In this episode of Eye On Franchising, I am thrilled to welcome Antonio and Landon, the co-founders of GFG Solutions. We delve into their unique journey from boarding school friends to successful business partners. Despite pursuing different sports in college, they stayed connected and eventually found themselves in the financial services industry. Recognizing their shared passion and expertise, they decided to start GFG Solutions to help businesses optimize their operations. Throughout our conversation, we stress the importance of planning and how GFG Solutions can assist in taking businesses to the next level. Join us as we explore the significance of identity for athletes transitioning out of sports, the importance of optimizing businesses, the role of asset protection, and tax strategies for entrepreneurs. Don't miss out on this informative and engaging episode of Eye On Franchising. Tune in now! - Friendship and shared experiences - Importance of planning and optimization - Identity transition for athletes - Optimizing for entrepreneurs - Tax strategies and asset protection - Importance of bookkeeping and financial understanding - Fact-checking and cross-referencing - Accelerated depreciation strategies - Overcoming ego and embracing help - Building a team and generational wealth - Growth mindset and assistance for businesses - Perseverance and consistency in entrepreneurship --- Ready to watch these great conversations? Come check out a few videos have have and give me a follow! https://www.youtube.com/channel/UCwoAdrkPZmveJt5AQRDk8WA --- Lance Graulich Franchise Consulting Services from ION Franchising Eye On Franchising
In this episode of Eye On Franchising, I am thrilled to welcome Antonio and Landon, the co-founders of GFG Solutions. We delve into their unique journey from boarding school friends to successful business partners. Despite pursuing different sports in college, they stayed connected and eventually found themselves in the financial services industry. Recognizing their shared passion and expertise, they decided to start GFG Solutions to help businesses optimize their operations. Throughout our conversation, we stress the importance of planning and how GFG Solutions can assist in taking businesses to the next level.
Join us as we explore the significance of identity for athletes transitioning out of sports, the importance of optimizing businesses, the role of asset protection, and tax strategies for entrepreneurs. Don't miss out on this informative and engaging episode of Eye On Franchising. Tune in now!
- Friendship and shared experiences
- Importance of planning and optimization
- Identity transition for athletes
- Optimizing for entrepreneurs
- Tax strategies and asset protection
- Importance of bookkeeping and financial understanding
- Fact-checking and cross-referencing
- Accelerated depreciation strategies
- Overcoming ego and embracing help
- Building a team and generational wealth
- Growth mindset and assistance for businesses
- Perseverance and consistency in entrepreneurship
---
Ready to watch these great conversations? Come check out a few videos have have and give me a follow!
https://www.youtube.com/channel/UCwoAdrkPZmveJt5AQRDk8WA
---
Franchise Consulting Services from ION Franchising
Lance Graulich 00:00:02 Welcome to Eye on Franchising. Are you looking for business opportunities? Well, you are in the right place. We represent over 650 franchises and business opportunities. We will help you find your perfect franchise for free. We even have a free assessment on our website that will help us determine what the best businesses for you based on your investment level mindset, skill set, and life experiences. This is Eye on Franchising, where we share our vision for your franchise future. I'm your host, Lance Graulich. Each week we will speak to fascinating folks from the world of franchising, franchisors and founders, franchise funders, and franchisees. Are you looking to find your perfect franchise? Or perhaps you are an independent business owner looking to grow and scale your business by setting up a franchise. Either way, our team can help you. Eye on Franchising, where you will learn the A to Z's of franchise. Hello everyone, and welcome back to another fabulous episode of Ion Franchising. I am your host, Lance Graulich. So you know, I always have franchisors, founders of brands, franchisees, and of course, resources that will help you either take your business to the next level or help you as you get into the business in the first place. Planning is everything. And these guys, boy, these guys are rock solid. I actually just appeared on their podcast recently and, they met in boarding school. They built that relationship and then built a seven figure business. They're going to talk about that. Their company is GFG Solutions. They're co founders of it. And, basically they optimize your business. But I'm going to let them tell you even more as to why they should be on your team. My good friends, Antonio and Landon. Welcome to the show, guys.
Landon 00:02:01 Thanks for having us on.
Lance Graulich 00:02:04 Absolutely. Landon, you go first. tell us, how did this relationship come about in boarding school? I, thought it was nursery school, but we can start a boarding school and, tell us how this all came about.
Landon 00:02:18 Yeah, I mean, you did a great job of just kind of teeing us up and giving the backstory. But like you said, we met in boarding school back twelve years ago at this point. Twelve years ago, whatever. And from the start, we were the two only people from the north at this school. So we were down in North Carolina. We went there to play sports. We got recruited, dropped what we were doing at our prospective high schools and took a risk and went somewhere new. And, we went there for two and a half years from literally the first week of us being down at this school. We connected pretty heavily because of the geographical familiar piece of being from the northeast. And Antonio was down there to play baseball, I was there to play football. And, I basically coerced him with a couple other guys down there to join the football team. He ends up being my best receiver. I played quarterback there. he ends up being my best receiver. We hold records. There all this crazy stuff. and he ended up doing really well in baseball down there and getting recruited to play baseball at a high level. So I ended up playing football as well, in college. And we just stayed in touch. Once a year, twice a year, we'd catch up, we'd link up with our buddies, and never thought that we'd be in business together. And then about five years ago, six years ago, we end up being done with our prospective sports. our whole identity now, at this point was kind of at a standstill, like, what's next? Right? And we again stayed in touch, right. But by chance, both ended up in the same industry on kind of the corporate side of financial services. And it was literally by just coincidence, there was no connection or correlation. We had caught up one day, and it just by chance, we were both in the same space, and we knew we were in the right industry. We were enthusiastic about it, but we felt like we were in the wrong. Leave Tony. I'll let Tony kind of hop in and fill the gaps there.
Antonio 00:04:07 to rewind a little bit, and thanks, Landon, for giving that synopsis there to rewind a little bit. The identity piece, I feel like it's so critical for athletes that are coming out of college. Literally, all you do your entire life is play sports. Your entire identity is wrapped up in that of an athlete. People ask you like, oh, I'm a baseball player. Oh, I'm a football player. I don't know anything other than that. And so after that happens and it ends, you're like, okay, what do I do now? I didn't really take school that seriously. I don't know what a career looked like. I was an MLB draft prospect. That's all I cared about. That was Plan A B&C. And so the dynamic that happened a little early was that Landon had already started taking on an internship in financial services. So we had a little bit of a direction. I went off the rails for, like, six to eight months of just ensuing bad degenerate habits, and we still stayed in touch. And then, I created this video, which was like, this moment for me, where it was like, I consider it the knock on the door to the universe, where I was in the car driving. And I was so sick and tired of being sick and tired. And I was like, you need to figure it out, man. What is going on? You have so much potential. And I started to realize that I thought my entire life was the purpose around it was to play baseball, but really, it was to serve people at a high level. And baseball was the vehicle to do that at the time. Now I can start to translate, that into entrepreneurship or whatever that looked like. And so we both got into financial services, as Landon said, and then we started to really ramp up the conversations. And where the conversations initially led us was, hey, let's start a podcast. Let's just start to get our thoughts out there. At the time, we were 22 years old. Our biggest reserve is like, who the hell wants to listen to two 22 year olds talk about success when we have $1,000 to our name? So let's start getting some business owners that are successful onto this podcast and live vicariously through them. One, that's going to be valuable to people that are going to listen, and two, it's free mentorship because we don't have a dime to pay people for the education anyway. And so during that time, we started to leverage these folks that were coming on, as I said, for free mentorship. And also, we gained the confidence to bring our value proposition to them, and, to be honest, get rejected quite a lot. But we were
Antonio 00:06:18 able to get these people on in abundance to build that muscle of sales. And so, fast forward, COVID started to happen, and we started to accelerate that virtual presence. And we were able to, uh as we started to become more valuable in the marketplace, create a lot of joint ventures, or what we like to call ecosystem mergers, where we were merging ecosystems with other people of influence that had communities of our ideal client avatar. And they were starting to drive traffic to us. Um, in return, they were getting a kickback on that business. And so we got it to a point where we were getting 500 to 1000 really warm leads a month. And it was incredibly, incredibly lucrative. Very profitable. We were excited. Um, we got into business together when we launched it ourselves, and it was fun. We were on 15 to 16 sales calls a day. But it wasn't fulfilling at the same time, because now you're in this position where you're constantly trying to fit a circle into a square hole and recommending products to people that might not need it. And we weren't really about that. We really liked the art of diagnosing and prescribing the right medicine for people that were in need. Uh, uh, that's, uh, a metaphor for what they needed in the product. And so we sold it about two years ago, we sold the firm, and we launched a consulting firm, uh, with 30% being to our other partner, Claudio Gammon, who's been doing this for a while. And this consulting firm is all about optimizing for the entrepreneur. We love entrepreneurs. We are entrepreneurs at heart. And so how do we optimize for the entrepreneur? We bring solutions to them on an unbiased basis, for the advice sake only. I feel like in the world of financial services, a lot of people are constantly trying to push a specific product that the entrepreneurs might not need. Entrepreneurs need to be building liquidity. They need to be taking risk inside of their business. Their business is their riskiest asset. So why take on so much risk elsewhere? And so we created this conserved consulting firm that operates on a flat fee so that we can stay unbiased in our recommendations. And we try and keep it based around four key pillars. One being asset protection. So where and how you own your assets, that's the boring risk management side of things that as you grow, net worth is one of the most important things because it could all get taken down out of nowhere for one catastrophic event. And so we want to build out a structure of how
Antonio 00:08:39 you own your assets in such a way that there's arm's length separation between you and that asset so that nothing can happen in a catastrophic way to take down everything at the same time. Two, we want to audit your insurance declaration pages. That is boring stuff. Most people don't update their insurances, and they just listen to what their broker tells them to do. And their insurance isn't in alignment with their net worth. Their deductibles stay low, their coverage limits stay low. And when a catastrophic event happens, they don't have the insurance limits to cover that. We also want to audit the articles, um, of incorporation or the operating agreements or the buy sells. How is this business carrying on? If one of the partner passes away or what does that look like? Then we move to the more fun stuff, the less morbid stuff, which is tax strategy, which is honestly why a lot of people call us in the first place. Because I think it's safe to say that no business owner likes paying taxes. It's part of the game. We all have to pay our fair share. But what our fair share is is all relative, right? The IRS tax code is designed for entrepreneurs to take advantage of it. And so how do I do? So we try and identify four major categories inside of the tax code that we can start leveraging. One is tax credits. And we'll go a lot more deeper into this, for sure, but I want to keep it high level. So, we'll go tax credits, which are dollar for dollar off of your tax bill, which are superpowers. Two is depreciation. Three is identifying deductions, and lastly, figuring out what deferments look like. The goal is not to pay $0 in taxes. The goal is to pay your fair share and, uh, to minimize it to a point where you're still attractive to banks, but not throwing all your money back to Uncle Sam. Third is optimization of the balance sheet. Then we look through the P L. Where are we wasting money? What levers can we pull to maximize profitability and in franchising? I know that's a huge thing, right? We need to make sure we're knowing our numbers all the time, then how do we build up liquidity? Because the goal isn't to just take this money and throw it into the next real estate property or throw it into Bitcoin. The goal is to build this business, right? So liquidity is the lifeblood of our business. How can we systematically build up an ecosystem of liquidity that has momentum, but also gives you leverage to go grow your business? And we could talk about that and then
Antonio 00:10:57 lastly, helping you exit. Whether it's estate planning or succession planning, how do we get this business that's worth 50 million? How do we extract $50 million cash out of this business and then mitigate the capital gains on the back end? So I'm going to shut up. I know that's a lot. Thank you for letting me.
Lance Graulich 00:11:13 That's great stuff. And as you guys know, in what I do, as a business owner multiple times over, and now helping people get into, in some instances, their first business, these are generally very smart individuals. They've decided that they were stuck either in a corporate job or a certain situation they don't want to be part of anymore. I educate people on the fact that there's three major pillars of investing real estate, wall street, and owning a business. And in the owning the business category, we know that franchising, is a chunk of that, but in most cases, an often misunderstood chunk. And every franchisee seems to be a little different at the start. Corporate, aka the franchisor, does help advise, but are also careful on keeping things at arm's length. They can't be your accountant or your CPA. So I advise people get a business attorney, put a proper agreement together. Also make sure you have a good accountant. Most people that come to me have an accountant, but I say, are they really a business accountant, a small business accountant? Do they understand, uh, doing taxes for a business? So what advice do you have? Let's talk about the chronological order, if you will, of giving birth to your first business. Whether it's a franchise or not, isn't it all about the entity set up and planning and getting it all right in the first place?
Landon 00:12:46 100%. Right? That's kind of why the order of what we talk about is asset protection. One, tax strategy. Number two, optimizing the balance sheet and then exit retirement, that type of world, in that order. Because how you build it is just how we're building it. We need to be building it with the end in mind, right. And making sure that we're protecting how we're building it. So from an asset protection standpoint, building out your entities, creating separation between you and how you own your assets, describe.
Lance Graulich 00:13:17 please, decrib little bit for people listening. I'm not sure what these guys are talking about.
Antonio 00:13:23 I was just told I needed to.
Lance Graulich 00:13:24 Set up an LLC. We know that an LLC is the most common entity that people will set up, but, most people don't understand. So I set up an LLC. So what?
Antonio 00:13:35 Yeah.
Landon 00:13:36 What does that mean as a disclaimer, right? Not an attorney, not specific legal advice, but this is kind of where the conversation starts and why we're constantly bringing attorneys and actually bringing this stuff to implementation and getting their kind of, green check next to everything as well, right? But really, an LLC, all it really is obviously stands for Limited Liability Company. It's essentially a pass through entity. So all dollars flow directly to you at the end of the year, right? You're paying taxes on all that money. It's not really a tax mitigation tool. It helps create separation between you on the personal side and your entity, right? And so a lot of times, folks just set up an LLC and own it outright. And that's okay. And for us, a lot of times for our clients, we're talking about finding out ways and figuring out ways to separate themselves even an extra layer away from that LLC. Maybe a holding company, right? Because a lot of times, entrepreneurs don't just own one business. They may own a couple or they may own some real estate. They may have some investments spread across a couple different areas. So if we're able to involve a holding company, in a lot of cases, it could make sense because it creates an extra layer of separation if it's set up in the right state, like a Delaware, Nevada, or Wyoming. They have really good charging order protections, really good anonymity type of clauses to kind of shield you from on your personal side. Examples, right. someone slips and falls in your storefront, they go to sue whoever owns it. If there's extra layers in place, they're not going to be able to track you down on the personal side and come for your personal assets. Now enter the franchise world. We're not going to pretend to be specific experts on what legal protection you have inside of that space with what, franchise you're working with. But in general, creating that separation can be a very helpful foundation. It's not bulletproof, but it does help protect against cheaper lawsuits. Right? Tony, do you want to add anything to that? I just really wanted to give kind of service level piece on the asset protection structure.
Antonio 00:15:36 Yeah. And that's why I think it's so important to build with the end of mind. Because if you're just starting one and that's all you intend to do, and that's like, you're going to live this more blue collar, it's going to be a job as opposed to just a business. An LLC is probably fine, right? The LLC creates a little bit of separation. You keep everything in that bank account. It doesn't help you in the tax world unless you, decide to elect as an S Corp or a C Corp. But that should be fine. Once we start to get towards creating a portfolio of companies and continuing to scale, then we want to create a little bit more organized and complicated structure because of the fact that if something happens inside of one LLC, we want to keep that lawsuit inside of that LLC. Because what they can do is what's called pierce your corporate veil. And so once they pierce your corporate veil, which there's a million ways to do it, the easiest way is like if they find out you're commingling funds, so using the, uhbusiness expenses for personal stuff, then they're able to go to all the other layers. If you have enough complicated stuff inside of all those layers, it takes a lot of money to pierce all of that. And there's going to be five, six years of lawsuits that incur. Most people don't have enough money to go through that amount of lawsuits and that amount of lawyer fees. And so that's where the lawsuit ends right there. Especially if you have good insurance limits that cover that stuff as well. So that's what I would add.
Lance Graulich 00:16:54 Great. So you mentioned the S Corp. if you're like a lot of people that I work with, Lance, I want to build an empire. I want to build generational wealth. So obviously an S Corp is certainly more sophisticated and gives you, u more tax advantages, I guess you could say. So besides asset protection, you want to move on to the next one? You want to move on to insurance, or I'll let you guys handle how you want the cadence through the process here.
Antonio 00:17:22 Yeah, I mean, if there's any more questions on asset protection, I don't want to bore you guys by talking about PNC insurance. I think we should move on to taxes. Taxes is more fun. This is where I think a lot of people I want to be able to provide at least one bit of strategic advice.
Lance Graulich 00:17:35 Go to tax insurance. You're going to find some things and you're, going to save people money, uh,and headache and everything else. So let's move on to tax. The biggest thing that everybody is overwhelmed with.
Antonio 00:17:51 Yeah. Insurance is something that it's better to have and not need than need and not have. Right? So just get it. Nobody likes having it. It's expensive. But have it in place for sure. And go talk to a broker to make sure you're implementing the right stuff. Taxes is a little bit more exciting. A lot of people fear taxes. We embrace taxes. Taxes are fun. Right. Because of the fact that, like we talked about len, what's the stat? There's like 3000 pages in, uthe IRS tax code.
Landon 00:18:16 There's over 5000 pages in the US tax code, right. Only 30 ish of them, maybe 30, 35 of them are actually constructed to talk about increasing your taxes. The rest are how business owners can take advantage of the tax code to lower their tax liability because the ultimate goal for the government has is to provide affordable housing and create jobs. If you're creating jobs as an entrepreneur, that's helping stimulate the economy. So they're going to incentivize entrepreneurship in the tax code if we're taking advantage of it.
Antonio 00:18:43 So let's start at the foundation first. Bookkeeping in my opinion, one of the most important parts of the business because you have to know your numbers. You don't want to build the business just to avoid paying taxes. The whole point of making a business is to make money. Focus on making money first. A lot of people, it's a huge MISC of like, how do I do this without paying the most tax? Make money, and then we'll figure out what the tax implications are on the back end bookkeeping. When you're first starting out, it's probably as simple as, like, you downloading QuickBooks and doing your own bookkeeping or hiring a family member to do the bookkeeping as you start to increase in revenue. I highly recommend hiring a bookkeeper. Someone that's preferably a CPA, someone that's certified to do this stuff and constantly give you monthly reports of what your balance sheet looks like, what your P L looks like, so that you're not scrambling at the end of the year to send these numbers to your accountant and figuring out what your tax bill is going to look like. Once we get to building an empire, then we want to look into a CFO, maybe a fractional CFO. That's the third layer right there to where it gets a little bit more complicated. Then we move on to mitigating the taxes. Right? U did you want to pause? Did you have any questions?
Lance Graulich 00:19:53 No. No? Good. You're on a roll.
Antonio 00:19:55 Cool.
Landon 00:19:56 Let me just add one thing before you get really into it, because I know you're going to drop some game here, Tony, but before we even get into this, when it comes to just your CPA, I can't tell you how many times Tony and I run into somebody that has maybe a couple of franchises. It has a couple of other ventures. They're doing really well. Right. Total revenue north of seven figures. Across the board, half a million north of seven figures. Whatever it is, they've outgrown their CPA by a long shot. They may have started it as a normal W two in the corporate world, or, uh, had their W two for a while, and they ventured out in entrepreneurship. Slowly, over time, they've outgrown the capacity of their CPA, and what Tony is about to talk about is going to be evident of that. If anything that we're talking about is completely foreign to you and you're not having proactive conversations with your CPA about mitigating your tax liability through all these types of strategies and opportunities, you've probably outgrown your CPA, and it's probably time know, go find someone.
Lance Graulich 00:20:50 Landon uI had a personal experience with that as I was building all of my wingstop restaurants years ago. My father was a CPA, but, uh, he was too involved in his main Wall Street career. And he would look over my shoulder a little bit, but when he would look at the K ones and everything, for that matter, he said to me one day, he goes, I don't know who these CPAs are that you're using, but they are not good any longer for you. You got too much going on. And I've already spotted a couple of mistakes. And then I found my new CPA, and he did all kinds of forensics and figured out where they made certain mistakes, fixed them. But I had to fire my CPAs for the reason that you said. It became evident. It was painful for me. Had to spend extra money and extra time, but it was a reality. I outgrew my CPA, and I think.
Antonio 00:21:49 That'S the biggest we have to really zoom out and see what their business model looks like and why it is that way. Right. And the reason is because to build out a really profitable CPA firm, you're just basically creating a tax return machine. Right. The easiest thing is that the normal w two person that you can just easily file their taxes, and you do thousands of those come tax season. They're not required to save you money. That's not their job. Their job is to make sure that they're filing your return on time and make sure you don't get audited.
Landon 00:22:15 Right.
Antonio 00:22:15 They don't care how much money you save because they're not incentivized to do that. Yes. Which is why you constantly have to be fact checking them, cross referencing them with other CPAs. This is not somewhere where you want to skimp out and just be like, oh, I trust my guy and that's it. I let my CPA do everything. I hear that all too often. I have clients that they make $30 million a year, and they still say that it's something that you're going to have to come to grips with and put your ego aside. We get it. You grew up with the guy from high school or you went to college with him, but maybe, uh, ask for a second opinion and look it over. Let's talk about taxes, though. I want to be able to give a couple good strategies that somebody could take away no matter what level in business they are. So we talked about it, right? You set up an LLC. That's a big misconception that people think setting up an LLC automatically gives you tax advantages. It does nothing. You could still have a business without having an LLC. Everything passes through to you anyway because you would just file it as a sole proprietorship or a partnership. Then once you start making sufficient money, which it's arbitrary, but let's say above multi six figures, we might want to look at Electing as an S Corp. That's a big one, right? This is where a lot of people fall in, because in the business that you operate, you're required to put yourself on a fair and reasonable salary. So you're going to want to put yourself on W two for, um, let's say you're doing seven figures. Maybe you put yourself on 10,000 a month or whatever that looks like. Why does that sound good? Why would I want to pay more taxes? I'm paying half of that in payroll tax and the other half in my FICA tax. So you are going to be, uh, paying on a W two basis on that side. But then every dollar that you take out in the form of a distribution is no longer subject to the self employment tax, which is roughly around 15.3%. So you're saving yourself a significant amount of money by taking this S Corp election. You have to make sure you're doing it right. You have to make sure you're putting yourself on a fair and reasonable salary. But now this opens you up to a bunch of different opportunities, right? Here's one. If you take an S Corp election and you're not renting your home out to your business for 14 days out of the year, you're losing free money. There's a code, section 280 A, uh, in the tax code called the Augusta Rule.
Antonio 00:24:22 What the Augusta Rule allows you to do is rent your home out to your business for 14 days out of the year at a fair rental value. You can't go crazy. It's not thousands of dollars a day, let's say $500 a day, that you'renting your business out to your home. What does that come out to? Is that seven, uh, thousand a year?
Landon 00:24:38 Right.
Antonio 00:24:39 There's got to be a reason as to I think it's 8000 a year. So there's got to be a reason as to why you're actually renting the home out, right. Whether you're having business, uh, masterminds at the house, corporate, uh, retreat, or meeting of corporate retreat.
Lance Graulich 00:24:53 The first thing I thought of in my hot tub in the back. Yes.
Antonio 00:24:56 There you go. And as long as the meeting minutes are recorded and the lease agreement signed and there's an actual invoice, you need the supporting paperwork for this, but it's ironclad. You send the invoice, it's tax deduction at the business level, and you don't have to report that rental income on the personal side. So you're just transferring money from your right pocket to your left and saving a little bit of money. Nothing crazy, but free money, right?
Lance Graulich 00:25:19 We like it.
Antonio 00:25:20 Exactly. Another thing is, if you have kids, why aren't they on payroll? We have to make sure that it's a reason to justify it, and we don't want to just do it straight up to the limits of the standard deduction. Get creative and put them there's a real reason as to why they operate in the business. If you own a roofing company, don't put them. On the roof. That's not justifiable to put a seven year old on the roof. Right, exactly. And talk to your CPA about this, uh, of how they want to go about it. But let's say you pay them $1,000 a month. The standard deduction is about $13,950. So you pay them, uh, it's a business expense. You're paying a wage, and that goes into their bank account. They take the standard deduction and they don't pay taxes on it. So another way of putting money from your right pocket into your left.
Lance Graulich 00:26:03 Love it.
Antonio 00:26:04 There's tax credits. So many things that we can go into. I want to just highlight something, something that's super popular. If you've been in business for a while, ERC is a big thing right now. Don't get caught up in the scams of ERC.
Lance Graulich 00:26:16 There's a lot of people trying to employment retention credit.
Antonio 00:26:19 Yes, sir. So employee retention credit, um, basically it allows you to make up for the payroll taxes that you paid during COVID if you were shut down at all, or if you had revenue reduction. A lot of people grew through COVID, so they think that they don't qualify, but also check if you qualify on the supply side, because there may be times where you were forced to shut down and you qualify for that stuff. It's not tax free money because you're going to have to repay the taxes on that. But it is free money that you might as well explore. Just do the extreme due diligence on it, because there are firms that are just saying you qualify when you don't qualify. And the IRS doesn't care if they said it, they care about who took that money. Um, you got work opportunity tax credits. Once you own real estate, there's so many other tax credits that you can qualify for. There's energy credits and things like, you.
Lance Graulich 00:27:07 Know, to your point, though, Antonio, when I had restaurants, I had a friend of mine, that her specialty. She was on the Welfare to Work Board for the state of Nevada, where I live. And she educated me on the work opportunity tax credits. In fact, for Krispy Kreme. Donuts, the governor at the time gave me an award on TV for basically helping the most disadvantaged employees in the state. And we got paid for it. We got tax credits. We got, uh, cash from local, uh, state agencies for employing some, uh, of the disadvantaged employees. People that were either on welfare, uh, people I hired, autistic people to fill Donuts, and they came with a job coach. There's a lot of creative ways to save money. I couldn't believe how much money we saved.
Antonio 00:28:02 And that's the beauty of entrepreneurship, right? And that's why, uh, the government incentivizes this stuff, right. They want you to go into business that you could provide opportunities for the marketplace. And how do they reward you? Tax credits or tax advantages. So, yeah, great point, man. And thank you for doing that. That's awesome.
Lance Graulich 00:28:18 Yeah, you got it. So what about things like depreciation? That's another big one, right?
Antonio 00:28:23 Yeah, let's talk about depreciation. Sorry, Lane. Uh, I'll stop taking up the oxygen.
Landon 00:28:27 For the next I was going to say this is where you get me the most excited. So I'm excited for this one.
Antonio 00:28:34 Cool. Yeah. Let's talk about depreciation. What depreciation is creating leverage on your tax bill. Right? So I pay a certain amount of dollars now and I get a massive deduction today. The classic one is the G wagon. Right? Let me go buy a car over 6000 pounds and be able to depreciate that full amount in the first year using bonus depreciation or Section 179. We never recommend people spend a dollar to save $0.30. But if you need the car anyway okay, let's figure out a way to do it where it's the most tax advantage.
Landon 00:29:03 Right?
Antonio 00:29:04 Last year I did that. I bought an escalade. I recorded all of my miles. I used it through QuickBooks and I realized that 80% of my car use is for business. Uh, pretty much everything I do is for business, but I don't want to get too aggressive and say 100% of everything is for business. So let's say 80%. Last year was the last year for 100% of bonus depreciation. So I was able to take 80% of the entire car's value and write it off in year one. That wiped out a large chunk of my taxable income. It was great.
Lance Graulich 00:29:35 That's fantastic. So wait, they're not doing that anymore?
Antonio 00:29:38 So it's down to 80% this year. Next year it goes down to 60% and then it eventually continues to get phased out. We will see. We're coming up to an election year, so it might change, but I'm just here to report what it is today.
Lance Graulich 00:29:50 Yeah. Because I actually had several clients that came to me saying, hey, I want to take advantage of that accelerated depreciation, section 179, and the IRS code. What, uh franchises do you have where I can buy some of that heavy equipment? And we had quite a few franchises that had a flyer like Section 179 take advantage.
Antonio 00:30:12 There you go. I love it. Yeah, it definitely does work. These are not gray area strategies. These are black and white. You're not going to get audited for doing this. Unot I'm not going to say you're never going to get audited, but this is going to fly by and audit easy money.
Lance Graulich 00:30:27 Yeah. Awesome.
Antonio 00:30:28 The biggest way is a big one.
Lance Graulich 00:30:30 I still remember when Anthony, my good accountant, came, uh, to me one year and I thought, I'd owe or whatever. And he goes, no, you're good. All that depreciation from your newest restaurant. He said, you don't know, you're not going to owe anything. And I was like, wow, I love.
Antonio 00:30:47 Being a business owner, and you just have to be cognizant. And that's why it's constant proactive conversations with your CPA, because if you're taking depreciation, then you immediately sell the asset. You will have to recapture that depreciation. So think about depreciation as like kicking the can down the road long enough to come up with a solution to fully wipe out the bill. And so let's talk the big one. Where the real big depreciation comes from is real estate. A lot of people talk about real estate, right? And as you continue to grow, there might be some real estate in your portfolio. So real estate is huge because let's say you buy a residential property, that residential property, excluding the land, goes on a 27 and a half year depreciation schedule. Even though you bought a rental property and it might be making money, you're able to take losses against that passive income because you just take the value of the home, divide it by 27 and a half, and each year you're able to take that in the form of what's called straight line depreciation. Let's go to the supercharged. Sounds good. Not going to be a crazy amount. The Supercharged way is we go in there and we do what's called a cost segregation study, which allows us to go inside of the house and put things on accelerated depreciation schedules. So now we're able to put things on 15 year, seven year, and five year depreciation schedules to where we're almost able to knock out about 30% to 50% of the purchase price in year one. Then we use the bonus depreciation that we're talking about, where we take all of that in that year and completely wipe out our taxable income for that year. Caveat. Sorry, I'm getting all nerdy now. But I do want to make sure that if people want to fact check this, there is a caveat in that scenario. You can only use that against your passive gains, those passive losses, unless you qualify as a real estate professional, your spouse qualifies as a real estate professional, or you're using it as a short term rental strategy in which that would be active income, then you could write it off against your business income. I'll stop there.
Lance Graulich 00:32:43 U these are all great strategies. Absolutely. Landon, anything to add to that?
Landon 00:32:48 Just to add to that last part? Because the real estate professional being qualified as that is kind of a hot topic right now. I'd say if any of you guys are listening to guys, or gals are listening to any CPA, uh, podcast for entrepreneurs, or if you're Googling anything, or if you have a really successful friend you're talking to, that kind of gives you a little bit of that, hey, I had no idea this existed. I did it this year, and I didn't pay anything in taxes. Right. The key is you want to put yourself in a position if you know that you shouldn't be working in your business as much. This is the opportunity to really test that and to really push yourself to be more in the place of working on your business and not in your business. Because your involvement in your business matters on if you can qualify as a real estate professional, you have to spend at least 750 hours a year actively helping manage your properties or looking for properties and working in that space. It has to be documented properly. if you can put yourself in the position to be able to remove yourself from your business and create automation and delegation inside your organizations and focus and redirect to real estate, if that's a passion of yours, it's an absolute no brainer, u from a tax perspective for yourself and your wealth. Right.
Lance Graulich 00:34:00 I represent a lot of real estate related franchises, so that'll definitely come in handy.
Landon 00:34:05 Beautiful.
Lance Graulich 00:34:07 Keep going. I want more tips.
Antonio 00:34:09 This is fantastic.
Lance Graulich 00:34:10 We're saving money.
Antonio 00:34:12 Let's talk about deductions then. Deductions are probably the easiest way to identify, right? Once again, proper bookkeeping. Make sure that everything's done right. Not everything is a business expense. Don't get crazy aggressive. Get aggressive inside of the scope of the law. Deductions things that qualify as business expenses are tax deductions. Once again, don't do something just because it's a tax deduction. You're going to actually save money by not spending that money if you're just doing it for the purpose of the tax deduction. Right. The goal is to not spend a dollar to save $0.30. But how do we create leverage on that? Right? So, for example, here's a creative way. We want to get creative with the deductions that we're already taking. So based on the spending that we're already doing, how do we maximize the deductions that I can take. Let me give you an extreme example. We have a lawyer, client practices. He has a really great law firm. Very profitable, fully. It's very aware that his main business is his law firm. Loves boats, loves fishing, loves going on the boat all the time. Bought a $3 million boat, fishing, yacht, hybrid type of boat that is not deductible inside of a law firm. Even if he's trying to justify, hey, I take clients on the boat. Okay? But you can't buy the boat through the law firm unless you want to get aggressive. Too aggressive. In my opinion, it's a little extra.
Lance Graulich 00:35:31 Right.
Antonio 00:35:31 But this was an impactful dollar amount to the point where he created, with our help, its own company, an, uhentire lifestyle brand based around fishing. So now this lifestyle brand sells apparel, it sells clothing, it sells hats, all these different things. He takes clients out on it now and documents all that stuff. And so this is a real company that's looking to do real business and turn a profit.
Landon 00:35:55 Has a PNL?
Antonio 00:35:56 Yes, it has a PNL. It has an operating agreement, all the insurances and all that stuff. But now that business owns the boat. Took massive depreciation on that 3 million and wiped out a lot of his active income on that side. So I'm not saying to go buy a boat, but if you're already doing stuff, how do we get creative in maximizing that bill? Does that make sense?
Lance Graulich 00:36:14 I love it. I mean, look, we all know that people are making a business out of anything these days. There are people on TikTok that have a legitimate business that are taking out ads and they're promoting. So who's to say what's a business? Uh,we all know the IRS has a definition, of course. You can't have a hobby for too long. You have to look like you're trying to make a profit, obviously.
Antonio 00:36:39 Yep. There's always got to be a motive for profit. But if there is, yeah, same thing if you're on TikTok. If you're a creator, things that are associated with those videos are business expenses. If you're actually trying to make a profit from these things, yeah.
Lance Graulich 00:36:51 Talk to me on your Instagram. I always see some clever videos, and one, uof my favorite expressions is, your ego is not your amigo. I always tell people I said ego, especially as a newer business owner, absolutely gets in the way. Some people have a difficult time asking for help. What do you guys see on a regular basis? You have a clientele, and we haven't fully explained all that you can do for clients, but talk a little bit about that.
Antonio 00:37:23 Yeah, it's a great question. I think ego is the enemy of a lot of things, right? And a lot of people in business, they have an ego. And sometimes it plays to your advantage because you have optimism and you have energy, and that's great. But the downside to the ego is that you think you know it all. And if you think you know it all, um, it's stupid. I'm sorry, excuse, but I don't mean to be blunt here, but that's just right. And so you find yourself with a lot of these do it yourselfers right, and you could only do it yourself for so long until you eventually scale to a point where you're a liability inside of the business. And so there's ego on the operations side, where you're, uhon the leadership side, where you think you know everything and you're not allowing other people to do their jobs. And then there's ego on this side of things where you think that you can be your lawyer, accountant, and fiduciary at the same time instead of just delegating to people whose actual jobs are to do this. You're going to mitigate what I like to call your stupid tax, because you're going to go through a lot of stupid tax if you try to do it yourself. And so if you're a business owner, lean into what you're really good at, your zone of genius, and then get out of the way for everything else and delegate it. Don't cut corners when it comes to the stuff that we're talking about in my yes. Yeah.
Landon 00:38:39 One thing to add to that, mean and Antonio and I are both in our mid to late 20s, right. And I think we're probably in a small percentage of entrepreneurs that have had some remote levels of success early on. And it has nothing to do with our knowledge, literally nothing. Four or five years ago, compared to where we're at now. We knew nothing. But really, all we just did was go find people that were way smarter than us and nag them and learn from them, and then we're in the information age. I said this today on a post I put out. Like, we're in the information age of all time. And a lot of people love window shopping ideas. They love window shopping strategies. They love, uh, the idea of success. But the actual implementation and execution is something we don't see a lot of people in any industry really optimize and take advantage of. There's a lot of people that dabble. There's a lot of people that are cool just being average, and they're almost too afraid of what happens if they become great. And really, the difference is just execution on what you're learning and what people are telling you to do.
Lance Graulich 00:39:37 Some people are also scared of the hard work. And that's what I personally love about franchises. You don't have to come up with the genius idea. You just have to follow the plan. Follow that blueprint. I, see franchisees, a guy exiting a garage door brand for almost $100 million. It's happening as we speak. Air conditioning brands. When the average home service brand, when you go to create it yourself, and you are a, uh, solopreneur, people max out at five, six, $700,000 a year because it becomes too much work, and you haven't invested in your team, and maybe your ego gets in your way, and that could be okay. But if you really want to build a team and build generational wealth, you guys are an amazing resource, and you need a resource like you guys. So talk a little bit about how you work with people, how you engage, and who is your ideal clientele. Clearly someone preparing to exit a business. Ubut obviously you want to work with people. Well before then, I have a great client that owns one super famous restaurant brand that his sons came to me and said, looks like dad can exit, and mom and dad can exit and make several million dollars off of this business. I said, Please do not sell yet, because they have nothing set up. There's no trust. Who the heck wants to pay the highest level of taxes? What is it, 40% plus on an exit if you're not prepared? Let's talk a little bit about working with people and the sweet spot, so to speak.
Landon 00:41:25 Even in 2023, with all the technology and information that we have access to, you need a team. It doesn't take a village, but it takes about three to five individuals to be around you to really help with a smooth exit, at least. Right. You have yourself and your partners that are involved. You have your attorney, your tax team, hopefully an advisor of some sort that's able to help implement any of these strategies, and help manage those dollars wherever they flow. And way from a trust perspective, there's literally hundreds of ways you can structure a trust. There's offshore, there's bridge trusts. The, Cook Islands are kind of a shiny object right now in the trust world. But in general, though, really building things out and being proactive is better than reactive in that space, because the last thing you want is a seven figure tax bill. That could have been six figures. Right. So, for us, a lot of the times when we're chatting with folks that are thinking about exiting, it's, hey, who's on your team right now? Let's audit those relationships and figure out who needs to be in the room and at the table. Right. So looking at your cost basis, looking at what the multiple is, and trying to find ways to actually maximize that multiple along the way, and increase the value and accelerate the value of your business. Right. You have, uh, your customer capital, your social capital, structural capital, and your human capital. Those are like the four C's we talk about for our business owners. And really auditing each layer of those four things and having you rate your business and where it's at on a scale of one to six. And then we have a metric that we kick off that kind of shows your attractiveness scale and your attractiveness to buyers for an exit. So that's the one thing is just finding the right team. And for us, a lot of times, we find ourselves being kind of the quarterback, and you're the head coach, right. So the quarterback, we're going to be there to make sure that all the right guys are on the field, and everyone that needs to be getting the ball is getting the ball at the right time. And you're the head coach to kind of orchestrate and delegate your vision. So I'd say that's the biggest thing on that. Anton, do you want to add anything, fill any gaps on that?
Antonio 00:43:29 Sure. what I like to call it is building your virtual or fractional family office. Right. When you're under 50 million of net worth and assets, like, you probably don't need your own full family office. But how are we auditing the relationships of people that we have around us? Because a lot of the times, our CPA is not talking to our financial advisor, who's not talking to the mortgage broker, who's not in alignment with the lawyer. We make sure that we're auditing those relationships. We're project managing all of those meetings. Our goal is to get everything to the goal line. Then we present the strategy to you, you sign it off, and we get it through the end zone with the help of the professionals. And so we're here to just build out the strategy. When it comes to avatar of client that we work with, the number one thing that we like to assess is if you're growth minded or not. If you're not looking to grow, it's probably not going to make sense because we want to help you get out of what we like to call no man's land, where you're too big to be considered small and you're too small to be considered big. Banks don't like you. No one wants to take you on as a client, and we want to help you get through that. Whether it's, hey, maybe we should slow down a little bit and just stay profitable here, or hey, let's go run, let's run, and whatever you want to do there, let's make sure that we have the team in place to make sure that that happens. So how do we make sure that we have the right foundation? Are we optimizing on the tax side then? Is our balance sheet working for us or against us? That's a big piece that I feel like a lot of people don't even know. They don't even know what their balance sheet is. And half the time, their personal balance sheet is the same thing as their business balance sheet. Right? So how do we make sure that we know what we want at the end and that we're creating a balance sheet that is in alignment with that vision and we're looking at it constantly. And that's our job is to make sure that we're zooming out because we know your business is your baby. So there's emotional attachment. It's very tough to be unbiased yourself. And so we're able to be unbiased and just give you the raw, cold facts based on what we're hearing from you of, hey, here's what I wanted. Okay, so maybe not buy Bitcoin this month because we didn't need this money to pay payroll next month. So that's where we're here to make sure that you're making short term
Antonio 00:45:32 decisions based on what the long term outcomes you want to achieve are. And then on, u the exit side, how do we actually extract the best multiple that we want on this company? And a lot of the times, a lot of people don't even think much about this is the best multiples sometimes come from within the company. If you finance it through other people, through other partners and financing that buyout strategy, you can use the business's money to amortize your exit. So there's a lot of ways to get creative about that and also mitigating that bill on the back end.
Landon 00:46:05 One thing to say here, too, that we talk about with all of our, uclients and just anybody that owns a business is something called the wealth gap. Right? So a lot of business owners net worth, statistically around 80% of it is tied up in their business. So we try to figure out what that wealth gap is. Which what that is, is literally a number that you need to be able at any point to walk away from what you have going on. Right. So this is really talking about the end in mind. This is really talking about the exit and what multiple you need if you wanted to sell. Really looking at what that wealth gap is, what is the dollar amount that you need to have in assets to be able to truly walk away and not worry about running out of money? And it's unfortunate to say this, but 80% of the net worth of entrepreneurs is tied up in their business, and so they basically become slaves to their scenario. So not only are we trying to accelerate the value to either allow them to exit in the future, but also to create the opportunity to close that wealth gap if they want to hold on to their business and really close that gap to a place where they truly have that independence and freedom.
Antonio 00:47:06 That's well said, because most great businesses are bought, not sold. If the cash flow is so good, why would you exit the business in the first place?
Lance Graulich 00:47:14 Yeah, guys, we could talk all day here with all this great information. So quick wrap up, final thoughts, final words of wisdom for the audience.
Antonio 00:47:23 I think mine is on a more mindset piece. I have an equation that I like to live by. I guess it's twofold. The question that I ask myself every day are my habits a reflection of who I want to become? I, u look at that every day on my whiteboard. And, uh, if I can answer yes, then I know that I'm moving forward because there are going to be probably more bad days or more energy, like more low energy days than not. In this game of entrepreneurship, you're probably going to want to quit more days than not. But the whole goal is to just not quit and move on to the next day. All right, I'll quit tomorrow and then the next day I quit tomorrow. Right. And then you're just getting through each day. And if you compound that consistency, it's guaranteed through logic, math, and science that you're going to hit that outcome as long as you're on the right track and zooming out and making sure that you're doing the right activity. So are my habits a reflection of who I want to become? The second one is my equation of happiness equals self confidence, and self confidence equals doing the hard stuff that you said you were going to do. So following through on your commitments, that's the biggest thing in my opinion.
Lance Graulich 00:48:23 Love it.
Landon 00:48:24 I don't know how you follow that up. I'll stay away from the self development side because Tony just knocked it out of the park. But, uhone know, if you want to check out our podcast with Lance, I'll send Lance that link so you can maybe put it in the description and whatnot. Uh, we're always having conversations like this with entrepreneurs, and this is like what we live. You, uh, know, for anyone in your community that wants to chat with us, just give us kind of bounce ideas off of us, we're happy. Like, we're not going to send anybody an invoice completely free. We'd love to just give you kind of like a free audit on your whole situation and bounce ideas off each other.
Lance Graulich 00:48:58 Free audit is good.
Landon 00:48:59 Yeah. So, uh,for us, we really just love to connect and network. We like to consider ourselves super connectors. So if there's anybody that's listening to this that's looking to connect with certain entrepreneurs, certain opportunities, we have a pretty lengthy and extensive network of resources. So we love to share. We love to impact people. So any way we can help, we're happy to love it.
Lance Graulich 00:49:22 Well, guys, you're awesome. Thanks for being here. And, uh, until next time, mr. Antonio and Landon appreciate you.
Landon 00:49:29 You're the man.
Antonio 00:49:30 Take care.
Landon 00:49:31 Peace.
Lance Graulich 00:49:32 Thank you very much for listening today. Please, like, follow and subscribe. This is Lance Growlick. Until next time.