Episode Transcript
[00:00:00] Speaker A: Bienvenidos ha L Ingrediente Secreto.
[00:00:03] Speaker B: Soy ol?
[00:00:04] Speaker A: Gurtado. Yoi vamos a de jubrir lo desa fillos y ha sierto reales que en frentan quienes emprende en con proposito est? Albiendo Naomi at Elevis.
Welcome to El Inrediente Secreto. I am ol?
[00:00:22] Speaker B: Gurtado. Today we're talking about one of the most stressful financial blind spots a business owner can face. Unresolved tax problems for many entrepreneurs, tax trouble is not just a paperwork issue. It can affect cash flow, confidence, decision making, and the ability to grow with discipline. My guest today is Christopher Bennett, an enrolled agent tax resolution specialist with more than 25 years of experience in tax resolution.
Through Nashville Tax Solutions, he helps clients work toward resolving IRS and state tax matters while pursuing the minimum amount of tax legally possible.
Christopher, welcome to El Ingrediente Secreto.
[00:01:13] Speaker C: Thank you, Olga. Happy to be here.
[00:01:17] Speaker B: So Chris, what are the most common tax problems that business owners ignore until they become urgent?
[00:01:28] Speaker C: Bookkeeping. Bookkeeping is the largest issue that my small business clients face on a daily basis. Typically they wait until the last minute when they're preparing their tax return to put together a profit and loss and balance sheet and by that time they can't make any changes that could assist them with their tax liability.
So it often is out of hand already and they haven't been keeping up with the bookkeeping throughout the year. And a quality bookkeeper and staying on top of your books is definitely beneficial to you in the long run as a business owner.
[00:02:11] Speaker B: Yeah, I completely agree with you.
So how can unresolved tax that affect cash flow, profitability, and the day to day decision making for a business owner?
[00:02:25] Speaker C: So tax planning can essentially crush the cash flow.
A lot of business owners say, okay, well I'll use tomorrow's payments to pay yesterday's taxes. And it begins to snowball. The irs. Or the state can add exorbitant amounts of penalties and interest for failure to file your tax returns, failure to pay your tax returns, and then business owners around Peter to pay Paul to try to catch up. And once they get on that hamster wheel of owing, it's really difficult to get off.
So advanced planning, making sure that you're setting aside funds or sending funds directly to the IRS to prepay your taxes. That's the biggest thing that a lot of people, especially if they're Transitioning from a W2 to a 1099 self employed position, they're not accustomed to having to pay their own taxes and Having to pay them in advance. So they put it off and they wait until it's a large amount of money that they may not have at that particular time, and then they have to go on payment plans and pay penalties and interest.
And that really cuts into your profitability when you're not only having to pay the tax liability, but you're having to pay the increased fees and statutory additions associated with that. So it really can crush a business if they're not prepared and doing the right thing throughout the year.
[00:04:09] Speaker B: Yeah, sometimes we have to witness that. Right, Chris?
And people don't understand how important it is for you to be able to save for your taxes and don't be rushing at the end of the year. So when a client first comes to you with IRS or estate tax trouble, what do you evaluate before recommending a strategy?
[00:04:34] Speaker C: So the first thing that I look at is compliance. Compliance is one of the most important aspects of any tax resolution. And there's two parts to compliance. There's the filing compliance and the payment compliance.
Filing compliance is just as it sounds. Filing your tax returns in a timely fashion. So I'll look at a potential client's filing situation. Are they current, what tax returns are missing? What do we need to prepare to get them back into compliance?
So then we can look at the second part, which is payment compliance. Are you required to make estimated tax payments? Are you required to make federal tax deposits on your payroll? And where are you at in that process and what's prompting this conversation? Did you get a notice from the IRS stating that you have a liability? Is there a tax lien that's been filed? Has a revenue officer contacted you, or has the seizure process begun? That's when it really gets critical, is when the IRS or state threatens or begins the process to seize some type of an asset, whether that's a bank account, your income source, accounts receivable, real property? The extent that the IRS and the state can go to collect is amazingly powerful.
The IRS and the states are the largest and most powerful collection agencies in the United States.
And without proper representation, you really can put everything that you've worked your life for at risk.
[00:06:19] Speaker A: Wow.
[00:06:19] Speaker B: So the key word here for everyone that is watching the word is compliance. You need to be compliant in order to avoid any future problems, either with the IRS or with the estate tax.
So, Chris, why is it important for entrepreneurs to understand that tax resolution is both, is both a financial issue and a business discipline issue?
[00:06:47] Speaker C: Well, your largest expense as a small business owner or a entrepreneur is typically going to be Taxes. And it's one of the things that a lot of entrepreneurs or self employed individuals don't account for.
And it is a business decision in the fact that you have to plan for it. You have to make sure that the funds are available when that bill comes.
And there's multiple types of taxes that you have to be aware of, whether that's payroll taxes, real estate taxes, employment taxes, income tax.
There's a lot of planning that goes in, first of all to being set up properly, choosing the correct entity for your particular business and also how that entity is taxed. And it's different for everybody's situation, the amount of income that you're planning on receiving, how that income is coming in, what the regularity of that is, and how you looking to scale and expand.
Everyone gets into business with the idea to make a profit and to be successful.
And how successful you are is dependent on how well you plan.
[00:08:18] Speaker B: Wow. It's very interesting because you know what, sometimes people open their businesses, their entities, and they don't understand why are they opening that entity instead of, you know, the other option. So what would you say to business owners who feel embarrassed or overwhelmed by their tax situation?
[00:08:40] Speaker C: I would let them know that they're, they're not alone. You know, I've been in this business for 25 years and I'm still learning every day new strategies, new techniques, new programs that the IRS and the states are offering.
So it's, it's not something to be embarrassed about. You know, most of my clients are fantastic at what they do. You know, they may be a truck driver, they may be a physical therapist or a dentist. And they're wonderful at those skills and everything that goes along with that.
However, the accounting and business side of it is not something that they spent years studying and learning on how to be successful in that end. So it's okay to ask for help.
There's qualified individuals like Nashville Tax Solutions out there that can point you in the right direction and walk with you through the journey of opening your business, growing your business, expanding, scaling, making intelligent tax choices along the way to help you and your company be successful.
[00:09:58] Speaker B: Well, my takeaway is you're not alone.
So don't be embarrassed about your tax situation if you're having any, and make sure that you contact people who actually know and they can help you navigate through these situations with your tax issues or tax problems, experts like Christopher that can help you do that. So tax problems often grow in silence. And the first step toward renewal is clarity, knowing what you owe, what options exist and what most change in your business so the problem does not keep repeating.
[00:11:07] Speaker A: Welcome back to El Ingrediente Secreto.
[00:11:09] Speaker B: Stay connected to this show and every NOW Media TV favorite live or on.
Before the break, Christopher Bennett and I talked about how tax problems can become business problems when they are left unresolved.
Now we're looking at strategy, what it means to have experience, representation, how relationships and knowledge of the process matter, and why a clear can help business owners move from fear to action.
So, Chris, what does an enrolled agent do and why is that credential meaningful in tax resolution?
[00:12:18] Speaker C: Yes, the enrolled agent credential is the highest level of federal licensure available to represent taxpayers in front of the IRS and all 50 state governments. It's a similar credential to CPAs or attorneys. We have the same level of authority with the IRS as those do as well.
So it allows me to become a power of attorney and essentially be the liaison between our clients and the the IRS taxing authority allows us to negotiate resolutions, set up payment plans, alleviate penalties, negotiate offering compromise resolutions.
So it's really a valuable credential that allows us to protect our clients and resolve their tax issues.
[00:13:18] Speaker B: Yeah, people probably don't know about that, that enrolled agents are basically, you know, very important for you to prepare your taxes to do tax resolutions. So it's not only the CPA, but also an enrolled agent who can help you with that.
So, Chris, how do IRS and estate tax resolution strategies differ depending on the client's situation?
[00:13:43] Speaker C: So every situation is different. You know, every client comes to us with situations where they've made a mistake, something tragic may have happened, or something even small may have been overlooked. But through our initial consultation, in listening to what our clients have to say, we can uncover which programs are best for them. Our goal is to make sure that our clients pay back the minimal amount legally possible.
And we do that through analyzing their specific situation.
The financial analysis is one of the most important parts of tax resolution.
The IRS or the state is going to look at what your current level of income is, what your allowable expenses are, and the amount left over.
They're going to want that as a payment.
So filling out the financial analysis in a light that's most favorable to our clients is extremely important because we're not just going to accept what the IRS has for allowable standards. We do have to work within their confines, but we're going to present the case in a manner that's favorable to our client. And we are here to advocate for our clients and show why the Government entity should accept a lower amount to get the client back into compliance, back into the system, if you will, to where they're reformed taxpayers, that they're doing things the right way on a timely basis and following the tax laws that are established in our country.
[00:15:38] Speaker B: It's very interesting because you know, minimum amount legally possible. Don't forget that if you're watching this show and remember that every situation, every client situation is different. So do not compare with your neighbor.
What does it mean to repay the minimum amount of tax legally possible without crossing compliance boundaries? Chris?
[00:16:06] Speaker C: So again, mentioning compliance is the most important part of it, specifically estimated tax payments or federal withholding. If you're a W2 employee, that's one of the most important things in the entire process because the IRS and states are willing to work with you if you are staying on top of your current tax liability. And that's where a lot of our clients miss, if you will. They've never made estimated tax payments. You know, anytime that you owe $1,000 or more to the IRS, you're required the next year to make estimated tax payments throughout the year. So April 15, June 15, September 15 and January 15, you're required to pay a quarter of what you owed the previous year.
And that's something that gets missed often. And a lot of my clients tell me I've never heard that before.
Well, it's a situation where the W2 individual is having taxes withheld from their paycheck, so they're staying on top of of their tax liability as long as they're having sufficient withholdings. And you as a self employed individual need to be doing the same thing. It's a prepaid tax system and if you're not, the IRS or the state can begin penalizing you April 15th of the current year.
And the IRS and state, they also allow you to make those estimated tax payments.
So that's something that you can use to reduce your net disposable income. And then the third most important part of paying taxes in advance is that hopefully you're not going to accrue new balances. And anytime we set up a resolution, whether it's a payment plan currently non collectible, we get an offer in compromise accepted.
You're required to remain in compliance moving forward.
That's one of the things that you agree to, that you're not going to have a new balance and you're going to file your taxes on time. And that's what's really important and how to get your tax issue resolved.
[00:18:29] Speaker B: And Chris, why is Documentation so important when negotiating with tax authorities,
[00:18:38] Speaker C: it's of utmost importance, because unless you can prove it, it didn't happen.
And a lot of my clients fall into the issue of I don't have anything. You know, this could have been going back nine, 10 years ago.
Typically at a minimum seven years, you're required to keep your documentation.
Okay. And if you do not have that documentation and the IRS or the state question a deduction that you took a credit that you had on your tax return, if you can't substantiate that with actual documentation, well, they can remove that credit and then cause a liability going back several years, and then they'll add penalties and interest onto that, and then it can just snowball and get out of hand quickly.
[00:19:34] Speaker B: So keep your receipts, people, if you're watching this.
So how can a business owner know whether they're dealing with a problem that requires professional representation? CHRIS
[00:19:49] Speaker C: well, I believe if you have a liability or even prior to having a liability, professional representation as a partner to your business is vital. You want to have the experts handling what they know.
And this is what we at Nashville Tax Solutions are experts at. Whether it's business strategy prior to opening or conducting business, or if it's an issue where you've received some type of a notice, you have a question. The most important thing is to open any correspondence from the IRS or state, read it thoroughly, and have an expert go over it with you and discuss your options. The the largest problem is ignoring it and not doing anything about it. And that just creates an ordeal that makes makes it a lot harder to resolve. Early action is important.
[00:20:53] Speaker B: Well, if you have a tax problem, do not ignore any correspondence you receive in the mail from the irs. And if you have any questions, call Chris so they can help you to resolve that tax issue. So effective tax resolution is not about guessing or reacting. It is about understanding the rules, preparing the facts, and building a strategy that gives the owner a responsible path forward.
We'll be right back.
[00:21:35] Speaker A: Secreto Porno Media Television Y estamo de vuelta soy olgurtado y est adriendo el ingrediente Secreto Porno Media Television Si gamos con la conversacion de hoy welcome back to El Inrediente Secreto.
[00:21:54] Speaker B: I am Olgurtado and I am here with Christopher Bennett of Nashville Tax Solutions. We have discussed task resolution and representation. Now we're connecting those lessons to a bigger business issue, the financial blind spots, cash flow habits, and planning gaps that can create tax pressure in the first place.
Chris what financial habits tend to Create tax problems for entrepreneurs and small businesses.
[00:22:27] Speaker C: Thank you.
Not accounting for their income and expenses.
Bookkeeping is one of the most.
One of the largest issues that entrepreneurs and small business people face.
They are good at earning income, bringing in the funds, but accounting for that and utilizing the correct categories of expenses and how they translate to a tax return or tax savings or tax liability is something that's often ignored throughout the year. And it isn't until the tax return comes due that they're scrambling to put together all the information on all their transactions throughout the year, rather than keeping a finger on the pulse of their business.
Knowing how funds are coming in, what the cash flow is, and making correct planning choices to allocate those funds to the proper places to reduce their tax exposure and to help their businesses grow and scale.
[00:23:46] Speaker A: Yeah.
[00:23:46] Speaker B: So basically, and this might be more like a question, Chris, So a better cash flow management reduces the risk of falling behind on taxes
[00:24:00] Speaker C: 100%.
I mean, at minimum, you should have a profit and loss and balance sheet on a monthly basis. And it's something that you should review with your tax expert, your tax consultant and bookkeeper and making sure that, hey, is this really what happened? Is this where the funds went?
Is it an ordinary and necessary business expense? Was it a personal expense that I use business funds on? And you have to be very careful about that. You know, what is the business purpose behind these expenses?
And can you document that? You know, if you're trying to write off a meal, what was the business purpose of that meal? Who did you eat with?
What were you attempting to get out of this meal? How is it advancing your business?
Things like that are easier done in the present moment than putting it off till a later time when you have time. As business owners know, time is very scarce. And doing it in the moment leads to more successful planning, documentation, and being able to validate those expenses that you're claiming on the tax return later on?
[00:25:29] Speaker B: Yeah. You know, a fun fact here is that when I started learning about taxes and accounting, one thing that stood out the most was the first thing they teach you is ordinary and necessary for your business. If it is, then you're good to go. So keep in mind that every time you're going to spend $1 in your business.
So, Chris, what should business owners be reviewing throughout the year instead of waiting until tax season?
[00:26:02] Speaker C: Cash flow is definitely something that they should be reviewing. How are the funds coming in and what am I budgeting and projecting to spend those funds on?
That's of utmost importance to just know where you are the health of your business.
The health of your business is going to be shown on a profit and loss on your balance sheet. Knowing how much funds you have available and how spending those funds is either helping or hurting your business.
And it also will allow you to take a look at spending funds wisely. You know, is this advertising expense bearing fruit? What's the return on investment here? Should I put more capital towards this particular brand of advertising or media or should I invest in my human resources?
Should I spend money on real estate or real property?
What's having the most success?
Where am I putting funds that are going to generate additional revenue? And if you're not watching your books, if you're not looking at where the money's coming in from and where it's going, you're just kind of grasping at straws, trying to throw money at problems that may be just a, a deep hole. And then when actual expenses like your taxes or, you know, mortgage rents, things that are vital to your business, the funds may not be there when you need them. So proper planning and proper observation of the status of your business is of utmost importance.
[00:28:04] Speaker B: Definitely proper planning, that's the, that's a keyword if you are a business owner and you would like to be more proactive about your business and your taxes. So, Chris, how can tax resolution become a wake up call that leads to, to stronger financial systems?
[00:28:25] Speaker C: So typically when an individual or a business gets into a tax liability, there's been an event, sometimes tragic, sometimes catastrophic, that has caused this issue.
It's not a conscious decision that, you know what, I'm not going to pay my taxes this year, this quarter.
It's, you know, I had a heart surgery or there was a death in the family or a natural disaster.
Something occurred that was outside of your planning and you weren't prepared for it. And that's how things get out of hand. When you're not prepared for the things in life that it's difficult to prepare for. But you need to be aware of every possible situation and stay on top of it. And as it comes in, as your situation changes, you need to have the flexibility to grow and to get through those tough times to get back on track. And often a tax liability, a tax lien, an asset seizure of some kind is a wakeup call that individuals or taxpayers need to get back on track to realize that, okay, I need to be, to know what the profit of my business is.
I need to know how successful or not successful I am and am I prepared for the next tragedy that that may Happen, do I have capital available to put towards these items. And those are the kind of things that a tax expert, somebody like myself that's got 25 years of dealing with people that have gone through catastrophes, tragedies and got them back on financial footing, that's positive.
And once they've experienced that situation, they don't want to get back there. And this is often the wake up call that they need to operate and run their businesses or their individual lives correctly.
[00:30:45] Speaker B: Yeah, life happens to all of us and we need to be ready for that.
So, Chris, what simple discipline will help more entrepreneurs avoid unnecessary tax stress?
[00:30:59] Speaker C: Well, the simple discipline starts right from the beginning.
Setting up the proper entity to account for your taxes and having bookkeeper, payroll, service, things that people can handle that aren't your expertise.
You know, if you drive a truck and you're great at truck driving, but you're driving a truck all day, it's difficult to handle your, your bookkeeping or your accounting, keep track of your expenses. Having a trusted professional on your side to walk you through these situations is very valuable. Is there an expense associated with it? Yes. But is the savings and the peace of mind more than worth the cost?
100%.
[00:31:55] Speaker B: Yeah. Sometimes, you know, the most expensive thing you do is the one that you don't do. So bookkeeping is definitely one of the things I also see the most that people don't do. And at the end of the day, you start, you know, saving money in the wrong place because fixing things that are not done correctly are more expensive. Right, Chris?
[00:32:20] Speaker C: That's right. Been doing it right the first time.
[00:32:24] Speaker B: Definitely. So please do it right since you open your business, hire a good bookkeeper and a good tax preparer and advisor. So the secret ingredient is not only solving the immediate problem, it is building the habits, systems and visibility that keep the business stronger after the crisis has passed. We'll be right back.
[00:33:10] Speaker A: Conversation welcome back to El Ingrediente Secreto.
[00:33:15] Speaker B: Stay connected to this show and every now media TV favorite.
Clock ready whenever you are.
So welcome back. Today, Christopher Bennett and I have been discussing tax resolution, financial blind spots, and the discipline business owners need to protect the profitability. In this final segment, we are focusing on what happens after resolution, how owners can rebuild confidence and strengthen systems and move forward with a smarter financial strategy. Chris, we're having a wonderful conversation. So once a tax, once a tax issue is resolved or under control, what should business owners do next to protect themselves?
[00:34:32] Speaker C: Business owners need to stay in compliance. They need to continue to file all returns on time, make any necessary payments in a timely fashion and keep accurate books. Those are the things that will keep them out of getting back into the tax problem that we just spent a period of time resolving and continuing to account for all of their transactions correctly. Again, back to that ordinary and necessary expenses, keeping track of those, keeping proper documentation receipts, the business purpose for your tax, your expenditures, and remaining in contact with a tax professional. If you're going to make some type of a decision to scale or to open a new location, consult your tax professional prior to doing that so that you don't get back into the same hot water that you just got out of. And whatever resolution is in place, follow that resolution. If that means making a monthly payment, make your monthly payment on time every month.
Do what it takes to stay successful and to not fall backwards into the old habits that you had that led to this problem in the beginning.
[00:36:04] Speaker A: Wow.
[00:36:05] Speaker B: Discipline, discipline and discipline, right?
Chris how can entrepreneurs rebuild confidence?
Because you know you are going through a stressful IRS or state tax situation, so how can they rebuild that confidence?
[00:36:23] Speaker C: So proper accounting and bookkeeping, again, will help you throughout your situation to see should you have confidence or is there something going on in your business that's maybe sprouting a little leak? You know, where are funds going that aren't being returned on your investment?
So the confidence comes from doing the right thing, knowing it's the right thing, and having consultations with tax experts to reassure them and have that confidence of a relationship.
That's one of the most important things in this business, whether it's the relationships I've developed over the last 25 years with the collection agents at the IRS and the state, the reputation of Nashville Tax Solutions. When they see a resolution coming from a company like ours, they know that we have the experience and the knowledge to present it in a manner that's accurate and feasible for our clients. And that confidence is going to come from knowing you have the right people on your side and developing an open, honest relationship that you can bounce ideas off of. This is what I'm thinking about doing. What's the best way to go about that so that I don't end up overpaying on my taxes. That relationship is what's going to build that confidence.
[00:37:59] Speaker A: Wow. Amazing.
[00:38:00] Speaker B: I love that. Because we underestimate the value of relationships and we also undervalue the importance of bookkeeping. So keep in mind that what role should advisors, accountants, and tax resolution professionals play in a healthier business ecosystem? CHRIS
[00:38:22] Speaker C: so the most important role of an advisor is to know where your clients Want to go?
What are their life goals?
Are they looking to build their business and exit and sell the business?
Is this a business that they want to pass down for generations?
Is this just something they're, they're trying? Is this a, you know, a hobby, possibly that has turned into a lucrative business idea?
Having the relationship, the open communication, that's what's really important between the advisor and the client, is to ask them, hey, what would you like to do?
Would you like to buy a new house? Would you like to simply minimize your taxes? That that's all I'm looking to get out of this relationship, or am I looking to be able to sell this with minimal tax exposure? Or am I looking to, like I said, pass it on for generations? And how do I plan my estate so that myself or my heirs aren't having to pay estate taxes or large tax liabilities from the transition? In this business, when's the right time to sell, to retire, to transition to new ownership? Those are the kind of things that you get from open and honest communication and developing a relationship with someone that you can trust that you know their goals are our goals as well. And we'll show you the way how to get there.
[00:40:12] Speaker B: Amazing. Chris, how can resolving tax issues create new opportunities for cash flow, profitability and long term planning?
[00:40:24] Speaker C: Well, once you don't have the largest collection agency in the world coming after you, worrying about whether you're going to have money in your bank account or not, it provides a new level of, of peace and you can actually look at, okay, I know this is my monthly responsibility for my taxes.
What can I do with the profit? Where am I going to see the most return on my investment?
And once you've resolved the tax issue, got them, you know, out of hanging over your head, if you will, and making the federal government your business partner, you can do what you want and what is going to be beneficial to your business, to your employees, to your clients. And you can utilize capital in a way that is beneficial for everybody involved without the fear of, oh, if I spend this, the, the IRS is going to take it. No, you are doing the right things now. You've got proper representation and you know that you can be successful. You're good at what you do, keep doing those things.
[00:41:43] Speaker B: So if we have a viewer that is having a problem or need help with tasks problem, what is one practical step they can take? This week
[00:41:56] Speaker C: my suggestion would be to call Nashville Tax Solutions at 1-855-Nash-Tax the the first step really is to contact someone to analyze your situation to see where you really are, get some clarity on what's going on, how bad or how not so bad is the situation.
But in any situation, professional representation can still guide you to minimize your taxes even before it becomes a problem that's out of hand.
So do something about it. Don't be reactive, be proactive, plan properly, keep accurate books and consult with a professional to see the best way to run your business successfully.
[00:42:54] Speaker B: I love that, Chris. And now you know you can call Nashvik Tax Solutions so they can help you with that if you're viewing it this, if you're doing the show today and you have a tax problem. So Chris, for viewers who want to learn more, how can they connect with you?
[00:43:11] Speaker C: Okay, the best way is to go to our website at www.nashvilletaxsolutions.com.
we have a lot of wonderful information there about the services that we offer, the designations that we have, our relationships with many different organizations. You can learn a little bit about me, the clients that we've helped, our partner organizations and how to minimize your tax liabilities and the different services that we offer and our involvement in the community, how we've helped out different no kill animal shelters, Catholic and Episcopal schools, and we're helping our community as well. And you can learn a little bit about our team and some celebrity endorsements as well.
[00:44:16] Speaker B: Love it. Chris, I love having this conversation with you. It was great.
I love how much we learn about tax resolution and being compliance.
So thank you, Chris, for joining us today on El in Secreto and for helping business owners understand that the tax resolution, that tax resolution is not just about settling the past. It is about creating clarity, discipline and a stronger path forward to everyone. Watching the numbers in your business are always telling a story. When you face them with right guidance, you can stop operating from fear and start building with strategy. I am Olgur Tado and this is El Ingrediente Secreto on NOW Media tv.
