 Welcome back to Geeks are sexy. I'm Jason Laduke here to talk to you today about all the things you need to do to be successful with your business in your and in your personal life. And one of those things that we all have to deal with, whether we're in business or just in our personal life is taxes. And my good friend Christy Lorenzo is here today to talk to us about some of the changes in the new tax law. Some of the things that are settled. And some of the things we're still waiting for some more information so that you don't get caught unaware. And we'd make some decisions that might not be in your best interest today when you might want to wait for some more information. So Chris started his company CMD to help ensure businesses and individuals found a competent partner to sustain and grow their profitability. More than just a standard accounting firm, you specialize in small business accounting solutions using cloud technology, including virtual CFO services. And that's what I think is so fascinating about your company is that's that's not what everyone out there is offering. And so I want to want to get to that a little bit today to audit reviews, compilations of business financial statements. And what Chris is here to talk about today, tax planning and preparation. Chris, thank you for being here today. Absolutely, my pleasure. So before we get to the tax stuff, tell us why you started your business and how you came all that came about. Yeah, sure. So I started my business about 15 years ago right around when I when I got my CPA license started very small, really part time as a tax planner and tax preparer. At the same time, I was working as an executive for a couple multi-billion dollar companies running their internal art department. And while I was growing that organization, I started growing my business a bit too. I left there about a year ago and had been working in my business ever since. And you've been working your butt off since you went full time. I have, yeah. I know. It's definitely a different environment. So tell us about these virtual CFO services. This is the thing that I think is so fascinating about your business. Yeah. So, you know, what I found certainly coming from the environment that I've come in with, with large scale organizations, lots of small businesses have a great need for CFO, but they can't afford the three, four or $500,000 a year bill. Absolutely. So what I've done is I've created this virtual CFO environment where I help clients that need things that a CFO would do on an ad hoc type of basis. So, you know, whether that's budgeting and forecasting to help them figure out how their business year is going and where they should be looking to cut costs or expand to help grow. To really just be that partner with the organization to allow the business owner to focus on running the business and let me help focus on the financials of the business. I think that's so important because as business owners, it's important for us to be decision makers and to be leaders. And if you're a business owner who's really good at making your widgets or your product or selling your service, that's great. That's really important. That's what you should be focused on as a business owner. But if you don't know how to read financial statements, you can make decisions that aren't so great because you don't really understand the information that's being put in front of you. And you are bringing not just the bookkeeping, the accounting and saying, here you go. Here's your numbers. You're bringing the knowledge and the ability to help a business owner make decisions about what they should do next quarter, next year, long term beyond that with their business. And I think that's such a valuable service that so if you don't know how to read a financial statement, connect up with Chris. But the reason we brought you here today, we want to talk about the tax piece, the tax education piece. And so what are the important changes that have happened for businesses at the end of last year and this year? And what's settled? I want to make sure we get a really good handle on what's already decided. And then what do we need to kind of watch out for? Where are we waiting for more information from the government on the tax situation? Yeah, so as far as the businesses are concerned, the biggest change that's happened with businesses are really two. And one is settled and one is not. So the first one that's settled is for C corporations, which is the type of corporation a business is when they initially incorporate. The tax rate has now been set at a flat 21% tax rate and they've gotten rid of the alternative minimum tax calculation corporations. So that's settled. That's done. If you are a C corporation or ready, if that's been the best business model for you, you're very, very happy. That's going to save you a lot of money. The part that's going to save the smaller businesses a lot of money is this new law that's passed. It's called the section 199 cap A production. And so what that is is for pass through business entities for S corporations, partnerships, sole proprietorships. There's a 20% deduction that you can get on your profit that you'll take on your personal tax return as a result of this being there. It's way more complicated than I just said. Yeah, and this is what you may have heard. This is QBI, right? If you've heard of QBI, this is what people are talking about. If you're a pass through, and we're going to talk about business entities and what's the smart thing to do, but if you're a pass through and that includes if you're an LLC, a single member LLC, right? Because you do that pass through taxes different if you're a multi-member LLC, right? Nope, it's still a pass through. Still the same, okay. See, I'm learning something too. But it's still a pass through. But yeah, so that's that QBI and that's the piece that's not quite 100% settled, right? Exactly, and as recent as a couple of weeks ago, I think it was maybe the first week or so in August. The way things work is so Congress puts out the law, this tax law, what we're going to be doing, and then the IRS comes in and interprets it with the regulations of how they're going to enforce that law effectively, right? And so the IRS just came out with the Treasury regulations a couple of weeks ago, and they're now out for public comment. So in there, they helped clarify a few different items, you know, what a service business is, which has some different ramifications and really how that deduction will take shape, what's in, what's out, those types of things. And there are some income levels and numbers out there and you guys can go look those up online, but stay tuned because that might not be for everybody and those numbers might change. So that's just what we really want to want to get across here is there's there's still more to follow on this. But it sounds like, and I'm going to lead the witness a little bit here, but it sounds like right now a C Corp might be the best idea for a small business. What do you think the best business entity is for a small business, whether you're forming now or maybe you've been around a while. Yeah, you know, it honestly totally depends. And I challenge you a little bit on the C Corp being the best form of business. Like I said, I'm leading the witness. And really, the reason for that is so the C Corp is really good when you're making a lot of money, right? Because if you're a pass through entity, as the profit is passing through your business, you're going to get taxed at your individual rate. Your individual rate very well may be less than 21%. Not only in the actual bracket you're in, but the way the system works, you get part of your money taxed at 10% part of your money tax and all these percent. So when you take the effective tax rate, 21% actually may be higher than what your individual rate is. So really the situation is totally dependent on the type of business you are, whether it's a service-based business or a non-service business, how much money you're making, how much your spouse is making, how much money you're making. That was something that it wasn't a huge surprise to me, but stood out to me is when we talked about this a couple of weeks ago, is this is your household income, not just your business or personal income. For the QBI, yeah. Yeah, so with all of those factors in there, you can't just say this one is the best, because for me it may be a C corporation, for you it may be an S corporation, for somebody else it may be a sole proprietor. And so we just kind of need to have a conversation, run the numbers and figure out what it is. One point I'd just like to make on that is the election. So the election of what you're going to be taxed as. So once you make that election, if you're electing to be taxed as an S corporation, for example, you have to maintain that for five years before you can change it. Good to know, I didn't know that. Yeah, so it's important to make sure that you don't just do it and then come talk to me and say, okay, did I do it right? Because now we've got five years to deal with it if you did it wrong. So just something to be aware of, it's a five-year rule. Okay, cool. Well, so what I'm hearing is get out your old taxes, everybody's favorite thing to do, and talk to your accountant or talk to your CFO or virtual CFO and run the numbers, run the possibilities, and really think it through before you make any changes. Absolutely. So any other last piece of advice, any piece of advice for us on our personal taxes under the new tax law? Yeah, so for personal taxes there's probably three big changes that's going to affect everybody. So first off, personal exemptions are gone. Yes. So for anybody, for you and yourself, your spouse, your dependents, you used to get about a $4,000 deduction that you could take as an exemption, that's gone. What they've replaced that with is they've also doubled the standard deduction. So what we're going to find is a lot of people may not be itemizing the deductions anymore, so that side may become a little bit easier. For example, if you were married, filing a joint last year, you had a $12,700 standard deduction. Well, in 2018, that's $24,000. So we'll have to play around to see which way you're going to go, but a lot more people may be opting for the standard now instead. Run the numbers on both, work it from both sides, and if you have an accountant or need an accountant, talk to an accountant and have that conversation. Well, Chris, it was great to have you here on the show. We're going to bring you back for our panel discussion in just a few minutes, but tell our audience where they can find you if they're looking to have that conversation with an accountant about what things they should be thinking about. Yeah, absolutely. So the easiest way to find me is online. You can find me through my website, which is www.cndca.com. And all my information you can find there. You can find tons of reviews about my business from there, as well as some great blog articles to keep you up to date. Yeah, there's a lot of good stuff on the website, tons of good reviews. Chris is a very high-level gardener in the community. So I'm Jason Ladouk. This is Geeks Are Sexy. We'll be right back with Sonny Chabreau.