2284 - Crossing the Road to Tax Savings with Pennywise Tax Strategies' Adam Williams

0:04Well, hey, Thoughtful Leader. Welcome to the Thoughtful Entrepreneur. On this show, I interview purpose-driven founders, experts, and change makers who are making a real impact in the world. Want to be a guest? Simple. Go to upmyinfluence.com and click podcast. I'd love to promote your story to our audience of over 100 ,000 and across over 2 ,300 daily episodes and counting. Want to get booked on other great shows like this? Simple. Go to podverified.com and get your free guest authority score. Thousands of hosts are looking for high quality guests and Podverified connects you the right way. Now let's dive into today's episode.

0:58With us right now, it's Adam Williams. Adam, you are an author, speaker, coach, and you are the co-founder of Pennywise Tax Strategies and the founder of Rust Belt Business Law. Your website for Pennywise is pennywise.tax. Adam, it's great to have you. Great to be here. Yeah. Listen, before we kind of get going, how has the summer been going? I don't know if you've been geeking out on anything lately, or what have you been doing for fun when work is all done? Yeah. I have too many hobbies, but my wife and kids and I spent 35 days in our RV, traveled the entire country. I'm working on getting my pilot's license, and I'm finally getting my race car running.

1:39So with all three of those, there's usually plenty of stuff for me to talk about with people. Yeah, no kidding, especially those last two. I mean, that's, well, you know, if you have a car, you're not driving. No, I drive it. Are you going to race? Are you going to have it raced? It's actually, Uncle Sam helps me pay for my race car because I built a tax strategy around it. Yeah, yeah, yep, yep, yep. So then you'll have a driver for that, and they'll actually participate in races and stuff? I drive it. I do track days and stuff like that. So yeah, I'm team owner, crew chief, and driver, and backup driver.

2:14Okay, nice, very nice. Well, that sounds like a lot of fun. And certainly, like I said, something that'll keep you busy. um so so adam um so in boy what uh you know we're recording this you know kind of in the middle of 2025 here into august and you know this will publish you know somewhere around september or whatever uh and what a i guess tumultuous or or you know a year or at least a year where there's been just a lot of movement maybe some confusion you know with though this is happening no it's not or, you know, it's, can you, would you mind just kind of starting off? And we'll definitely talk about your work.

2:57For founders that are listening to this conversation right now, as of where we are today, give us a lay of the land for 2025, particularly for SMB business founders. Sure. Yeah. So I don't, I should probably keep track of how many presidential administrations I've survived, but certainly this year has brought more, more chaos and uncertainty than than any prior year. And I don't mean that in a positive or negative way. Yeah, it just is. Right. And I think the other factual piece of that is the rate of change of things this year, especially legally and and policy wise, things have never changed so fast.

3:35Things have never moved at such a rapid rate. So I think people have spent a lot of the year trying to play catch up, trying to figure out what's going on. And we're now about 30 days after one of the biggest pieces of legislation, especially as it relates to tax, was signed by the president. So we've got 900 new pages of stuff that we're learning and digging through. And so you've got the tax piece that everybody's worried about. But then, of course, oh, yeah, we're also running a business where we've got to continue marketing and our clients and customers and patients are worried about what's going on in the economy.

4:08And some new tariffs took effect today that I just read about. And there's so much chaos and so much uncertainty that I hate the phrase unprecedented, but there aren't a lot of situations that we've seen where all of these things are happening at the same time like this. How is it? So, you know, obviously, you know, we're in a situation where you better have somebody to help you navigate this, because if you're making the same decisions based on years past, that could really come back to bite you. And And my observation is this seems to be creating a lot of, I mean, concern is one way to look at it.

4:47But, you know, just impensiveness might be another way. Confusion is another way. I don't know. What are your observations in terms of like working? What I'm hoping, Adam, is that you could share a little bit of normalcy that if someone, a small business owner, is feeling a little overwhelmed. overwhelmed. I want to let them know you're not alone. Right. And again, I just like you, you know, I don't want to address the good or bad of it. It just, it's outside of our control. This is just what it is. I, you know, I trust me. I'm like, I've been a consumer expert and advocate in the media, you know, over 3000 media parents have been a syndicated newspaper column writing on consumer skills for the past 20 some years.

5:30It is like it's close to 20 years. And it It is, it's hard to keep up. Usually we used to have to like, oh gosh, what do we write about this week? Now it's like, oh, now what do we pare down to talk about this week? You know, just helping consumers, you know, make smart decisions. But again, with business owners, it can get even more cumbersome. All right, provide some normalcy on like what you're hearing from other business founders and leaders. It has never been as important as it is right now to work with experts on things. So yeah, I talked about legal and policy and government and all that crap.

6:07Yeah. But also, what about like AI, right? Well, we all have enough stuff going on in our lives that I can't go and figure out AI and update my marketing and figure out what's going on with tax policy changes. So I think the time is now if you don't have it in place to assemble your board of trusted advisors that you go to, especially with people that have experience and expertise and knowledge, and now more than ever, probably really niche expertise in things. So, you know, we you told me your audiences is we're grownups. Not sure how I got in the room, but I think it's time to mature a little bit and realize that we we can't do it all on our own.

6:49In fact, trying to do it all on your own is what's going to continue hindering your growth. So when it comes to everything that's going on right now, having that sounding board, having those people that you that you talk to. So like I do, I do a little bit of coaching work on the side. I have a mastermind that I put together with local business owners. And yes, I'm the facilitator and I have the most experience and I have the biggest business of anybody in that room. But I'm still learning from the people that are sitting in there because there's things that they know or that they've experienced that I haven't seen before.

7:17So I think it's more important than ever to make sure that you're in rooms with people whose advice you trust and who have experience with the things that you're trying to do. Yeah. You also mentioned AI. Adam, what are you seeing? How does that affect your world? The effect right now is significant, but it is so insignificant compared to where it'll be 12 months from now, 60 months from now, 10 years from now. This is where I've been actually spending a lot of time recently is the rate of change that AI is going to cause is going to be incomparable to anything that has ever happened in the history of the world.

7:58And the book that I'm reading right now is saying, you know, we're working towards this artificial general intelligence, and it's going to be able to problem solve complex scientific, blah, blah, blah. And the book is saying, and you know, chat GPT five is going to be the biggest hurdle towards that that we've ever seen. And we can't wait for that to come out. And literally today, I think they're unleashing chat GPT five. So I'm trying to figure out what's going to happen. Every industry is going to be completely disrupted. Like, yeah, we use AI in our marketing and in our data analytics and in a whole bunch of other ways, but the way that it's going to transform and be able to actually complete work for us, both at a low level and at a very high level, it's blowing me away.

8:40It scares the crap out of me, but that also motivates me to try and figure as much of this out as possible. Yeah. So obviously, this is disrupting organizations and people because employers need to make big decisions, you know, as to listen, our competition is already moving forward and streamlining using AI in this way. You know, do we keep up? We have to make personnel decisions, you know, that affects hiring that, you know, affects culture. There's that side of it. And then of course, you know, you know, there's the, just the business owner side of it. And like, and, and, you know, I have to, you know, you don't want to stay stuck in the past just because that be silly.

9:19But are there, you know, so there's that, you know, and I appreciate, you know, having the conversation around that operationally, you know, obviously, I think, you know, with you in the room, Adam, you know, I think it's really important to kind of talk about tax strategies, the average business owner, like if they're just using, let's say a tax preparer, they're just using a bookkeeper, is that enough? If they're doing, kind of like typical kind of maybe mid-figure, mid-six figures, maybe kind of low seven figures in business. They could have an e-com company. They could be an agency, a service provider.

9:57Why is not working with a strategist, why could that be a very bad idea? Because you work too damn hard and you want to be able to keep more of your money. So it's not for me to tell you whether you need it or not. I tell people to go and look at your tax returns on page two of your 1040, it says what your total tax bill is for the federal government. And if you look at that number and you're okay with it, your relationship is fine. There's no reason to change anything that you have going on. Most business owners don't even know what that number is. And then when they do look at it, they're ready to throw up in a garbage can.

10:31And that's when they call us and say, hey, what do you guys do that's different? And really what What we do is we completely flip the lens on your tax bill and tax preparation, where when you sit down with your accountant in the first quarter of the year, you're looking backwards. You're looking historical. You're reporting on what happened. What we do is we sit down and look forwards and say, all right, we got four months left in this year. There's laws changing five weeks from now. There's stuff that's going to expire on December 31st. There's things that you can do now, and chances are things that you were doing already that we can account for in a certain way to save you tens of thousands, hundreds of thousands.

11:10We've got clients that we've saved seven figures on their taxes. And these are not massive corporations. These are, I'd call them mom and pops. They're single shareholder businesses, or maybe a husband and wife that own them. They're obviously doing well and very successful, but a million bucks a year that you can save on a tax bill. We started our journey, Jackie and I, she's a CPA, my wife, we started our journey the first year we started putting some of this stuff in place, we saved ourselves a quarter of a million dollars on our taxes. That's real money. We've been through seven or eight different tax preparers in our career and as our business grew, businesses grew, and nobody ever said, hey, there's things that you can do differently.

11:47It was always congratulations. Here's how much you owe. How much do you think you're going to owe next year? That was it. That was the end of the conversation. We decided to change that because it's not the smart way to do things. Yeah. You know, obviously there's, you know, you could answer this question. I mean, there's an infinite number of strategies, potentially just depending on unique circumstances. But I would imagine you probably see some patterns of some of the most overlooked tax tips. What are like one, two or three tax tips that you had mentioned like, listen, if you're not doing this, here's an example of something that you, you ought to be, cause you know, that definitely saves you some money.

12:32I know, you know, shame on me, you know, for only learning about something like the Augusta rule, you know, a couple of years ago. And I think about all of the years that, you know, I could have been using that. I mean, that's an easy one, especially, you know, my wife owns a small business. I own a small business. So I, you know, I, I didn't mean to lead the witness here, but you know, what, are some of the common ones that you come across? No. And I think, I think that's really important because the answer that I give on social media is different from the answer that I give when we're meeting with clients.

13:03I got to give the sexy answer when we're on social media. Cause you know, we got to, how do I write off my Rolex and my race car and my airplane and blah, blah, blah. You want the truth. The number one tax strategy is to look at your profit and loss on a consistent enough basis and make sure that your expenses are in there. Like, do you know how much we're here. It's, it's beginning of August. We're like, we're in the third quarter of the year. You have any idea how much money you've made so far this year? Maybe, you know, the revenue number because that's a vanity metric. And we like to compare that year over year, but like really your, your profit, your, your wages, what we call it, your total owner benefit, like what you take home.

13:40Do you have any idea where you stand so far this year? 95 % of business owners have no clue. And I don't even mean just like the small time. Maybe you're only doing a hundred thousand in revenue. I met a guy a week and a half ago now that has a$20 million business, a very profitable$20 million business, and he has no clue how much money he's made this year. He thinks he has an idea. So that's the boring answer. That's the textbook answer is like start looking at your P &L. Start looking at your bookkeeping and make sure your expenses are in there. This guy that we were talking to with this massive business, he's like, what about offshoring?

14:15What about revocable trust? What about blah, blah, blah? And it's like, well, I don't know. Do your kids work in the business? Yeah. Are they on payroll? No, they're just here to work. Okay, well then let's put them on payroll because that's going to get them out of your really high tax bracket and into a zero tax bracket. We did talk to him about the Augusta rule. He wants to buy a vacation home. So we're like, all right, what are you looking at? Big ass lake house. Cool. Have you considered putting that in, doing it as a short-term rental because there's huge tax benefits for that. And this is a guy whose income fluctuates every year.

14:48He's going to have a big income their year this year. So it's like, all right, let's look at some changes with the one big, beautiful bill. Let's look at doing that cost segregation study. So, you know, it's really a case by case thing. Other foundational stuff, we make sure you're in the right type of entity. This gets really nuanced. You know, even when I was in law school and when I was in getting my MBA, the common advice was like, yeah, set up an LLC, make an S corporation election. But it turns out that we have a lot of clients that are considered small businesses that they're way better off being a C corporation or better off setting up some different partnership arrangements, depending on what they have going on.

15:27So we always look at choice of entity, Augusta rule, like you mentioned, putting your kids on payroll. And then again, I like to do an analysis of what else do you have going on in your life? And what can we do in a tax advantageous way? For me, it was the race car. Jackie and I just went to Las Vegas a couple weeks ago and there was a business reason for the trip, but it was only one day of business. We were able to stretch that into five days in Las Vegas and write off our plane tickets, our meals, our hotel stay for the entire duration of that trip, even though we were only there for one day of business.

16:00So, you know, before we need to get into the really crazy, obscure stuff, do you want to move to Florida to save on your state taxes? Great. If that's what you want to do. You've already done that, Josh. Good job. Do you want to relocate to Aruba? You don't need to disrupt your entire life just to save money on your taxes. And in fact, we advise against that. We prefer that you take the things that you're already doing and find a way to get Uncle Sam to help with it. Adam, your website, pennywise.tax. For a friend that's listening, I know you've got some great resources here. And then obviously, there's Tax Guide, and this is where they would connect with you.

16:37Go ahead and share with our friend that's listening right now, where do they go from here? If they'd like to maybe discover where they might be way overspending to Uncle Sam. Yep, so if you go to pennywise.tax, which is our website, we've got a PDF you can download and it's seven of those common strategies, a lot of them that we just outlined that says, hey, if you're not sure if you do these or if your accountant hasn't brought these ideas to you or if your accountant has shot these ideas down, you're leaving money on the table. And we actually guarantee that with our fees, that if we jump in and get to work and can't save you anything, you don't pay us.

17:13So we've got that free guide available. We've got some other free resources that we're working on that we're going to send out to our list in the next couple of months. There's some really good stuff in there, an even more robust list of 151 strategies that I've been working on. So the website's the best place to go. And then of course, following me or the company on social media. I'm Adam Williams, just about everywhere, and pennywise.tax on all the other social media accounts. Yeah. Adam Williams, again, your tax strategist, author, speaker, coach. Your website is pennywise.tax, of which you are the co-founder.

17:48Adam, thank you so much for joining us. Thanks, Josh.

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