealing with it and it’s one of those things where you just have to have a system for how you’re going to deal with it. Usually the best way is to pay somebody else to do it.
So then talk to me about that. Obviously part of what we’re talking about today is tax planning and understanding some of the credits and the things that are available. Then we’ll get back into that pool and you’ll give us some more tips and stuff. But talk to me about how we plan, how you partner with a bookkeeper or you know accounting service? What do restaurant owners need? What are the systems that should be in place to help them be more successful?
I’d say the first thing that you want to do is really think through and it’s good to find people that can do consulting on this. If you want your tax records to be correct, you’re going to need to have your bookkeeping setup so your tax records are correct. Ask your CPA about it. How do they need things to be and do they have advice? Do they have bookkeepers that they can recommend if they handle a lot of other restaurant clients? What do other people do? Thinking about that, how we gonna get our tax records correct and then the second piece of it is getting an accounting system in place. Something a lot of people use like QuickBooks online, that’s a very popular platform. Other people use things that are specific to the restaurant industry because they’re able to handle things like managing inventory, managing payroll and a lot of other stuff. It depends on the scale of your operation. What kind of system do you need in place to do that data collection? What kind of data do I actually want to know about or like, what do we even need to be tracking and taking some time away and thinking through, if this thing works or if this thing was perfect, what would it be? Then backing your way into what that’ll be and that’s usually where I tell people to start is you need what’s going to be right for your tax works to be right and that’s something that your CPA can just work with you on. On the other hand, it’s like well what do I actually need to know to make the decisions that I need to make? If I need to know what my cash is going to be two weeks from now or how am I going to fund my payroll? How am I going to put a system in place so that that stuff is just available for me. You can pay a bookkeeper and then there’s other tools out there that you can use to help with the process of cash flow forecasting or budgeting and those sorts of things but I think you have to plan it ahead of time and devote the headspace to really get an action plan in place.
So talk to me a little bit more deliberately about that because I think what we do is look at the numbers and then say, “Oh well I think we were slow because of XY and Z or I think we didn’t make as much revenue I think we’re crazy that night because of XY and Z”. But what we don’t do is look ahead, look back at historical data and use that to make more informed decisions moving forward. You had said figure out what data you’re going to need. Which data is going to be most important for you so that you can forecast and budget etc. How did people begin to do that because I think for me it’s like a mindset shift right? It’s like we do things this way and it’s getting people to understand. It’s the same amount of work it’s putting the effort in a different direction to the fact it’s forward or. So how do you begin to think about that and how do you advise small business owners and in particular restaurant owners to do this?
I see the first step is you need to have a system that’s collecting data correctly and that’s just a matter of paying the bookkeeper or whoever to make sure that you have updated financials so that you have them on time. Then once you have that piece in place, you can say “All right, at the beginning of each month I can have a profit loss statement that shows me what happened. At least I can know what happens in a timely way”. So let’s look to the future and what’s coming. That’s usually with the forecasting process. It’s something where I tell people the person who’s doing your books, you can just ask them a budget for this month, a budget for six months, a budget for a year, where do we think we’re going? Where’s revenue going? Is it going up, going down? Up and down you know fluctuating seasonally whatever it is. What do we think it’s going to be? What are the reasons why and kind of charting that out you can use tools for it. You can use excel for it, it doesn’t have to be that fancy. When it’s financial stuff they’re afraid to do ballpark numbers and you don’t have to have every single account perfect. You don’t have to have it very granular but can you think through what are reasonable expectations for what the budget is going to be for your top line and then your expenses. It’s usually a little easier to budget for expenses than it is for top line because how is this marketing campaign going to perform? If we’re a restaurant in the weather, get out of semi outdoor operation and the weather is going to be garbage for three weekends in a row. That’s really hard to predict but at least on the expense side of it, projecting labor costs and how many people are we adding on or especially I think for a lot of people in this industry right now. It’s inflation with food cost.
The amazing thing is that we spend a lot of time talking about prime costs in this industry. Because we live and die by those and they’re both so hefty you talked about inflation, right? Like the cost of goods sold to get in raise your prices four times in 2021 you got killed. If you ever raised them twice so far this year, you’re getting killed and I mean that really seriously they have to stay fluid and especially as we try to entice employees back in. We looked at our books in 2019 and our payroll is 30% higher than it was there simply because we have to pay people more to do the same job because the way the world has changed. I will say that for me making sure that restaurant owners understand that there’s a relationship or there should be a relationship between revenue and cost of goods sold between revenue and labor and understanding that those expenses are tethered to an overall revenue number. Which is where you get the budget building a pro forma so that you can forecast. But again, forecast is a fancy way of saying educated guess like you said it yourself, right? It doesn’t have to be perfect down to the penny but about how many covers do we think we’re going to do this week? What about next week? What about the week after? What did we do last year or the year before? I know historical data is hard because we’ve had you know blip on the history here but you can look at historical data you can look at recent trends, inflation and labor market and all of that and make an educated guess otherwise called a forecast. You don’t need a statistics degree to do it but restaurants don’t do it. You’re saying that coordinating with your tax professional whoever does them and the bookkeeper this is something you can talk to them and say hey this is something that we want to be doing.
Yeah and I find too that really helps with the accountability of it. If you say to your bookkeeper hey we’re going to do a meeting Monday morning every week for 30 minutes where we’re going to talk about this stuff. You as a business owner you’re gonna do it because now you’ve got somebody showing up. And I think just that piece of it alone, that accountability brings it and an outside person to saying OK we’re gonna have a meeting where we’re going to talk about this stuff once a week or once every two weeks. It’ll make you do it and that’s the main thing is getting into the habit of doing it. And once you have those budgetary numbers and that I always tell people to look next is what are the non financial things, that are inputs, that are affecting these numbers. Because the financial numbers are really down streams, those are the outputs. What are the inputs that we’re looking at? And how do we wanna keep an eye on those and modify those? To see how they relate to those outputs.
So explain to me what some of these inputs are. What sort of thing are they?
A common one is advertising budgets. How much are we spending on marketing? Are there ways to track performance of it? What are those inputs that are going to increase our top line or decrease our bottom line that are the non-financial things, like the number of employees or the number of vendor relationships or just different things like that. Those are the things that are upstream of the numbers that you’re looking at. ‘Cause ultimately you’re trying to change your behavior. You’re trying to change things that you’re doing and to just see that financial information, that’s kind of the result. But it’s how we can track what we’re doing and then try to correlate that to the results we’re getting so that we can change our behavior. Financial information is great for making decisions and decisions are about taking action or not taking action and how you’re going to do that. That’s what that input piece is, it’s the non revenue things that you also want to start tracking that are going to help you make decisions and get that data correlated with what you’re doing.
For sure this is so great, see? We’re making taxes fun. Go back to me and talk about tax planning and again we sort of have a foot in both yards right now. What else can they be taking action on to recover some money that already belongs to them? Or to plan out their cash flow better so that they’re not worrying about making payroll every week etc. Talk to me about some of that.
I would say first piece internal operational. On the internal operation side, I’d say the biggest action items are if you don’t have a system around getting accurate financials regularly. You need to pay somebody to do that and go out there, talk to your accountant, talk to your friends who have restaurants nearby. What do they do? Who do they use? Find somebody to do that for you so you get good data coming in regularly. Once you’ve got that in place, now we know what’s going on historically we need to do forecasting. You could probably get the same person who’s doing your books to help you with that process because it’s not actually that complex. You take a profit loss statement and say, this is what it was. What’s it gonna look like next month? It’s gonna go up this much down, this is roughly what it did last year, this is probably what it’s going to do this year and then you just bought it out on an excel document. It’s revenue, it was 200K last month, this month we think it’s going to be 225K or it’s going to be 185 or you can shoot from the hip. That’s the next step. And I’d say with accountability just schedule a regular weekly meeting either with that outside bookkeeper person or somebody else in your operation so that you’ll be held accountable and stick to doing that. To help you make those decisions and that’s the internal operations piece that I would say are the two big action items and then when it comes to the tax planning, a lot easier. Because you’re not actually going to have to do the footwork for most of the things that get executed. I always tell people tax planning is one of those things that it’s per your man hour as the business owner can be one of the highest return on investment activities you can do. Because if you can pay a CPA to tinker with your entity structure and it shaves off 10% of your taxes. It only takes you like 2 hours and a couple meetings to execute that. That’s a pretty high return on investment of your time. That’s why you know with the tax planning piece of it I always say it gets confusing and a little in the weeds sometimes working with accountants on it but it can be a really high rate of return on your actual time of things you were doing .
That’s interesting! So some of it, like you were saying, is just shifting your entity. What else are some actions or activities that will have a big impact in that same way?
I’d say the top tier one for the restaurants is going to be going after tax credits like especially the employee retention credit. That’s going to be a huge one time bump if you can get that one which if you haven’t already gotten it, you’ve probably eligible for it. You can reach out to a company like mine and will do the assessment for you. That’s the first thing I would go after because that’s easy a low hanging fruit for you and then the second piece of it is to go back to your tax professional. You might have to shop around a little bit for other tax professionals but just tell them, I don’t want to pay you just to do my tax return. I wanna pay you to help me reduce how much I’m paying. If it’s gonna take you 10 hours to help me do some more planning items that are actually going to reduce how much I’m paying, let’s do it. I’ll pay you two grand or three grand to save me 20-30 like that’s easy math. That’s just something where you need to have a conversation with that person and if they’re not of that mindset or they’re just not as competent for things like that. Then I’d say it’s worth shopping around. Then try to find somebody else who’s got that specialties in your local area who can do that planning work. That’s going to be able to help you and that usually what the tax professional is going to do is going to look at things like what’s your entity structure? What are you doing for retirement planning? Because those are the two biggest pieces that are going to move the needle like percentage points for wrong tax planning and then taking advantage of different smaller programs that are recurring. There’s things like the tips credit, you’ve got the worker opportunity tax credit and you’ve got other local programs I know. I have a lot of clients in Massachusetts. There’s currently a labor grant for Massachusetts companies. Can you take advantage of those things? Can you do things like hire your kids? Should you do things like buy your building? Those kinds of questions are things outside of the scope of filing a tax return and you just have to tell your CPA to help you think through these things and find places where you can actually do things to pay less. I think if you change that conversation with them they’ll be able to bring ideas to you.
It’s so interesting. One of my clients that I coach with, is a small company within a much bigger umbrella and they’re really good at this. One of the things that I do is I offer executive coaching for restaurant owners all over the country. I’m offering a new program and basically they’ve started putting in a lot of their managers to go through the program because it teaches an 8 week program and what they realize is that they can recover 75% of the costs from their state and it didn’t take a lot. I’m telling you, it was like 2 hours of work and they were covered with five figures worth of money that they put out and that works because it’s staff development. It’s helping them get better but it’s helping them feel more involved, more part of it. It’s giving them more opportunities to grow within the company. It blew my mind. They are really good at finding these sorts of things and that is one of the things we always talk about staff development and how hard it is to train managers. It’s like the last man standing becomes the new manager like you’re the most senior server, manager did something really stupid last night so we had to fire him. Now we’re working on giving them. They’re really what do we mean by management? How do you interpersonal skills, leadership, how do we set visions? How do we budget? How did we manage the budget? How do we manage for the bottom line and what are the things that we can look at and we’re sort of giving that education but when you talk about tax credits just popped up in my mind ‘cause this is fresh in our mind right now because they’ve got eight of their managers who are now going through this program that I offer. Because they thought it was a good idea and they thought it was an even better idea when they realized they could recover 75% of the money they put out too which is cool.
That’s awesome! And there are a lot of programs out there like that. Especially for restaurants there are a lot of local programs or state run programs and things like that and I think you as an owner your best time investment with your tax situation isn’t you trying to Google things and figure it out yourself. It’s really shop around for tax professionals and see who in your local area has that mindset and is going to take ownership of that part of your business and take it off your plate. That’s what you’re looking for. Instead of you trying to educate yourself and then bringing things to that person you should think about switching and finding somebody who’s going to have that alignment and who has that mindset of how do I take things off of your plate. As a business owner you shouldn’t have to know everything. You just need to know enough so that you can make the right decisions but beyond that that’s why you have to delegate stuff like this. The financial pieces and especially the tax work and so it’s just a matter of finding somebody that’s going to share that vision and be a driver towards bringing you opportunities and finding new things like this.
I love it! I think that’s great. I want to shift gears a little bit ‘cause we got a few more minutes left and I want to ask you a few questions because you have the luxury of being able to peek behind the curtain at a lot of different businesses. I say this to a lot of guests who come on the show. There’s a lot of consultants that offer professional services. I think there’s value simply because we’re so siloed in our industry. That was none more obvious than when we were trying as an industry we’re trying to lobby the government because there was no collective voice and we got better at that over the course of two years but we’re on siloed and we all do things our own way and nobody really sure whether they’re doing it right. We’re sort of infamous for not really talking about things to other people, not really sharing what we do. You get to look behind the curtain and talk to me about what are the other common mistakes you see and give us some fixes for those. What are the things that other industries do really well that we can sprinkle over the restaurant industry to be better on what we do?
I would say the most common mistake that I see new business owners make is they try to DIY and they try to do everything themselves instead of what are the things that you love the most about your business or about the pieces of the business and really take ownership and be excellent at those? But everything else like you just need to get other people in place to help you with it. If you get to the point where you’re having to do those other activities like bookkeeping is the most common one that I think of, you’re just gonna grow to hate your business and you’re also just gonna stall out. Because you’re doing something that you’re not going to be good at and you’re not gonna like and you just need to hand things off. I would say the other piece of it too that I see most commonly as a mistake is very early on, you want to start working with people and getting in the same room with other business owners especially those in your industry that have the same vision for where they want to go. If you can do things like mastermind programs, coaching programs, anything that’s going to give you accountability to force you to drive the business forward, not just operate in the business. Long term, that’s going to be the most beneficial thing for you to do. It’s tough because you’re like oh really am I going to drop like 10 grand on this program or it’s hard to say like Oh well like well what if it doesn’t work. Doesn’t matter. Trust me, just do it. You gotta do programs like that because unless you are in a space where you’re gonna be held accountable and you’re working with people who are trying to do the same thing as you or you’re working with a coach who’s been where you are or they’ve taken several businesses from where you are to where you want to be. You have to trust and make that leap and do it.
I don’t know Catherine that well, but I did not pay her to say that ‘cause this is what I do. This is the majority of what I do. I host a weekly show every single week on this podcast and the majority of my work is I run a series of masterminds. Group coaching programs for business owners because I think there’s real value in being able to share insights and in looking at things from a different perspective and like you said accountability. You find a bunch of like minded people who are saying, “ I wanna find a new way I just don’t know how” and they collectively sort of head out with the desert together. I love obviously hearing you say that because it’s what I believe in but you’ve obviously seen that first hand and you’ve seen the impact.
Absolutely! I can see a bright line difference when I work with clients who are in that mindset and they want to grow, they’re just aggressive about developing themselves personally in order to be able to develop their business. There’s just the amount of growth those people see versus the ones that are nope, we’ve been doing this this way, this is how we’re going to keep doing this. I’m the one wearing all the hats, I’m the one doing all the work because nobody else can do it as good as I can and those people get stuck. They don’t grow, they slowly fail. It’s the people who that I need to have a team of excellent advisors around me. I need to really grow myself personally. If this thing is going to be successful, we’re going to develop this into a real enterprise and really make this thing work. I need to be that level of person and in order for me to be that level of person, I need to be held accountable and I need to schedule that improvement and schedule that work and be financially on the hook for it. If you want to really succeed you kind of have to bend your arm around your back and you just make it happen.
I always say that when I have people who enter the program. I say, it’s an investment of time, it’s an investment of money but you carving out two hours a week every single week for a year is gonna be good. ‘Cause you’re gonna realize oh I gotta carve out two hours a week and you’re going to realize that there’s going to be a lot more than just the two hours a week that you’re going to have to carve out and with the money like you said Yep there’s a financial commitment but I want you to show up hungry and say hey listen I just put out a lot of money here you better deliver. I better deliver for myself my business and all of that and I find that people show up and really sit on the edge of their seat and really want to make a change, which is great.
Because I always tell people when you’re in business you just have the mindset that everything I’m doing is an investment. I’m either investing my time, investing resources and what’s going to give me the biggest return on that investment of my time and money that I have and different things I have at my disposal like my employees or my equipment whatever it is. Everything is an investment and you always have to think in terms of what am I getting as a return on this investment and you have to just go after the things that are going to be the highest return on investment activities you can be doing. If you get into that mindset, I think very quickly the path becomes clear. How you should be making decisions? How should you be allocating resources? What you as the business owner should be doing? Because if you’re doing those low value tasks, you say I’m investing four hours figuring out my budgets and figuring out my cash flow and then maybe getting some like line of credit in place that I can hire on some more people to do this that or the other instead of me working the pizza oven or me cleaning the floor. It’s much easier for you to make those decisions ‘cause they’re like well where am I investing my time and what am I actually getting back? Each hour, each dollar or whatever it is. I think that framework is helpful.
We say it all the time into cliché at this point. You gotta work on your business not just in your business and people hear it. They say it’s like a mantra but there’s a reason we say that ‘cause if you can put systems in place and be more efficient at what you’re doing. Efficiency just means less resources going into the task. We can either do more or we can do it in less time than that time is money. Understanding what’s at the end of the line, what stems from working on your business? I think it’s hard to see sometimes when you’re at the beginning of the line to see all the way down to the end of the line but it makes a big difference.
It’s a discipline. It’s hard when everything seems like it’s on fire, to say “Nope, I’m gonna stop, I’m gonna let those fires burn because I gotta figure out my financial forecast”. But that takes discipline to be able to do that and say, “Nope I’m not answering the phone. I’m getting this planning thing done.”
It’s so true. It’s so funny. People say, I can’t ‘cause I’m doing this. Like you think that’s going to be harder, but this is hard. What you’re doing right now is hard. It’s all hard. So we can do smart hard or not smart hard. Let’s just do the hard thing that’s smart that’s gonna get you ahead rather than the hard thing that’s just gonna be hard and it’s going to be over and over again. The example we always say in the restaurant is that it’s like whack a mole. Looks like we’re putting out fires all day long ‘cause we do! The bartender’s a no show, the delivery didn’t show up, the sink is leaking, the health department walked in. It’s always something, there’s eight things over the course of the day. There’s just smarter we can be doing it. That’s gonna come up, but if you put systems in place for dealing with those when they come up, not if they come up but when they come up, the health department walks in twice a year. You don’t know when they’re going to walk in but it happens regularly. Somethings gonna break. Something’s gonna happen, people get sick people, miss their train, people get in a car accident, their kids get sick. Like there’s always something a matter of like if this diagnosis shows it’s like when this guy shows what are we going to do about it and I think tax planning fits in so nicely and we’ve done a great job for this hour to make it not boring. I want you to be really respectful of your time and wrap things up. Any last thoughts? Again, you’re speaking to an audience of small business owners. Specifically independent operators in the restaurant industry or any other advice you can pass on to them things that we haven’t already covered and we’ve covered a lot of great stuff so far.
I’d say the one thing is if you took action items away from this podcast. If you’re driving your car or you are walking your dog or whatever, just stop what you’re doing right now. Put it on your calendar of the things that you need to deal with. If it’s, I really need to hire that bookkeeper I need to get that done. Put it on your calendar and get it done. Or my CPA really stinks, I need to find somebody new. Just put it on your calendar right now, decide you’re going to get it done and just do it. The same thing with the Employee Retention Credit, make that decision now. Talk to your accountant about it. You can reach out to my company. We do these for all sorts of different people all over the country and just go for it.
And you gave us a bunch of really good advice again in the minutes before this. You said, get a steady bookkeeper, somebody who can consistently put together your financials and somebody who can also then start giving you forecasts so you can get a sense of what you can expect. That you’ve got a P&L every month and you’ve got a forecast for a pro forma every month. You can say hey this is what we did last month, this is what we think we’re going to do next month and then at the end of next month we say OK this is really actually did last month with the P&L and you look forward. See a CPA or some sort of tax professional who’s going to be as assertive as you need them to be. Somebody who’s going to be a partner who can really advise you recommended at least 2, 3, 4 times a year where you get together and say hey what should I be doing? What should I be looking at? What are my things that I can take advantage of? And those are the two big ones themselves.
Those are the two biggest ways to go after those and that’s the best place to start and it’s just being proactive with those pieces.
And then obviously the Employee Retention Credit which is a one time government program that will start to run out in the next six months to a year and there’s real urgency to do this and it takes a call to your tax professional for CPA or to affirm like you work at. This is not something you should be dragging your heels on and in a lot of cases with restaurants ‘cause they employ a lot of people this can be a big six figure check.
For most restaurants that’s what we’ve been seeing. That it’s very high impact and usually on our end when we deal with clients. It’s maybe one hour, 2 hours of document collection and that’s it. It’s really low hanging fruit to just put the time in and get him done.
I love it! Where can people go to learn more about you, your firm, what you do, if they’re interested in asking you questions after listening to this. Tell people where they can go.
So the best place to get in touch with us and find more resources is on our website, dominiones.com. I’m sure it’ll be somewhere in the show notes and also if you’re a person that hangs out on LinkedIn which I’m guessing maybe some of you do. I’m pretty active on LinkedIn and post articles there. Other interviews do that kind of stuff there but always feel free to reach out there as well.
Awesome! Yes and you’re right we will include all those links on show notes for sure so people don’t have to wander very far. Catherine, I really appreciate your time. Thank you so much for sitting down to chat with us in making sure that taxes don’t sound boring. Just like you said free money.
Free money and it’s yours. You’re legally entitled to it from the government, you’re very right to go after it. Don’t let it just languish away just because you don’t wanna have to wrestle together with some profit and loss reports.
Absolutely! Listen, I appreciate you being here. Thank you so much!
Thank you so much! For such a pleasure.
My pleasure, take care!
Once again I would thank Catherine for taking time out of her day to speak with us. Remember there is free money out there! There’s money that belongs to you. You’re leaving it on the table so don’t drag your feet there’s some urgency here because this program will end. So all the links are in the show notes that you want to reach out to Catherine and her firm. See what they can do for you or by only just reaching out to your CPA and get this ball moving and see if there is money that you can go claim. Again I wanna thank you for tuning in if you haven’t done so already wanna remind you again to join our challenge. It’s a three day marketing challenge on June 6th 7th and 8th it’s totally free you sign up by visiting restaurantstrategypodcast.com/challenge. I will see you there!
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