216: Save 2/3rd of your Taxes with Shauna the Tax Goddess

23
Jun

Shauna Wekherlien is the owner of the Tax Goddess Services firm, a top 1% tax advisory firm helping small businesses with tax, accounting, and payroll duties.

We discuss Shauna’s journey to becoming the Tax Goddess, inspired by her dedication to assisting small businesses with tax strategies. She explains the “aggression scale” in tax planning, highlighting the importance of aligning strategies with clients’ risk tolerance and sharing innovative tax deductions to help business owners maximize savings and achieve financial success.

 

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Save 2/3rd of your Taxes with Shauna the Tax Goddess

Good day, dear listeners, Steve Preda here with the Management Blueprint Podcast, and my guest today is Shauna, the Tax Goddess, who owns the Tax Goddess Services firm, which is a top 1% tax advisory firm helping small businesses with tax, accounting, and payroll duties. Shauna, welcome to the show.

Thank you so much for having me. It’s such a pleasure. I’m so excited. I love management stuff, so this should be lots of fun.

Alright. It’s not all management, but definitely, I mean, we have evolved. We are still called Management Blueprint, but it’s all about business framework. So let’s jump in and I’m really curious about how you became the tax goddess, or is it just your firm’s name?

It’s a great question. So, well, technically I suppose at this point it is my title, but yes, it is the firm name. So we’ve really all started, and two sides to this. There’s how the name came about, and then all of these fun little designations behind my name, you know, the alphabet suit behind the name. So I’ll start with the alphabet suit. That’s probably the easier one. So I am a CPA, certified public accountant. I have my master’s in taxation. I am a certified tax coach, a certified tax preparer, and a certified tax strategist. So certified, certified, certified, certified, and some more certifications in there, right? And that’s all the technical gobbledygook, right? Basically saying that out of 660,000 CPAs in the US, there are only 15 of us that have the designations that I have. And we all specialize in tax strategy and only tax strategy. We don’t do audits. I own a firm that does a bunch of stuff, but me, myself, and I, I do the tax strategy side. And so really, I suppose that’s where the name Tax Goddess came from many, many, many years ago. Tax Goddess is a company that’s turning 20 years old this year in August. I’m very excited about that. So let’s see, I think it was year three of my business or something like that. So a very long time ago, I was at a networking group and it was one of those instances where, you know, they had a microphone and they were passing it around and they were like 200 people in the room and they’d give you the microphone, you’d stand up, do your 30 second commercial, you know, who are you? What do you do? All the things. And unfortunately I’m a little bit of a chatterbox, just a little bit. I like to talk to people. And so, I was talking to my friends that next to me and talking away. And I get a tap on the shoulder and a microphone shoved in my face. And I went, I’m not prepared at all. Grab the microphone, stand up and say, hi, I’m Shauna the Tax Goddess. And it just rolled out. And every head, 200 people in the room spun to look at me. And a very good friend of mine who was sitting way on the other side of the room came up to me after and said, best marketing name ever. You put that on everything. It goes with the flaming red hair. I mean, it's your personality, like everything. Share on X

And so, from that day forward, we were called Tax Goddess.

So okay, well, that makes sense. I can actually visualize you as being up in the clouds and looking down on the other 14 tax mortals who are strategists but maybe not gods.

Aww.

All right, so let’s dig in because I’m really curious about what a tax goddess can do. And in fact, you have a framework which is pretty divine, which basically allows someone to identify all allowable expenses, including even to write off pet expenses. So can you explain how that works?

You got it. I love it. So I think the best place to start here is to understand the difference between a tax preparer and a strategist. That’ll give a good, big overview, okay? A tax preparer is looking at the IRS laws, right? Which to many people can seem black and white. It either is or it is not. But when you go to a strategist, our job is to figure out how do we use those tax laws and of course stay legal, right, all on the white side, but there’s a big area of gray in between yes or no, right? There’s a huge area. And in our world, we call that the aggression scale. So, zero to 10, zero meaning the IRS never calls you, never ever, but you’re leaving a ton of money on the table, and 10 means we’re all going to jail. This is one of the most important questions we have to know for our clients. Because some clients never, never, ever, I want to be at a zero. Some clients will tell us, I want to be at a 20, and we have to pull them back to the light side, okay? Tax goddess will never go if a 10 is going to jail, 9 is Al Capone, meaning you’re doing bad things and hoping you don’t get caught. An eight is where you’re okay getting a call from the IRS because you know everything is legal, everything is above board, here’s the documentation, here’s why, like the reasons, legal court cases, all the things. And then of course it goes down from there. So, when we start looking at clients, right, and what do we do and how do we, as you said, writing off pet expenses, some of these fun deductions, right? How do we write off your dogs? How do we write off the Rolex you want to buy? How do we buy a yacht, a million dollar yacht? How do we do these things while staying on the right side of the law? Because, you know, good or bad, red and orange do not look good together. Not going to jail for nobody, okay? So how do we do these things, staying on the right side of the law, and being where you want to be as a client? Most CPAs, I can almost promise you that the likelihood that as a client, you’ve ever been asked, what is your aggression scale? Where do you want to be in this? It’s almost nil. Because most CPAs, tax preparers, will come in with their own aggression scale. Maybe there are two, maybe there are five, maybe there are negative 10. We’ve heard that from clients. They won’t let me take anything. They’re a negative 10 on your scale, right? But if that question is never asked from you as a client to your professional team, so side note, ask your team, okay? If you’ve never asked that question, the strategies and things that might have even been presented to you will never be presented if that person and you don’t have the same scale. So, for us, that’s always step one.

So, if someone never gets caught by the IRS, they are being too low on the aggression scale?

I’m smiling, you’re smiling, I think so, yes, right, but I’m a level eight. Now, if you’re a level seven, you never want to get a telephone call from the IRS. You want to push that envelope, it’s not worth putting up with the time, with the audit, the calls and the paperwork, like you just don’t want to do it. So, it really doesn’t matter what your scale is, but you need to know what your scale is so that you can tell your professional team, your CPA, your strategist, your financial advisor, all your business coach, everybody on your team needs to know where you wanna be so that they can apply their professional knowledge to what you want for your life.

Yeah, that makes perfect sense. So you have three magic questions that you like to ask. I think it’s ordinary, necessary and reasonable. So what does it mean and how do you ask it? When do you ask it and what are the answers?

Absolutely. I love it. Well, so ordinary, necessary, reasonable. You’re so good, Steve, at keeping me on track. I love it. So ordinary, necessary, reasonable. Right. These three questions you need to know in order to take a deduction for something. Let’s go back to the example you brought up, pet expenses. Let’s go back to this example. Now, if a CPA, let’s say you are an office worker, you’re C-suite executive, you’re a finance data analyst, whatever. It doesn’t matter what your job is, but your CPA knows what you do, so they know you’re a C-suite executive, okay? They made an assumption in their mind about you writing off your dogs, which is you don’t need ordinary, necessary, and reasonable. You don't have a business purpose, ordinary for your type of business. Share on X You’re a data analyst. Why would a data analyst write off a dog? It’s not necessary for a data analyst to write off a dog? Is it ordinary, necessary, and reasonable? Well, I don’t know, is it a $2,000 dog or a $50,000 dog? How much dog expenses is that? But in the CPA’s mind, they’ve already said you don’t meet those qualifications. So when do we ask these questions? When you become a client of a strategist, okay, strategist’s job is to look at that chess piece. You have a dog. And let’s look at the specifics on the dog and on you. So, great, you’re a data analyst. Do you work from home? Yes, I do. Ooh, okay, this is good. This is good news for a strategist. Okay, do you have a computer in your home office that you work on client information that might potentially in some way have client information on it? Yeah, I do all the time, right? I connect and here’s the files and okay, great. What kind of dog do you have? Is it a Chihuahua or is it a Rottweiler? Right? Is it a Pitbull? What kind of dog do you have? Okay, in this case, my dog, I have a Great Dane. Big, huge, scary, scary looking dogs if you’re on the wrong end of that dog. Okay, so we’re picking these facts, right? These little facts. Okay. And would your bosses be upset at you if client information got in the wrong hands? Oh yeah, I could lose my job. That could be the end of that. That’d be a real big problem. Okay, so let’s go back to thinking of the dog. If somebody tried to break into the house and they knew where that computer was and they were trying to get after your client information, right, because you’ve probably got socials and birthdays and all this information, they’d be going for that computer. Is the dog at least trained, air quotes, trained? The IRS has very specific meaning for this, but is the dog trained? Sit, stay, come, are they trained? Yes. Is the dog big enough to scare off intruders? Great Danes can be pretty scary. They’re big, they’re gonna do it. And the third one, is protecting your client’s information a reasonable expense for what you do? All day. You could lose your job if you don’t protect that information. If you can meet the three qualifications, ordinary, necessary, and reasonable, you now have yourself a write-off. Share on X

Okay. I can see that. Now, just another example. You mentioned the Rolex watch. How does this work with the Rolex?

Let’s talk about the Rolex. It’s everybody’s favorite question, is how do I write off the Rolex? Okay, so let’s back up. Let’s play a game. Let’s play a game. Give me what your job title is.

Owner.

Okay, I’m an owner. And as an owner, do you have to sell people? Do you have to sell a client?

Sell my services, sure.

Sell services, yes I do. Okay, fine. Now, if I am a client and I see you in a Rolex, how much more likely am I to use your services if I see you in a Rolex?

I have no idea.

Okay, so that right there is a detractor for you, right? Because we don’t know, we don’t have any measurement. So we can’t say whether it’s reasonable or not reasonable. Okay, so that’s something we either got to figure out, or solve. It’s like a missing piece of the puzzle. So this is one example. Let me back up. What is the purpose of you having a Rolex?

I don’t know. Status symbol?

Status symbol. Okay, I like it. It’s pretty, right? I want to have something that shows my success. It makes me feel good because I have something that I can prove that I did a good job, whatever these things are. Is there a completely different way besides trying to write that off in your business? Is there a completely different way for you to be able to wear a Rolex and have it as a write off? Let’s think outside the box. What if we set up a business on eBay buying and selling Rolexes? And we have to buy and we have to sell. It’s got to be a real business. But as a part of my buying and selling, I need to wear the Rolex. I have to show people, right, that, hey, look, this is what I do when I sell and I sell Rolex and here’s what I have to do. Well, now the Rolex, I get to wear it and I get my status symbol and I get all the benefits that I wanted. I get to wear something pretty, right? And I have a business where owning Rolexes and wearing Rolexes is ordinary, necessary, and reasonable because I got to show my clients what the wares are. So sometimes it’s not about fitting in an expense into what you currently have. Sometimes it’s about weight. If that expense is big enough, you know, some of these Rolex Submariners are $150,000. If the expense is big enough, how do I figure it out, above board, legal, right? What kind of business, what kind of way can I write off this expense? The yacht that I mentioned, farms, a lot of people have backyard farms. How can I write off the backyard farms and my fruit trees on my property? So, a lot of strategy is looking at it from 15 different angles to figure out which angle gets you what you want and whether you’re willing to or not, put up with all the extra paperwork and effort that it takes to get that. Is it worth setting up an entire eBay business with clients and you have to ship things and pay things and hunt for deals and whatever? Is it worth all of that or would you rather just pay the 150 for the Submariner Rolex?

Yeah, got it. I used to work for a bank two decades ago and it was in Hungary and there was a subsidiary of a Dutch group and they had an Irish subsidiary and Ireland was a low-tax country and they had a subsidiary in Hungary and they were making these weird meetings where there were local directors and they would have all these licensing agreements and this intellectual property leasing agreements and Swiss bank accounts and no one understood what they were doing, but they sure had some expensive CPAs coming traveling just to this meeting. So they must have made a lot of tax savings there.

 And that’s exactly what it is. How much of a, excuse the language, pain in the, are you willing to put up with? And how much money is it saving? Because if it’s only saving you a couple thousand dollars, it might not be worth it. If it’s taking you billions, yeah, you’re gonna pay some very expensive lawyers and very expensive CPAs to set you up with the right thing.

So, what is the size of a business that justifies your level of, you know, your divine level of tech strategies?

I love it.

A solo planner who makes, you know, just crack six figures, it would probably not make sense. And they will probably able to expense all of the revenues that they have. But what do you see is, where is the tipping point? Typically, there are issues that can come up or that could be the size of expenses that would justify your level of expertise.

Yeah, yeah. To me, it really comes down to, because gross can be big, it can be small, because it’s all about net profit, right? In my world, it’s all about how much do you make, take home, and how much you’re paying tax on. So really what you’re looking at is somebody paying at least $250,000 of taxes every year, kind of the break-even point, because you’re right, it’s expensive to do things that big, right? But the one thing that I always promote, because my world started, my family for 800 years back has been small business, entrepreneurs, own in the belly, these kinds of things, right? I love education. And just because a strategy works for the big boys does not mean that it doesn’t work for the little guys, right? So something as simple as a defined benefit program. If you’re a solopreneur and you’re taking home $150,000 a year total, right? That’s how much you’re taking home. If you want to put a bunch of way into retirement, you can use the defined benefit plan. Same thing as somebody who’s taken home 6 million a year, you can dump a bunch into a defined benefit plan. So, it’s not that the strategy itself doesn’t work, just kind of has to be tweaked based on the net profit, the taxes, and how much time and energy and effort you want to put into it.

I love it. So, essentially, you’re democratizing tax strategy because you’re allowing smaller businesses to tap into all those legal loopholes that exist. And all the big companies are aware of it. And now you’re opening the Pandora’s box and anyone can take advantage of it, even small businesses. I love it.

You got it. Bring the big boy strategies to the little guy. It’s one of my favorite things to do.

So, that’s awesome. So, is it really true that the IRS has a hidden guidebook?

Oh, yes. Oh, yes. Oh, yes. Now, is it hidden hidden? I’m kind of 50/50 on whether it’s actually hidden or whether it’s just kind of hidden. They do have an auditing guidebook. Okay. They will publish historical years auditing guidebooks, but obviously they don’t want to give you like the play for play today. But do those guidebooks change very frequently? Not really. And so, if you keep up with the news, that’s one of the job of a strategist is to make sure we know what are the court cases, what’s happening, like what’s the buzz in the world, right? If you have the old guidebooks and you’re keeping up with the news, you have a pretty good shot, like 80% shot of knowing kind of what’s coming, what’s happening.

That is cool, that is cool. So you basically know exactly what they’re looking for and you can prepare people for it.

Yep. You got to give warning. Got to give warning, right? I mean, just recently, what was it? Almost a year and a half ago now, the IRS came out and said, okay, we don’t have enough bandwidth to audit anyone who’s making less than a million dollars. Awesome, right? And they said that publicly. I mean, whatever. Then they got a mandate about four months ago from the government saying, well, you need to increase the audits. Like, we need more revenue. We just printed all this money for COVID, like bring us some revenue. The IRS basically went back and said, well, that’s great. Can you approve our budget to get more staff? There’s a lot of politics and money, all sorts of things that happen in the background. But yeah, side note, just stay on the right side of the law. It doesn’t matter if you get audited or not, you’re doing everything above board.

Yeah, exactly. Okay, let’s talk about the future and what you’re looking at because your field is ever evolving and the techniques and what you can bring down to the little guy from the big boys is, I assume, evolving. So what is it that you’re working on that most excites you?

I think, at the moment, it’s probably, I’m going to call it empire building. I suppose a goddess would have to help Rome build an empire, right? This is how this works. One of the things that I’m really deep diving on right now is how parents can like train financial education and really set up their kids to build empires. Think Rockefellers, Kennedys, this kind of stuff, right? For a lot of people, they’ve never been trained money, right? Money is not trained in school. Money is not talked about at home for most people. There are some amazing tools that if you start young, right? If you start when the kid is born, baby, day one, okay? If you start some of these things within their own lifetime, that child’s lifetime, and for their kids and their kids and their kids, if you do it properly, if you set it up properly, we’re literally talking empires, millions, massive amounts of real estate. You want to create foundations, you want to do charity, all of these things can be done. But a lot of this is across a very long timeframe. Maybe you’re the one person that bought Bitcoin when it was a penny, right? And now you have a lot, but that doesn’t happen to everybody. And so really looking at what does somebody want, not only for your own lifetime, but what do you want generationally? You know, do you want to set up your kids? So maybe you’re just paying for college, maybe buying your first car, giving a down payment on a house. How do you do that? Because for a lot of people, they were never trained on that, and they were never taught to look at things from the generational standpoint of building small empire or the next Rome. So I think that’s what’s really floating my boat at the moment is digging into all the strategies for empire building.

Wow. Build generational wealth. I mean, you need a really long term thinking clients to do that.

Yeah. Yeah. Well, and sometimes, you know, sometimes it doesn’t even have to be that far out. You know, if you think about it, most grandparents want to help the grandchildren, right? Three generations. You’re right. Not a lot of people think about the great-grandchildren and the great-great-grandchildren and the great-great-great-great-grandchildren. But even just within three generations, if you can go from, like, I’ll use the number and example I was just looking at the other day. If you can go from baby, baby, just born, okay, day one, and you put away $100 a month, $100 a month, by the time you get to the third generation, you’re talking almost $25 million completely tax-free based on one child, one. So if you have four grandkids, could you imagine the empire you can build? And it’s all tax-free, which is the coolest part. Like no tax ever, never ever. Government doesn’t get involved, never ever. There’s some really cool things you can do if you’re willing to, I’m going to say, be strict with yourself. If you decide this is what you want, this is the long-term thinking. You've got to follow through. You've got to do it. Share on X

Yeah. I guess Warren Buffett must have done something like that to be able to pay less taxes than his house cleaner. Yeah.

I was just about to say, right, if you know how to use the laws, use them to your advantage. You pay, I mean, our average client’s tax rate is 6.92%. I mean, that’s how we ended up, the most recent book just came out last year, July, 6% life, this is real. 6.92% average tax rate for clients that use tax strategy and follow through on them. Because you get a lot of people that will show up and say, yeah, yeah, yeah, I don’t wanna pay any tax. And you tell them what they have to do. I don’t have the time, energy, effort, I don’t want to do it. Then keep paying the tax you’re paying. Whatever makes you happy.

And in order to get to 6% or 7%, what is the percentage of cost that you have to incur in order to get down to that level? Because there’s got to be a cost, whether it’s your time, whether it’s advisors time, whether it’s infrastructure you have to set up at eBay, business or at Rolex and stuff like that. So what is the cost of goods sold, basically, to do that?

I love it. Well, what I can tell you is the average ROI. Okay, so for the clients that we write plans for, average ROI is running 7.62 times your cost. Okay, now, I put cost in air quotes, okay, because yes, of course, there’s physical hard costs, right? You’re going to pay me. You’re going to set up an entity. You’re going to buy the $150,000 Submariner to put it into your inventory. Like, there’s physical hard costs, okay? Time is the other side of it. And time is the one thing that is very difficult to, for me, to be able to tell anyone. I can give you estimates, okay? So in a simple, simple case, we have five or six strategies we need to implement. You’re maybe talking 40 hours in the first year and 20 hours to maintain it. Looking at somebody that already has 15 entities, I may need a full-time accountant on your team to come do this for you. If we were to look at worst-case scenario, full-time accountant in-house, $65,000 a year, you’re still making seven times. I mean, for most people, as I said, you’re getting down to 6% on what you were paying, $350,000 in tax, you’re fine. Like, you’re still way above. So it really depends. And I know nobody wants that answer, but it depends on the case.

I get it. So let’s say you pay 6%, your tax rate is 35%. No more, the average would be, you know, if you make millions, then it’s most your marginal tax rate is your tax rate. And you save, let’s say, 30 percent, 28.

About a million dollars.

If it’s a six, seven times ROI, then your probable cost of goods sold is maybe five, six percent. Right? So you took your tax rate effective cost from 35 to 13.

10, 11, 12, yeah, wherever in there.

Yeah, that’s pretty cool. Yeah, that’s pretty cool, pretty cool. All right, so if someone would like to talk to the tax goddess or pray to the tax goddess or commune with the tax goddess, where can they reach you?

So sweet, you got me totally flushed. I love it. The easiest place to find my team and I, we are at taxgoddess.com. You will speak with the team first. They’ll gather a bunch of data and details. I get involved when we get to kind of the big picture planning and the big structures and stuff. But yeah, taxgoddess.com, we’ve got a team of, geez, how many now? 90-something, 93 people. We’re global. We only focus, I’ll be honest, we only focus on people with U.S. tax burdens. Unfortunately, I am not yet a Canadian tax goddess or any other country tax goddess, only US taxes.

Yeah, well US citizens have to pay taxes on their global income.

Global income.

Yeah, it’s probably still a pretty wide thing for you. All right, Shuana, the tax goddess, it was great to have you on the show and very exciting stuff. If you’re going to have $3,000-$5,000 in taxes, then definitely call Shona and save 25% on your revenue as tax saving or whatever it is. That’s a big opportunity. So, thanks Shauna for sharing your secrets. And those of you listening, stay tuned, follow us on LinkedIn, SPBG, and our YouTube channel to make sure that you don’t miss out on scores of percentages of savings on your tax bill and other great frameworks. Thanks for coming.

Thank you so much for having me. It’s been such a pleasure.

 

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