Neal McSpadden on Small Business Tax Deconstruction & Profit First Systems

Welcome to the world's greatest minds, where the most [music] successful, impactful, and creative game changers on the planet deliver their hardest-hitting advice in [music] 30 minutes or less. Every guest is specifically handpicked. There's no paid placements allowed, and every conversation is completely [music] authentic and entirely unscripted. Big ideas, raw conversations, and real impact. [music] This is World's Greatest Minds, and the revolution of thought starts now. We're back with World's Greatest Minds. I'm so excited about this guest. Neil Mcpadden is the founder of Tax Sherpa, a profit first professional and a defender of small business owners with an engineering background, which is odd for a tax guy and I actually really like cuz we're going to dig into why those two things might be connected. Neil went to Georgia Tech. His career was reshaped after facing a wait for it 3 million IRS bill. An experience that became the foundation

of his mission to help entrepreneurs master their finances and avoid unnecessary taxation. Over the past decade, Neil has worked with more than 50,000 tax returns. He trained under a former Wall Street tax attorney and created transformative frameworks such as the Clear Path Accounting Method and the Money Compass. Through tax sherpa, he’s helped small business owners pilot their finances with clarity and confidence. His upcoming book, Become a Money Pilot, teaches entrepreneurs how to stop flying blind and turns taxes into a wealth building system. Neil, thanks for being here, buddy. I appreciate you. >> I love it. Glad to be here. >> Yeah. So, my business partner in driven, Perry Belchure, is one of the smartest humans I’ve ever known in my entire life. And Perry said something during one of our unplugged sessions that stuck with me, but I still haven’t done anything about. So, maybe you you can

help me with this. Perry said, “The biggest bill any entrepreneur will ever pay by far is taxes.” >> Yes. >> And yet, most of us spend a sum total of literally zero hours working towards or understanding how to even begin to diminish that or attend to it, which I think is absolute insanity. and I think stems from fear. Like I’m afraid of the IRS. It sounds like you might have been afraid of the IRS in the very beginning. And and so I’m I just choose to bury my head in the sand and live with it. I did an 8 figureure exit. I had a seven figure tax bill. I did zero tax planning, which is stupid cuz I found out later I could have paid literally half. Talk to me a little bit about what’s actually possible like in the tax world. You know, we all assume that

there are people that are paying way way way way less taxes than us. But when I crack it open or I talk to my CPA or I try to go to school on it, it feels so inaccessible. It feels so hard and so complex and like I’m reading Greek. Like are there really the little secret tips and tricks and hacks? Like where do we start on this journey if a business owner actually wants to wants to protect themselves from the tax beast? Yeah. So there are tips and tricks for sure. the there’s kind of an order of operations when it comes to talking to somebody about their taxes from from the beginning. So, the first step is entity optimization. What do you have going on? Are they in the right vehicles tax- wise? And um do you have to make any changes? Then you go into deduction

strategies. And there’s a couple different deduction strategies. You might have heard of um the master strategy or the Augusta rule or anything like that. Uh there’s reimbursement strategies. There’s all these different things you can do as far as bringing additional deductions into the business. And then we get into optimizations. What should my salary be? Do I want to contribute to retirement? And you know, all those kinds of things. There’s a lot of optimization be done there. Ever since Trump’s tax reform in 2017, which invented the concept of qualified business income, that’s created huge tax deductions for people. You but you have to optimize it, right? And then once we get through all that, that’s all the things that are 100% in your control. And then we get into what I call the exotics. is if you still have a tax liability after that then there’s other

things that you’ll get pitched if you make enough money these people will find you says well we have this fund that you can buy into and you get a tax credit along with it you know things like that and those you have to vet very carefully but those there are legitimate ones that do exist and can provide you know huge tax savings so that’s that’s sort of the order of operations that we go through but as far as taxes being the biggest expense it’s like yes you can do all those things and if you don’t two things happen so One is on the year-to-year basis. So, when you’re operating your business, you’re growing your business. A lot of small business people out there know, they’re they’re just busy. They’re doing their day-to-day, like you said, they’re spending zero hours thinking about their tax situation. And at the

end of the year, they have a bill, whatever that bill is, right? So, let’s say, just to pick a number, you’re you’re married and you make 300 grand from your business. Your tax bill on that is going to be probably 60 $70,000. And the question becomes, it’s like, okay, that’s that year-to-year expense creates a drag on performance. So, what could I have done with that money in my business to grow it next year, right? Or even even if we don’t save the full $60,000, let’s say we save half, we save $30,000. That $30,000 reinvested into your business will create additional revenue. And if you have your business created structured properly, that additional revenue creates additional profit at the end of the year. So imagine that repeats because when you do this setup kind of stuff, the the savings that you get will occur over and over and over again every year. So if I

can reinvest an extra 30 grand into my business over 10 years or 15 years, however long you own the business, you know, that’s going to grow my bottom line and that’s going to grow my eventual exit. You know, not everybody’s going to get to eight figures like you, but a lot of people can get to seven figures, a lot more than they think. And at that point, I now have a larger amount to cash out on. I get a larger sale. And then there’s the the second stage which is that exit planning. And there are things you can do at that exit stage to save on taxes. There’s there’s multitude of different strategies depending on what it is that you actually want to do. But uh but bottom line is at every step along the way, if you don’t do this, you are costing yourself that future growth. And at the

end, even if you grew in spite of that, you were able to overcome that and just because your business was so good, then there’s still a giant chunk at the end that you could be missing out on because you don’t do the planning. The thing that scares me when we have these conversations is it feels it feels very subjective. So, and I’ll give you just some a personal reflection. I’m with one CPA and I’ve been with him since my exit and he’s great. He’s also very like middle of the lane. Just we’re going to follow the rules. We’re going to pay our taxes. Before him, I tried to get a little tricky and I’d switch it to a different CPA every year or two. And every CPA told me the last CPA was an idiot. And then every CP I switch to, I’d get a bill from the IRS saying,

“Hey, you made a mistake and now there’s another this bill that and so it doesn’t feel like there’s like a rules engine as much as there is. It’s almost like medicine. There’s a bunch of theories and I’m the guinea pig and there’s no recourse and the CPA basically has zero accountability.” Like, talk me off that shelf a little bit cuz to be honest with you, me and all my listeners are afraid of guys like you. Like we’re all afraid that like what you say sounds good and then we get into the mix of it. How do we know who to listen to, how to vet them, what questions to ask? Like, give us the insider secret. Destroy your industry for me and help us help us vet the the finance guys. Yeah. So, I mean, there there is some truth to what you say in that, you know, it’s it’s sort of

like everybody who goes into the accounting world always thinks they’re the best, right? And I’m I’m no exceptions. You know, people bring stuff to me from, you know, from prior years that other people have worked on and I’ll say, “Well, you know, if I had done it, we would have done it this way.” and you know we would have said you know XYZ and so you know there there are things that are factually wrong and in those cases you have whoever you’re talking to should be able to back up their argument with documentation and with citations is fundamentally what it comes down to. It’s like we can do it this way because this line in this particular code section says we can. So everybody who’s doing that should be able to point to that and you know the code is like the beginning of of the guidelines and and

you know the medicine is a good analogy because it’s like yes there is the code but then there’s you know the evolution of court decisions ever since then that can alter interpretations of things. So, one of my favorite examples is if you take money out of your IRA for your first time home purchase, there’s normally when you take money out of your IRA early before age 59 and a half, there’s a 10% penalty, but you can take out up to $10,000 from your IRA for your first home purchase and get rid of that 10% penalty. So, you still have income tax, uh, but you don’t have the extra tax on top of that. So, if you tell that to most people, they say, “Okay, well, I bought a house before, so I’m not eligible.” It’s like, well, you got to read you got to read the details because

in their world, first-time home buyer means within the last 3 years. Oh, if it’s first time in 3 years, then it’s going to qualify. You know, somebody saying that is like, well, that sounds ridiculous. That’s not what first time means. It’s what the whoever’s whoever is telling you that should be able to point to the documentation and show why that is the case. So, repeat what I think you just said. You’re saying that if I haven’t purchased a home in three years and then I purchase a home, I’m technically like it refreshes every 3 years. So I can be a first-time home buyer again. >> Yeah. Well, it’s it’s a little bit more complicated than that in that you have to not have owned a home in the last three years. But yeah, so if you’re renting for 5 years and then you go buy a home for three years.

What if like I I’ve got 20 doors in Fargo, North Dakota. When I when I want to park money, my capital preservation plan is just buy because Fargo is the most recession proof economy in the United States, continental United States. So I just go buy houses in Fargo. But let’s say I was renting my personal house, but I’m buying these single family homes as investment properties. Could I still do what you just said? You know, I’d have to look into it. But I think that would not work. But I would check. >> But this is what people need. People need someone like you to just hop on the call, especially if you’re making any amount of money. Like what would you what’s the minimum gross revenue before somebody talks to a Neil? >> Yeah. So, uh, we really start to pay for ourselves once you’re over the 100 grand

threshold. Under that, you know, things can be done. It depends. Everything taxes depends. >> 100 grand net to me or 100 grand revenue to my business? >> Net is the most important one. >> Okay. So once you’re at six figures, you need somebody. Yeah, >> for sure. And and before that, maybe. It just kind of depends on the situation. So there there can be situations where you’re making, let’s say, 80 net, but I’ve got kids and I can structure things in a way that I actually end up with larger uh tax breaks because of my kids. >> Mhm. >> But you know, that’s going to depend on particular family composition and things like that. So it’s not a hard >> Is this business owners only or can you help W2s as well? >> You know, there’s less to do with W2s, but things can be done. Yes. And then

the the higher your W2 is, the more things open up to you. Uh because some of those exotic strategies become available to you, but you got to be over like $400,000 before that starts to make sense. So yeah, we can we can definitely work with with W2 earners and business owners. A lot of households are hybrids. You one spouse has a W2 and one spouse has a business. >> But you know, even if you’re even if you’re straight W2, then there are things to do. Like everything, the more you make, the more the more becomes available in terms of tax strategy. Yeah. What does it mean to be profit first? >> So, Profit First was a book uh written by Mike Mccawitz that was it’s essentially the envelope method for businesses. And so, I’m a profit first professional, you know, through their training and everything. And uh the the

the basic idea is that you want to start with the focus on profit first, hence the name, right? So, instead of saying, “Oh, I made I brought in whatever $100,000 and I spent $80,000. So that leaves me with a profit of 20. Well, let’s flip that around and say, okay, I made 100. I’m going to build my business in a way to guarantee myself a profit of well, at that number it’d be, you know, roughly 55%. So, how could I build my business making bringing in 100,000 so that I profit 55 and I that leaves me 45 to spend on everything else, marketing and and systems and, you know, fulfillment and whatever. So it’s it’s really just shifting the focus of how you do things and and the biggest the biggest problem that entrepreneurs have is that we are eternally optimistic which you know it doesn’t sound like a

problem but it’s like well if I I’m going to try this new thing somebody has this new software if if I build this system then it’s going to increase my business and it’s going to increase my my my net profit and all this kind of stuff. You have to keep a rain on that. And the way to do that in the prop first method is to have separate bank accounts so that when you log into your bank, you just look at the one that you have spending money in. And all the rest of the money is take it out of your direct view automatically so that you’re not tempted to then spend it. Because if there’s no money in the spending account, then you just don’t spend the money. >> Yeah. My favorite thing to do is just to take money and throw it into Erade and

then I buy some blue chip that Yeah. The thing that I like about that is now if I just have money sitting, the question is is do I spend this or do I not? It’s it’s very binary and there’s really no consequence like either I have the thing or I have the money but they feel perissue in value. When I own a stock especially as the stocks tend to increase even incrementally 1 2 3 4%. Now it’s do I want the thing more than I want this percentage share of Google which if I sell now creates taxable event and even if it’s teeny teeny teeny tiny still pisses me off. You know what I mean? So I like hide the money for myself which I don’t know if that’s good or bad but I’m also a toddler dude. Like I should not have money. >> No that’s great. I mean if if your

overall portfolio plan supports buying those stocks then fantastic. I think that’s not what else to do with it. So, you know, I have transitioned my own company into a Bitcoin treasury company. And I don’t know if we have time to get into all that, but now what the hell does that mean? Well, >> what what what that means is I take my profit and I get it out similar to your Erade story. I get it out of my account and I’m buying Bitcoin just every day I’m buying a little bit. And so if and when I need that money, instead of selling, I will borrow against it. >> Who needs Bitcoin? >> There’s there’s a number of platforms out there and more every day. Um, I think >> why are you so long on Bitcoin? >> I’m long on Bitcoin because there is no alternative to inflation.

You know, >> well, what about gold? Why not gold? >> I mean, gold works. It’s just harder. >> And so your your your delta is going to be smaller. So gold’s been on a rip this past couple months, >> dude. It’s what is it? $4,400 an ounce right now. >> Something like that. And so it’s doubled over whatever 6 months to a year. I haven’t tracked that closely. But you know in the same time you know Bitcoin can 3x and 5x and 10x you know not that it necessarily will but it has the potential. >> When you buy bitcoin you said I turn my company into bitcoin treasury. So when you buy bitcoin do you have to [snorts] first take that money personally and pay taxes on it and then buy bitcoin or is your company buying the bitcoin? So in my case my company is buying the

bitcoin. So it’s an asset of the company. >> So you’re buying bitcoin taxfree. >> Well it depends depends on what when all said and done. So, you know, in general, no. You know, the way my setup is is in a in a Ccorporation. And so, you know, I’m paying a flat rate 21% on net profits. And so, the the uh the money that goes into the Bitcoin will end up being net profits and I will pay tax on it, you know. So, >> does it is it like an IRA to where it gets to grow taxree? >> Well, it will grow taxree because I won’t sell it. Yes. So, it’s it’s it’s similar to buying a stock, right? And you don’t pay tax until you sell. If you never sell, then there’s no taxes, >> but you could continue to borrow against it. You can continue to borrow against

it. >> Wow, dude. That now that’s a hell of an unlock, dude. Wow. >> So, there there’s an old um uh there’s an old uh maxim in the financial planning world. It’s buy, borrow, die. So, you buy >> Yeah. >> you buy assets, you borrow against them uh you know, as their values, you know, increase. Could be real estate, could be stocks, could be crypto, could be Bitcoin, whatever. And then you die. and you know your errors will get step up at basis. Uh if it’s through a personal and if it’s corporate it’s more complicated but there are avenues to do that. So I’ve heard these words basis and I I think I think the way you I have a 10th grade education Neil so I’ll be the dumbest human you talk to all day. The way I understand basis is the price we’ve decided that thing was zeroed in

at at a certain point in time relevant to your acquisition of it. And so if I have Bitcoin, let’s say I’m buying Bitcoin right now and it’s at 100 grand a coin and I buy one coin. My basis because I paid 100 grand is 100 grand and then it goes up to 500 grand. Let’s say 5x is and I borrowed against it. So now I’ve I’ve borrowed $500,000 back and I’m because I’m borrowing against it, I’m paying some amount of interest, right? >> You are paying interest. Yes. >> How much interest do you think I’d be paying? >> So interest rates fluctuate quite a bit. On the low end, I’ve seen as low as like 1%. on the high end if uh there’s a lot of utilization in the funding pool it can be you know 20%. And typically those rates will will vary constantly. So as

an average right now 10 to 12%. >> Okay. And so the idea here is that the interest would be less than the tax. I borrow that money. I spend it. I have to be able to service the debt. >> Yes. >> Which that could be its own little monster, right? Like if it gets >> Yeah. You don’t want to borrow for consumption. You want to borrow for investment into your business. Okay, so you’re borrowing to ensure a yield and then let’s say I’ve done this. I’ve borrowed the 500 grand. I’ve invested in my business and then I die. My kids get the Bitcoin. Well, how could they? Cuz I owe $500,000 against that coin that’s now worth $500,000. Wouldn’t the detor get the coin as collateral or how do I pay off that 500 grand? >> Yeah. So, it depends on how you set it up. You know, one way would be that the

debt would just continue. And a lot of these a lot of these Bitcoin loans and other crypto loans are not personally guaranteed because they’re through you know decentralized finance or DeFi. And so um there’s no there’s no mechanism by which you say hey I no longer there’s nobody there to pay this loan. It’s kind of an autonomous sort of thing. So it’s a very different beast than if you have a credit card for example. So these are these are these loans are secured and if the loan ends up not being serviced then it will end up liquidating and the lender will keep the collateral which would be >> which is like a smart contract that will automate that process. >> Yeah. >> Got it. >> Yeah. So DeFi is still an evolving space and so you know what I’m saying right now might not be true in 20 years or

whenever somebody passes away. So uh you definitely have to keep up on it but you know that’s that’s how a lot of it stands right now. >> Yeah. And so if I did have the money to pay it off in my trust or will or whatever, the kids get the coin with when they inherit the coin, they inherited it. The adjusted basis is now 500 grand. And so the money that the distance between the 100 to the 500 was never taxed. And then I’ve used that to grow my business. And that’s the real key is the utilization of the funds, >> right? >> Yeah. Man, God, that’s tricky. It’s not for u uh like I said, it’s not for consumption, but you have to be mindful of how you manage that sort of thing. But if you’re willing to do that work, then it’s fantastic. And like I said,

doesn’t have to be a Bitcoin. Could be it could do the same thing real estate. Could do the same thing with gold. So there’s companies now that are starting to lend on gold, like monetary metals. Yeah, I know that guy. He’s in Scottdale. Yeah, I think that’s right. Jeff D is involved in it now. Depends on how deep down the rabbit hole you want to go. But uh what do you think happens to Bitcoin? Do you think it is a 10x or 100x or long term? And when I say long term, my time horizon’s 10 to 20 years. I think uh that Bitcoin specifically and crypto in general will in everyday use will supplant the use of fiat money. I I’m full disclosure, I am, you know, on the on the on the bullish side of of everything there. So, you know, as as tech the technology improves, you know,

we’ve already seen countries start to experiment with electronic versions of their currencies. The European Central Bank is currently working on a centralized centralized electronic euro. And so what I think is going to happen is that the national currencies or the euro will continue to exist and they will still be used in the governmental things. You’ll still pay your taxes in US dollars and things like that, but I think everybody is going to shift over into using Bitcoin and other cryptocurrencies as an everyday transfer of value because it is it it it works with the law of disruption where something is 10 times at least 10 times better and at least 10 times cheaper. If you want to send uh so if you want to send $35,000 for example to somebody on a on a random Tuesday, it’s actually hard to do, right? Uh so you got to call

your bank and they have to agree. It’s like, well, do you know this person? And you know, you got to jump through a million hoops. And if you want to send that same amount of money in Bitcoin, you just enter the transaction and you pay a fee of, you know, pennies essentially, whereas the bank is going to charge you, you know, 1% or $80 wire fees or what have you. So it is it is both more functional uh in terms of money as well as just better to use u because it has that law of disruption criteria. I I do think that over time people will adopt it just as their as their everyday money. Now there are there are definitely legal and tax challenges between here and there because if you actually spend your your bitcoin or or whatever then you’re having a taxable event every time you do

that. So, uh I’m not a fan of like there are there have been like crypto credit cards and things like that where you fund a balance with Bitcoin and then you go out and spend it. It’s like well you’re chipping away in incremental sales every time. So, you’re buying the object and you’re having a capital gains event at the same time. So, until that’s fixed, that’s definitely an issue. But eventually over 10 to 20 years, I I do think we get there. >> Man, I’d love to just sit down and pick your brain on that topic. I’m a I’m a rabid libertarian that hates other libertarians. I think that every central bank is a satanic demonic repository of just evil and I I can’t see them letting that control go. >> Yeah. I don’t think they’ll have a choice. I think the market will win in

the long term. >> Oh, I hope you’re right, dude. That’s that’s so optimistic. Talk to me a bit about being an engineer. What kind of crazy ass engineer becomes a tax professional? You know what I mean? Like those two things feel so diametrically opposed to me. But then I also see I’m like, you know, I can see why an engineer would be the best tax guy. You’re not >> an accounting nerd. you’re like, you know, how things work from the inside out, right? So, yeah, I went to Georgia Tech, like you said, and um I was majoring in electrical engineering. And so, my senior year, I decided, you know, before I go out and start this whole career, maybe I should like have some experience. I uh I got an internship with AMD, you know, they make microprocessors and things. And uh the when I happened to be there, which was

the spring of 2000, the AMD came to market with the first 1 GHz processor. And it was a huge deal because they beat Intel to the marketplace and you know the stock doubled and everybody back then people were using Daytech online as their online trading platform and it was just people I could see in my lab just people had their stock trading uh accounts up and nobody was getting any work done. So it it was a big deal. Everybody was was excited. The company made a billion dollars or whatever. And uh so a couple months later I’m I’m still there during my internship and we have an awards ceremony and so the we all gather in this auditorium and you know they’re recognizing you know great employees for the last year. So you know so and so got three patents this year. Let’s give them a hand. You know here’s

a plaque because the patents belong to the company you know and so they go through this all morning and the last guy and and I wish I remembered his name. I always call him just Bob in my story. You know Bob here uh he’s he’s such a great company man. He had a pre-approved prepaid European vacation with his family all booked and everything. And it just turned out that that vacation was was what ended up being crunch time for this launch. So he’s a great company man. He canceled his vacation and he came in to work and you know we got the product out. Let’s give him a hand. Here’s a plaque. And so I’m sitting there in this auditorium and at that moment I said this is not for me. So I didn’t want to go into the corporate engineering world with those kind of expectations. So that launched

me into what I call my decade of wandering. So over the next, you know, almost decade, I was doing everything except corporate engineering. So I managed a bar. I delivered luggage from people who lost their luggage at the airports. I did day trading. I did I was doing real estate flipping and, you know, got my my butt handed to me in the financial crash of of08. 2007, I started getting letters from the IRS and that that’s where that $1.3 million came from. Like a lot of people, I didn’t know anything about taxes. So, I had never had a class on taxes. I knew it was a thing you were supposed to file. [laughter] I was supposed to be doing something here in all this in all this wandering that I was doing. Um, I didn’t. And so, what happens if you don’t file your taxes for a couple years is that the IRS

will take whatever data they have on you from third party sources and they will file an SFR, which is substitute for return. So, uh, they’ll say, uh, you know, Mr. Smith, you know, we have this information from these parties and we’re going to do a s a sort of quasi tax return for you. And if at the end of that process under the worst assumptions possible, then uh we would have given you a refund, then you’ll never hear from us. But if you would have owed us money under this scenario, then you’re going to start getting letters. And that’s what happened to me. So it was that day trading part that actually caused my problems cuz they saw that I sold billions of dollars worth of stock, which I did. But what they didn’t have is that I bought millions of dollar stocks plus another hundred grand and I

ended up losing money uh for for that year. And so, you know, but they don’t they don’t build that into their assumption. So, back then, prior to 2011, actually, the purchase of a stock was not reported to the IRS at all by your broker. It was only the sale. So, they they just saw all they >> only saw your sales revenue, but they didn’t see the basis. They didn’t see the basis. I use that word, right? That’s correct, man. Look at me. >> Yeah. >> Yeah. That’s so interesting. And so, so I started getting those letters and like most people when you get a nasty letter from the IRS, you just ignore it. So 70% of the letters the IRS send out get no response at all. And so I went through that whole process. You get letters and if you ignore those, get certified mail

letters. If you ignore those and the number’s big enough, you’ll start getting phone calls. I got phone calls from this woman named Joyce. And then if you ignore all that, they’ll just start going after whatever they can find. And so in my case, uh I was I was pretty broke at the time. Uh, but I was tutoring high school kids as as just a W2 employee. And so they started garnishing my paycheck. So I went from making peanuts to nothing. And I was like, “Oh, well, now I have to fix my problem because I can’t pay rent anymore.” So that actually got me off my butt and and started trying to fix my problem. And I I happened to uh find somebody who was able to help me. And he was a former Wall Street tax attorney and he used to handle specialists on the New York Stock Exchange and all kinds of

stuff. And he helped me fix my problem. And it took about a year. Now, at that same time, his business was starting to grow because, you know, he had moved to Florida and started his own practice. And to to this day, still fantastic at taxes, still terrible at running a business, but I had a 10 years of all these entrepreneurial things that I had been doing and had developed my chops during that process and was able to come in and help him actually run his business as a business and we’re to triple his business over the next couple years. >> Wow. And so he taught me the tax world and I helped him on the business operations side. And so everything kind of came together with my engineering training, you know, cuz engineering is all about systems. It’s all about systems level thinking. You know, we

have a circuit that we want to achieve a certain type of output based on the input and how do we do that? And you know, we tweak this thing over here and it alters the thing over there and you know, how does everything work together? And what I didn’t know and I didn’t appreciate back then was that like you said, it’s it’s a very different than being an accounting nerd. So I come from I come from the small business world of knowing what it’s like to go out in the world and try to make something happen and marrying that with this systems perspective where I say okay what can we do with the ingredients that we have? Do we need to add something? Do we need to subtract something? How can we do that in order to optimize the situation as much as possible? And optimize in our

case is going to be pay as little tax. minimize that drag on your on your growth that we talked about and get you to being being the best whatever you can be. Um, you know, to borrow a term from the US Army, I guess. >> Dude, I love your story so much. It’s the the archetypal entrepreneurial journey, right? It’s the broken road that led you straight to where you’re supposed to be. Are you a CPA? Did you go back and get all the >> So, I I am not a CPA. I’m what’s called an ERO. I have EAS, which are world agents and CPAs who work for me. But uh >> I like that better too. An erro. Okay. Uh I wanted to make a sh this is such a dramatic shift but I just feel like it’s such an important topic too. I just kind

of want to touch on it if you don’t mind. You mentioned in the very beginning you’re like the entity structure and I feel like again as a business owner all that I me I just have a bunch of LLC’s. I have 17 different businesses that I have some meaningful involvement in not in in terms of management. I just in ownership. Yep. and they’re all LLC’s because that’s the easiest thing to do with Business Rocket and it feels like the simplest and my CPA said that’s okay. >> Yes. >> Like how stupid am I? >> No, LLC’s are fine. So, the thing about an LLC is that for for the IRS, an LLC does not exist. They’re what they call the creature of the state. And so, an LLC can be anything for tax purposes. It could be a sole proprietorship. It could be a partnership. It could be a CC

corporation. It could be an S corporation. And so, just having the LLC, that’s a legal designation. And that does not tell us anything about how it’s being treated for tax purposes. So legal and tax are two different things. And so you know typically when you know somebody like you were to come to my office or or to talk on Zoom or whatever then we’re going to start to figure out which of these entities are filing in which ways and how do they impact your overall situation. So you know optimizing that and that that goes into that entity structuring conversation. So just saying I have an LLC actually tells me nothing about your tax situation. So, we’d have to we’d have to dive into each single one and see what’s going on. >> Yeah, that makes a lot of sense. The the the designation piece there is a

conversation we always have to have and I always just get so confused. Um, dude, this is awesome. Where if people want to learn more, find you, have a conversation, how do they do that? What do they do? >> Yeah. Uh, easiest thing is go to taxpro.com and book an appointment and you can talk to somebody on our team. I am going to make a or I am in the process of writing a new book called money pilots and that is that is my next evolution of the profit first system and it’ll be on Amazon or or wherever you you buy your books and what that will be is going to show you how to implement the system in your business so that depending on know how big your business is how many people are involved and all those kinds of things you can figure out how am I doing right

and there’s you’re going to be able to input your numbers into basically a dash board and it’ll show you where you’re out of whack. Are you spending too much on advertising? Are you spending too much on systems or people or or whatever? And then you can start to calibrate yourself because, you know, a profitable business is the only sustainable thing humanity has ever invented. And the reason for that is because it actually aligns people’s incentives with human nature. So, you know, charities are great until somebody doesn’t care about your charity and then it stops, right? So, so profit is really the key driver in that it puts your your normal human nature to to to gather resources to yourself or your family or whatever and puts it in line with serving other people in ways that they want to be served. Because if you’re selling a thing nobody wants, you don’t

make any money, right? But if you’re selling something that the market wants and you can structure your business in a way that doing that is profitable to you, that can continue forever. I mean, there’s uh there’s families, you know, you’ll see these stories every now and then of like this family’s own this hotel chain in Japan for 1,200 years or something like that. Those are those are families that have really figured out how to align everything within their family so that you know that that business continues. And so, you know, my goal is for every small business in America that does sell something that people actually want to be as successful as they can be and keep as much money for themselves and for their business rather than giving it to the government. And that’ll all be in the upcoming book on money pilots. >> When’s that going to be published?

Hopefully within the next two months. >> Okay, good for you, dude. So, if you’re listen, >> keep your eyes and ears peeled for money pilots. I’m so glad, dude, that you are here. I really appreciate you, Neil. This is not an accessible topic, you know, but you make it accessible. I can tell you really know your stuff. What is it that there’s a fun saying if somebody if you don’t understand something, well, you can’t explain it simply. Like, you explained really complex topics simply. So, I appreciate that so so much. if you’re listening, reach out to Neil, check out the tax stripper. And last words to you, man. Any parting wisdom for our audience before we jump ship? Yeah, I think I just want people to take a step back from their day-to-day activities. We’re all busy with our our businesses, our families, and everything

else that’s going on in your life. uh take that step back at least once a month and look at look at your business as an owner and say, you know, what decisions can we make at that strategic level to improve things going forward and just take that time. I know you’re busy, but it’ll be worth it and it’ll pay dividends over time. >> Yeah. Yeah, that’s Gosh, is that true? And I’ve learned that the hard way. That’s really good wisdom and advice. Um, awesome. I appreciate you. To our listeners, thank you so much for tuning in to World’s Greatest Minds. This has been Neil Mcpadden, the founder of Tax Sherpa, who as a reminder is a profit first professional, a defender of small business owners, an engineer from Georgia Tech, an erro, truly a renaissance man with a financial mind, and one of the world’s greatest minds.

Neil, thanks for being here. We’ll see you on the next episode. >> You’ve just heard another powerful episode on World’s Greatest Minds. For links, resources, and full show notes from this episode, [music] go to world’s greatestestminds.com where you can also subscribe so you never miss another episode. Drop [music] us a review because your feedback fuels the mission. And share this with somebody who’s willing to buck the status quo. Most importantly, tell us who you think we should interview next. Nominate the people who you believe have the results, the track record, and the brilliance to truly qualify as one of the world’s greatest minds. Join us weekly as we forge innovation [music] in real time. This is World’s Greatest Mind. The revolution of thought continues with