Episode Transcript
[00:00:00] Speaker A: Foreign.
[00:00:18] Speaker B: Most firms survive. The best ones scale.
Welcome to the Managing Partners podcast where law firm leaders learn to think bigger.
I'm Kevin. Daisy.
Let's jump in.
Welcome to the show, everyone. We are recording and I'm here today with a friend, someone I've met probably over a year ago at this point and Karen's with me here and we met at Eight Figure Firm in Chicago. Actually, Luis Scott's a friend of mine. He's been on the podcast a few times and so for any of those dedicated listeners out there, you've, you've probably seen Luis on the show, but he invited me out to Eight Figure Firm. If you don't know who they are, I would definitely take a look at that group. And that's where I met Karen and her husband and excited to bring her on here today because we're going to be talking about tax strategies and things that law firm owners should be aware of, things you can take advantage of, common, you know, mistakes and things that Karen here sees that law firm owners are not, not doing. So I'm going to learn a lot too because I own businesses and I'm excited to see what I can learn. And Karen's a client of ours now as well, which is, that's exciting. Very exciting. So, Karen, welcome to the show.
[00:01:27] Speaker A: Thank you, Kevin. I'm so excited to be here. And yes, it's, it's quite, we met and made in Chicago last year so, you know, really grateful to be here as a guest in your podcast. And yes, it took a year to be here. So quite an honor, Quite an honor. You know, we're, we're really excited to talk about the big beautiful tax bill that a lot of changes just happened. This is going to be incredibly amazing, especially right now for all law firm owners to have understanding and give firsthand experience on tax advantages and planning and strategies, how to save, keep cash and have control of your cash flow and predictable businesses. Right. We always talk about that. So thank you, Kevin.
[00:02:18] Speaker B: Yeah, huge. Huge.
[00:02:19] Speaker A: Yeah. You know, we do business and tax advisory. We've been in business since 2012. I'm here in Georgia. Our, our office is located in the, in the heart of, somewhat close to the heart of Atlanta. You know, my experience and background, because you did ask this earlier in our conversation off camera today and I was like, you know what, I gotta say this on camera. Cause a lot of, a lot of our clients are like, how do you know so much about firms? So I started my career back in OA when recessions, I don't know if you remember those times, those dates were hard dates, you know, so I started my, my career while I was a paralegal in a law firm. So, you know, my experience comes from way back in the day, way back in the day, understanding the ins and outs of a firm, you know, how they actually operate the cases, the research of the law, understanding, you know, creating all of those pleadings and stu like that. So that's where all that CFO KPIs. And now, you know, I'm a tax strategist with more than 16 years of experience in the legal field, growing law firms from being, you know, just 22,000amonth, very small firms to being more than 22 million, you know, 2 million a year and so forth. Ryan have more predictable sales and growth, creating those dashboards in the businesses.
[00:03:39] Speaker B: Yeah, that's awesome story. And so, you know, coming from being an inside a law firm to starting your own tax practice and you know, really leaning into the law firm experience and then, you know, being part of eight figure again, if anyone's not familiar with them, it's just an amazing group of mostly law firm owners. Everyone in the group is a good person to know and a good person to meet. And again, I'm excited I got to meet Karen and her husband.
[00:04:03] Speaker A: A lot of driven individuals, a lot of driven, driven business owners with growth mentality.
[00:04:09] Speaker B: Very driven. And that's the, you know, this podcast is about managing, growing, scaling your law firms, running it efficiently. And that includes, you know, your books and your taxes and planning for, for those things to make sure that you're keeping as much as possible in your pocket. And I think that's always a challenge for, for a lot of business owners is that tax planning piece versus oh, it's taxes again. Let me, let me see what I owe and what do I need to gather for, to, to process my taxes versus proactively planning well in advance. So.
[00:04:42] Speaker A: Yeah.
[00:04:42] Speaker B: So obviously you work with firms all around the country, correct?
[00:04:46] Speaker A: Yes, we work with firms all around the country, Kevin. And, and, and I would like to, to say a little bit about there's different type of laws, right? Some firms are more in the flat field. They're in the billable hours and obviously we have the contingency fees. Every firm needs to have their own type of system in place or, or an accounting method. Right. How they do and their books. And I was having a conversation earlier today with, with one of the law firm owners that came to our office about a month ago and it's like, you know, my firm, it's our goal is to have $6 million in, you know, unpredictable sales. And that got me like, oh, this is exciting. You know, you're in a growth mode. You already in four point plus. So it, you know, we're half a year in. So yes, this is very doable according to your marketing plan and according to, you know, your KPIs and everything that you're showing. So it's like, you know, do you mind if I access to your QuickBooks? Let's look at your P and L. Let's look at, you know, everything else that you have in house. Sales, not a problem. They were making sales, problem AR no systems in place for collection. No system, no billing system in place. The lines, the chart of accounts and the, you know, that you can call it like the boring stuff or the, for me, the exciting things, but the lines in the P and L didn't make sense. And so those are the shadow of accounts. And I'm like, how can you make your payroll and benefits predictable when you know, I have one line here that shows me wages and salaries. Another line that doesn't even show me bonuses, benefits for employees or 401k or vacations or whatever. You know, your company is offering to stay competitive in the market to attract talent. Because if you're growing, you want to grow your team, you don't want to be the one driving sales having to go to court and doing all the work. And if you're going to do that, then you need to have an administrator that's going to be growing your business and obviously, you know, making sure that things are not breaking in systems and all of that in your budgets in place. Right? And having the right numbers, understanding the lines of the P L's is critical. And so we couldn't determine that. Then when I looked at overhead, overhead, what's off the roof? So they had over $60,000 just in office expenses. So people were ordering. She's like, oh, well, we do Starbucks, we do Celsius, we do all of these other benefits on like $60,000 just for office expenses on a monthly basis. And I'm like, your sales, great buy your take home. You're in the red. You're being in the red for the past five months. I'm like, you have no cash flow predictability here. And I'm like, yes, you're, you're closing all of these cases, but you're literally not making money. So you know, that's a common mistake that I often see. Another one that I often see is that you know, we have these cases that, you know, if we're a PI, we already anticipate or can kind of estimate. Estimate when it comes to settlements, and we kind of know our average value case when it comes to that. But we do have these outlier cases that we have to plan for, because otherwise you're going to end up paying thousands and hundreds of dollars in taxes if you don't prepare. What we did with one firm that they settle a catastrophic case, and they're just settled for, you know, this case settled for $25 million. We obviously defer some of this money into some portfolio investments, and the rest was invested in their own commercial location, which we closed for $3.5 million, and their down payment was about 5%.
So they still were able to keep all of this money, all of these cash. And we did something that is called cost segregation study. Now we're writing off over $1.8 million in taxes. Otherwise, they would have to pay in taxes. So this is the beauty of, you know, doing all of these tragedies with anticipation and reviewing your books, especially right now that we're in the middle of the year and bonus depreciation is back ke so a hundred percent, we get bonus depreciation 100, which I'm so excited for.
[00:08:37] Speaker B: Yeah, I heard about that. Yeah. Well, I was just looking at cost segregation, I think, this morning, early, before. Before I was at my desk because I owned some Airbnb properties and things like that.
Yeah, there's, you know, it's. It's funny. It's like taxes are. It's. It's an art form. Right? There's. There's. There's ways you can. But it's all legal. It's just. You have to understand it and you have to document and you have to plan ahead. You can't go back in time. You know, you have to look at what you're doing today and how you're doing it and how you're documenting how you're doing it is really what it's all about. So, yeah, bonus appreciation is coming back, you know. Yeah. Real estate investing in your. Your building versus leasing and renting, all kinds of things like that. With this big, beautiful bill, you know, what are some of, like, the key things that you're seeing that, you know, law firm owners, especially ones with, say, PI, getting large settlements, large sums of income coming in, you know, what do you see?
Thank you for tuning into the show today.
I have taken things to the next level, and I've started the managing partners mastermind we're a peer group of owners looking for connection, clarity and growth strategies. So if you're looking to grow your law firm and not do it alone, please consider joining the group. Spots are limited, so I ask for anyone to reach out to me directly through LinkedIn and we can set up a one on one call to make sure it's a fit.
Now back to the show.
[00:10:12] Speaker A: So one of the ones that I, that I see is that, you know, mainly the, the shareholders, the owners don't have a plan in place where they're benefiting their family. So in a lot of the firms, not both spouse are licensed attorneys. So one of those spouses is and the other one is not. And oftentimes, you know, we don't plan for our family towards the future. So meaning that the firm is the one right now that is obviously generating all of these cash, all of these money directed and distributed to the shareholder. So I'm the law firm owner, I'm the one taking distributions, I'm the one taking salaries. But my family, I don't have a management company in place or I don't have a plan in place to benefit my family. In the event that something were to happen to you, what happens to the firm? Right. Do we have an exit plan in place? That's one of the first questions that I often ask. The other question is, is your spouse, does have any retirement plan, any benefits, your children, how are we benefiting our family from the firm? Is our family involved in the operations of the firm as administrators or, you know, if we have children, are the children participating in any activities related to the firm? Right. So a lot of the benefits that we oftentimes, you know, we're overpaying in taxes when we take vacation. Kevin, what do we do when, when, you know, sometimes you're just looking at the beauty, beautiful, beautiful weather or, or beach or, you know, or you're at a place and you're like, man, this is beautiful. And I was thinking of the business. When we work these days, you end up talking about the business either way. So what conversations are you having? Can you document and do meeting minutes so that, that, that vacation can be reimbursable to you. It can be benefit to you as well and in your family members.
So one of the key strategies that we implement for law firm owners is an accountable plan for your management company where you get to reimburse certain expenses legally. Right. And when we make sure that we stay in compliance on everything that we file because we gotta document our processes in the event or in case of an audit. But you get reimbursements from the firm to yourself and your family members for any related activities that you have, according to the firm. The other strategy that we often implement or overlook is Augusta rule the 288.
So this is, you know, renting your, your, your primary residence or your home to your business up to 14 days a year. And you know, you get to take this money home tax free. And you know, everything is reported. Do obviously a 1099 miscellaneous rental for that. We document meeting minutes on, you know, the events that happen in your house. So like in my personal. I just celebrated my father's birthday not too long ago. I invited, you know, my in laws, I invited my family member. But guess what? My shoulders are employing the firm. So I had other friends that happened to also be clients at the firm. So.
[00:12:59] Speaker B: Oh, wow.
[00:13:00] Speaker A: Not only my primary residence to the firm and the firm got to sponsor my father's birthday because I have my banners all over and they were listed in the pictures, right. So I'm also promoting my business while having a family gathering event.
You know, I own a boat. I love to spend my weekends in the lake. And you know, it's a beautiful boat. We have a cabin, we get to stay with the family. We do cookouts, friends and all of that. But guess what the name of my boat is, Kevin. It's called Taxnotti.
[00:13:30] Speaker B: I love it.
[00:13:32] Speaker A: This past weekend I got two clients, two doctors. They were, you know, we invited them as a guest and then they're like, you know, we gotta do tax plan. So I have a law. And so now my vote, it became materially participate and it creates me business. So I get to write it off for purpose of businesses. So there's so many things that we can do to legally benefit our family because we're business owners. We always do in business, wherever we go. So you know, you, you're a licensed attorney. You're speaking with someone and then they're like, you know, I have a friend of a friend that has a case. And I was thinking about that about you the other day. You're talking about business while having the conversation, right? So you take business, whatever, you go 100%.
[00:14:12] Speaker B: I talk about it everywhere. I have a boat too. I didn't think about that. I need to take some clay. You want to go on my boat? I can bring you out.
So now, so for the Augusta rule, for the Augusta rule, real quick, is that I have three properties. Is that per property 14 days.
[00:14:29] Speaker A: No, you don't get to do it for properties per entity. So it's up to 14 days. The entity. So if you have a boat, then we can do it on the boat.
Or the entities.
[00:14:40] Speaker B: I can record the podcast on the boat.
[00:14:43] Speaker A: Exactly. And you get to pay, pay rent or otherwise. You know, imagine, think for two seconds. You would do it on my boat. I will charge you rent. Right. For that day. So then you're paying rent to yourself.
[00:14:53] Speaker B: Makes sense. I love the Augusta Rule. That's something I'm just engaging in this year. Finally, something that I learned about at Eight Figure Firm actually from Adam Williams, who's does tax stuff and so. And he's an attorney, actually.
[00:15:05] Speaker A: I mean, there's, I mean, you know, for the attorneys, there's one, one of the other rules that we often, you know, depending on how many people on your team are still continuing education. Right. So you get to give them, you know, incentives. Sometimes, you know, we think that incentives are just bonuses or pay increase. But if I'm paralegal and I'm getting my certification or, you know, I'm having some sort of other program or I'm going to school, there are certain strategies that if I'm. There's two different ones, right. So let's assume that I'm just taking a temporary certification for the next year to become a certified paralegal. If I'm doing that, you can sponsor transfer up to 5250 to that employee and that becomes obviously a deduction to you, but you also get even a refundable credit from that. So that strategy is one of the strategies that you can do for employees. The other one is called employee reward program, where you can give up to 1400 to an employee. Can't be cash. It has to be some sort of tangible, like a gift, like a property, you know, sometimes like an office cell phone or like an office tablet or things like that.
And you get to obviously depreciate and take that as an expense in the firm. And sometimes, you know, we have people that are remote, right. And are we sending them equipment or things of that nature? Then we get to even write it off. The beauty of these strategies is that you get refundable credits. So sometimes we just write it off as an expense in the business, but we're not maximizing the part of we can even get refundable credits on social strategies. Another one is like right now during the summer, if you're employing college students, interns that are actively, you know, that are studying and they took a break in the summer to it have to be less than 300 hours a year. They have to work for you, but you give. Give back and refundable credits up to 13,600. So imagine if you were to employ two interns in your firm or three interns in your firm. You're not only getting to pay them for, obviously, the hours that they're. They're working in your firm, but you also can claim those credit back.
[00:17:15] Speaker B: Ah, that adds up, you know.
[00:17:17] Speaker A: Yeah, it adds up. It adds up. Trust me. And, you know, it was Tuesday or Wednesday last week, we received a $16 check for a client on some of the strategies that we implemented about 45 days ago. So, you know, tax planning is not just reducing or expensing out a lot of things in your. In, you know, in your tax return. It's. It's knowing what to report and how to benefit and continue to grow your business and invest in your business and in your family. I mean, the beauty of this is that you get compensated for investing in your team and for investing in your family.
[00:17:51] Speaker B: Yeah, it's all about, you know, again, to me, it's.
It's stacking all the things you can do right. And take advantage of as much, but it's all there. It's written in the bill, the. Or the tax code to take advantage of. I think the biggest problem, I think, is people are organized, and they don't take advantage of. They don't take the time to sit down and plan. A lot of people have just terrible P Ls, you know, we spend every. You know, we have internal financial people, but, you know, we've been going through our P. L every single month. We make a change or a tweak or we make it better.
And we look at it in detail at the first, you know, about the third day of the month every month, and we plan accordingly from that. So I think having a good P and L is super important. It sounds like that one firm you met with didn't do a very good.
[00:18:41] Speaker A: Job having a clear understanding. One of the firms that we. That engaged with us. This was. It was so funny. Every time I see. I see him in our meetings, I'm like. I remind him of, like, you know, he engaged with us December 31st at 5pm and it's like, karen, I got to do this because I was just told by my friends that if I don't. This is a PI Firm, very successful here in Atlanta. They're like, I'm gonna end up paying all of this money on that day. We spent about two and a half hours on the phone. I saved them 843. 43. I didn't even like finish. Yes.
You know, it was just 100 and change to a million dollar in tax savings that we did. We processed payroll on a last day for the administrator and for the shareholder because only one of them is a licensed attorney of the spouse of the couple. We process an ADP right in there. I said, we got to process your payroll. We gotta contribute to your 401k. We gotta, you know, do this benefit for your children. So at last minute, last day, we were running on these tragedies and saving money and, you know, making sure the transactions were happening before midnight.
Wow.
When I came to find out they had overpaid the previous year in taxes, about $1.2 million. And it was all because the bookkeeper didn't categorize advanced clients cost correctly. So you know how as a law firm owner, you have all of these expenses related to the case. All of the cases that they had as a bad debt didn't show in their P and L, all expenses that were uncovered from cases, you know, all of this money that was just sitting in their CRM or the CMS case, you know, management software, it was not showing in the actual financial. So when they were filing the returns, you know, it was just when you file that returns, Kevin, you just grab the return that a bookkeeper or somebody's giving you or your own cpa. And you're not looking at the lines and you're like, is, are we doing three way reconciliation? You know, this, that's something that we proud ourselves because we do every month look at the cash management software and make sure that you know, your, your lines and your financials align with your case management software. Because you can look at your P and L all day long, but that's not what's actually happening in the business. It's only what's happening in the bank. But if you're not doing three way reconciliation, then you're missing out on so much more.
[00:21:19] Speaker B: Wow, that's crazy. I would have told him. I was like, I need 10% of what I saved you today.
[00:21:25] Speaker A: That's not legal. But I can't do that. I'm not, I can't do contingency. Yeah, according, according to the new changes. Maybe in the future.
[00:21:34] Speaker B: That'd be nice though, right? Hey, how much? If I save you this much, then I keep it.
That's amazing.
[00:21:43] Speaker A: One thing I always say, you know, you gotta partner up with the right partners depend, you know what Stage you're in. In the business. That' conversation that I always have with a client, it's like, you know, trying to go higher. You gotta make sure that people you listening to, you know, are also that at least above you many steps because otherwise, you know, you're guiding them. If you're the one having to ask your CPA every time, what should I do? Hey, I'm about to settle this case and what should I do? There's no proactivity. You're not receiving those emails. Like with, you know, in our firm, everybody already got emails. According to the new changes. How will the impact.
Because we already know what's going on with that firm. We already know what they have, and we already know what plans they have. So how are these changes going to impact you in a good way and not in such a good way. So they're already getting all of this information.
Like right now, the last week of July, first week of August, we already have it completely booked on, you know, tax planning, appointments for existing clients only because we want to make sure that everyone is getting this information firsthand and that we're implementing this information before the end of the year that we're being.
[00:22:56] Speaker B: Yeah, that's the thing. Yeah. You got to be.
Come December 31, you don't want to be trying to get Karen's attention.
[00:23:04] Speaker A: No. At least that one did it at 5pm though. In 2023, I had another firm that did it 30 minutes before midnight and I was on the phone with the fireworks. I'm like, okay, we gotta do this. Get into your case manager. It has.
[00:23:16] Speaker B: Don't do that, Karen.
[00:23:17] Speaker A: It happens. Don't do it. You gu.
[00:23:20] Speaker B: That's crazy. Yeah, well, yeah, it's. I feel like that's, you know, my history with my CPAs. As you know, we have almost 50 over 50 employees. You know, we're always. We have masterminds that we're part of. My business partner is part of. And we're always learning and then bringing stuff to our CPA and going, hey, can we do this? Can we do that? And, you know, we're always bringing them in the past, the information. And so we switched CPA firms not too long ago, but I still feel like maybe that's what we're doing. So it's. It's frustrating, I think. You know, it's like, what. What should we be doing? What can we do based on all the things that we have going on? And. And let's be as proactive as possible.
[00:23:56] Speaker A: Yeah.
[00:23:56] Speaker B: So that we can fit it into our schedule so that we can change up our habits or documentation or whatever we need to do. But I feel like I'd say most CPS I know or have worked with, they're not very proactive or very creative.
[00:24:08] Speaker A: Yeah, I always say it's more reactive, not proactive. And, you know, one of the things that we. It is, it is, you know, an actual plan. This is not just communication, which another firm that came to us is like, no, I have tax planning meetings every quarter. And I'm like, okay, that sounds great. I love it. I would love to see, you know, your plans that you have in place. What implementations are we doing and things like that. Oh, no, we discuss in the Zoom meetings, we said we're going to do this, and then I don't know if it actually happens. I'm like, oh, no, that's not how we work. You know, we're going to give you an actual visual, an actual plan, and we're going to have our quarterly plan according to your case pipeline. Because, you know, one of the things is what you want as well, and the other thing is what we have in the business. So everything have to align, right, with how much you're taking home. Because regardless of not if you only have losses or you're tying cash, you can't make certain type of investments. Right. So we got to make sure that your plan aligns to your business goals as well and your family goals. So we actually do an actual plan for three years. Doesn't mean that the plan is not going to be adjusted and improve. And, you know, things are going to be changed. And Kevin, I do want to say something. We have something for law firms that we've been doing for over a year. It's a guarantee within seven days, we're going to uncover $50,000 or more that you're going to have. And obviously that we're going to help you save or you already haven't lost it. And if we don't find that, we're going to give you $1,000, bang.
[00:25:36] Speaker B: All right, sign me up. I'm a marketing firm.
[00:25:39] Speaker A: That's a guarantee that we have because, you know, that's. That's how confident we are in the work that we do.
[00:25:46] Speaker B: That's awesome.
[00:25:46] Speaker A: You know, if your audience, if somebody wants to. Wants to take advantage of that, we do a free assessment, a full dashboard, and, you know, within seven business days, we'll give you that and we'll show you what you have, what you are. Obviously, no obligation to sign up with our pharma but at least you have an idea of what things you can improve. And if we don't find $50,000 or more, then we'll give you a thousand dollars.
[00:26:10] Speaker B: Man. That's awesome. That's awesome. If everyone's listening, please connect with Karen. Also, I forgot to mention the beginning. Karen's firm. Obviously it's in the notes on the show and tagged here probably, but King of Kings firm, if you look them up, King of Kings, you'll find them and make sure you connect with them. That's an awesome offer. I like a confident CPA firm. And would you call, well, would you call yourselves a CPA or more of.
[00:26:33] Speaker A: Like a tech business and tax advisory firm? Because we're on the advisory side. Yes. So we do a lot of tax planning. Majority of our clients that come to us either refer word of mouth or they find us somewhere is because they want, they want tax plan. Not just compliance based, but we do compliance based work which is, you know, tax filing. We have come across, you know, last year we were, in previous years we were doing a lot of collaboration with other CPA firms that you know, let's say, you know, you have your CPA in place, we'll do your tax plan and your CPA will file that return. We came to find out that many CPAs are not up to speed with the strategies and so we were having to teach a lot of other folks on how to actually do that compliance work. So now you know, we have taken more on that compliance work. Yes, the tax filing, the tax plan for you. And obviously we have, you know, CFO services in the firm and we have, you know, the, the bookkeeping services if necessary.
[00:27:32] Speaker B: Yeah, the CFO services is amazing.
You know, any firms that are listening, you know that you're, you know, you're not, not the size that you can handle hiring a cfo and most of you probably aren't, you know, maybe you just have an in house bookkeeper. Actual CFO CFO services is, is going to be amazing for you.
But what a deal. So you kind of win the way if they, if she finds 50 grand, then you save 50,000. If she doesn't, you get a thousand.
[00:27:58] Speaker A: You're gonna find 50,000 or more and you're overpaying in taxes or you, you know, you have uncovered that will save, save you 50,000 or more within seven business days. If not pay you.
[00:28:11] Speaker B: I guarantee if you're a multi million dollar firm, that's easy to do for her. So I would take her.
[00:28:17] Speaker A: Yeah, it's super easy Even if you're in one or two million, you know.
[00:28:22] Speaker B: Yeah, yeah. I mean the more you make, the easier it is to have money slip through the cracks. Right.
[00:28:27] Speaker A: So sometimes it's a just looking at the chart of accounts and I'm just like, okay, we have line items and our balance sheet that should be in our P and L or you know, vice versa. It's a lot.
[00:28:39] Speaker B: Karen, I appreciate you throwing that offer out. That's awesome. I love that from a marketing perspective too, how you're, how you're doing that. And you also do around Atlanta, at least for local folks, you, you do like in house workshops a couple times a year as well.
Yeah, this is pretty successful too.
[00:28:56] Speaker A: Yeah, we do, we do a lot of, you know, we call it a wealth creation. It's a one day event, starts from 8am all the way to 5pm and it's all about asset protection. We have one of the state planning attorneys that teaches that class. We have, you know, all about strategies lions, you know, what documentations you're going to need, how to take advantage of certain things and investments. You know, a lot of the firms, you'll be surprised how they're not the banks, they're not approvable. They're not, they're not lending approvable. And so they sometimes want to apply for lines of credit or want to apply for something else and they can go above a hundred thousand. And you know, we had a firm that came to us that were making 7 million doll.
Their take home had been about 1.A which you know, it was good but they wanted to buy a building and it was only 750,000. And they're like, we can buy that even cash. Why are the banks not approving us? I'm like, yeah, your financials do not look that you're approval. You have taken all of your money out of the business. So I'm like, you're not bank approvable.
So we do talk a lot about that. How to utilize credit and take advantage of good debt, bad debt, administrating your cash flow, you know, your free cash or investment cash and your operating cash, which is huge. Especially if you're in the, in the personal injury, in a personal injury feel, you know, practice that's, that's, that's something that you have to know how to, you know, manage your cash flow because you're going to have those highs and those lows. So what do you do in the lows? Yeah, yeah.
[00:30:37] Speaker B: And then you got your fund the cases that you know, you have going on and, and yeah, yeah, that's a tough place to be. I mean it can be rewarding too, but you got to make sure you're taking care of everything and planning ahead. That's for sure.
[00:30:50] Speaker A: Yeah. I mean, I mean when you make things predictable and you take, you know, the time to proactively design what to expect and what problems you want to be solving, things become less stressful and less of a chaos and you know, you have more control.
[00:31:06] Speaker B: Huge stuff. Well Karen, I appreciate you sharing all of this. There's so much more we could just dig into and go down the rabbit hole of.
I want to do a quick rapid fire round. We just have a few minutes left here. Big beautiful bill. You know what's like one main takeaway from that that we can take advantage of here?
[00:31:24] Speaker A: Well, there's so many. Right. But one simple one that you can take away is that you get to pay overtime to your employees for those that you know, we sometimes want to have or we have a lot employees that they're, they're overbuilding overtime or we want them to stay and they don't want to stay. You know, they're, they're. Now they don't get to pay taxes on overtime. So that's, that's a plus. The next one, what I will say for, for all of those business owners that want to take advantage of bonus depreciation and buying equipment. This is not just for cars. I mean my friends, please don't just go and spend hundreds of thousands of cars. What I told one of my clients is like I want a G Wagon. I'm like yes, you're going to get a G wagon, but let's get two rentals that will pay for your G wagon. And guess did. So the J wagon was about 180 that two rentals in Texas are given a cash flow of 800. So they're paying for the G wagon and we only invested in the rentals. About 70,000. It was. You know that savings is not only from the rentals. We're doing cost segregation study plus bonus depreciation. This law firm owner gets to keep the G wagon and the G wagon is being paid by the rentals.
Keep to keep the cash tax savings.
[00:32:35] Speaker B: Cash flow in a car.
[00:32:37] Speaker A: Yes. So that it's a one that you want to take advantage of. Yes.
[00:32:40] Speaker B: Huge. All right, I'm gonna have to talk to you about some of this stuff too.
[00:32:43] Speaker A: You do one on G wagon as well.
[00:32:45] Speaker B: I don't really care about that. But I do have rental properties And I'm trying to buy more. And yes, then I could get, you know, something cool to drive. But I'm a truck guy, so I'm always working on my, my rentals.
[00:32:56] Speaker A: You want a truck?
[00:32:57] Speaker B: Okay, use a new truck. Maybe a new truck. I don't know. And then one final question before we go. A law firm. Let's say we got a law firm owner listening or a new law firm owner, which I have a lot of folks that I talked to that just started, or they're about to start and they haven't even started yet. Any tips for someone listening? That's just bootstrapping. They're trying to start their own firm. They don't really have, you know, the capital at this point. Any tips for what they should do out the gate to be in the best position possible for their accounting and things like that?
[00:33:27] Speaker A: Yeah, when it comes to, you know, your accounting, you want to make sure that you, you set up budgets in place. A lot of, a lot of the times we just overlook that. And it just like, you know, I remember when, when grandma used to say we gotta, we gotta budget for this, we gotta do this stuff back in the day when I was a kid. But coming to find out over 20 years working in the profession and businesses that actually make it to the next level and make their businesses predictable is because their budget is one of the things that they don't sacrifice and it's not overlooked in, in the business.
So, you know, I said starting up, I will say, you know, set up your goals straight. Right. Meaning have a clear vision of what you want and what to expect and, you know, what services are you going to offer. You know, when it comes to that, if you're going to go in the PI, then you're going to need cash, you're going to need accessible cash because, you know, you have to pay rent, you're going to need software. So there, there it goes back to, to it again. You know, planning and budgeting. It's going to help you.
[00:34:22] Speaker B: Excellent. Great advice. I think. Yeah, I think starting out, it's, you know, a lot of people are thinking, well, you know, hopefully this will work. And you know, I'm, I'm all in. But you know, they kind of just see how things go and next thing you know, a year's gone by and then you haven't really taken care of those things. You maybe don't have time.
[00:34:40] Speaker A: A lot of the business owners that, that the big, the, the, the big problem is that they want to take all the money out all the profits.
Don't, don't. Not, not in the first two years. You're not gonna get a reasonable salary. You know, you're gonna get crumbs from the business. You're gonna get little beanie tiny bits. But then if you leave your profits and you continue to reinvest, your business will down in the future. Yeah, for sure.
[00:35:06] Speaker B: Best investment I've ever made is in the business, back into the business, not taking out profits, putting it back in.
Me and my business partner track how much we've invested. If you count it in profits back in, plus our initial investments and the return that we get on those is higher than anything else we've ever done, whether it's stock markets, rentals, real estate, hands down, the best.
[00:35:28] Speaker A: Yep. You become your own bank.
[00:35:30] Speaker B: That's right. Well, Karen, thank you so much. What's the best way, other than your website, is any social media? Where's the best way for folks to find and connect with you?
[00:35:39] Speaker A: So email. My email is karenofkings LLC.com and then our direct line, that's 678-249-9899.
You know our website, kingofkings LLC.com and you know LinkedIn, it's the same king of kings firm and social media, king of kings business and tax advisory. You'll find us, you know, you can look us up. And again, we do free assessment. So there's no obligation to become a client of our firm. And if you're just wondering or curious, you know, what would our tax plan look like or what is the dashboard? What my P and L or chart of accounts designated for my field, Industry specific. When it comes to I'm just doing immigration, I'm doing deliverable hours or you know, I'm contingency fee firm, or I'm a mix of both. You know, and I'm looking at this P and L. And my understanding, you know, because that's the other thing too, we have practices. We have law firms that they practice many different type of areas. And so they do like civil immigration and PI. And you know, in the P and L, it's just one line payroll. But my, it's, you know, is it immigration more profitable or is the PI more profitable? And how many people do I have on each department? Right. Or type of area of law that I'm practicing or stuff like that. So it's understanding and breaking it down per sections where you are. So you can just actually understand those lines in your pnl.
[00:37:06] Speaker B: Yeah, you need to understand. And we do this in my company but, yeah, is the criminal defense, is that losing money or is it flush with money that where, you know, you can hire more staff on that team and paralegals and.
Or, you know, do you not know that if you don't know that the PI could be carrying you and you're putting more people in the criminal team, but that team was losing money the whole time. So, yeah, you really have to have that clarity to understand where you can staff up and bring in more resources versus where you can't.
[00:37:36] Speaker A: Yeah.
[00:37:37] Speaker B: So, yeah, super important. Well, everyone, thank you so much for tuning in. Karen, thank you so much for sharing again. I know I could talk about this kind of stuff all day. There's a million things that we could cover. If you got any questions, anyone, put them in the comments. I'll tag Karen, have her connect with you and answer those questions. But I would definitely take her up on the offer of a thousand dollars if she doesn't find 50,000.
That's pretty cool. I like that. So reach out.
[00:38:02] Speaker A: Thank you. Kevin, what's an honor being in your podcast.
[00:38:05] Speaker B: Thank you so much for coming. You stay on with me. I'm gonna hit done. It takes a second to upload everyone else. We'll see you soon on the next episode. Thanks for tuning in. See you soon.
