Shownotes
This episode of the Small Business Origins podcast features guest David Encarnacion, the founder of Day Care Accounting Pro. They discuss David's journey into entrepreneurship, from working various jobs like driving a cab and bartending while attending college, to becoming a stockbroker and eventually an accountant focused on helping daycares. If you have tax questions and would like to limit your liability, this episode is for you!
Main discussion points:
- The importance of tax planning for small businesses instead of just tax preparation
- Common mistakes David sees daycares making with their taxes and entity structure
- How proper bookkeeping, payroll, and taxes can help daycares grow their business and retain more of their income
- Actionable tax strategies listeners can implement like retirement contributions and bonus depreciation
Guest Bio:
David is a Tax Strategist, Speaker and Founder of Daycare AccountingPRO. David runs a boutique accounting practice exclusively servicing the Daycare Industry for over 10yrs. David and his team provide modern-day accounting tactics & strategies to help Daycare Owners increase profits, cut cost, pay the least amount to the IRS and put owners on the road where they can focus on building their business so they can ultimately enjoy peace of mind. David has put together a team of strategic thinkers focused on exploring tax strategies, uncovering hidden gems in the tax code, and executing outside-the-box tactics that will increase revenues, save on taxes, and bring unsurmountable VALUE to the Daycare Industry. If Owners are not as financially successful as they want to be, the team will help them to get there. David’s mantra is “Daycare Owners suffer from an inherent number of challenges; Accounting should NOT be one”.
Key Quotes:
"Everyone talks about, without naming any names, all these companies and individuals that are paying 0 in taxes or very little. Well, guess what? That's what you should be following." [00:20:29]
"If you're paying tax, you're in a group that doesn't know." [00:36:33]
"How much business can you bring in if you had an additional 43 days?" [talking about spending less time on bookkeeping] [00:43:43]
Links Mentioned:
Transcripts
Full Transcript
[:[00:00:01] Intro: Tell me your story.
[:[00:00:03] John Kelley: Do you remember?
[:[00:00:04] John Kelley: How did it stop?
[:[00:00:10] David Encarnacion: I love an origin story.
[:[00:00:17] David Encarnacion: Louisian, what's his origin story?
[:[00:00:21] David Encarnacion: I told you this was a good idea.
[:[00:00:30] Intro: Yeah.
[:[00:00:32] Intro: Welcome back to another episode of Small Business Origins.
[:[00:00:41] Intro: It's our nationwide search.
[:[00:00:45] Intro: And joining us virtually in the studio from New York City, I've got David Encarnacion with day care accounting pro.
[:[00:00:53] John Kelley: Thanks so much, John.
[:[00:00:55] John Kelley: I appreciate what you're doing for the entrepreneurs with, sharing this platform and trying to get these stories out there.
[:[00:01:03] Intro: Man, I love it.
[:[00:01:08] Intro: You know, we were chatting prior to the show about yesterday's episodes were just so heavy with this guy that at 17, had a brain tumor.
[:[00:01:22] Intro: Boom.
[:[00:01:23] Intro: He goes blind, you know, and then this, lady that I had on the show, she gets hit by a car, like car versus pedestrian, injured in chronic John, and, you know, finds her way to kinda deal with that stuff and open up her own entrepreneurship into CBD and finding, you know, these alternative ways to cure her pain.
[:[00:01:49] Intro: And you don't need a crazy war story prior to opening your business to be able to tell an excellent story.
[:[00:02:04] Intro: So it's everything in between, and I can't wait to unpack what your story is because as you know, I don't know much of your story prior to this, so I don't know what we're gonna talk about, but I enjoy it.
[:[00:02:15] Intro: Every single episode, we start out with 1.
[:[00:02:22] John Kelley: Favorite decade was 19 eighties.
[:[00:02:26] John Kelley: We had the hip hop era.
[:[00:02:30] John Kelley: It was a time when, I was transitioning from high school and into college where I became a club kid in New York.
[:[00:02:43] John Kelley: And back then, all the all the clubs, discotheques, I wanna call them that, they used to choose certain people how do you who gets in.
[:[00:02:56] John Kelley: We just walk into these clubs.
[:[00:02:59] John Kelley: We have a bunch of fun.
[:[00:03:03] John Kelley: And that period of time is when I really exploited my youth, and I have fun.
[:[00:03:17] John Kelley: I lived that life.
[:[00:03:22] Intro: You know?
[:[00:03:29] Intro: You know?
[:[00:03:35] Intro: And, Yeah.
[:[00:03:39] Intro: I definitely don't hate the way that I grew up and where I grew up and all that kind of stuff.
[:[00:03:54] Intro: You know?
[:[00:04:01] Intro: It's it's mind blowing.
[:[00:04:08] Intro: You know, as a firefighter for me, it was the World Trade Center Museum.
[:[00:04:20] John Kelley: And even as
[:[00:04:23] John Kelley: And even as a New Yorker, there's so much to do here.
[:[00:04:28] John Kelley: So, you know, within a 10 book radius, there are 10 museums, if you like museums.
[:[00:04:38] John Kelley: And, you know, there are places my son, he goes out a lot, and he's always telling me, dad, have you heard about this place?
[:[00:04:44] John Kelley: Because it's constantly evolving, constantly changing.
[:[00:04:50] John Kelley: Now they're called lounges.
[:[00:05:01] Intro: Yeah.
[:[00:05:05] Intro: I think it is something I probably would have loved.
[:[00:05:15] Intro: I was born to be a DJ, which is why I own a company that does that stuff now because I I DJ'd for a lot of my life, and I love all music.
[:[00:05:29] Intro: But I will say the nineties kind of continued that really, really nice hip hop transition and change that was occurring.
[:[00:05:46] Intro: And I think that our country was kind of in a really cool place in that period of time, man.
[:[00:05:51] Intro: You know, it started getting bad, and then 911 happened, and then it's like our country came together even harder.
[:[00:06:08] Intro: So I know we always wanna live in the past, but I just feel like I'd love to go back to those days where things seem so simpler.
[:[00:06:16] Intro: Awesome, man.
[:[00:06:19] Intro: So where did you come from?
[:[00:06:22] Intro: I always ask, man.
[:[00:06:24] Intro: Okay.
[:[00:06:27] John Kelley: My mother was a interpreter at the American Embassy.
[:[00:06:38] John Kelley: I have 5 brothers, 1 sister.
[:[00:06:43] John Kelley: 1 is a MMA trainer.
[:[00:06:49] John Kelley: The other one, what does he do?
[:[00:06:55] John Kelley: So pretty much, we were a close knit family.
[:[00:07:02] John Kelley: When I went into high school, that's when everything began to change.
[:[00:07:14] John Kelley: We had a radio show at a college.
[:[00:07:22] John Kelley: We were getting involved with a lot of things that were basically programming us to where we are right now or to who I am right now.
[:[00:07:38] John Kelley: The last time I've always been a self employed or a 1099.
[:[00:07:48] John Kelley: So back then, when you were in high school, you had to get your working papers.
[:[00:08:01] John Kelley: That's amazing when I think about that.
[:[00:08:06] John Kelley: They were paying $5 an hour, but it was in one of these meat warehouses.
[:[00:08:18] John Kelley: And, you know, as a 16 year old, it became overwhelming for me because these things are heavy, and I wasn't built for that yet.
[:[00:08:29] John Kelley: I got accepted to Ohio University, and my father refused to pay because it once again, my father was a doorman.
[:[00:08:40] John Kelley: And I ended up going to City College, local community college.
[:[00:08:47] John Kelley: I missed one math class.
[:[00:08:52] John Kelley: When I came back, we were working with symbols.
[:[00:08:59] John Kelley: And then my GPA, fell down to, like, 2 point o because once again, it's eighties, heavy party.
[:[00:09:09] John Kelley: I mean, David, if you know, we have to expel you if you don't pick it up.
[:[00:09:14] John Kelley: And from then on, I hit the books, and I finished up with the, 3.2, GPA.
[:[00:09:23] John Kelley: The day after I the day of my graduation, I moved into my new place.
[:[00:09:34] John Kelley: Bench cards.
[:[00:09:37] John Kelley: And when I moved out, I was I was working.
[:[00:09:40] John Kelley: I had a, a window cleaning business, and I was a bartender at one of these bars in Manhattan.
[:[00:09:52] John Kelley: Then I had some friends that went to school with me.
[:[00:09:57] John Kelley: And, you know, you have 22 year olds, 23 year olds making $20 a month.
[:[00:10:04] John Kelley: So I became a stockbroker, and that was the hardest training I've ever had.
[:[00:10:14] John Kelley: And on Thursdays, I would Tuesdays Thursday, I would stay till 9, and on Saturdays, 10 to 2.
[:[00:10:24] John Kelley: And the reason they do that is they wanna sort through they want the top 1%.
[:[00:10:32] John Kelley: At the end of the training, they were maybe 5 because some couldn't probably take the because you have to make $400 a day.
[:[00:10:41] John Kelley: If you can't deal with rejection, that's not the job for you.
[:[00:10:46] John Kelley: If you weren't able to make that, you were out.
[:[00:10:57] John Kelley: So after work, we will go to the library.
[:[00:11:05] John Kelley: So a group of us that were in the training class would go there study, study, study, study.
[:[00:11:10] John Kelley: First time I failed with a 69.
[:[00:11:13] John Kelley: I was like, oh my god.
[:[00:11:16] John Kelley: It's a done deal next year.
[:[00:11:21] John Kelley: And then I started working as a stockbroker.
[:[00:11:34] John Kelley: And the first account that I had, institution, was the Lowe's Corporation, and they're worth over a 100,000,000,000, and that came through some contacts.
[:[00:11:49] John Kelley: Their first stop was Miami.
[:[00:11:51] John Kelley: Let's go down to Miami.
[:[00:11:57] John Kelley: I go down there, and, they give me a signing bonus.
[:[00:12:06] John Kelley: Then 911 hit.
[:[00:12:17] John Kelley: So margin is when you purchase stock at half the price.
[:[00:12:25] John Kelley: But what happens when that stock goes the other way?
[:[00:12:31] John Kelley: So you have no idea how difficult it is to write a check for $200,000 to cover a margin call.
[:[00:12:40] John Kelley: And during 911, I remember we were in, our sales meeting, and it was early in the morning.
[:[00:12:50] John Kelley: So we had TVs all over the place, and we saw the the planes crashing into 911, into the buildings.
[:[00:13:02] John Kelley: What I was actually seeing was the 2nd plane hitting the towers.
[:[00:13:09] John Kelley: So I'm going home.
[:[00:13:14] John Kelley: And when we went back, we had some losses that I have never experienced.
[:[00:13:25] John Kelley: Some contemplated suicide.
[:[00:13:29] John Kelley: At least a fortune to me.
[:[00:13:33] John Kelley: But, you know, when you lose you know, it cost $1,000,000 in the stock market, you feel that pain, and you feel like you have to start all over.
[:[00:13:46] John Kelley: I was crushed, and that's one of the things I regret because I should've stayed, but I was crushed.
[:[00:13:54] John Kelley: I started a a mortgage company.
[:[00:13:58] John Kelley: Everything was going well.
[:[00:14:02] John Kelley: Everything was going well.
[:[00:14:06] John Kelley: The market crushes us again.
[:[00:14:12] John Kelley: Again?
[:[00:14:14] John Kelley: So then during that period of time, when I left the firm because of the sign bonus, there was some accounting error that happened where I received the 10.99 actually, no.
[:[00:14:34] John Kelley: I was like, what was this from?
[:[00:14:44] John Kelley: So it got to the point that I was so frustrated because you get these notices John the IRS, and they cause so much anxiety and fear.
[:[00:14:53] John Kelley: Let me speak to them.
[:[00:15:01] John Kelley: So that was a huge burden off my shoulders.
[:[00:15:09] John Kelley: I'm like, sure.
[:[00:15:14] John Kelley: I was there for about 10 years.
[:[00:15:26] John Kelley: I said to myself, I need to do this on my own.
[:[00:15:34] John Kelley: We started targeting construction companies because accountants, they shy away from that because it's very the accounting is very overwhelming.
[:[00:15:48] John Kelley: So if you don't wanna do it, I'll do it.
[:[00:15:52] John Kelley: And then my day care business in day care business started increasing.
[:[00:16:03] John Kelley: And I came to realize that that's the industry that's suffering the most, and they're suffering the most for very simple reasons and very simple fixes.
[:[00:16:20] John Kelley: They're pushing.
[:[00:16:22] John Kelley: It's easy.
[:[00:16:24] John Kelley: It's great.
[:[00:16:29] John Kelley: I just wish that they would also talk about the tax consequences of opening an LLC.
[:[00:16:44] John Kelley: It's it's not frightening to me, but it's upsetting when a client is sitting across the across the table from me and I could pay the tax return, and they have this huge tax bill, and they ask me why.
[:[00:17:00] John Kelley: If you want to an LLC is a disregarded entity, quote, unquote, according to the IRS.
[:[00:17:10] John Kelley: IRS doesn't care about that.
[:[00:17:16] John Kelley: Am I gonna tax you as a sole proprietor, s corp, c corp partnership?
[:[00:17:29] John Kelley: So when they get here, then we have to make adjustments, and I'm able to fix it and get them on the right path.
[:[00:17:37] John Kelley: And part of all of that led me to where I am now.
[:[00:17:47] John Kelley: Last year, we rebranded, and we went to the day care counseling pro servicing.
[:[00:17:56] John Kelley: Because if I were to tell you, I would say about 75% of the day care owners or child care owners right now that we've spoken to, 75% have the wrong tax structure, and that's why they're paying so much tax.
[:[00:18:26] John Kelley: Today, there was a post where someone posted on a because I'm in these different, chat groups.
[:[00:18:38] John Kelley: So during the pandemic, the government was sharing and giving grants to childcare owners, and some didn't know exactly what to do with it.
[:[00:18:51] John Kelley: And there are some because they had to pay tax because they, again, they were the wrong tax structure.
[:[00:18:59] John Kelley: And, you know, it's all a matter of mindset because I wanna pay personally, and I posted it.
[:[00:19:07] John Kelley: I wanna pay $10,000,000 in tax.
[:[00:19:14] John Kelley: So paying the tax is not the issue.
[:[00:19:17] John Kelley: If you bring it in revenue, that's what you want.
[:[00:19:23] John Kelley: So if the IRS or whoever the government is giving you a 100, a $150,000 in grants, how can you say no to that?
[:[00:19:43] John Kelley: I wish I can get $200,000.
[:[00:19:48] John Kelley: I'm sure you'd agree if if I gave you a $100,000 and I told you you're gonna pay 20,000 in taxes, would you take it?
[:[00:19:57] John Kelley: But it's so disheartening that that's happening.
[:[00:19:46] John Kelley: Well, I'll pay tax on it.
[:[00:19:55] John Kelley: Everyone would all day.
[:[00:20:01] John Kelley: And one of our focus is to educate the 856,000 childcare owners in the US where we can show them how they can use bookkeeping, payroll, and taxes as a tool to increase their business and pay less tax.
[:[00:20:29] John Kelley: Well, guess what?
[:[00:20:31] John Kelley: Don't hate on them.
[:[00:20:36] John Kelley: The IRS gives us a road map.
[:[00:20:39] John Kelley: They'll encourage us us.
[:[00:20:44] John Kelley: So if you have the same ability, just use it.
[:[00:20:57] John Kelley: What's the other one?
[:[00:21:00] John Kelley: The point is you the strategies are there, and most people in general, they think about tax prep.
[:[00:21:09] John Kelley: No.
[:[00:21:11] John Kelley: You need to find out what you need to do to pay zero tax.
[:[00:21:21] John Kelley: So it's more of a tax advisory business that we have where we share the knowledge.
[:[00:21:30] John Kelley: The guy that I, went to his wedding over the weekend.
[:[00:21:34] John Kelley: I told him what I do.
[:[00:21:37] John Kelley: Is she charged for this?
[:[00:21:39] John Kelley: Because you know what?
[:[00:21:42] John Kelley: It's gonna become overwhelming, then they're gonna end up calling me because they know what I'm doing.
[:[00:21:50] John Kelley: I give I do webinars, podcasts.
[:[00:22:01] John Kelley: And the more knowledge that a taxpayer knows or has, the easier my job is because then we could talk the lingo, then we could talk about other things.
[:[00:22:10] John Kelley: Talk to me, David, I wanna open a trust.
[:[00:22:13] John Kelley: Before we talk about that, that's a great idea.
[:[00:22:18] John Kelley: Because if we can't master the simple, the basics, there's no way I'm gonna talk to you about trust.
[:[00:22:27] John Kelley: So these type of situations arise, and it's our job to help the childcare industry overcome
[:[00:22:33] Intro: Yeah.
[:[00:22:34] Intro: So are you just kind of, you know there's so many different ways you can do this type of service for a a company.
[:[00:22:45] Intro: So if I'm a day care and I wanna start doing business with you, is this a coaching thing?
[:[00:22:52] Intro: Is it a software you have?
[:[00:22:55] John Kelley: There's different options.
[:[00:23:02] John Kelley: We provide you the profit and loss and balance sheet every month along with the video.
[:[00:23:10] John Kelley: The video will break down the profit and loss.
[:[00:23:21] John Kelley: We do their, taxes, personal and business, and we do their payroll if they choose.
[:[00:23:30] John Kelley: Then we also have individual services.
[:[00:23:34] John Kelley: If you just wants to do the bookkeeping, we can do that as well.
[:[00:23:40] John Kelley: So all of our clients that are we have clients in 36 days.
[:[00:23:50] John Kelley: So what we do is we have a secure portal with a 500 plus bit encryption.
[:[00:23:58] John Kelley: We we prepare the return, then we schedule an appointment for Zoom.
[:[00:24:06] John Kelley: We're the only ones that we do a share screen.
[:[00:24:17] John Kelley: And then depending on what situation we have, I go back into the w two and I make changes.
[:[00:24:34] John Kelley: That's huge.
[:[00:24:37] John Kelley: So I have clients says, no.
[:[00:24:44] John Kelley: Why you pay more taxes?
[:[00:24:47] John Kelley: Put that money into the 401 k, and you don't have to add any more tax.
[:[00:24:55] John Kelley: There was
[:[00:25:04] John Kelley: I told him, listen.
[:[00:25:13] John Kelley: That's John put 61,000 into the SEP, and his tax bill went from 60 to 40.
[:[00:25:22] John Kelley: So I told him, pay yourself.
[:[00:25:25] John Kelley: Put the money away and pay yourself.
[:[00:25:28] Intro: Yeah.
[:[00:25:31] Intro: What, so is there, like, a minimum income that a company needs to be making to type me type thing.
[:[00:25:49] John Kelley: So it Kelley doesn't matter.
[:[00:26:03] Intro: Gotcha.
[:[00:26:12] John Kelley: Right now, we target day cares, but we also have physicians, restaurants, construction companies.
[:[00:26:25] John Kelley: But we have clients that come to us where we are able to service them.
[:[00:26:32] John Kelley: It's just our niche.
[:[00:26:38] Intro: Absolutely.
[:[00:26:56] Intro: Because it sounds like there's kind of a it's all kinda gray area connected.
[:[00:27:00] Intro: Because like you said, if I can invest into some of these IRAs or 401 k's, it's gonna help my tax bill.
[:[00:27:12] John Kelley: I do help with the financial, strategies because I used to be a stockbroker.
[:[00:27:25] John Kelley: I have a partnership with a securities firm where if I see a situation where the client needs some help, I would let them know.
[:[00:27:37] John Kelley: He works at this firm, and he's gonna discuss the best scenarios for you.
[:[00:27:45] John Kelley: And I also prep Mike Mike.
[:[00:27:47] John Kelley: But you're a professional.
[:[00:27:50] John Kelley: Because the financial, planning, it's like our DNA.
[:[00:27:56] John Kelley: So we have to find out what the client objectives are and find something that's ideal for them.
[:[00:28:11] John Kelley: But, primarily, Mike will take care of that through our partnership with the securities company.
[:[00:28:17] Intro: Do you have a specific software or anything that you prefer clients use for keeping up with their own accounting that you can access and take care of their account?
[:[00:28:30] John Kelley: They're different softwares, and sometimes they're specific to some industries.
[:[00:28:39] John Kelley: There's some that are specific for nonprofits.
[:[00:28:45] John Kelley: But QuickBooks is pretty much the general format.
[:[00:29:01] John Kelley: But once we are able to do that and develop that system, then everyone is able to join in.
[:[00:29:14] John Kelley: We'll do the payroll, and we'll do the taxes.
[:[00:29:20] Intro: That's amazing.
[:[00:29:32] Intro: What do you see that people are making the most errors at, if you will?
[:[00:29:41] John Kelley: So we have these these corporate so another thing we have, we have these s corps in which the owners are not taking a payroll, a w two.
[:[00:30:01] John Kelley: Now which reason?
[:[00:30:08] John Kelley: And we're able to determine that so that you pay less tax.
[:[00:30:19] John Kelley: The IRS is hiring 87,000 new auditors, and they're gonna go after the low hanging fruit.
[:[00:30:35] John Kelley: So if I like to do things from the seat of an order, what is the order looking for?
[:[00:30:42] John Kelley: If I was an auditor, I'd just look at everyone that's in escrow and see if they're taking a w two.
[:[00:30:48] John Kelley: And you wanna avoid that because audits, not only do they become expensive, but there's so much of a stress and a burden on you that you don't wanna deal with that.
[:[00:31:02] John Kelley: You know, people that work here in the office, they tell me they will you know, why don't you speak to the clients that way?
[:[00:31:09] John Kelley: People come here with anxiety and fear, and you have to address that.
[:[00:31:18] John Kelley: I hear that all the time.
[:[00:31:23] John Kelley: Are they gonna arrest you?
[:[00:31:25] John Kelley: What do I have to pay?
[:[00:31:27] John Kelley: But if you don't have it, don't worry about it.
[:[00:31:30] John Kelley: And you hear the fear.
[:[00:31:40] John Kelley: Listen.
[:[00:31:43] John Kelley: How much do I owe?
[:[00:31:47] John Kelley: And I showed it to one of the staff members here.
[:[00:31:52] John Kelley: Because these people are going through anxiety and fear, and we have to address and put them at ease.
[:[00:32:00] John Kelley: They don't understand that, you know, we get tax notices all the time.
[:[00:32:04] John Kelley: Okay.
[:[00:32:06] John Kelley: But they're so nervous that, you know, they're basically pulling their hair out, and we have to avoid that.
[:[00:32:17] John Kelley: It's just a situation that you have that can be fixed.
[:[00:32:24] John Kelley: So when I received my bill, I felt the same.
[:[00:32:28] John Kelley: This is just something that we can deal with.
[:[00:32:36] Intro: Yeah.
[:[00:32:39] Intro: I've owned a business, but it wasn't until I brought on a partner and really took business ownership serious because like you said, so many it's like, well, I'll just put it on my personal taxes.
[:[00:32:51] Intro: And you float that river for so long and hope to god it doesn't come back to bite you.
[:[00:32:59] Intro: It's something even when I was a w two employee working for a company, and then they switched me because he wanted to do his taxes incorrectly to protect himself during a, slump in payments that were coming in for the company due to Medicare cutbacks and stuff like that.
[:[00:33:28] Intro: All intents and purposes, we are w two employees, but we were being paid 10.99 so he could save on the tax burden for the company for having employees.
[:[00:33:47] Intro: The IRS came to me and said, well, you still have to pay the tax bill as it's presented currently.
[:[00:34:05] Intro: So I got set up on the payment plan, and then all of a sudden, now 10, 11, 12 years later, I'm still paying penalties and interest and everything else because I never had the money at the time for all those years to be able to just pay this tax bill outright.
[:[00:34:26] Intro: And then now all of a sudden, you know, your $2,000 bill turned into a 6 or $8,000 bill, and then you're making these payments of $2,000 per year, but it's inflating and inflating.
[:[00:34:45] Intro: And it's just like you said, the biggest lesson I learned there was I'm not a tax professional.
[:[00:35:00] Intro: There's a reason that the tax codes is a book, you know, that's this big.
[:[00:35:05] Intro: And so I would just use my story to encourage listeners that, like, everything we're listening to here today is not a sales pitch.
[:[00:35:24] Intro: Talk to a tax professional about that form and make sure because you could be doing this all of your life with this 1040 e z using something like TurboTax online and missing out on deductions you still could have taken because if you would have taken the time to talk to a tax professional and I'm not talking about H and R Block or, you know, Jackson Hewitt.
[:[00:35:45] Intro: They're doing good.
[:[00:35:47] Intro: But I'm talking to someone who's gonna open up your life and look at it and say, you know what?
[:[00:35:57] Intro: You know, get more money back.
[:[00:36:05] Intro: If that's not happening, there's something wrong.
[:[00:36:17] Intro: So talk to a tax professional.
[:[00:36:24] John Kelley: You touched on 2 things, and I tell all my clients, there are 2 rules.
[:[00:36:33] John Kelley: If you're paying tax, you're in a group that doesn't know.
[:[00:36:41] John Kelley: They refuse to pay on a w two.
[:[00:36:49] John Kelley: So if you wanna avoid them because, you know, in during a period of 18 months during pandemic, 17,000 child care businesses closed.
[:[00:37:03] John Kelley: So make sure you're paying your employees.
[:[00:37:11] John Kelley: And the moment you say yes, automatically, it's an employee, and they have to pay self employment tax.
[:[00:37:21] John Kelley: So I was I'm an s corp owner, and I try to skate.
[:[00:37:30] John Kelley: I wasn't paying myself a w two.
[:[00:37:36] John Kelley: Hey, David.
[:[00:37:39] John Kelley: We need to see your last 3 year bank statements and your last 3 year profit and loss.
[:[00:37:46] John Kelley: They went through it together, and any item on that bank account that I couldn't account for or had justification was considered income to me.
[:[00:38:01] John Kelley: It's like the end of the audit.
[:[00:38:03] John Kelley: They, you know I said, okay.
[:[00:38:06] John Kelley: Tax bill is 5 figures, and I paid it.
[:[00:38:13] John Kelley: I knew what I was doing.
[:[00:38:22] John Kelley: It's gonna put you in a position where you have to lay off to pay some tax.
[:[00:38:33] John Kelley: During the pandemic, with the PPP loans, a lot of these day care loans couldn't qualify because they did not have a payroll.
[:[00:38:44] John Kelley: So because you were paying John a 10.99, you didn't qualify for those funds, so you lost out on that.
[:[00:38:52] John Kelley: If you do things the right way, you will come out winning because they want you to avoid paying tax.
[:[00:39:06] Intro: Absolutely.
[:[00:39:18] John Kelley: They can call our office.
[:[00:39:24] John Kelley: They can go to our website and schedule an appointment.
[:[00:39:35] Intro: Perfect.
[:[00:39:37] John Kelley: Yes.
[:[00:39:39] John Kelley: I think, TikTok is, daycareaccountingpro.
[:[00:39:49] John Kelley: Yeah.
[:[00:39:54] John Kelley: So I constantly do educational videos on what strategies to use, so that these John fair owners and business owners can take advantage of this tax code that we have.
[:[00:40:12] John Kelley: Yeah.
[:[00:40:18] Intro: I'm gonna tell you right now, you don't wanna see my dance skills on TikTok.
[:[00:40:22] John Kelley: Yeah.
[:[00:40:23] Intro: I love it, man.
[:[00:40:27] Intro: It's a question I ask almost every single episode, and I'm always hoping the answer is yes because we follow the same at Beefy Marketing, the same exact philosophy that you do, and that is we'll tell you how to do every single part of your marketing ventures.
[:[00:40:47] Intro: Listen to our podcast that we have, Business Growth Hacks.
[:[00:40:51] Intro: We're gonna give you all those answers for free and talk to other experts in the industry and tell you that stuff too.
[:[00:41:11] Intro: It's time consuming.
[:[00:41:15] Intro: So we'll tell you the whole secret to the farm.
[:[00:41:18] David Encarnacion: the whole farm.
[:[00:41:20] John Kelley: And as a business owner, you have to understand what you're good at.
[:[00:41:30] John Kelley: My focus is bringing in revenue, bringing in new clients, educating more clients so that they can call the office and become clients.
[:[00:41:42] John Kelley: There's no way that I'm gonna sit behind a computer and prepare a profit and loss.
[:[00:41:49] John Kelley: I mean, I could use my time to increase the business, not to, you know, do things that anyone else can do.
[:[00:42:01] John Kelley: You you can't do it all, and you're not the only one that knows how to do it.
[:[00:42:07] Intro: I'm I'm mad at myself.
[:[00:42:10] Intro: I don't mean to interrupt, but I just I love what you're saying, and I'm mad at myself.
[:[00:42:32] Intro: And then the inverse is also true that there's 20% of tasks that generate the 80%.
[:[00:42:51] Intro: But that's the only thing you should do.
[:[00:43:03] Intro: I'm gonna pay someone to do that.
[:[00:43:12] Intro: Like, whatever it is, you just focus on making yourself more money.
[:[00:43:25] John Kelley: So really?
[:[00:43:28] John Kelley: So I did the math.
[:[00:43:37] John Kelley: Now when I asked her, how much business can you bring in if you had an additional 43 days?
[:[00:43:50] John Kelley: How many vacations can you go and spend time with your family with within those 43 days?
[:[00:43:58] John Kelley: She David, you know what?
[:[00:44:00] John Kelley: And she became a client.
[:[00:44:06] John Kelley: How about that?
[:[00:44:09] John Kelley: I can have someone else do it.
[:[00:44:11] John Kelley: I need to focus on building the business and increasing revenue.
[:[00:44:20] Intro: Absolutely.
[:[00:44:26] Intro: It's such good information.
[:[00:44:29] Intro: It's been a great conversation, man.
[:[00:44:31] Intro: I appreciate it.
[:[00:44:33] John Kelley: Appreciate it, man.
[:[00:44:34] John Kelley: You're doing an awesome job.
[:[00:44:38] Intro: Listeners, I hope you enjoyed that conversation.
[:[00:44:58] Intro: We're looking for entrepreneurs like David who wanna educate you and make you experience and educate in what you're doing so that you can make better decisions for yourself.
[:[00:44:37] Intro: Absolutely.
[:[00:44:40] Intro: There's always so much to unpack in every single one of these episodes when we have something incredibly different than other accountants may come and, you know, kind of come to this business and just John take your your money, prepare that tax thing for you, and that's it.
[:[00:45:06] Intro: So if you're not following David, please head out there to the show notes, check out everything that's in there.
[:[00:45:15] Intro: It's attached to this episode.
[:[00:45:22] Intro: If not, we just appreciate you tuning in.
[:[00:45:26] Intro: But that's it for us.
[:[00:45:28] Intro: We'll see you on the next one.
[:[00:45:34] David Encarnacion: Thanks for listening to another episode of Small Business Origins.
[:[00:45:40] David Encarnacion: If you like what you just heard, leave us a review.
[:[00:45:44] David Encarnacion: You guys, check this out.
[:[00:45:46] John Kelley: You're gonna love it.
