From Tax Bill to Wealth Plan | 035

Welcome back. I hope that you're excited about today's episode, because today's episode is going to be something that's going to be really great, even though we never like to talk about it, we're going to be talking about taxes. But don't worry, this is good news about taxes. And let me introduce our

expert today. KC Chohan is the founder and CEO of together CFO, a premier financial strategy firm helping business owners build generational wealth through advanced tax strategies with a background in finances and accounting. KC has worked with Fortune 500 companies and elite entrepreneurs to optimize

their wealth structure and protect their assets. He's a sought after speaker and thought leader in areas of business, finance, tax strategy and wealth management, regularly featured on top podcasts and events. KC is also the host of the CEO story podcast, where he interviews top performing

performing entrepreneurs to uncover their paths of success.

Welcome, KC. Hey, thank you so much for having me.

So glad that you're here today. So this is a topic that looms over people's heads, right taxes and strategies and and I know sometimes we sit around and we go, what are the wealthy people doing? How come they're not stressing about that? And so that's your That's your secret

sauce, that's your little superpower that you can have made a business out of taking all of those cool secrets and bringing them down to people with with smaller businesses, right?

Yeah, that's exactly right. We take the concepts and structures used by family offices and the elite billionaires, and then we bring that down to a level that's more accessible to the average business owner.

I love that. So whenever we're talking about, like, let's talk about taxes in general. Because, as you said, I'm not sure when the podcast is going to come out, but it's probably going to be right around October. So that's the time if people have filed extensions, then they're going

to be writing those checks, right? So this is very timely, and we want to talk about what, what do they need to be aware of business owners when it comes time to pay taxes?

Well, there's so many things that you need to be aware of. There's over 90% of taxpayers are actually overpaying on taxes every single year. So that goes to show us that we all have a lot of work to do to stop overpaying the government really right? If we can think about this better and

structure it, be more proactive. There's no reason that you can't reduce your tax burden significantly.

So what kind of things should we be Well, first of all, let me ask you this a two part question, what should we be aware of, and how early do we have to plan for those things,

as early as possible, ideally. And the things that you need to be aware of is, think of it as two different levels. You've got the loophole level, and then you've got the structure or the entity level, with the loopholes. We see that that changes all the time. We've just had this new big, beautiful

bill pass. It's got new legislation that changes a lot of things, a lot of good things and a lot of bad things, right? And that's going to happen with every administration that comes in. So every few years, there's going to be things that phase out, and there's going to be things that phase in, and that's

all at the loophole level, which is great for most people. If you are a small business owner, less than a million dollars, then you can definitely seriously reduce your taxes by just using loopholes alone. If you are above seven figures, above a million dollars in revenue. That's where the loopholes start

to run out. As an example of that retirement account. So you can only put so much money into a retirement account and get a deduction for that, versus if you have the right structure or the right entity type, you can take 50, 60% deduction on your taxes every single year, and then compound that wealth, which

is what the elites do and the family offices do.

So would you so both are good loopholes, and the structure are they? They're both good

100% it's just dependent on where you are, right? If you're a business owner that's just starting out, that hasn't hit a million dollars. Yet, there's so many loopholes, and one of the giveaways that we've got for your audience today is the top 50 loopholes that you should all

be using. And again, just go down the list. You don't have to understand it. You can just email that list to your CPA and ask them a simple question, how many of these 50? Are we using, and how many should we be using that we aren't currently using, because that will indicate how good a job the CPA is doing for

you versus you taking a solution to them. It shouldn't ever be like that. You shouldn't have to do that digging, but we've done the hard work for you, so all you've gotta do download the free PDF, and then Away you go, send that off to your CPA. Ask them the questions, and you can grade how good they are based on

the answers that they give you back.

That was what I was just going to ask. What when we're hiring CPAs, when we're hiring someone to help us with our taxes, what should we be looking for in terms of the right fit.

So ideally, if you can get a CPA that's got experience in your industry, and that experience at your wealth level as well, because things do change a lot. So as an example, if you work with a CPA as a manufacturing company doing $10 million a year, that CPA should have a really good knowledge of

inventory, of cycle counts, of working capital budgets and forecasts and things like that, if they're getting really involved in the business, versus if you've got a CP, if you're a million dollars a year doing straight consulting, you probably don't need the CPA that's got that in depth

industry knowledge, because you're effectively selling your time project by project. So that's a

really good point of their CPA. Knowing the industry, I think sometimes small business owners might go, Well, I know Joe, and Joe uses this person. So can you, I don't even know if this is, if this is something that you do, but like, what types of questions should we be asking CPAs before we hire

them?

How many clients do they have? What their scope for taking new clients on is? Because a lot of the times, the pain points that we're hearing is they're not getting back to me quick enough that don't give me in any answers. I'm always the one reaching out to them. So CPA is generally a very bad

business owners because they don't do a good job at customer service. So when interviewing a new CPA, ask them, hey, what does your organization structure look like? Will I be dealing with you? Will I have a point of contact? How will my questions get answered? How frequently are we going to be meeting? Let them

know what your expectations are up front and what your needs are, because that's really important. If you're just expecting to have one call a year with your CPA and expect to save all the money in the world, that's probably not realistic, right? I think ideally you should be planning quarterly

meetings with your CPA, just to go over what your books are saying, what strategies you want to put in place, what life looks like, because life changes a lot, and depending on how that changes, it can definitely impact taxes as well.

That's a really good point. So I love that you the way you structured all of that and and the right questions to ask, because so many times we hire someone, and then we're just frustrated because we're not getting back the service that we thought we were going to get. And did we actually ask

that question before we hired them? So I love that. That's great. So I like, I like that. We've, we've talked about the CPA, so now we and also, if you're listening to this, get a CPA or an accountant. Have somebody doing your books, not just you, someone looking over your books for you to make sure

that you're getting the best value. Because we have great tools like QuickBooks. It's extremely powerful. If you don't actually know how to use it or use it to its best ability for you to understand things like building wealth and profit, then you need to have someone on your team that is going to be able to

interpret that and articulate what's going on so that you can actually make informed decisions. So highly recommend that that's one of the professionals that you hire in your business, is someone to help you take care of your books, and especially to do your taxes. So yes,

you know, you get a bookkeeper 500 bucks a month, and that one position will give you so much financial clarity. And another one of the giveaways that we've got for your audience today is a free month of financial fusion, which is an AI CFO tool that we use internally with our company, and that helps

stack, it connects into QuickBooks and into Xero, your accounting software, and it gives you a platform where you can just talk to your books as if it was your CFO and ask it any questions you like, so that ultimately you can make quicker and better business decisions.

That is really an amazing that's what, thank you. Thank you that for both those gifts, those are amazing, powerful gifts. And and KC has just came and he was like, oh, and I can give you this, and I can give you this, and I'm like, Okay, this is awesome. I. Um, so what's so a CFO is a chief

financial officer and a lot of small businesses, you are the CEO. The CFO the CEO. You're all the letters, um. So having somebody that you can talk to about financial things that actually knows the answer and understands is a really, really powerful tool. So thank you so much for bringing that to our

listeners. I think that's really that's a great one.

Definitely for early stage companies that don't have the cash flow to justify a full time or even a part time CFO, because that can still cost five to $10,000 a month, right? They can get access to the aicfo for a fraction of that. We're going to give it away for free, so you guys can at least utilize it,

look at the reports, talk to it, understand what's going on in your numbers in plain, simple English, and then make better decisions so you can grow quicker

that that really is an amazing gift. Thank you and and thanks for explaining all of the pieces of it, and it take take advantage of this offer, because it's very, very powerful, and it will probably show you a lot of things that you weren't aware of, especially when it comes to

taxes, right?

100% Yeah, so that's the number one expense for most big companies is how much they're paying on tax. I'm here in California, and most people here that are making good money are paying close to 40% tax rate, which is absolutely ridiculous. So it's it's a killer if you don't understand

it, if you can't reduce it down efficiently. And it's so crazy because the billionaires pay single digit tax rates, and it's Middle America and lower America that ends up getting crushed when it comes to taxes, all because they do not have the right structures and the right teams in place, and they are

heavily relying on a CPA to save their money on taxes when the CPAs job isn't really to do that. The CPAs job is to file the taxes and make sure you pay your taxes right. Tax strategists job is to make sure you reduce your taxes by using advanced strategies. So there's two different roles there that

people just merge into one and don't understand, because if you look at your CPA, let's just use your own personal CPA. Sharon, if that person was to save you an extra half a million dollars on taxes, would they get paid any more than if they didn't do that?

Probably not right, unless it's unless it's built into the the payment structure they they're doing what they're doing, right?

Why would they take the extra time, energy and effort to go ahead and do that when they're not getting compensated for it?

Because they like us. Yeah, you're right. You're right. Um, and that's like, that's the kind of cold, hard truth we need to be talking about on this podcast, is we just have a perception that, you know, like, oh, they should be doing that well, unless that's part of the you know, their job

description that they've given you before you hire them. That's not necessarily what they're looking for. And as you pointed out, what they're being paid for

now, they might do a little bit of that, so let's just call it the basics of let's make sure you're funding a retirement account. Let's say you're doing some other basic, low level stuff to reduce taxes, but they're not doing any advanced planning for you. And that's the difference between

being rich and being wealthy. Is when your money is making money while you sleep, as opposed to you having to work every hour of the day to make that money. Right? That's the difference between the elite mindset that allows them to compound and grow wealth by doing things like saving 50% a year on taxes. Now,

if you were to go up against a billionaire that is saving 50% a year on their taxes compared to you, you can definitely see a clear winner and who's going to build a longer lasting legacy with their future generations. Just based on that one saving alone, it will be 10s of millions of dollars. Wow.

So what you said that that there are some basic things that we should have in place. What are the basic things that we should have in place?

Yeah, so we call it the strategic giving partnership. And anyone who's making seven figures plus in their business should set something similar to this up. And effectively, what it is is it's a way to donate money to charity and get a tax deduction. And you can get up to 50 or 60%

deduction, sometimes, depending on which way you structure it, and that allows you to one reduce your taxes by, let's just say 50% control. All the cash, and then reinvest that so that it grows and have full access to that as well. So you get two bites of the cherry. One, you get a 50% reduction every single

year on your own taxes, and then on the 50% that you've donated, you get to reinvest that as well. So that one, the charity, is actually going to get more than that 50% and then we put numbers around this, because it can get a little confusing. So let's just say you have a net profit of a million dollars in

your operating business at the end of the year. Usually that million dollars would come to you personally, and then you would pay tax on that personally. So if we just use simple math, at 40% tax rate, you'd pay $400,000 in taxes in that example. Now if you were to donate half of it to a non

profit, then your tax rate would go down from 400,000 down to 200,000 because now you're not taking a million dollars to yourself. Personally, you're only taking half a million dollars times 40% equals 200,000 and then the other half a million would go into a limited partnership company which you

have full control of as the general partner, to then invest those funds in passive investments on behalf of the charity and yourself. So now you've effectively increased the total wealth that you control, because you control that half a million that's in the limited partnership, and you've reduced

your personal taxes by 200,000 Does

that make sense? So you're not donating half a million directly to the charities. You're donating it through a partnership, correct? Oh, okay, that makes sense. I got

it like I do have a visual. I can do a share screen with you, if you would like.

We can. Some people are listening to this audio only, so we can see what we can, we can describe as

well. Got it? Yeah, well, we'll, we'll go through a description of it as well. Like, like we just have, but generally speaking, is on the top left, you've got an operating company that flows to yourself, and then you pay tax on that normally. But in the second scenario, there's another new company

that's created that has two partners. One would be yourself as a general partner and a charity as a 99% limited partner, and then that new company can passively invest in stocks, loans, real estate, crypto, any passive investment. And that way, you can effectively control the cash

that's in that new company, in this scenario, would be 500,000 and then, personally, at the top level, your taxes have gone down in hard cash by 200,000 so you've got $700,000 gain compared to scenario one, where you were paying 400,000 in taxes and didn't have this new company that's growing wealth completely

tax free.

Very interesting. So now on the the way that you're doing the passive investments, how does the charity then benefit do they get? Like, how do they get paid out from that?

Yeah, they would get distributions and K ones at the end of every year. So on the passive investments, the the managing member would decide how much of that would be distributed to the members, so 1% of themselves and 99% of the charity. And again, there is no requirement that a distribution

has to happen, but a k1 will be issued every

year. Okay. Alright, cool. That's very, that if you're, if you're able to see the video, it, it's very it's a good visual. Awesome. Now let's just say we're not a million dollar, you know, we're not over a million dollars. We're smaller businesses. What kinds of things can should we be looking for and

being aware of

so one of the simple things would be a private, non operating foundation. You can instantly reduce your taxes by 30% by donating into a private foundation, and you can still fully control that foundation. So that would be one. And then the second one, I would say, is look over the the list of

loopholes, because by going through all 50 of them and applying as many as possible, then you will significantly reduce your taxes, probably down to single digits. Wow, this is single digit tax rate. Just to be clear,

single digit tax rate. Yes, I. Um, yeah, that's that is really and really impressive. And actually, I haven't heard this before, so I'm really happy that you're bringing this to our listening audience. So what other things? So we need to look at loopholes. We can if under a million

dollars, you still can have that partnership that's that's takes care of charitable giving, and if you're over a million dollars, then you can form that separate company and structure over a million dollars, under a million dollars,

is loopholes, right? Yep, yep. That's an easy way to think about it.

Yeah. Okay. Um, what other what other things do you think our listeners should be thinking about and considering when it comes to their taxes and how to pay less well?

I think they are the that covers most of it. To be honest, it's like, I know we've just glossed over it and said there's 50 loopholes there, but we don't really have time to go through every single one. Some of the major ones would be accelerated depreciation. Right now is huge because of this new

tax bill. So you can go buy a vehicle and write that off in year one, and the vehicle doesn't just have to be a car. It could be a yacht, it can be a jet, it can be helicopter. So there's lots of things that are classed as vehicles, not just SUVs and cars, right? So just bear that in mind, we have

plenty of clients going out in December and going to buy a jet just to get that depreciation so that can be really powerful. Real Estate is a huge one. I think every millionaire that I know all has some type of real estate investment, so that's generally a good place to go. Simple stuff like hiring your

kids, Mm, hmm, and put your kids to work in your business, they can be cleaning, they can be doing research, they can be doing social media stuff for you. So there's plenty of things that you can do, like you could pay them up to, I think, $13,000 a year, and that's completely tax free to them, so that could

go towards their education needs or their daycare needs and things like that. Right? So there's the Augusta loophole where you can rent your house back to your company for 15 days over the year. Again, there's so many of them, but they're all small dollar amounts, right? It's not like you can go hire

your kid and give him $100,000 a year salary and have a good write off in your business. That's not how it works. It's restricted to 13,000 the retirement accounts were restricted to 10s of 1000s. So there's so many of them that you have to keep stacking them to get the maximum value.

So on the on the children, is there an age limit up to do they have to be under 18 to to qualify for that?

No, no, there's no age limit. As it's just as long as you can legitimately prove that they are actually doing something in the business. Now, if you've got a one year old, it's going to be difficult to say that a one year old is cleaning the office right. It's probably making the office a lot

dirtier, but what they could do is they could be a social media model for your business. Okay?

Wow, you are. So you have such a genius, creative mind. Are you thinking about that? Absolutely, a social media model. And then you pay your child because they're a model in your business. And brilliant.

I love it. Yeah, Johnson, and Johnson is paying some baby some obscene amount of money for being on their adverts, right? So your version of that, as long as it's true, right? So make sure that you do take the photos, you do post them on your social media, that there is proof, and don't just

say you're doing it and not do it, because that's where people get in trouble,

right? Absolutely. And you document everything and make sure that you're doing it. You're doing it by the book, so to speak. Those are really great. And is there anything else, in terms of, and you talked a little bit about the tax bill, anything else that has changed? Or, as business

owners, we need to be aware, I'm sure there's a lot. And can you just give me, like, one or two things that have changed that we should be aware of in this year for the as we the

biggest one is the accelerated bonus depreciation, because that's where you can get your the most bang for your buck in terms of reducing your taxes. And simple example is you can go buy $100,000 vehicle. You can put 10% down cash, so you're spending physically $10,000 but you're getting a tax deduction

of $100,000 so that's really good leverage on your money if you need a vehicle for your business. Now, if you don't need a vehicle for your business, you can then look at real estate. Do cost? Segregations and kind of get depreciation that way. Or you can go the philanthropic route, donate 30% to charity,

fully control that and invest that on behalf of the charity. Or if you are above that seven figure threshold, the strategic giving partnership that we looked at is probably the most powerful way to save 50% on your taxes without breaking sweat.

Wow. This is, this is mind blowingly Awesome. Thank you, KC, and you've, you talked about, you talked about the gifts that you have for us so we have the 50 loopholes and then the free month of the AI. Tell me again the name

of it. It's financial fusion, which is an AI CFO.

Financial fusion, the aicfo. Really powerful, valuable gifts. I cannot thank you. Enough, KC, so the way you're going to get those gifts is, as always, you're going to the profit connectors dot club page. That's profit connectors dot, C, l, u, B, you just go in, you'll

register, and then you'll have access to KC's gifts. We'll have his contact information and info about him, and then, of course, this podcast and all the other gifts that are our guests have given us, and you'll have access to all of that within the portal. And it's profit connectors, dot, C, l, u, B, dot

club, and that's where you can go to get all of these gifts. I really appreciate your time. KC, is there anything that you want to leave us with before we wrap up.

Yeah, if anyone is worried or wants a second check on their taxes, we're happy to do a free consultation with them. Just again, our link will be in the our website portal, so feel free to reach out to us, follow us on social media, or check out our website at together.

Cfo.com Awesome. So that's how his website will have that inside the portal as well. Definitely connect with KC. This is immensely valuable to every single business owner, even if you've never thought about doing anything like this. Get educated, get the information.

Spend the time with KC's extended an offer to spend time with his staff. That's what I think we talked about, $500 value right there. So make the time to get to spend some time with KC and find out what you need to know so that in addition to building a business, in addition to having profit,

you're actually building wealth, and you're creating a sustainable future for yourself without having to work as hard as maybe you are working right now. So thank you so much for being here. KC, thank you for joining us. Thanks for showing up. Your future self will thank you, and remember it's your

impact. Go, make it matter. I.