#80: Modern Payroll 101

In this episode of the Teaching Tax Flow podcast, we welcome Will Lopez of Gusto to unearth the critical significance of payroll beyond its traditional perception. The conversation dives deep into the transformative power of modern payroll services provided by Gusto, as well as how efficient payroll processing can be leveraged for strategic tax planning and business growth. Explore how shifting from an arduous, compliance-heavy task to a streamlined, culture-centric system can make all the difference.

This podcast episode delves into the importance of choosing a payroll solution that offers more than just transactional processing, with Will highlighting the culture and community aspects they weave into their payroll services. Will Lopez sheds light on income shifting as a tax planning technique and how proper classification of employees and contractors can save businesses from trouble. Furthermore, the discussion touches upon leveraging payroll to offer employee benefits, enhance retention, and position oneself as an appealing employer in today’s competitive job market.

Key Takeaways:

  • Payroll is more than just a financial transaction; it’s an opportunity to reflect and build company culture and employee well-being.
  • Proper classification of workers as either employees or contractors is critical for legal compliance and tax benefits.
  • Income shifting and tax strategies like S corporations can save businesses significant money, with payroll processing playing an integral role.
  • A modern and comprehensive payroll system like Gusto provides additional value through benefits, HR, and effective onboarding processes.
  • Implementing strategic payroll processing through a cloud-based system can safeguard against compliance issues and facilitate growth.

Notable Quotes:

  • “Payroll really is a reflection of society, in my opinion.” – Will Lopez
  • “The economy flows through payroll. Communities are actually upheld through payroll.” – Will Lopez
  • “The only thing that’s really happened with payroll, it’s gone from like rock hammer chisel to desktop to the cloud.” – Will Lopez
  • “Running a business, you wanna save money, but if you’re running a team as well, you wanna give yourself or make yourself look good as an employer, especially if you’re growing a team.” – Will Lopez
  • “Compensation is only a small piece of somebody’s consideration of staying at your company.” – Will Lopez

Resources:

Episode Sponsor:
The Mortgage Shop

WEBVTT

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Welcome to the Teaching Tax Flow podcast, where the goal is to empower and educate you to legally and ethically minimize taxes paid over your lifetime.

00:00:16.590 –> 00:00:26.335
Hey, everyone. Welcome back to the podcast episode 80 today. We are gonna jump into the pesky little thing we call payroll. And why it’s really not that pesky?

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Because we got an answer for you with a great guess. But as always, let’s take a brief moment and thank our sponsor on this episode.

00:00:35.940 –> 00:00:51.155
This podcast is sponsored by The Mortgage Shop. Are you looking to qualify for an investment credit loan without jumping through hoops? That’s easy. They have loans with LTV up to 89.99%. Exploring their products and discovering how they can work for you is simple.

00:00:51.990 –> 00:00:59.050
Just visit mortgage.shop or call 865-325-2566, and tell them TTF sent you.

00:01:01.125 –> 00:01:29.350
Hey, everybody, and welcome back to the Teaching Tax Flow podcast. As you likely seen in the intro or took the time to actually read the show notes, you know what we’re gonna talk about here. So before we introduce our guest, and I know for a fact that this is a great topic because I was actually asked about regarding this this morning in the, lobby area of a Starbucks. So I’ll bring up the questions that the guy asked me here shortly. But as always, Chris Pacuro, welcome back to your own show, sir.

00:01:29.350 –> 00:01:30.410
How you doing today?

00:01:30.470 –> 00:01:44.690
Thank you, Johnny t. It’s always a pleasure to be back to my own show. And, our show, John. Remember, it’s our show. It is our show, but I am so excited, about our guest today and our private CPA practice.

00:01:44.690 –> 00:02:21.220
We don’t talk about it too much on this podcast, but has partnered, with Gusto for payroll processing successfully on tons and tons of clients. Your payroll can be an intimidating thing, and and payroll really applies to not just, you know, not just big business owners. In fact, it’s more challenging for that that solopreneur. So we’re gonna talk about payroll processing today. We’re also gonna tie it into some really cool tax strategies that circle around that, and we’re gonna have a great conversation with our friends at Gusto, and they’re gonna make it they’re gonna make the sound very easy.

00:02:21.220 –> 00:02:40.075
It’s not easy, but one of the reasons I’m just gonna speak from personal experience. We you know, in our CPA practice, private CPA practice, we used to process about a 100 payrolls. This is when I was young and dumb. And we started with the software called PayCycle. Way back in the day, they’re, like, the first ones to be online.

00:02:40.075 –> 00:03:06.000
They got bought out by Intuit payroll, I believe, Intuit online payroll IOP. And it was just kind of a a difficult task with with withholdings, and it was really the best way I could describe it as a process was super clunky. So about I wanna say, 7 years ago, John, you you know, you and I go to a big conference every summer. We spend more time in the vendor hall, actually. And I’ve talked to every payroll processor there.

00:03:06.000 –> 00:03:25.400
This was the IRS nationwide tax form. I believe it was it was in Atlanta at that point. And I was very impressed with Gusto. It was the least amount of clicks possible to successfully run a payroll, so I’m honored to have these guys as a as a partner really in our private CPA practice, but and as a guest on the podcast. So thank you guys.

00:03:25.400 –> 00:03:27.295
And, John, take it from here.

00:03:27.375 –> 00:03:45.035
And so we had a we had a discussion with Gusto, and that was my first interaction with them probably probably about a month ago. And I was super impressed, And I’m and I’m hard to impress. I will say that. I’m a very difficult customer with everything, but these guys are awesome. And without further ado, Will Lopez from Gusto.

00:03:45.035 –> 00:03:46.635
How you doing today, Will? Hey.

00:03:46.635 –> 00:03:47.515
Doing well. Thank you

00:03:47.515 –> 00:03:48.395
so much for having me

00:03:48.395 –> 00:03:49.120
on the show.

00:03:49.200 –> 00:03:59.565
Absolutely, man. And and, honestly, a couple of the things that really stand out from our first conversation. And this is coming from somebody, you know, as I always like to put the the disclaimer out there. I am not a tax guy.

00:03:59.705 –> 00:04:14.035
I’m a business owner. Chris is the tax guy. If I ever try to give anybody tax advice, don’t listen to it. Just, you know, fact check me on teaching taxable. So, Will, you had mentioned a couple things, again, that really stood out.

00:04:14.035 –> 00:04:33.225
And y’all’s approach to payroll is not really as as cut and dry maybe as some people think. Like, oh, you just input and output. That’s it. It’s done. You guys really approach us in a sense that you really focus on payroll is culture within an organization.

00:04:33.365 –> 00:04:34.825
Is that is that said correctly?

00:04:35.445 –> 00:04:51.105
Yeah. I would say so. I mean, when you think about just the history of payroll, you’ve always people approach it in in the mindset of it’s just a it’s a way to pay your employees, and that’s all it is. That is they just kinda defaulted as an exchange of money. Hey.

00:04:51.105 –> 00:05:08.875
You provided me a service. I owe you a paycheck in return. But it really is a reflection of society, in my opinion, when you think about what goes on with payroll. Careers are built through payroll, Retirement is is achieved through payroll. The economy flows through payroll.

00:05:09.255 –> 00:05:33.540
Communities are actually upheld through payroll because, you know, those who receive a paycheck, they’re able to take care of their family. They get benefits through paycheck. All those things are taken care of through paycheck. They’re able to take their take care of their immediate families, the communities around them. So, you know, it’s a lot higher than than I think what we’ve given it credit for for the last 100 years or so.

00:05:34.160 –> 00:05:57.275
You know, when you think about a paycheck, it’s always been looked at as just like a way to compensate labor. But it really is, in my opinion, kind of a true reflection of the value of of a of an individual when they’re working. And so and everything that that individual needs in order to work, to live, to be taken care of.

00:05:57.815 –> 00:06:06.073
I’ll ask a couple more things here that we could touch on. I know that you mentioned that I’m gonna release the, the tax animal. Right? We’ll let we’ll let Chris really chime in here. There we go.

00:06:06.073 –> 00:06:33.275
We’ll we’ll let him out of the cage, and it’s you know, all the tax knowledge is all gonna come out at you. You know, in saying that too, which I I really wanna reiterate with everybody too, it’s it’s almost you know, if we as business owners are paying those who do work for our organization. Right? So we see the value in them every day, every hour, hopefully every minute unless they’re hanging around the water cooler or the mini bar too much. But, you know, because they’re providing something ongoing to the business.

00:06:33.275 –> 00:06:49.435
Where to them as employee contractor in cases which we’ll get to. Right? A lot of their we won’t say payback is really like you mentioned, it’s really reliant on the time when they are, quote, unquote, paid for their services. So I can only imagine. Right?

00:06:49.435 –> 00:07:04.250
I’ve never luckily, I’ve never been in a situation where, you know, the a payroll system within an organization is just completely broken, and you’re sitting there, you’re like, oh, maybe I’ll get paid today. Maybe I won’t. I don’t know if it’s gonna be the right amount. You know, what’s it look like? What’s the user experience?

00:07:04.250 –> 00:07:21.680
Is there an app? Is there all these features? So I absolutely love that you guys put that just it really is an organizational culture for yourselves, but that also into the product and service that you guys offer. So I really appreciate you going into detail on that. And then, obviously, through Gusto.

00:07:21.680 –> 00:07:40.190
So if you can, before we get too deep in, maybe tell us a little bit more about yourself and about Gusto, really, maybe even how you ended up there. Right? Because you you have a background in in tax, obviously, and now you’re at a payroll company. So we’d love to hear that. And then, obviously, as I mentioned, let’s talk a little bit about Gusto.

00:07:40.190 –> 00:07:41.330
So what you guys offer?

00:07:41.630 –> 00:07:49.505
Yeah. Sure thing. So I’ll give the 60 seconds on me. So, I’m I’m head of their customer mission. Also serve as chief chief ambassador at Gusto.

00:07:49.725 –> 00:08:11.965
Started at Gusto 5 years ago. Came in to create people advisory powered by Gusto, which is, a new consulting service for the accounting profession, not only here, in the states, but also globally. We built programs around it, education around it. We built community around Gusto for the accountants, that partner with us. And so that that’s been my MO the whole time.

00:08:11.965 –> 00:08:29.790
But to your point, I’m actually just an accountant by trade. So I have a bachelor’s degree in accounting, master’s degree in accounting, CPA license in Florida. I ran a firm for 9 years. I served small businesses all across the United States. By the end of my practice life, we served clients in over 42 states, 3 continents.

00:08:29.850 –> 00:08:32.970
Thank god for the cloud. And

00:08:33.370 –> 00:08:34.810
I like you said on just a discount.

00:08:34.970 –> 00:08:42.105
Account. Yeah. Just an account. But, you know, overall, I just I love entrepreneurship. I grew up in a family of entrepreneurs.

00:08:43.685 –> 00:08:57.495
Both my parents had businesses all their entire lives. I saw them struggle. I saw them succeed. I thought business I think business is the ultimate adventure in my opinion. I joke around and say, like, I was the kid in the never ending story.

00:08:57.495 –> 00:09:21.060
Like, instead of being enthralled with, like, fantasy worlds, I was actually really enthralled with my parents’ stories about business life. I always knew I was gonna get into business or or somehow serve business or businesses and entrepreneurs. I just never knew accounting would actually turn it on for me. So when I was back in my practice life, we ran a fully remote online based practice. This is back before it got hot.

00:09:21.300 –> 00:09:43.550
This is, you know, 2011, 2012. I saw the entire cloud being built at the time. I built software back in 12 that integrated into Xero. You know, we had software where all our clients joined on our platform and kinda joined us in managing their own accounting services. But, yeah, we offered, you know, advisory, tax, tax planning.

00:09:44.650 –> 00:10:01.120
I firmly believe, you know, that small businesses are not just the backbone of the economy. They are the economy. And so I was a small business owner myself. I had employees myself. And so all of that just kinda work and being on the front lines led me to Gusto.

00:10:01.120 –> 00:10:27.200
Gusto wanted to make major investments, into accountants into the accounting profession, way above and beyond my competitors. And I I, yeah, I have no problem throwing shade over them. I they’ve been around for a long time. I don’t know what they’re up to. Because at the end of the day, the only thing that’s really happened with payroll, it’s gone from, like, rock hammer chisel to desktop to the, you know, to the cloud And all you know, so it’s gotten easier.

00:10:27.200 –> 00:11:06.320
And Gusto has made that incredible. But we’ve payroll companies have never really come around and thought differently for small businesses, have thought differently for accountants, and actually pave a way for that kind of stuff. So, you know, I’m proud to say that Gusto’s made tremendous strides with those who run a company and have to pay their teams, whether they’re subcontractors or employees, and those who are running accounting practices and need to serve their clients and wanna keep their, practice very modern or, you know, they wanna continuously grow through payroll. So all of these things, you know, we’ve been able to achieve in strides in such a short amount of time. It’s been amazing what our team’s been up to in the past 4 or 5 years.

00:11:06.700 –> 00:11:25.390
So we keep making you know, we keep getting accredited for what’s next for payroll, both from owning a business and paying your team all the way to an accounting firm, actually, servicing and and trying to support their clients through payroll benefits and HR. And in full transparency, when I first got on a call, with you

00:11:25.390 –> 00:11:33.475
and your your team members here, again, probably about a month or so ago, I I think I may have told Chris before that. I’m like, oh, you know, okay. Great. You know? Payroll.

00:11:33.535 –> 00:11:48.225
Payroll guys. You know? How wonderful. I prob honestly, I probably had, like, a and you have. Honestly, even just I mean, you’ve taken some and, again, this is coming directly from a business owner’s mouth who dreaded payroll as a whole.

00:11:48.225 –> 00:12:02.815
Right? Because it’s something that you have to do. You don’t wanna mess it up, because it makes you look bad, obviously, but then, you know, it’s it’s just not it’s it’s not something you you see as creative. You guys have made it so simple, and this sounds like an absolute sales pitch. It’s It’s not, I promise, we’ll make it easy.

00:12:02.815 –> 00:12:23.805
We’ll put a link in the in the show notes so you can see for yourself. You you guys ask, like, 4 questions, and it delivers really 3 or 4 questions. It really it delivers a, you know, a suggested product for somebody. So we won’t we won’t go into detail on it all, but, I know Chris is just etching to start talking about how to use payroll and taxes. He’s itching.

00:12:24.425 –> 00:13:00.605
Well, I wanna say something. You know, we talk in our practice in what I’m always looking for, and I learned when I was very young was that someone intelligent makes something very complicated and can explain it to you very simply. And that’s what Gusto really does with payroll, not that this is a commercial for Gusto, vice versa. Someone that you wanna not deal with is someone that could and we’ve been there with clients and customers. Someone that could take something very simple and complicate the heck out of it is not someone that you want to spend too much time with because you’re gonna spin your wheels.

00:13:01.065 –> 00:13:23.820
So that’s the one that’s not the only thing. That’s the to me, the biggest takeaway. Payroll is a huge responsibility. When we look at the entire amount of federal tax that it’s collected, a huge percentage goes through payroll via federal tax withholding, Social Security, Medicare. Really, it’s as we talk about the entrepreneurs, the backbone of the country, that’s the backbone of our federal tax system.

00:13:24.360 –> 00:14:24.925
And all of the responsibility falls on the employer to collect and remit that tax, both at the federal, state, and local level, and that’s very, very intimidating for people that have never processed processed payroll before. And, you know, I I concern myself with, you know, peep people that are processing payroll, not in a modern environment, not in the cloud, that are printing out paychecks and signing them and handing them out and having their payroll software on some type of desktop. Not only is that a very big concern for data security, but it’s also a concern, I mean, for I can’t tell you how many times it’s happened where someone, the employer goes out of business, the employee can’t get a w two, the you know? And then, man, how valuable was it to be processing payroll in a modern way when the pandemic hit, when we had PPP, ERTC. If you didn’t have those these things in place, you were cooked.

00:14:25.305 –> 00:14:41.025
So to have that system set up, well, seriously, no matter what payroll you know, if you’re processing payroll, I strongly encourage you to make sure that you are processing it using some type of modern system that’s cloud based.

00:14:41.325 –> 00:15:02.130
Yeah. And to your point, Chris, like, you know, when you think about payroll, Gusto has made it incredibly easy, but the concepts are incredibly difficult. Right? And so, you know, I think people approach payroll saying, well, because the concepts are totally difficult, therefore, my processes should be really difficult. And that should really shouldn’t be the case.

00:15:02.130 –> 00:15:36.510
And I think, like, when I think about other solutions, I feel like, you know, the accounting industry loves to just kinda liken the product experience with the complication of the code or the complication of the administrative processes. That shouldn’t be the case. You know, we should acknowledge that things are very difficult and then find find ways and strive for and make strides towards making those very complicated concepts come to life a lot easier, because there’s just no need to complicate your life even further, especially when you’re running a business.

00:15:37.690 –> 00:16:03.715
Perhaps that we have someone, real real story, in our private CPA practice. He’s been a client for a few years. He came to us during the pandemic, and he owns a pretty decent sized painting contracting business in Florida. He has tax notices. He was with a different payroll processing company that that even though this is a large national organization, still mailed him 94 ones to sign and mail in.

00:16:03.855 –> 00:16:39.745
940 ones for those listening are quarterly federal payroll forms that reconcile your withholding with your wages. But he’s a painting contractor. He didn’t mail them in because there’s and now he’s getting some serious IRS notices failure to file penalties because it that wasn’t filed electronically. And he now has he will spend about $4,000 in in fees to to with someone that is that helps with IRS resolutions to alleviate him. He doesn’t owe this money, but it’s a disaster for this gentleman.

00:16:39.805 –> 00:17:12.205
And, you know, it’s ultimately, yes. He could have opened his mail and and and mailed it in. But but, again, it was an archaic system even though this is a large company. So my point is, like I said, make sure you’re working with a modern payroll company. But let’s tie in a couple really cool strategies with teaching tax flow because a lot of people in our community want to do tax, partake in tax planning in the secret sauce because a lot of times people say, man, you guys you have you give out all your almost all your content for free and you you were putting out daily content.

00:17:13.305 –> 00:17:44.165
But the the thing is is, like, you shouldn’t charge for the the content. It’s the it’s the implementation that’s the secret sauce. How do you implement what we’re talking about? So some of the strategies I wanna talk through with you guys, maybe not John. John’s just there to look pretty, but we’ll talk about a couple couple a couple strategies, you know, one of which that’s very popular, with with business owners is the strategy of income shifting to, to a related family member.

00:17:44.165 –> 00:18:36.745
Now that could be putting a spouse on payroll. Let’s say if you’re tying that in with an s corp election and implementing a section 105 plan meeting, what that means to the listeners is that you can take your medical expenses that are out of pocket, that are typically nondeductible and make them an employee benefit, Or you might be paying a child as long as they’re doing legitimate work for the business and shifting their taxable income out of a high marginal tax rate into a lower marginal tax rate. So, Will, can you kinda just touch on, you know, what what the lead time would be for someone that wants to hire a child? And I know there’s maybe some special rules with your let’s say, you’re self employed or a single member LLC with in respects to Social Security. And, and then also maybe another example of someone that elects to be an s corporation and how they, you know, could process monthly payroll.

00:18:37.845 –> 00:19:04.750
Yeah. Absolutely. So for those who don’t know, income shifting right, also known as, like, income splitting is like a tax planning technique. It’s a strategy that kind of transfers income from like this high tax bracket to a lower tax bracket for you, the individual, the taxpayer, the business owner, stuff like that. It’s also used to, like, reduce the overall tax burden by moving income from, you know, one of the high higher tax brackets to a lower tax bracket.

00:19:05.050 –> 00:19:20.740
You know, when I was back in practice, and I’ll I’ll speak there’s a lot of ways to to income shift. Like you said, you pointed out, like family members, putting them on payroll, things like that. And, of course, there’s guidelines to all of that. The Internal Revenue Service wants you to do that correctly. Right?

00:19:20.740 –> 00:19:45.455
But paying somebody paying a family member who’s not doing work for the business is not a great tax strategy, especially if the IRS finds out. But I used to do a lot of work when I was back in practice on s corps. So I would run into a tremendous amount of solopreneurs that had LLCs set up, because that’s what they Googled. And they were like, okay. I need a LLC because I guess it limits my liability.

00:19:46.080 –> 00:20:01.935
Right? And but they didn’t think about the tax side of things. And so I kinda liken, like, the s corp opportunity to my clients as, like, driving a BMW. It can you can have a specific BMW, but the interior can be really different. And so that’s how it is.

00:20:01.935 –> 00:20:37.775
Let’s say if you’re a solopreneur owning an LLC LLC is according to the IRS, there’s, like, 3, 4 ways to tax your BMW, your or your LLC. And s corp is generally the most, so long as you qualify for a variety of things, but generally the most tax advantageous. Because a lot of the additional taxes that you get hit with, Social Security, Medicare, those things actually only apply to the paycheck. And so you have to run a reasonable salary. And then anything above and beyond the paycheck that’s net income only gets taxed federal income, state, state wise, federally.

00:20:38.235 –> 00:20:55.535
So, you know, we used to save 10, 20, 30, 40, $50,000 a year for our clients who went the s corp route. And then, of course, going to s corp just requires a little more administrative duty. Right? Now you have to file a separate tax return. It’s no longer on your schedule c.

00:20:55.750 –> 00:21:24.135
So you have to file your, you know, your your 11 20 s’s. You have to actually get payroll set up. And that’s what’s really exciting is, like, you could save a tremendous amount of money and then actually start forming your own business in such a way where you can take advantage of medical deductions. And you can start taking advantage of maybe setting up a solo 401 k or something like that. And so, it really allows you to manage your tax bracket, greatly.

00:21:24.515 –> 00:21:32.560
And so, I’ll share a quick story. Has anybody heard of Sasquatch? So Okay. John’s shaking his head. Yeah.

00:21:32.560 –> 00:21:42.645
Yeah. So I actually started their business. They were actually my they came to me. It was 3 founders, 3 young guys. And I managed their account for about 6, 7 years right when they were blowing up.

00:21:42.645 –> 00:21:48.650
Now you can find them in, like, Target and Costco and all this kind of stuff. But at that point, they were and I say

00:21:48.650 –> 00:21:52.410
that I know what they are not just because I look like them. A furry guy from

00:21:52.410 –> 00:21:52.970
the woods.

00:21:52.970 –> 00:21:55.310
Let’s be honest here. Let’s put that disclaimer.

00:21:55.690 –> 00:22:19.695
Their their marketing is incredible. I mean, I’m so proud of those guys, but I started their I helped them start their business. And at some point, you they went from a loss on their income to to a gain, You know, net great net income bottom line. And at that point, we shifted them over to an s corp. So all that to say is there’s a variety of ways to income shift, to get yourself from a higher bracket to a lower bracket, and there’s a lot of strategies to implement.

00:22:19.695 –> 00:22:44.840
I’m sure you guys really help your clients do that or even prospective clients consider that. But, yeah, that that you know, through Gusto I used to use Gusto for my own clients and used to do all my tax planning through payroll. So we offered quarterly tax planning, real time, for our monthly clients. And we would adjust their payments that were forecasted out, for the year. And our margin of error was, like, less than 1% as far as, like, what actually came on tax time.

00:22:45.140 –> 00:23:02.420
So, you know, there’s a lot of cool strategies that you could do. Payroll definitely is at the center of a lot of it. Not only does it pay you, but you could leverage payroll, benefits, HR, those things as ways to income shift. So high utility, lot of function within payroll.

00:23:02.560 –> 00:23:25.820
Yeah. And I think that that’s one of the things that we run into here in the state of Tennessee. We’re having a kind of in the middle of an overhaul of our franchise and excise tax. We had a law passed, the Tennessee Works Act, that passed last year, and we have another potential law change. So Tennessee is a little quirky with the s corps, but I would agree, you know, for a profitable, business, the s corp is an amazing strategy.

00:23:25.880 –> 00:23:58.090
So if you’re listening to this, don’t go to TikTok. And go to TikTok and learn to dance or something, but don’t go to TikTok to your tax advice, unless you go to the teaching tax flow TikTok account, of course. But, I want you to think about it. If you have net income of over a $150,000 or more and you’re self employed or a single member LLC taxed to someone that’s a disregarded entity, don’t just jump into an s corp. Think Let us know, and we could take a look and see if it makes sense because what Will said is very important.

00:23:58.390 –> 00:24:28.840
You we have to determine something called a reasonable compensation, compensation, and it can’t be 0. So we have within teaching tasks, so some great resources so we can, calculate your reasonable compensation, using IRS compliance software. And then now you’re talking about potentially an amazing tax planning strategy. So s corps definitely makes sense if in the right situation. Unfortunately, we see them in in for people for rental properties and s corps, this is a whole another episode that we’re not gonna go down that rabbit hole.

00:24:29.960 –> 00:25:02.095
If you’re listening to this and you are you’re self employed and you have a lot of medical expenses that you’re not getting a deduction for. So that could be, you know, beyond your health health insurance, and you’ve done your HSA. But let’s say you have someone in the home that has special needs or you have just could you could even have a parent that’s a dependent, a child that’s a dependent that has a lot of medical expenses. That’s where you might wanna think about changing that s corping. Because remember, if you’re on payroll, then you’re an employee and you would be eligible for employee benefits.

00:25:02.510 –> 00:25:43.640
So that’s that’s really where it comes into play. Again, there are some rules and and and things that we need to work through because you might have other employees. So if you have high medical expenses that you’re not getting a deduction for, self employed over $150,000 worth of net income, those are the those hanging fruit for the s corp election. Or and as far as the income shifting or income splitting, if you run a business and you have someone in the household, in the family, that’s really helping you out with the business and not formally paying them as a business expense, that’s where you might want to employ them and and don’t be intimidated. Processing payrolls is only a few clicks away.

00:25:43.640 –> 00:26:18.400
So it is something as long you know, that that can be intimidating. Then, you know, you’ve gotta register for state and federal unemployment and then that sort of stuff, but the software will take you right through. And then one thing that Gusto has done that I’m really impressed with is, because I’ve worked I advocate for you guys with other accountants too is that they allow you and your your accounting firm or even teaching tax flow, access to your you could share your information so that they can they can see the payroll and maybe troubleshoot if you do run into a little bit of a problem above customer service. So, that’s that’s a night like, for our private CPA practice and teaching tasks. So we have a dashboard.

00:26:18.400 –> 00:26:21.755
We can we can see what’s going on with client payroll. So

00:26:22.155 –> 00:27:12.265
What I’ll add to that is what’s what’s really cool about today is, you know, 10 years ago, the ability to, you know, income shift, easily, was very difficult. Because, I mean, I ran a practice and and providing those kind of tax strategies or that tax advice, And then executing on it was generally difficult. So if you’re in business right now, that’s the reason why you would wanna work with a professional is because to to achieve these things requires not just advice and guidance, it also requires great solutions, to manage at scale or to manage in general. Because a lot of like like you said, payroll benefits, AHR, very technical concepts. So is tax planning, very technical concepts.

00:27:12.325 –> 00:27:42.560
So is income shifting, very technical concepts. So you basically work with a pro that has a suite of solutions that can execute all those things. So, you know, the beauty of Gusto is Gusto, of course, can allow you to achieve all your tax strategies through the platform and achieve them very well. And we do the compliance aspects of achieving those tax strategies, like making sure your payroll’s compliant or all the tax ones being automated and filed for you. So that way you don’t get hit with penalties, interest, and all that kind of stuff.

00:27:42.560 –> 00:28:20.835
And then on top of all that is Goso as a solution, not only does what all the other solutions do, but much better as far as, like, automating compliance. But we also help you become a great employer. And that’s also a great thing that is, like, you run a business, you wanna save money, But if you’re running a team as well or if you’re a solopreneur, like, you wanna give yourself, or make yourself look good as an employer if you especially if you’re growing a team. And Gussow allows you to also achieve that. So you’re killing a lot of different stone birds with one stone, and that’s more realizable today than I have ever seen.

00:28:20.835 –> 00:28:52.170
And I’ve been in the industry for since 2,000, 2,001, so I don’t wanna date myself. But, you know, like, you know, it’s it’s it’s incredible what you can do now and, you know, achieve these tax strategies, look like a great employer, run an awesome team, make that team feel very supported, you know, achieve the goals of, like, being a great employer. Like, I wanna take care of my team. I want them to go home and sleep on the pillow at night and and not be stressed out about working for my company. But I also wanna run it efficiently where I’m saving money.

00:28:52.675 –> 00:29:29.035
Right. And before John puts a bow on this, I agree. And in when you’re thinking about, picking a payroll solution, what I want the listeners to think about, because if you’re listening to this, you’re you might be an employee, and you might be you might be frustrated with your how what your employer’s doing with that process. It goes beyond the payroll, like Will said. So if you’re if you’re listening to this and think about the other factors and think about us you know, think about making sure that you have a solution that can help you with the workers’ compensation, that can help you with employee benefits and HR and and, you know, term life insurance and because you don’t wanna outgrow a system.

00:29:29.035 –> 00:30:01.285
You know, you want something that you can grow with. So those are some of the things that you need to consider when picking a payroll. Don’t be intimidated by payroll processing. We’ve taken a lot of time here teaching Taxo to bring in the best, the best of the best as far as what we call implementation partners, and resources for you. And, yeah, so so we’ve been real happy and and I would encourage you to as as someone that has that out was that went with a modern solution that we outgrew once already, as a business owner, you know, think about that.

00:30:01.285 –> 00:30:08.130
And think about if you fit into one of those avatars that I discussed as far as maybe, you know, doing some more tax planning. So

00:30:09.310 –> 00:30:29.730
And, Will, before we before we let you off the hook here, I know you guys kinda answered this just in conversation, but, and I know Gusto as a whole. I mean, you guys do a great job with just, you know, paying contractors, w two employees. You got you guys do a lot which which is incredible. But let’s take a really, really simple but possibly a complex scenario. Right?

00:30:29.730 –> 00:30:47.955
And say somebody, you know, we’re just gonna I’m just gonna pull this one out of thin air. Say I’m a real estate agent. I got a team of 3 people, myself included, and I just, you know, Venmo them or or do something here, you know, kind of ad hoc. I got I got some office teams. So what would be your response to that?

00:30:47.955 –> 00:31:00.825
And feel free to get sales y if you want to because you guys actually have a good product. So we’ll let you on that one. But how would you describe to them? Say, you know what? That’s great you got what you got, but this is a better way whether it’s with Gusto or somebody else.

00:31:01.545 –> 00:31:26.815
Yeah. Absolutely. Here’s so my advice would be, first, work with teaching tax flow because you need to you need to consider whether or not those those individuals you’re paying are actually employees or contractors, and that’s very important. So you re really gotta classify them correctly or else you’re gonna get yourself in trouble. And then secondly, what is the opportunity tax wise to make sure that you’re actually taking advantage of your real estate business?

00:31:26.815 –> 00:31:46.970
And, you know, how do you maximize you saving the most amount of money? Giving uncle Sam exactly what he’s due, not what he wants. And and so that’s that’s the first point. And that’s why Gus partners with accounting firms nationwide. We partner with over 14,000 accounting firms nationwide because I believe that the advisers are the advisers and Gusto plays its role.

00:31:47.130 –> 00:32:22.480
And so once once you’ve kinda gone through and identified things and are saving taxes, then you can turn on Gusto to make sure your team members, whether they are gonna stay contractors or not, or employees or not, are taken care of or paid on time. That the compliance around all of that, both federally, state, in your city, municipal, are all automated and taken care of. Running a business is a is a lot of work and a lot of administrative duty. And so especially especially when you have a team. Especially when you’re taking advantage of tax strategies like an escort.

00:32:22.780 –> 00:32:39.970
So GUSO really helps you onboard new employees, onboard new contractors. They get these beautifully designed portals. They really feel a part of the team. As you continue to grow, you get to provide, you know, low cost, no cost premium benefits to that team. So that way they stick with you.

00:32:39.970 –> 00:32:56.400
So that way retention is big right now. There’s 1.6 jobs for every unemployed person right now. Anybody can leave a company and find another job. So if you have some incredible team members that you don’t wanna lose, you’re gonna have to do a lot more than just pay them. And and that’s and proof is in the pudding there.

00:32:56.400 –> 00:33:16.070
So compensation is only a small piece of somebody’s consideration of staying at your company. So I I would approach it like that. It’s in my opinion, it’s a it’s a multifaceted, attack. First, let’s make sure you’re you’re taking care of your team and you’re in the right spot legally, and then execute on taking care of your team and yourself through Gusto.

00:33:16.070 –> 00:33:21.835
If that’s not a mic drop moment for describing the importance of payroll, I don’t know what is, man.

00:33:21.895 –> 00:33:28.840
I am I love the pay payrolls are part of a broader ecosystem of advice. Right? And so that’s how I would approach that today.

00:33:28.840 –> 00:33:40.415
Absolutely. Absolutely. Well, Chris, thank you as always for joining us here on your own show. And, well, we appreciate the time. I know you guys are extremely busy and and always are just obviously improving the whole world of payroll.

00:33:40.415 –> 00:33:51.885
So we appreciate your input and your your time on the show. Awesome, guys. Well, we we’ll see everybody here again. However, I just wrote down an acronym that I think I’m gonna use somewhere. Maybe this is it.

00:33:51.885 –> 00:34:07.225
Instead of, you know, ASAP for as soon as possible, I think teaching tax flow and gusto still you know, we it’s a good marriage in a sense because we try to accomplish the same thing, and we’re keeping it as simple as possible in a complex situation. So

00:34:07.705 –> 00:34:14.185
So like TTFG? Is that, like, teaching tax flow gusto? Oh. Okay. I like that.

00:34:14.185 –> 00:34:21.960
Here we go. I can tell you’re a marketing guy. See, CPA gone marketer. I like it. I could I could appreciate that.

00:34:22.020 –> 00:34:44.755
The you know, you we need to get you a T shirt that just says that and then let you out. We’ll let you and Chris out in the wild, but excellent show, you guys. Thank you so much for the insight as always. We will put the link directly in the show notes so you guys have you as the listeners have no excuse for not checking out everything that Gusto was about. And by the way, also, for everybody that’s listening to this, Will’s plug on TTF was completely unsolicited.

00:34:45.375 –> 00:34:49.830
So he was not paid at all. That is right. I I that’s right.

00:34:49.830 –> 00:34:51.610
I it was it was unsolicited.

00:34:52.550 –> 00:34:54.950
So Just the Starbucks gift cards, which I will mail to you.

00:34:54.950 –> 00:34:55.270
That’s right. I was

00:34:55.270 –> 00:34:58.735
gonna say I was I I I appreciate the check that’s coming in the mail, John. So thank you.

00:34:58.735 –> 00:35:22.860
Well, hey. I know who can process it. They so on that note, everybody, thank you again for joining us here on the Teaching Tax Flow podcast. We will see you back here again, same time, same place, next week, but different topic. Thanks for hanging out with us as always here on the podcast.

00:35:22.860 –> 00:36:10.575
John Chapalski here from the TTF team still with you, and thank you for hanging out with us today. So although a little bit longer than usual on this episode, obviously, thank you Will and Chris for joining us on this topic, and for anybody that was listening to this, you probably I don’t know. I’m gonna take a guess. You probably weren’t too excited about talking payroll because it’s probably a hassle to you. So one of the things I really wanna highlight that we touched on early in this episode and probably a couple times in the middle and a little bit towards the end too is whether it’s Gusto or whoever you go with for a payroll provider solution, we’ll call it, really look at it as something that’s an extension of your business, an extension of your culture, just not something that’s so transactional.

00:36:10.795 –> 00:36:31.330
Right? Sure, it’s an expectation obviously from any employee that they’re going to get paid, but it’s the little things that count. In this case, exactly. It’s a huge thing going above and beyond making it, you know, just easier. A little bit more reliable for yourself, but then also for your team as you hopefully are growing.

00:36:31.550 –> 00:36:57.595
So as mentioned as always, we are popping in some resources in the show notes of this as well as a direct link to check out Gusto, and, honestly, we look forward to working with these guys more. They’re, I think they’re a great fit, obviously, for teaching tax flow. We have very, very similar interests in mind, obviously, making things less complex, a k a easier than expected. So join us here next week. We got another great topic coming up.

00:36:57.595 –> 00:37:07.480
Actually, a whole roster of great topics here. I’m looking at our schedule as I’m reading this, probably for the next 3 months. Actually, we got some really good stuff. So we will talk to everybody very soon.

00:37:11.425 –> 00:37:29.010
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00:37:30.225 –> 00:37:40.413
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