 All right, welcome to another webinar. This is a good one with my good buddy, Mr. JD Frost on how to put 25,000 box man back in your box next week. Dude, you said that and I'm like, I'm in. I'm in. 25,000 dollars, yeah, man. Dude, which is amazing, right? So for those that don't know JD, JD is a very good friend of mine. He's the co-founder and managing partner of Croft and JD Frost and Company. They are the headline sponsors of 8% 2020, which is amazing and huge. Appreciate everybody being here. We are recording this and we promise that will not be the last technical difficulty because neither one of us are geniuses, okay? When it comes to that. Now, JD is, he's a genius when it comes to money. We met at 10X3 in Miami and I was watching Instagram stories and Cardone keeps sharing this dude on Instagram. Like, oh, he bought a diamond ticket, another diamond ticket, another diamond ticket, another diamond ticket. And I met JD because he actually got a private suite at the 10X growth cone in Miami, right? So I showed up, met some people, met JD and I'm telling you the one thing I love about JD is a few things I love about JD. JD is a connector, a master connector, great relationships. It's hard not to like him. Once you get to know this dude, it's hard not to love him. JD goes to a ton of events and I admired the fact that you jumped in on a massive suite at 10X and you bought like seven diamond tickets or something. I don't know, how many was it? The diamond tickets, I bought tickets in the executive level. Like I did the sponsorship down there. I mean, that was $100,000 sponsorship. It's nuts, but I mean, it's paid off because I mean, over the last year or year and a half, I mean, we've gotten a lot of recognition from it. Huge man. I mean, that's big. That's what a lot of people don't realize that I get to see from people like you is the opportunity that's available if you will just invest in your business, right? Like this dude. Exactly. I'm trying to spend money to keep up with you, man. Like I'm trying to compete, but I'm struggling, man. I am. Oh man, I mean, it's a balance. You gotta keep a balance. And that's what we're gonna be talking about today is this balance of between what's business deductions and what's a hobby. So I appreciate that introduction. I really do. And I mean, you wanna kinda like jump into it here. Yeah, let's do it. I want everybody to know that I'm a part of your president's club. Like our company pays you on a monthly basis simply because you're a dude that cares. When you take someone's money, you feel obligated to get them a return on investment and for them to see value from it. We talk all the time now, good buddy. And just a lot of good things to go on, man. I mean, I just love being around you anytime I can share amazing people like you that I absolutely love spending time with with our audience, the hundreds of agents that register for this. So thank you for taking time. I know you're really busy. Yeah, no, I really appreciate the opportunity. I'm glad we're able to do this together. And I wanna try to bring value to anybody who's investing in us, investing in relationship like you and Lauren have, and I really appreciate it. And I mean, a lot of what we do comes from little conversations that we have. And these little conversations that we have end up yielding big results. And a lot of people don't understand that in accounting, in taxes, what the conversations that you have, the fact patterns and what we call facts and circumstances when we're talking to the IRS, a lot of these facts and circumstances can change from one person to the other and it can have a significant difference on your business and on the amount of taxes that you pay. So today we're gonna be talking a lot about different tax strategies that are going to literally put money back into your pocket. And most entrepreneurs, most small business owners, most agents that I believe that are watching this, you probably are earning a 1099 income. You probably file on a Schedule C. You might have started another business on your own or you just have a sole proprietorship. So your taxes are one of the largest expenses that you don't get to deduct every single year. And so what we have come up with at Croft and just to tell you a little bit about Croft and JD Frosting Company for just a second, I'm the co-founder and COO of Croft, LLC. Croft is the parent company of JD Frosting Company now and JD Frosting Company is the first vertical in our suite of services. So our first vertical and how we start a relationship with all of our clients is through their tax returns, is through their taxes, because guess what? Everybody pretty much files taxes. I mean, everybody files taxes. Everybody has an issue with taxes. Most people that I run into feel like they pay too much in taxes or they get no new ideas or they are extremely confused by taxes every single year. It's always a problem, right? And so what you can help me with, Cody, if you don't mind, I would like this to be as interactive as possible. And so if there's some comments and stuff, if you can help me ask some of the big questions that are kind of coming across, I would love to entertain those questions. Now, I think we have this set up, Cody, for us to be talking for about an hour maybe, hour, hour or so. And so I'm going to show you how I'm seeing, I would say 80 to 90% of the clients that we come into contact with, either a W-2 employee that's making over $100,000 or their 1099 income earner that's earning over $100,000 and how we've been able to put $25,000 back in their pocket within six weeks. And why do I choose $25,000? Let me tell you why. I say $25,000 because if you're making that amount of income, your average tax rate is about 20 to 25%, okay? So 20 to 25% of $100,000 is about 20 grand. I know we have a progressive system but just work with me on the math here. So that's 20 grand. We also have self-employment taxes that you pay on that. If you pay self-employment taxes, please say yes. Like just light it up because almost all of you do pay self-employment taxes. That's another 15%, so that's another $15,000. So about on average throughout the year you're paying anywhere from 20 to $25,000 in taxes if you're making that kind of money. Now what we do is we have this strategy called the jump method. And I'm gonna spell it out for you, jump. The jump method is a way, and I don't know if you can see that or not. I'm gonna try to get another marker here. The jump method is a way that we help our clients save money on taxes in the past, as well as in the future. So the IRS right now will allow you to go back three years and amend your prior year's tax returns. And so you can go back to 2016, 2016, 2016, 2017, 2018. And since they extended the deadline this year because of the coronavirus, we have until July 15th, 2020 to file your 2019 return. And we have until July 15th, 2020 to amend your 2016 tax return. Now utilizing the jump method, we are able to save our clients anywhere from five to $7,000 every year that we amend or that we file for them, okay? So if you take $7,000 times those four years, that's gonna be $28,000. So I picked $25,000 as this title. And it typically takes us about six weeks to go through this process. This is involved. This is not just, I tell a lot of people that we are not just tax preparers, we're tax strategy. We're tax strategists, we're not tax preparers. We are going to look at your specific situation, layout a fact pattern, layout facts and circumstances to defend the position that we take on a tax return for you in order to minimize your tax liability as much as possible. Because everybody I'll run into feels like they paid too much in taxes. They have no idea what's going on with their taxes. They're confused and they get no new ideas, okay? So here's the idea for you. So jump stands for justified actual business expenses. Justified actual business expenses. There are actual business expenses that the IRS allows you to take in your business, in your business every single year. There are certain expenses. If you're a W-2, now do we have any W-2 employees on here at all? If we have any W-2 employees, the IRS doesn't allow you to take what's called unreimbursed business expenses. I'm gonna show you how to take those expenses today, okay? So justified actual business expenses, utilize the tax code effectively. How many people have no idea how to utilize the tax code? The tax code is very confusing. It's kind of intimidating. And so what we do is we show you how to utilize the tax code. We're gonna maximize your deductions as much as possible, maximize your deductions as much as possible, and we're gonna protect you from the IRS audit. Nobody wants to mess with the IRS. Everybody's afraid of the IRS. I think it's good to have a healthy fear of the IRS, but you don't wanna work with an accountant that doesn't wanna mess with the IRS. You don't wanna work with an accountant who just takes the easy way out. Most accountants are afraid of their own shadow. They don't wanna take a chance. They don't wanna stand for you. They don't want to be on your side. What we wanna do is be on your side and be your advocate. And I'm not just selling you on this. I'm telling you that you need to be working with an accountant that is your advocate because your accountant is the translator in this language called business. That's what the accountant does. It translates the language of business for you in taxation every single year to give you the maximum benefit. And every single year that we are working with our clients, we're investing, they're investing in us, but we're investing in that relationship so that we yield some type of return from their investment in us, okay? And that's our goal. So with the jump method, we are able to help our clients justify actual business expenses, utilize the tax cut effectively, maximize deductions, and we're gonna protect you from the IRS audit. And the way that we do that is that most people, most taxpayers have thought about starting a business before. They've thought about it. They've either started a business and nothing ever happened, but they've thought about starting a business. And now with the way personal branding exists and Instagram and Facebook and showing our lives and everything that's about us, there is a business somewhere inside of you that you just haven't found yet. And so what we do at CROP is we help you jump. We help you take that leap. We help you take the risk of starting a business. And what's cool is, is that the IRS allows you to start a business back in time. And the way that they do this is there is a revenue procedure called Revenue Procedure 8435 that allows you to start a small partnership, which is 10 partners or fewer, and you can actually go back in time and record all of your business activity. Now, some business owners, and you might realize this as a business owner yourself, Cody, you start a business like you really don't make any money the first month or two or three, or sometimes small businesses don't earn any money in the first year because they might have just started it because it was a hobby. They might have just started it because I just wanted to dabble in it. I just wanted to try it out. I started that multi-level marketing deal, right? Like I started selling CBD oil, right? Like that's one multi-level market is CBD oil. Well, you spend a lot of money but you never actually incurred any income. Well, what we do is we help you create this business, create this business based off your education, based off your expertise, and based off of your skills. That's three things that are very important, skills, expertise, and education. We look to see if you have these certain skills, expertise, and education revolving around your business and we show you how to put this business together. And it's very important when we're doing this because when you own a business, when you have a general partnership, and that's what we start is a general partnership, you're able to take a lot more deductions inside that general partnership than you are as an individual. I don't know about you, but I come across a lot of taxpayers that really have no idea what they can deduct and not deduct. I talked with a real estate agent yesterday. We got her tax return done. She ended up owing about $12,985. And I know that because I look at every tax return before it goes out the door because I want to see what the answer is. And I was like, man, I looked at her income. I'm able to do this pretty quickly because I do it all the time. I looked at her income. I looked at her taxes that are due. And I'm like, I looked at her schedule. See, there's stuff missing. There's not enough deductions. There's more deductions there. So I get her on the phone and I talk to her about it. And that's a big part of the jump method is we talk to our clients. We have what's called an expense call. Once we've formed this business, we have what's called an expense call and we go through your life. You know, I'll pick on Cody. Is it okay for me to pick on you for a second, Cody? Go for it. So Cody is on Instagram all the time. He's on Facebook. He's doing webinars. I mean, he's working out on Instagram. He is doing webinars on Instagram. He is shopping on Instagram. He's doing everything on Instagram. And as he is doing that, he is building his brand for his business. So anything that he's wearing, anything that he is doing while on Instagram, anything that he's showing, while he's on a vacation, while he is at a conference, while he's putting on a conference for sure. Boom, there you go. There's the socks, exactly. I don't have my socks on today. I've just got orange socks on today. But like he's got all these different aspects of his business. And this is the power of social media too that most people don't understand. We're not only branding ourselves, but we are providing proof and support and facts and circumstances that define why we took an actual business expense. And so a part of the jump method is we help you create this entity. We help you put together a business plan. And once you put together this business plan, then you have identified exactly why you spend, what you spend in your business, which further supports the deductions that you take on your tax return, which then is going to reduce your income. Okay, your taxable income. So another part of the jump method, and this is basically a 15-step process, is the expense call. What we do in this expense call is we actually sit down with you. We have a 30 to 45 minutes, sometimes it lasts an hour, and we talk about your actual life, your lifestyle, what do you do? Where do you live? How do you spend your money? Where do you go on vacation? Where do you go on conferences? And we accumulate all of these expenses. Typically, we're able to find clients' expenses to cut their taxes by 50%. 50%. 50%. Like, and that is not like this is a reality because a lot of these expenses that you have, especially if you're an independent insurance agent, a lot of these expenses you have, you're just not thinking about taking them. Most I see are preparing their own tax return or they're taking their tax return to somebody who just does tax preparation. So once we have this expense call, we have an expense sheet that allows us to define exactly what these expenses are, and then we utilize the tax code through our revenue procedure, 848435, and we file amended tax returns for your business, okay? We go back and file your tax returns for your business back in the past, and I get this question a lot. Well, if you didn't start the entity till now, why are you able to go back in time? Well, the IRS allows you to do that if you have facts and circumstances that support the fact that you're doing that, okay? And a lot of those facts and circumstances have to do with your documentation, okay? So we do have one, yeah. We do have one question if you need me to jump to it. Yeah, please. So Jean is very engaged, thanks for being on Jean. She says, can we deduct credit card payments? I've been using my credit card to purchase leads and I haven't fully been paid back yet, or haven't fully paid it back yet or paid it off. Yes, yeah. Anytime you use, yeah, that's what's called cutoff. And that's where, man, who was that the last question? The Jean. Jean, that is a fantastic question because it's so important for your CPA to understand exactly what your cutoff is at the end of the year. I had another client that they collect a lot of money upfront at the end of the year. And what we did this year when we were filing their tax return, we had to figure it out that they were getting paid for services that were gonna be used in the future. What that is called is unearned revenue. And when you have unearned revenue, we were able to take $547,000 off of their income this year. His tax bill went from $85,000 down to 12 grand. Wow. By one conversation, one journal entry, one adjustment. Now that doesn't eliminate that income forever. It defers it into the next year, but that's a part of planning. But yes, you can take those expenses if you've incurred them on your credit card statement. Unbelievable. That's what's so powerful about this. When we are utilizing this jump method system, we're helping you determine what you are including in your expenses and what you're not. Cause that's where everybody misses. The IRS does not come after you for taking too many expenses as long as you have support for them. Let me repeat that. The IRS does not come after you for taking too many expenses as long as you have support for them. The IRS will red flag your tax return if you're 1099 said that you earn $137,000 but you only reported $60,000. They typically will not come after you or look at your tax return unless there's an exorbitant amount of expenses that are being taken. And that's basically comparing you to all kinds of other insurance agents and all kinds of other people that are in the same business as you which we know where those levels are because we see so many different tax returns. So we know where you can kind of push it. And please, let me make sure you understand we are protecting you from the IRS audit. I don't wanna put you in a position and I don't wanna have to talk to the IRS all the time but I sure as hell I'm not afraid of them if that makes sense. So that's where we are able to utilize this new business that we help you form and maximize those deductions that you take through that business. Now another thing, another way that we protect you from the IRS audit utilizing this part of the tax code is when you form a general partnership, a general partnership has a 0.4% chance of being audited. 0.4% chance. If you have a schedule C that is the most audited schedule out of all the schedules in an individual tax return. An individual tax return has a one in a hundred chance of being pulled for audit. If you make over a million dollars you have a one in 10 chance of being audited. One in 10. So it is based off the amount of money that you are making. So what we wanna do also as a part of this forming your business we're gonna create this business for you. We're gonna form this business. You've already got income. You can record that income through your business that you've got on your 10.99. Take the business deductions through the expense call that we have for you. And then we're gonna also put together a business plan to support what this business does, why you have it set up and why you're able to take the deductions that you're able to take, okay? Once you create this entity and you file those tax returns then we go back and amend your prior year tax returns on your individual return in order to maximize those deductions and to take advantage of the business deductions that you take it. Now, one way, another way that we protect you from the IRS audit as a part of the jump method is we utilize what's called the nine factors that the IRS determines whether or not you're a business. Okay, some of you might have heard this before there's a difference between a hobby, I mentioned it before, and a business. And there's nine factors that determine that. Those nine factors are basically how the taxpayer carries on their activity. Like what are you doing? What are you doing to actively grow this business, actually generate revenue in this business? The taxpayers expertise, that's the second one. We talked about that. What skills, what education, what expertise do you have in this area? It would be really difficult for me to all of a sudden start to say that I'm gonna generate leads for insurance agents if I've never done it before. It would be hard for me to legitimize that business. The nice thing is the IRS doesn't force you to prove every single one of these nine factors, they just want you to consider some of these nine factors. So the taxpayers expertise, the taxpayers time and effort in carrying out the activity. Do you put the time in? Are you trying to grow the business? Is this just something that you just kinda work on on the weekends every now and again? We have to document and consider that. An expectation that the assets used in an activity, such as land, may appreciate in value. So the expenses that you're recording, is there an expectation for that to increase in value in the future? Is it gonna create value in the future? The taxpayers success in other activities. Are you successful at another business? Do you have proven income? Where we see this method and this strategy work the most, it's for people who are already generating revenue. They're just not taking the deductions that they should be taking or that they have the courage to take. How often is that? Oh, a lot. Yeah, where someone's got like, I mean, because that used to worry me. Probably still worries my wife. It didn't worry me as much anymore, but in general, I think that's really common. I'm making a good amount of money and et cetera, right? Right, it's very common, but if you have the right facts and circumstances and the fact pattern and the defense put together, the documentation put together, then you can take those and you have the courage to be able to do it confidently, and then you're not paying as much tax as you are. Like there is a lot of money that many taxpayers just give away every year. That's why I saved $25,000 in six weeks. Just by going through this exercise, you can figure out how much you possibly could save and how much you have left on the table just by having a conversation. So that's where the opportunity lies. Another one of these factors is the taxpayers' history of income and losses over the activity. So do you have only losses for like the last 10 years? That could be a factor. The relative amounts of profits and losses, we talked about that a little bit. The taxpayers' financial status, yes. Whether the activity provides recreation or involves personal motives. That's a very interesting one. So we help you with this documentation to support the fact that your business does exist. Now, if you file a tax return late, which we are doing basically in this scenario, we're creating your entity and then we're filing it late, you will get what's called a penalty notice. You'll have a penalty for filing the tax return late. We're able to overcome that penalty because of this revenue procedure 8435, okay? Now, when we overcome that penalty notice, the good thing about receiving the penalty notice is that the IRS recognizes that you're a business and that you filed late. So if the IRS sends you this penalty notice, then they basically confirm the fact that you are a business. And if they confirm the fact that you are a business, then they cannot deny the business expenses that you put on your tax return. So if they can't deny the business expenses you put on your tax return, then we've done everything correctly and we've executed the job method. So a part of our job method system is not only helping you create these deductions, it's not only getting money back on taxes, it's not only about just getting the 25,000 bucks back in six weeks, that's great. And as you can see from all of the stimulus talk in COVID-19 and the coronavirus, the only way for the IRS to grow the economy, I mean, the IRS, the Treasury, the Treasury is collecting the money. The only way for them to grow the economy, to put money back in the economy is to give us our own tax dollars back. So this isn't just about creating a tax deduction just to get money to put it back in your pocket, it's to put it back in your pocket so you can reinvest it into your business so that you can grow your business. I mean, what would you do with an extra $10,000, Cody? Like how would, what would you do with that? Yeah, I mean, I would either put it into like a payroll or advertising or marketing, you know? You would use it to invest in your business moving forward. It's not gonna just stay in your pocket. We don't wanna just keep it in our pocket. I've talked to Grant Cardone last week, like get it out. Like that's what he did wrong. He tried to keep everything in his pocket. Also on that note, for those that don't know this, JD interviewed Grant Cardone last week on the Daily Ledger podcast. You can find it on iTunes. And I'm here to tell you that was the best interview that anyone's ever done interviewing Grant Cardone. Unbelievable. I love it. Man, that was way too kind. I appreciate that. It was good. If you've watched a lot of Grant Cardone, it was Grant Cardone kind of unplugged. Yeah, yeah, very comfortable. And I think there's a couple of reasons why it was so good. Number one, your relationship with him, which is unbelievable. And a lot of the stuff you talk about, I know you do a lot with their companies in general. You can't talk about it, but I know you do. Also, it's because of your business knowledge, your business acumen, your understanding of money and the tax code and examples of that. And that came out in that interview. So you were able to ask questions that someone like me wouldn't be able to ask. Right, right, yeah, yeah, exactly. So going back to this, this is where you can save so much money by going in and looking and understanding exactly what expenses are applicable to you as an insurance agent. So I wanna kind of go over those a little bit. Yeah. So where we see, and this is something I'll admit, I mean, you can do this on your own. You don't even have to form the new business if you don't want to. You can go back and just amend your schedule C. If you want to. Now, I will say that there is an element of risk of doing that. And that's why we do it through a general partnership because it has a less likely chance of getting audited. Okay, that's why we do it. But there's a lot of expenses. And what we find is that there is a lot of places that people miss. There's travel. Travel is where a lot of people miss their opportunities. If you're going to a conference, if you're going to 8% nation, everything, when you go to 8% nation this year, everything you spend is a write-off. Everything, everything, everything, everything. I can't say enough. Like take the expense. It's a business conference. Now, when you take that, I know you might not be able to see this. It just kind of helps me to kind of keep my train of thought. So if you can't see it, hopefully I'll get you some of these examples. But this is a business conference. This is travel. Now, let's say that you are active on Instagram. Let's say that you take your family on a vacation. Let's say that you take your family on a vacation and you talk about your business. You talk about that with your family. You talk about that with somebody that you meet. If you grab a business card, if you grab a business card of somebody randomly that you meet while you're out traveling, I don't care what it is. That's you doing business. And you put that into a mailing list that you come back and you put that in a mailing list and that's a new prospect and that's a new contact. The whole point of business is making connections. Your purpose in business is to meet more people. Get their name, their email, their phone number, name, email, phone number. The more information that you get, the more money you will make. Information equals revenue. And so when you are in a business and you are starting a business, this is a way for you to create more deductions. And this is where you have found money in your business is in travel. Now, meals and entertainment. You can't talk about entertainment too much anymore. I tend to encourage my clients from an entertainment perspective to put their name on something that they did with the entertainment. So let's say that we're going to play golf. You need to put your name on the shirt that you're wearing while you're playing golf and that's advertising instead of entertainment. So where else did you entertain a client that you could reclassify to be advertising? Now, advertising, you can write off 100%. Entertainment, it's 0%. So did you have a question? No, no, that's good. I haven't thought like that. Like, I mean, that's why I love spending time with you. I learn some every time we spend together. So that's a big place where a lot of, I think about, I try to think about my audience and I try to think about like what you're dealing with as an insurance agent, 1099, you're paying too much in taxes. I mean, most everybody should be paying probably between 18 to $25,000 a year in taxes. So if I'm at a 20% interest, I mean, tax rate, if I'm at a 20% tax rate, let me make sure that I do all this math correctly. You know what I'm saying, 18,000 bucks. If I'm at a 20% tax rate, I just need to find $25,000 of deductions and I will save $5,000 in taxes. Here's the thing. Here's the thing. You've already spent this money. You've already spent this money in the past. It literally doesn't cost you anything to go back and do this. And this is where you have the most found money. Like I was saying, the Treasury of the United States puts our tax dollars back into the economy and this is a way for us to actually grow our own, create our own stimulus by utilizing what the tax code already allows us to do and amend our prior year tax returns. Now, you might be like some people that come across and they're like, oh yeah, I never pay hardly any tax. I only pay like 400 or 500 bucks a year. You're going to end up in jail. It's going to happen. Like there's an amount of taxes that should be paid, a reasonable amount, but there's also an amount of taxes that shouldn't be paid. So where do you find that happy medium? But if I find $25,000 of deductions, then I'm going to save $5,000 in taxes. That's $5,000 in every year. If I can amend the last 16, 17, 18 and 19, that's going to give me 20 grand, $20,000. Now you file those tax returns, you get that return. It's going to take about 12 weeks to get that check back in the mail. Okay. Now if you do this and you find $35,000, let's find $35,000 of expenses. $35,000, that's $7,000 a year. There's your $28,000. So 28 grand, travel, big place to find it. Instagram, if you are active on social media, I encourage you for any reason other than, like for no other reason than for tax purposes, get active on Instagram and social media and personal branding and give yourself the opportunity to take advantage of writing off more expenses. Because you have the ability to. I wrote off this coat. I wrote off this shirt, everything. Because it's being seen, it's a part of what you're doing. So your meals and entertainment, your travel. I talked about this before, but advertising. What are you spending money on? Where are you talking to people about your business? Most 1099 people that I know, independent contractor, they're talking about their business everywhere. I talked to one of my guys that my daughter is 13 years old and she plays select volleyball, okay? Select volleyball. You know, we're sitting there on the volleyball court. We're watching volleyball all day long. All day long. I'm talking like 6.30 in the morning till like nine o'clock at night. And we're just, yeah, we're just sitting there talking and what are we talking about? We're talking about our business. What do you do? What do you do? How do you do it? How do you help people? I started talking to this guy and I told him about the jump method. He's a software engineer, does software engineering, does sales as well. I told him about the jump method. I found about $8,000 that he could save just by having a conversation with him. Now, did I write off that volleyball trip? Hell yeah, I wrote off that volleyball trip. Everything related to select volleyball, that's a way for me to advertise now. Because when I am around people, that's why I go to so many conferences. When I'm around people, that's where I'm growing my business. That's where I'm creating connections. So a part of my business plan lays that out and that's what's important about having the facts and circumstances that I was talking to you about. The importance of having facts and circumstances is that it lays out why you do what you do and how you build your business the way you build it. So you gotta think creatively. That is the way to be able to execute this. Office expenses, office expenses. Did you buy an iPad? Did you buy AirPods? Did you buy a new phone? Telephone expenses, all of those. Any technology that you're using, wireless internet at your house, anything related to those technology expenses is another area that I see a lot of people forget. They're like, oh yeah, well I did buy my kids a couple of iPads. Well yes, you bought your kids a couple of iPads. Do you ever pick up that iPad and get on it and do some research according to your business? You do. The facts and circumstances, what are you doing? Do you use your home? Did you buy a desk at home? My wife and I, we redesigned, my wife's an interior designer. We designed this office space in our hallway. We wrote off the whole thing. We wrote off the whole thing. Now it takes having these conversations in order to determine what you are going to write off and what you aren't gonna write off. But those are some examples. That's where I see a lot of people miss in this advertising and the entertainment people think they lost. But if you document, write a memo as to why you did what you did. How you did it. Why did you write that off? Well, we had our sign at the event and we had a big golf event. Yeah, it was entertaining or we went fishing but we put our sign on the boat. That's advertising. That's advertising. So this is a phenomenal way for you to find this and $25,000. If you have a gross income of $150,000, you'd be surprised at how quickly you can find $25,000 of expenses. So I'm gonna stop right there for a minute. Is there any other questions or anything that have come up at all? Is everybody, do you like this? Have you learned anything? Love some feedback. Yeah, they're jumping in chat and loving it. I'm freaking loving it too. And we had a few other questions since then. One person's a realtor and just curious, if this works for that and tips there. Yes, yeah, any business. So anywhere, that's the thing that's so great about this. It's any industry. You can create a consulting company. You can create a realty company. You can create any type of company you want to. And the nice thing is, is that the government in the United States, this is what a lot of taxpayers don't understand. The government in the United States gets you the opportunity to fail. It's okay to fail. So it's okay to show a loss. It's okay to do that. It's okay not to have income. You can't have zero income for five years in a row. I like to recommend that you have income at least two out of five years. So when we go back in time and we create this business, you were thinking about the business and just because you were thinking about the business but you never acted on it, didn't mean that a business didn't exist. And so just because you didn't have revenue doesn't mean that a business didn't exist. And so this is a powerful thing. We're getting some clients hundreds of thousands of dollars in returns. I found the client wasn't like, this is a big client and this is a big, this is the biggest one I've ever seen before. We went back and mended their prior year returns. We got them a total of $2.1 million back. $2.1 million. Like that, that doesn't cost that taxpayer any money. That's free money, literally going back into their hands. Unbelievable. God, it's gracious. That's awesome. Also, Shanae says, is it important to keep all your receipts for anything you purchase throughout the year? Yes, it is important but it's not required. You don't have to have a box of receipts at the end of the year. You need to have the bank statements. You need to have the credit card statements. The whole point of the receipts, and this is a common misunderstanding, is that the point of the receipts is, if for some reason something happened to you and later on down the road, you were having to explain why you did what you did, most of the time people turn the receipt over, they're like, okay, I ate with so-and-so, this is what we talked about, this is why we met. And they put that explanation on there. You can also write that on your credit card statement and it serves the exact same purpose. So you don't have to have every single receipt. It's more of a mechanism to train you to record why you did what you did. Francisco says, is a bank statement proof enough for the IRS? Yes, yeah. The first thing the IRS is gonna ask of you is do you have any bank statements? And part of our jump method system that we help you with is we encourage you, you need to have a separate business bank account for all these expenses. So the thing is, when the IRS comes in and audits you, they ask for your bank statements. Well, if you run everything through your personal account and I would encourage you, if you're an independent contractor, stop doing it through your personal account because then you're gonna have to hand in the bank statements that have all of your personal stuff on there. And you don't wanna show them any of your personal stuff because then they're gonna say, well, where did that money come from? Where did that deposit come from? Oh, well, that was a gift from my grandma that she gave me $10,000. Well, where did that, you know, they trace it. They call it tracing laws. So if you have a separate business bank account, which is what we encourage when you form your separate business, then you are able to just hand them those statements and everything in there is business. Everything in there is business. Eduardo says, what if you haven't filed taxes in the past two years? Great question. We help people all the time who haven't filed taxes in the past two years. And you probably would wanna utilize something like this as much as possible because what's nice is we can go based off of estimates. We can go based off of conversation and documenting and documenting as much as we possibly can through memos. But you really need to have the documentation. If you do go into an audit, you're gonna need those bank statements to support why you took the deductions that you took. But not filing the last two years isn't the end of the world. It's just something that you need to get caught up. Um, look, yeah, Clint said hints the socks. Mark said learning tons, Vito Manko, what's up buddy? He said, what about leads? Paying for leads, mileage, you know. Oh yeah, yeah, yeah, exactly. So if you're paying for leads, that would be part of, you know, I would be putting that into advertising. Go ahead. Yeah, but I'm guessing, you know, mileage is travel or at least your mileage, mileage would be travel. I get this question all the time, should I write my vehicle off or should I take the mileage? And the best answer I have for you is it depends. It really depends on your facts and circumstances. If you're driving your car 60,000 miles a year and 35,000 miles of that is a business miles, then you're able to take about half of those and that's gonna be your write-off. So let's just say it's $17,000. Well, if your vehicle cost you 20 grand, you really shouldn't write that vehicle off in the first year, you should utilize the mileage so that you can take that 17,000 mile, that $17,000 deduction every single year. Now, mileage is a place that can get you in a lot of hot water with the IRS. And anybody who takes mileage on their tax return as a deduction, I highly recommend you use what's called Mile IQ. It's the easiest mileage app out there. You're able to swipe right for business, swipe left for personal and you create an account. I mean, you create a PDF all the time. And I'll tell you a little secret. I'm not very good at this, okay? I am not very good at it all, but no matter what, I've got that DaGum app on my phone. And what it does is it logs your mile, it logs your activity all the time. I probably haven't actually categorized my miles in the last two years, I bet. But if I ever need to go back and create the document that's gonna support it, I'll have all those drives logged. And the IRS is really looking for, this is the thing that a lot of people don't understand. If you've got a piece of paper, it's amazing. It is amazing what you can accomplish when you just write something down and when you have a number on your tax return and the IRS says, prove it to me and you hand them that piece of paper, almost every time they go, oh, that makes sense. That's just the documentation alone. And that's the thing, when you hear, and when we're talking to people and they're saying, why do you cost so much? Why this? Why aren't you like $300? Well, because we take the time to write this shit down so that when we come across and sit across from the IRS, we can hand them a piece of paper and they say yes to a deduction that we came up with for you. We didn't make it up out of thin air, but we came up with it that when we found your tax return, we properly documented that. So that's where the value is. Our buddy, Eric DeJohn says, what if you didn't make 100K during 16 through 19, but you worked full-time towards driving, trying to drive revenue? Yeah, exactly. So if you didn't work full-time, then you probably have a lot of deductions that are taken. So it depends on what your income level was in those tax years. And did you actually pay tax? Because remember this, and this is something a lot of taxpayers miss, is that if you didn't pay any tax in, you can't get any refund back, okay? But if you actually didn't pay any tax in, but you did spend the money and you didn't claim the deductions in order to create a loss and then roll that loss forward in the future, you could be missing some possible loss, what's called loss carry forwards into the future that you could offset future income with. That's one thing, like no matter if you're making money or not, the accounting is extremely important and it can control how much tax you pay in the future or in the past. Well, Kevin says great stuff. A says thanks. Angelo says dude, you rock. I appreciate that. Yeah, he's Paul says, how do you create a partnership when you were a sole proprietor? Great question, excellent question. So you gotta find somebody that you trust. You gotta find somebody that you trust. Maybe it's a, the IRS requires you to be a partnership. So you have to have what we recommend 95% ownership for yourself and 5% ownership to somebody that you trust. It can be your wife. It could be your child. Actually, I've got some people that have created a partnership with their child. It could be with a good friend. It could be somebody that you work with. I've had two guys that I helped down at Cardone's place. We did this strategy, saved one of them $17,800, saved another one $19,000 and they were partners in each other's entities. So they just flip-flopped it. So one was 95, the other one was five in each other's entities. And so if you're a sole proprietor, we get this question quite a bit. You can create a partnership and just find somebody that you trust. Now they would need to amend their prior year return, but if they don't want to amend their prior year return, it's really not a big deal. I haven't seen too many, what's called a matching notice on that, but that is possible. Well, we're starting to get a bunch of questions, man. I don't know how much, how many you want to? Oh, keep going. Yeah, I mean, I would love to, I mean, as long as you're okay, I'm good. I love answering these kinds of questions. And we gotta let them know how to take advantage of the jump method before we get off too, or remind me of that. Yes, yeah. Well, I'll go ahead and tell you real quick. Because of the facts and circumstances, like it's really best for us just to have a conversation. So the way to set up a conversation is go to frostcpas.com, frostcpas.com backslash jump. And you can schedule a call with Logan. We put that in the frostcpas.com slash jump. Yeah, backslash jump. And that doesn't cost you anything. Conversations are free. Conversations are free. And we're gonna provide you with a way to understand if this is gonna be a good fit for you or not. And it might not be, you might not care about getting $25,000 in six weeks. It might only be $15,000 for you because it depends on what your facts and circumstances are for your actual situation. But moving forward, it could be a lot of money. I mean, imagine if you paid $5,000 too much in taxes from now to the end of your career. How much money is that? Yeah, it's a lot, yeah. That's a lot of money. That's a lot of money. Let me show them this real quick, JD. I'm gonna let me show my screen. So I've actually pulled up. Oh, that's Logan right there. There he is, there he is. So it's... Yeah, so just put your information in there. Yeah, you can fill that out. I've also put that in the chat. I've actually linked it and put the link in chat. So maybe I'll make sure you get into that. I'm telling you, you want to talk to this dude. I promise you. I mean, it's too easy not to have a conversation. Yeah, I want to make it to where it's impossible not to do it. Like, you've got to just try it. Not actually this method. I'm just saying this having a conversation. Totally. And what I love, what my favorite thing in the world is, is like when I was talking to Lauren, helping people learn more and educate them on this part of their business, like showing her how to create these new ways of recording money in between companies and stuff like that. Like that is the kind of, I love that kind of stuff. New methods, how to save money. I mean, this money, like I said, has already been spent, everybody. Like this has been spent. Yeah, I mean, so, and you've been a huge help to Lauren Bragg is on you all the time because we've got five companies that do over half a million dollars a month and we're struggling with like, I'm 29, like she's 30, like we don't understand this stuff like you do. And like walking through financial statements and all this stuff that when it comes to being a business owner, you know, you've been a huge help there. And it's provided a lot more clarity than we used to have. And actually you've even given us some ideas on how to like grow specific pieces of our business that we're now making more money just because we initially did something like this. We clicked the link, we filled out the box. We just had a conversation and it's amazing where it's went. Yeah, that's awesome. That's cool. It's the little conversations. Like I was telling that to a client, it's the little things, that's what's so powerful about our expense calls is, and this is something, you know, Paul Croft, my partner, he came up with this and we coined it together, the jump method. And the most powerful part about it is actually sitting down with the CPA and having a conversation, like for 30 minutes, but the amount of knowledge that we have that we can help you understand can make a huge difference on your overall tax situation. So what's one of those other questions? Yeah, so Mark says, should we have a separate LLC slash corp for each business type, example one for insurance, another for say, affiliate marketing or a different side hustle? That's a really good question. What I would do to begin with is I would keep it all together into one entity for simplicity purposes. I would keep it all together and I would start to track the revenue separately so that you can see if that business, the affiliate marketing or the other type of business that you might start to see if the revenue is big enough. And when I say revenue is big enough, I'd say over $100,000 is the time to break off a company into another company or if you have strong liability purposes for some reason. But I would keep it all together because number one, that makes it real simple for you. Number two, it gives you a lot more flexibility on your ability to ride off expenses relative to that business. You can start to be a lot more creative in how you're building out that business plan. That's good. That's good. I'm trying to keep up with some of these questions here. This is good. Vito, so what about charitable giving? Yep, charitable giving is incredible. It's awesome. It's an itemized deduction. It is limited to 50% of your income. There's talk about the phase four of the stimulus package providing a lot less limitations on charitable giving, but charitable giving is always a good thing to be doing. My read is a great question. So if you're going back to review returns, how are we documenting if it already happened? Make sure I understand the question correctly. Yeah. You can, okay, so if you're saying, okay, we're going back for review and the return and we're like, hey, we had these actual other expenses. We document those other expenses through just simply through memos. We just basically provide support based off interviewing you, talking to you, understanding why we're taking this deduction and documenting that fact. That's what we spend a lot of time doing is we have what's called work papers. We call them work papers and this supports the positions that we take on the tax returns. Yeah. I mean, I've got a little bit of a question. I mean, does it, I don't know how to word it, but obviously, you helping them with the gentleman that isn't free, but if you're going to help them get money back, it'll end up feeling free afterwards. Oh yeah, I mean, so, I mean, here's the thing. I mean, most people that we work with and we have to be very careful, I have to be very careful from a compliance standpoint because we cannot get paid based off of what we get you back. I'm not doing that. What I'm doing is making sure that you're filing a compliant tax return. If it so happens that you get a refund because of filing a more compliant tax return, then so be it. But what we do is we do not charge more than 40% of what your tax savings are that we generate. Now I say tax savings specifically, and I will repeat it. I say tax savings, not tax refunds because I'm not sitting here trying to generate a tax refund for you. I'm trying to help you save more on taxes. What happens with a lot of our clients and when we work together with you is over time as we work together, all of a sudden you stop paying as much in taxes on the front end of the year and you start to actually owe tax at the end of the year so that you're not giving the government too much money throughout the whole year. It improves your overall cash flow. But we plan for that so that you're not surprised by that amount of money that you have to pay on April 15th, but you've planned for it and you've planned for it in a way that allows you to invest your tax dollars throughout the whole year rather than giving it to the government and letting them hold on to it the whole year. I mean, I hate paying estimated tax payments. That's another one of our five pillars of mastering tax strategy is I encourage people to actually when they start to make over $250,000 a year, I encourage a lot of business owners to form S-Corps in order to avoid having to pay estimated tax payments. That was a good question you just answered. That's perfect. Also, Zach says, hey, do you help people that are just starting out and are not making $100,000 a year yet? Yes, yeah, we help all kinds. I have a sister company called O'Brien Tax Service that provides a little bit more affordable tax service. To be honest with you, it works better for that type of income level that you're at. The beauty of O'Brien is you got Stacey over there and she has the same kind of conversation with you each year to maximize your deductions because even if you're paying $75,000 in taxes, I mean, if you're making $75,000 a year, you're still paying some tax and we just want to try to minimize that as much as possible. Totally. Angelo says, what about depreciation on a car? Great question. Awesome. So we were talking about the mileage. You can take depreciation on a car. If you write the car off, I recommend that if you're gonna write a car off that you apply only 80% of that write-off to business because there is no way that you can argue with the IRS unless that vehicle stays on your lot at your business all the time and is a business asset 100% of the time, it's hard to argue that you're not using that asset for some personal use, okay? So, you know, I like to say that I am a more aggressive accountant but there's some places where I know there's no room for aggressiveness. That's good. Lorene says, what is the best method for proving time spent on social media to convert to a monetary value and what formula do you use? Great question. That is a really, really good question. So, here's the thing. And I mean, I have a simple answer for you. You're not gonna like it but you cannot deduct your time. That's a lot of business owners don't understand that and it's like, well, but if I could have been billing for my service at that time, I should be able to write that off. You can't write off your time. You can only write off the expenses related to that activity. So your close relative to that, the place where you are when you're shooting that video. That's a lot of the documentation that can support why you wrote those things off where you actually handed somebody a credit card or you paid them cash or you wrote them a check. Who writes checks anymore? Does anybody write checks anymore? I actually write checks. You don't know, do you Cody? You're like, that's how I thought about it. I don't know. But you cannot write off the actual time spent while you're making the videos. It's the time, it's the expenses that are related to that activity. But that activity could support the fact that you get to write off your trip to Miami because you were going down there to do professional photos in order to post on your Instagram and you have the proof. Here's one thing that I've thought about, like there's not a lot of accountants on Instagram. Okay? Huh? That's good. There's not a lot of accountants on Instagram. So I take pictures of my direct messages where people will give me their phone number in email and say, I want you to do my accounting because I know one day I'm gonna have to defend the fact that a hundred percent of my business is generated from social media and that's why I spend so much money on social media and marketing. It doesn't, it doesn't, there's no other accountants that are spending as much as I am on advertising and social media. And so it would spit me out in terms of an audit. So I wanna be able to have documentation that proves that's why I'm doing what I'm doing. David says, I plan to create a partnership with my wife but I receive the commissions. How does this work? Great question. So you can still receive the commissions. This is, this is where it gets a little, was that David? David? Yes. Yeah. So David, you can still receive the commissions but you have to be a little bit, you got the tracing laws. So if the commissions are sent to you and it's your social security number, if that's the way the 1099 is issued, you still have to record the 1099 coming into your schedule C and then you record one big expense. Let's say the 1099 was for $100,000. You record one big expense that says other expenses, income reported on federal ID number and whatever your new federal ID number is for the general partnership, $100,000. That basically tells the IRS that you recorded the 1099 but then the expenses were recorded as well for the same amount, which gives you a zero amount on the schedule C. Then that amount is recorded on the general ledger as the general partnership as income. That's how you're able to get it over there. Now, that's if the 1099 was issued directly to you individually. And I don't know if that's exactly what you're talking about. If the 1099 was generated and sent directly to address to the general partnership and your wife was a partner in that, well, then she would just share in that small amount of income. Okay, through that K1. Eric Johnson, I've got to work with JD Frost. Was that good or was that good? I appreciate that, Eric. He's making fun of me a little bit because I always say that. Is that good or is that good? Is that good or is that you say that all the time? Mess it with me, but it's good, you know, I like that. Patrick says, is it possible to partner with you or somebody on your team for some of my clients? Yes, of course, yeah. I mean, set up a time with Logan, go to frostcpas.com back slash jump and you'll be able to schedule a time to meet with Logan, for sure. I think that's it for the questions so far. Any questions, okay. So that is, I just want to make sure that we understand where we're coming from here. The jump method system allows you to go back and amend your prior year returns in order to get tax dollars that you have paid already in the past and get them back. And that's where I see a lot of clients, a lot of opportunity for business owners is to go back in the past and get those dollars back. And the IRS has different parts of the tax code that allows you to do that. And that's what we show a lot of our clients, okay. I'm gonna show that again really quick. All right, so again, frostcpas.com. Yeah, that's Logan there jumping. Or slash jump, he's jumping in the air and I don't know if it's money or what that is, but it look, it's good. I think it's money. Is it? Maybe it's rain. Maybe it's rain, man, I don't know. I don't know, I like it. I like it. Make sure that you guys go there. You thought, name, email, phone pretty easy and schedule a call. So definitely do that. Conversations are free. I mean, that is where we're going to provide you the most value. If anything, you have that conversation and you have a plan to walk away with. If you wanna execute that plan on your own, that's fantastic. If you want us to help you execute that plan, we would be happy to do so for you. Good man. We're getting a lot of thanks and appreciation and you're the man, JD. Thank you. I really appreciate it, Cody. Thanks for having me on here. Thank you for everybody watching this. I really appreciate the support. These are fantastic questions. This is one of my favorite things to do. I plan on doing it a whole lot more teaching these webinars and this kind of stuff. So yeah. We need to help them over for 8% because JD again is headline sponsor 8% and speaking at 8% and gonna be there in a big way at all the little parties and everything else. So I'm sure you'll be able to buy him a drink and ask him a million tax questions. Oh yeah, excellent. I love it. I love it. All right, buddy. Thank you all for being here. Thank you. Appreciate it. All right. Thanks for taking advantage of the jump method. Again, this was how to put 25K back in your pocket and JD's gonna be the man to do it. So make sure you go to frostcpas.com slash jump and schedule that call. Thanks again, brother. Thank you. If you love this video, stop what you're doing. Click right there. I've got another phone sales videos with tips specifically for you to convert people over the phone. Click on that video and I'll see you there. Today I wanna talk about five easy phone sales tips that you can implement right away and see success with. Okay, so stay with me as I go through each one of these.