The Ambitious Bookkeeper Podcast

226 | Need to know OBBBA highlights for Bookkeepers Adrian Lopez

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The 'One Big Beautiful Bill' introduces significant tax changes for 1099s, depreciation, and employer credits, emphasizing meticulous bookkeeping for compliance and savings. Listen in to the conversation with Adrian & Serena as they unpack the need-to-know highlights for bookkeepers and how you can stand out in the industry by making a few small changes to your processes.

In this episode you’ll hear:

  • 1099 Reporting Changes
  • Bonus Depreciation and Section 179
  • Tips and Charitable Contributions
  • Employer Tax Credits and Deductions
  • Pass-Through Entity Tax and Reconciliation

Resources mentioned in this episode:

Meet Adrian

I’m Adrian Lopez, a Certified Public Accountant (CPA) and former IRS Revenue Agent.

During my tenure as a Revenue Agent in the IRS Small Business / Self-Employed Division, I audited self-employed and small business taxpayers like restaurants, construction contractors, real estate agents & brokers, wealth managers, tax preparers, and farmers.

Now, I help individuals, families, small businesses, and non-profits thrive by providing quality tax return preparation, tax planning & advisory, bookkeeping & accounting, and tax representation.

Connect with Adrian

Website: https://anlcpa.com/

Linkedin: https://www.linkedin.com/in/adrianl1996/

Thanks for listening. If this episode inspired you in some way, take a screenshot of you listening on your device and post it to your Instagram stories and tag me @ambitiousbookkeeper

For more information about the Ambitious Bookkeeper Podcast or interest in our programs or mentoring visit our resources below:

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Welcome back to the Ambitious Bookkeeper Podcast and YouTube. If you're watching us on YouTube, welcome. I have Adrian Lopez on again. We, I had him on sometime last year. I can't remember exactly the episode number, so I'll just have to link it in the show notes. But Adrian is, I'm dubbing you my official tax expert for the podcast. So welcome back. Thanks for, thanks for having me back. Hello? Hello. Today we are going to, we're gonna discuss the one big, beautiful bill. Fun stuff. We'll try to keep it fun at least. And Adrian was gracious enough to come share his expertise on that and give us a little education from the perspective of like maybe what we should be watching out for as bookkeepers, how we can help our clients through this. And just flag some things for when it comes time at the end of this month, if you're listening, when this goes live in January of when hopefully you'll be sending your books, your client's books to their tax preparers. and you'll just stand out more if you are kind of in the know about this and you can flag some things. So any who? Yeah. Yeah, yeah. And, and if you have questions, you know, Serena, I'm gonna be, \ I got a couple notes and stuff I'm going through, but if you have questions about like, Hey, how would this apply? Or like, Hey, how can, how can bookkeepers better keep this in perspective? Feel free to, feel free to interrupt me and, and, you know, because I, I don't want to be a lecture. I interactive, you know. own private little presentation on an A CPE course where I get to interrupt the presenter and be like, well what about this? That's great. Uh, alright. So all I do kind of take it away. Maybe give a little, if you wanna give a short little background on who you are before we dive in, in Sure, have those listening. Haven't heard the other episode we did together. sure, sure. Well, hello everybody. Uh, my name is Adrian Lopez. I am a CPA based out of Sacramento, California. I'm a former IRS revenue agent. I used to be a small business employed auditor at the, internal Revenue Service. Now I have my own tax and accounting practice, and I, I love talking and learning with Serena. I, I appreciate she keeps bringing me back here. So hoping to, hoping to teach y y'all something today about taxes and the, the one big beautiful bill. I'm sure all of you have heard about it in the news. It's funny we don't even know the acronym. Some people call it like OBBB. Some people call it like the BBB three, you know, so, just call it? but we still. Yeah, we, we still don't quite know how the acronym's gonna be pronounced and it's gonna plague us accountants and CPAs for at least the next eight years. So, so we'll be, we'll be just kinda going, doing a, a rough overview of the one, the one big beautiful bill act. There's some individual provisions, there's some business provisions. I'm sure a lot of you bookkeepers, you're gonna be concerned about the business stuff, so, we'll, don't worry. We'll, we'll get into that. Just as a disclaimer, I am a CPA, but I'm not your CPA, so please always consult with the qualified tax professional when, when preparing folks is tax returns and, uh, or if you have tax questions. So, gotta throw that in there. So just an introduction. What is the, the, you know, what, what is this, what is this bill? so under the, under the previous tax regime, you know, we had eight years under the previous tax code, or tax act, which is a tax Cuts and Jobs act. that was pressed by President Trump. That was back in 2017. so this bill that was passed here, July, 2025, addressed a lot of stuff that was gonna sunset. There was a lot of like, little changes in nuances that, well, I don't wanna say little. The TCJA actually was, was the biggest tax reform we've had since probably 1986. It was, it was, it was a big change. so a lot of that stuff was gonna sunset. The, the, the oh B has made a lot of stuff permanent and, and so now us, us CPAs have, have breathed the sigh of relief and be like, okay, we don't have to go back to the old rules anymore. So we can, we could keep our, keep our expertise, some somewhat constant. I will say there's, there's always a lot of federal and state tax differences. we're still waiting to see how a lot of the states are going to respond with their federal, with their income tax laws compared to, to how the Fed the Fed handles things. So, um, you know, asterisk on that, they're, I mean, hell, I think some of them are issuing guidance like this month, right? In January and people are supposed to be filing their tax returns here pretty soon, so, always a fun time. so. Absolutely. so before I, before I dive in, I am curious, Serena, if you, if you have any like, high level questions that, that maybe you might wanna address with your audience before I get into like, the nitty gritty of it is there's things that, like you've heard or you've wondered about, you know, one again, the specifics of things before I just kind of go through an overview. What's, what's kind of on your mind? disclosure, I have like not, I've kind of heard bits and pieces here and there, but this year has just been kind of crazy for me. And so I've been really like not plugged into all the noise. Like I took a break from social media. I'm still off of social media and things like that. So I've heard bits and pieces here and there, and so I'm like kind of high level aware of, what's going on, and I've read some summaries and stuff. I know that 10 90 nines is always a big question mark for a lot of bookkeepers. Like there was stuff floating around and I think they were going to have the change happen sooner and then things change. So definitely wanna address 10 90 nines. but other than that, I don't really have any like big. Big overarching questions about the bill, other than basically like give us the, like what's need to know on a business level for as a bookkeeper, right? When, which you already know because you also do bookkeeping for clients. So this is hopefully gonna be easy for you. But like, what are the kind of like the, the need to knows for people like me who are like, I don't just give me, give me the overview. Like, don't dive off into all the like, crazy, like all, obviously there's, there's an overlap with the personal taxes for a lot of business owners, so I'll kind of default to you to like what you think is gonna be like the most commonly come across things or whatever. but for the most part, like as a bookkeeper, what do we need to really be aware of to highlight for our clients and make sure that they're not missing out on things with their tax repairs. Got it. Okay. Okay. Well, and I guess since we brought up the, the, the subject to 10 90 nines, let's, let's talk about that first. So, ten nine air reporting has been changed by the one big beautiful bill, , prior to the, the previous regime under the previous rules. So you had to give a 10 99, either a miscellaneous or a 10 99 NEC, for anybody who, who has, payments for services of $600 or more. and just to clarify, a lot of folks they may, this is, this is a side that would help bookkeepers. A lot of folks think you have to give a 10 89 for payments of goods and you actually don't, it's only, it's only services and service based payments. So if you're receiving some sort of consideration that's a physical, tangible good from someone, you don't have 10 99 for that. just, just, just throw that out there. A lot of folks get confused about the rules, like, oh, when do I have to give somebody that? Or, you know, they're like, I have a hundred vendors. I buy stuff from, like, how do I 10 99 them? I'm like, dude, you don't have to. it's like gotten more confusing over the past however many, five, six years ago when they implemented the 10 99 K with the payment processors because the payment processors aren't delineating what's a service and what's a good, right. So their 10 99 I've, we just made it into a verb or their, Yes, they're 10 99 ing I. that their payment processor, whether it's a good or a service. So that's caused confusion. There's also been confusion over, I still get clients of mine that are like, why is this vendor of mine or customer of mine. Asking for, , like a 10 99 or a W nine from me when like they paid me commissions through PayPal and I'm like, they shouldn't be. gonna 10 99, you. So there's all these added layers that have happened over the last few years that have added confusion to it. However, I will say that we came across this with one of our clients is they had, a vendor that did that provided goods and services. And so if something is combined, you can report the whole thing on the 10 99 Yeah, like, 'cause then it becomes confusing splitting it out. If you send the vendor a 10 99 that that's great. that you've paid them, they're gonna be like, why doesn't That's right. just add it, just put the whole thing on there. But in general, like you said, yes. Yeah. So the only free services That's correct. And, and I will say, you know, a similar threshold used to exist for the ten nine Ks. Right. It was like, it, it was such a huge change. Everyone was like, wait, I'm gonna get a 10 99 k from like eBay and PayPal for stuff that's like 600 bucks or more. The previous threshold used to be, I believe it was 200 transactions in any one calendar year or $20,000. it 20,000? I, I think it was, I think it was 2020 or 2020, 20,000. 20,000. And so like all these over 20 k. And so all these people were like, wait, like I sell little knickknacks and caricatures on eBay and now I'm gonna get a ten nine K. And it's like, it's a hobby. It's like, dude, it's not a business. You know? And so that, that, just to speak to the 10, nine Ks, that threshold has been rolled back, so as part of the, the BBB. So now you should only be getting a 10 99 K if it's either, more than 2200 transactions in a year or the $20,000 filing threshold. So, what's interesting as well is for 10 99 miscellaneous forms, or 10 99 NEC, the threshold has been, heightened from $600 to 2000. So all those little one-time jobs and stuff that people might do for you, I mean, I know we work with, you know, construction contractors, this and that. Like you might have just subs for a day. You might have like daily and stuff like, that's been, that's been moved up, uh, to $2,000 now, so not a. not effective for this filing 20, 25 season? Correct. Okay. That's correct. That's correct. confusion for place. It's, it's why Congress wrote it that way. I do not know. Go call your congressman. You know? Um, forms and all of that. Right. Whatever. you know, so that does take effect one, one to 2026. So that, so, so now we can all breathe a sigh of relief. for You know, there's, there's, there's, we did last year. yeah. For, for 25. correct. Yeah. what Um, in for 2025. 10 that's good. That's good. That's great. As accountants, we're always living in the best always. Mm-hmm. so that, that's, that's some of the big changes there. There are still some specific reporting requirements, like there's stuff for medical payments, you know, that that hasn't changed. stuff for payments to attorneys, whether they're incorporated or not, that stuff hasn't changed. So that's, that's all the same. It's just that for, for generally for ten nine Salinas and AC forms for 2026 onward from $600 to 2000, and then the 10 99 Ks. So, for all you square folks out there and people selling, you know, knitting, little knitting knicknacks on eBay, hopefully you'll get a little bit of relief. I will say I used to, I used to buy and sell guitars like kind of as a hobby, and so I had to, I had to deal with this actually, this was like in 23. Yeah. So I was like, wait, I got, I have to keep all my records and put on the tax return and, you know, so, I've personally affected by this, so. personally affected. That's interesting. As a side, do you play guitar? I do, I do, yeah. Yeah, I play, I play instruments and stuff. Um, I get a drum sit downstairs. I play electric bass. I play electric guitar, so, yeah. guitar So, have a drum set. ah, that's cool. That's cool. Oh my gosh. That's cool. That's cool. All right. All right. ob. Yes. Yes. The L-B-B-B-A. So, so, and I'll, and I'll stick with, I'll, I'll kind of stick on the line of sort of more business centered, provisions here. So is that 10, nine and K thing, which is important. there is, another huge provision. I, I think probably one of the most, significant provisions implemented as part of this bill. it'll basically affect, I'd say, almost any business that has like fixed assets and, and capital permits, that kind of thing. So there's, there's a concept known as a bonus depreciation, which basically means for certain types of property. You can place it in service in your business and you get to write it off a hundred percent, the year you place it in service. So there's, there's limits, depending on what type of property is it usually qualifies for. Anything from, like vehicles to tenant improvements in a building, you know, cement, you know, pavement, vehicles with some restrictions as risk, some restrictions. and so this was phasing down since 2023. The, the, the amount of bonus depreciation you could take was coming down. so they've reset that back to a hundred percent and it's, it's nice 'cause it's retroactive. So right now, as everybody's gonna start filing their tax returns and start, you know, getting their fixed assets together for reporting for the 2025 tax year, any property that was reinstated or that was placed in service after, I believe it's January 19th, 2025, you get to now take a hundred percent bonus depreciate depreciation on that. which is a big deal because. Being able to take the tax benefit of something immediately, you know, a hundred percent in the year that you, you, you place in service, you know, you used to have to spread it out. And, and so that would we call that, um, income tax smoothing or like income smoothing. So now the fact that you can take it all a hundred percent, I mean, there's, there's, there's basically tons of businesses. They might have, you know, capital improvement, heavy stuff, a lot of equipment. Um, for example, I have a, a, a farmer client. I mean, he, he bought what I think he bought 800 grand worth of tractors and, and, and equipment in 2025. You know, we're gonna to write all that off. I mean, this guy's not gonna pay income tax, like at all. Like he's, you know, and it's a huge deduction. so this is gonna be one of the most significant provisions for pretty much any bookkeeper and any tax professional to keep in mind when, when preparing the 2025 tax return, you wanna make sure that your fixed assets and stuff are recorded. It's capitalized properly. And, and to the extent possible, make sure it's recorded properly so that the tax preparer could take advantage of it, right? And, and use that bonus depreciation, assuming it's qualified property. Yeah. Is Um, So so are they bringing back section, did Section 1 79 go away and can you talk to that? The differences between the two. yeah, yeah, yeah. So, section 1 79 is still here, which is, which is awesome. it's, uh, section 1 79 depreciation or section 1 79 expense. The, the biggest difference between 1 68, there's two, there's two big differences, two big differences, between 1 68, the special depreciation, special depreciation, and the 1 79. So the special depreciation is automatic. You have to elect out of it to not do it. 1 79 you have to elect in to do it, and you could do it on 1 79. You could do it on a per asset basis. 1 68 K is for a whole class of assets, you know, three year property, five year property, seven year property, that kind of thing. That opt in, opt out sort of difference makes 1 79 sometimes makes sense more than one 60 k. Sometimes it doesn't. It's like So that's, that's one of the big differences is Like they Yes, this that's correct. not very much income, but they were investing heavily in equipment. They wanna save of that for future years, so they're gonna maybe opt out of bonus and just opt in on some of it for 1 79. Okay. That's correct. That's correct. That's correct. so that's, that's one big difference. The other big difference is, uh, lost my train of thought. Sorry. I know, I know. Hold on. What was the other one I was gonna talk about? Yeah. 1, 2, 9 most appreciation, bonus. Yeah. Class versus, oh, that's, that's right. That's what I was, okay, I got it. I got it back. so 1 79 can only be used up to the extent that you have business income or like business taxable income. So it can't be used to create losses. So if you have, you know, W2 wages or rental income, other, other types of income, and you have a business that you wanna say, take a lot of exp, want something non expense on, Mm-hmm. get you to zero. It, it won't get you negative bonus depreciation can get you negative. and so you can use that, like you said, say it's a business that's investing a lot in heavy capital equipment and you're like, Hey, you know, I, I don't wanna have any taxable income this year. In fact, I wanna have a loss that I can use to offset all this other stuff I got going on. You're gonna wanna prioritize bonus depreciation once a night. You can't do that. it's limited to, to net taxable income from a business of zero. that creates really strategic, opportunities for tax savings, particularly for people with rentals. I'm sure you've heard people who have like short-term rentals, Airbnbs, you know, they have commercial warehouses. They wanna get cost segregation studies done, you know, all that. Bonus depreciation makes a lot of that possible where 1 79 doesn't. You can't, you can't use those losses. You can't, aggregate those losses. You'd have to, you'd have to spread it out. We're one in nine, or sorry, we where the most depreciation wouldn't be there now that it is here. Huge tax savings opportunity. I mean, massive. So for all your real estate folks out there, I mean, if you have a CPA or somebody you're doing tax planning with and they haven't already discussed, bonus appreciation, 1 68 K cost segregation, sitting on new buildings and stuff, you're already behind Yeah. So please go to, Yeah. All right. Thanks for walking us through that. It's all stuff that I learned when I studied for the CPA and now I'm like, relearn all this. that's right, that's right. I was gonna say, I mean, honestly, besides, let's see, anything else, I mean, there's qualified business income deduction, which is section 180 9 capa. But I mean, bookkeepers, unless you're preparing tax returns, you won't, you won't really deal with that. Let's see. So my only other point of advice would be you're gonna want to have assets segregated on the balance sheet and recorded properly to the extent that you, you're giving the tax preparer, the information he needs to be able to kind of choose and prioritize, okay, what's, what makes sense for 1 79 versus what makes sense for 1 68 K? and I'm sure you see it all the time, Serena like, folks don't capitalize stuff properly. You know, or they, they, you know, they don't record the full asset price and stuff, you know. so I just, I always encourage bookkeepers, make sure you're, you're, you're getting sourced documents for purchases of, of fixed assets and equipment. You're, you're capitalizing stuff properly, even loan origination fees, document fees, title fees, government fees. Like you gotta, you gotta make sure you capitalize all that properly and be able to write that off through depreciation. So it's important. I mean, as far as the business tax provisions, that's, that's kind of some of the big stuff as part of the one BBB, to be honest, there's a lot of individual stuff in here for the, for the business stuff. That's, that's some of the big, the big points, the tenant and I reporting the 1 79 expense, the one 60 K bonus depreciation. so we can, we can jump into some of the individual stuff I know you mentioned, you had a lot of viewers from the previous podcast, they had like, additional questions they, they had or wanted to bring up, that kind of thing. So, I'm curious, you know, I don't remember any specific questions. I just remember there was a lot of feedback of like, bring him back on for part two. So pretty much like whatever, like whatever you're seeing in your tax practice, like common issues or things that you've had to unravel, that's always helpful, but especially if it's related to bad bookkeeping, right? Because our Yeah, is to help our bookkeepers be the best so that they stand out and help their clients as best as possible. And a lot of times people just make mistakes 'cause they don't understand like the ultimate impact if they're not doing taxes, like we wouldn't have yeah, into that. And a lot of times tax payers aren't sharing the feedback either. It's just. It gets true, the shuffle. So it's not that people are purposely doing a bad job, but if we can help y'all like, do a little bit better and understand, the impact of things, then, then yeah. but yeah, if you wanna go through any, like, of the individual stuff, if like, if it's kind of tied to how it might affect, you know, an owner of a business, that's a good thing to tackle. I think. Um, for example, if there's anything related to like, I know we have the health insurance deduction and things like that as being self-employed. If there's anything along those types of lines that are changing or have been added investments, things like that. Mm-hmm. That's fair. And, and I, can't think of one provision. and this is gonna be particularly important to any bookkeepers who do, like service-based businesses that have tips, tips and ities service charges, that kind of thing. So you might've all heard, there's this, there's this no tax on tips provision as part of the one big beautiful bill act. so the, the prior, under the prior rules, basically tips are fully taxable as any other compensation. and an employer would get a fica tax credit for the payroll taxes. They pay on, qualified tips. So they're, if they employees receive tips, you know, there's, there's a Social security and Medicare burden on that. Employers will be able to receive a, a tax credit for, for some of that portion. So, so now, it's not that tips are, totally exempt from income tax and, and, and tax. There's just kind of a, a deductions allowed for, income tax for qualified tips, up to $25,000, per person. unless you're, uh, is it, oh, no, I think that even counts if you're married filing separate as well. Yeah. So I think it's just 25,000, either if you're married filing joint or, or married filing separate. It's just like a, a blanket$25,000, uh, amount. You get to basically back that out of your, of what you would have for income tax. So, as an example, if you have, say, you know, like you're the world's most best paid waitress, you know, you have a taxable income of 125,000. Okay? and 25,000 of that is tips. It's actually gonna decrease your taxable income down to a hundred thousand. For, for income tax purposes. So that's, I mean, for some folks that's, that's quite a bit.'cause I, I know a lot of folks, they have a lot of professions where it's like that's tips is like half their income. That's like, Or more. I mean, you know, it's huge. ages since I waited tables, but our wage back then was $3 an hour and then everything else was tips. And I was probably making at least $20 an hour overall. You know what I mean? So it's like, like I don't, honestly, I don't remember, but it was a lot. The difference is a lot, like tips are a big Yeah. of, um, of the income. So that's a big deal for sure. So, so I would encourage, I would encourage all bookkeepers, you know, when, when they're doing the, you know, the books and reconciling payroll and doing all that, you're gonna wanna keep track of, in the financials for what's, tips, what's being retained by the owner and what's being paid out to the employees, because that's, that's gonna have like actual taxable impact on, potentially the owner's tax return. But, but especially, you know, you wanna make your payrolls being reported properly and and qualified since you're getting in there. they have to be reported on a a W2 in order to, to get that deduction, or, or possibly a 10 99, like a ten nine K or 10 90 c, that kind of thing. it's gotta be, you know, please make sure, report all that. know, we Yeah. restaurants work. I remember when I. do, yeah, I've. exactly. Like I, when I, I worked at an Italian restaurant too, and it was like the only, they didn't report our tips if as long as they were cash. We only reported credit card tips. So it's like if, if Yeah. reporting, but the employee doesn't know that and then they try to go Yep. the deduction because they've kept good records of their Yeah. there's gonna be some issues. Good. So, I, I always encourage, I even have a, my Italian restaurant client, we're moving, the payroll and the POS reporting to Square and Square. What's nice about it is it tracks all that. So it, it's so easy, whether it's a cash tip, whether it's a credit card tip, right? Square's just doing, it's on market, selling all the reports with Square every month, all that everything's being paid out to the employees properly. It's going through payroll, you know, payroll, tax expenses being paid, and so. We, we feel very confident. She was asking me, she's like, do I have to do anything different? I'm like, no, no, no, no. It's cool. Square Square is handling all that. You know, they're gonna be taken care of. Don't, don't worry. They can, it's their tax situation, but we're giving them the information that they need. You know, they're gonna have what they need to get this deduction. Don't worry about it. so please all bookkeepers, you know, just, just make sure to keep on top of that. I get it. Sometimes the clients don't know, and that's why, that's why they have us as professionals to, to help 'em out and, and, employees by like, oh, I'm not gonna report any of the cash tips, because it's not trackable. But if they are yeah. it with their system, but not, you know, like it's, they shoot them, Yeah. Exactly. and their employees in the foot and they think they're doing something good, but That's, badly. So it's that's, just advise your clients and hope they do the right thing. And if they don't, you have to make a decision on whether that's, them. So, correct. okay. One other note That's correct. realized I had too that might be related to business, 'cause I wrote it down as a note for myself that I heard somewhere for my own taxes. But tell me, talk to me about a paid leave deduction. Do you remember hearing about any of that? I So, you're to take some sort of paid leave deduction. If you pay your employees paid leave, you get some additional, can't remember what it was. Was it like 2,500? yeah, so, so if I recall there is, um, there's like a paid sick leave. I believe it's a tax credit. It's like if, if you.'cause 'cause a lot, like for example, here in California, there's like, a mandatory like sick leave, you know, provision. You have to give a certain amount of sick leave depending on how much the employee accrues. there's like, there's like another provision for, I think it's like paid sick and family leave to either take care of a family member, that kind of thing. Sometimes they can, the employee can go on, um, short-term disability. So there's a credit that if the employer is like, okay look, I'm gonna let this person take some time off. I'm just gonna pay their salary. I'm just, they're just not gonna be working. But I'll pay 'em. I believe there is a paid sick leave and family credit that you get to claim, I believe, at the federal and the state level for offering, for offering that. The only other alternative is like, oh, they'd have to go claim short-term disability from the state and be outta work for six weeks. And even then it's not even a hundred percent a salary. I believe it's 65% salary. So something, something like that, if I recall, a note for myself to my tax repairer, 'cause I do offer paid leave, but it depends on, like, I guess it sounds like it depends on the situation. Like it's only applicable, not just for regular PTO. Yeah, I don't, I don't believe it's regular PTO. It has to be, I believe some, some sick or, um, either the person is, is ill or a family member is ill for the care of a family member. Yeah, it's like a family leave, family medical leave thing. and to be fair, I mean, it's a nice benefit as well, you know, be able to give your, give your folks, say paid family leave, somebody comes up, whatever, and you're like, look, take the time off, you know, pay your, I'll pay your salary. Just, just come back when you can. It's nice to give the employer a, you know, a little bit of a tax break on that because it is, it is sort of a, a, a it's almost like a double dip that they get to take because you are getting a tax deduction in general for just paying wages. But to get an additional That's oh, you went, you were a nice employer. a little pat on the back. That's right. That's right. That's great. That's great. That's great. And, and, and I'm, you know, the governments do that, a lot of times because they're like, look, it's either the employer's paying the wage or honestly, you know, state disability has to, has to be the tab, you know, someone, someone's gotta do it, you know? so that's, that's a good point. I was gonna say too, it's not part of the one BBB, although there is, an employer pension startup tax credit that I am actually using for quite a few of my clients. Yeah. Let's, let's hear about it. Yeah, so there's, there's a tax credit, it's called the Employer Pension Plan, startup Tax Credit. And what it's meant to do is it's meant to incentivize employers to start up, you know, 4 0 1 Ks and, and tax savings plans for their, for their employees. so you get to. as part of the, uh, as part of the credit you get to, to, get a tax credit for all the startup costs of the plan. so like if you have to, you know, go to Fidelity and have them set up a plan, there's like administration fees, there's a custodian fee sometimes. So you get to, you get to get a tax credit for all that. like I have one client we're getting it for, it's like 1500 bucks, you know, to, to establish a, they establish a simple IRA for their employees, starting in 25. So we're gonna get her that tax credit. And then what's really nice is depending on the number of employees you have and their compensation, you actually get a tax credit for the amount of employer contributions you put into their plans. So not, not the employee deferral, employer contributions, I think it's up to a thousand dollars per employee. So like my one client, she was telling me like, oh yeah, you know, we, we, we do matching and we do all that. And she's like, I think we have like non-employees. And I asked, is it, is it more than a thousand dollars per employee? And she's like, oh yeah, you know, for sure. Yeah. Our, our contributions are pretty, pretty good match. And I was just like, well, we get to get a tax credit for you now. You know, I think the total tax credit's gonna be like, I think it's like 12 or 15 grand for her. And, you know, just, just a high level speaking out, you know, speaking out there to all the bookkeepers and tax payers, you know, tax credit is much more viable than a tax deduction. You know, tax credit is a dollar for dollar reduction in your tax liability. So you wanna prioritize credits where you can, um, whenever you can. So I, I would say, I mean, you know, for tracking purposes, definitely bookkeepers keep, keep an eye on that, the employer contributions, employer matches, that kind of thing. I am hoping the tax preparers know about this credit and are willing to take it or having these conversations about it. Yeah. they should, they should be talking to their clients about this. in fact, California has a requirement by it actually already. The deadline passed by 1231 of 2025. You have to offer a retirement plan to your employees. It's not even optional I think Oregon does too. oh, okay, okay. So it's like this, this pension, you know, startup tax credit. It's like, dude, if you're gonna have to do this anyways, it's part of the law, be compliant. You might as well get a tax credit for it. So, yeah. Absolutely. And that's just like one little note that I've discussed here on the podcast before and within my community. One of the things that we do for our clients at year end is we create a tax package, quote unquote, they can literally just give the, like the workbook, it's an Excel workbook to their tax preparer with all the detail of the accounts that we know they're gonna need to like, fix assets. We list out and, charitable contributions and all of the accounts where we know they're gonna wanna be able to see the detail of and Within that, we have like a cover sheet of like, here's what we're addressing in this workbook. One of the ones that you should add for this year is the employer pension credit, right? So pull all the detail of all those employer matches, add that as a tab in the workbook, put it on the cover sheet that like, make sure you discuss this with your tax preparer. The, the credit that you have available, that you might have available if you created the plan in 2025. Or also have a match, right? one. Yeah. Yeah. I mean, if you created a plan, if you have a match, or possibly both, or, you know, it, it actually applies, I believe it applies to the 2024 tax year as well. because, because it's from the, the bill that put that into place was the Secure Act 2.0, which I think was implemented in 2023. So, you know, all you folks out there who might have been starting retirement plans, if you haven't gotten that tax credit and you started a retirement plan for your employees in the past couple years, you know, go, go, go talk to your, you know, go talk to your tax professional. You know, you can, you can always get some money back too. I mean, you never know, you know, 2024 wasn't that one ago. So. it's funny, speaking of charitable contributions, you actually, you actually that's a good, good segue. so I don't know if you remember,'cause I know you don't work too much with, with tax arena, but, , so back during COVID, I believe for 2020 and 2021, you didn't have to itemize and you could get a certain amount of a charitable contribution deduction. I think it was up to $600, on a married filing joint return, you didn't have to itemize. So you can get your standard deduction and you get additional charitable contribution deduction. So the one BBB, the oh Baba has brought that back actually permanently. it's up to $2,000 for joint filers and a thousand dollars for other, for other filing statuses. So you can get your standard deduction and if you do a little bit of charitable giving throughout the year, you actually also get, get a tax bid for that, for that now. and that's really nice 'cause you know, I mean you work with, pass their entities, you work with, you know, schedule C, so props and all that. A lot of times they do have charitable contribution deductions and they're asking. Like, Hey, how's that gonna help me? And before it's like, well, dude, you didn't itemize it didn't help you at all. Now there actually is a little bit of a, a little bit of a benefit for it, which is, which is nice. Yeah., That's a small thing. It begins, I do believe it begins, 1, 1, 20 26 though. So it's sister. So for 25, and unfortunately it's not gonna become anybody. this is one of those things that like you can also stand out with your clients is be like, this isn't, you know, I see you did charitable contributions in 2025, it's not really gonna help you much, but in 2026 it will. So if you have someone you want to give to an organization, and have the cash for it, definitely plan for it in 2026. But it's also gonna be permanent. So is what you said? yeah. So it'll, it'll, yes, yes. That's, that's my understanding. Yeah. Permanently provides, yeah. Permanently. Yeah. so just going forward, you know, I, I know a lot of folks. Like, I've seen it in the books where sometimes there would be a charitable contribution that wasn't recorded as such. You know, and sometimes those get deducted and, and that kind of thing. So you gotta make sure you're separating that out properly. You know, the book tax differences, but with someone on my team today, because I was like, yeah, charitable contributions, when they pay it through the business, it's not a business deduction. So we report it separately, below the line, but we do pull the detail for it and put it in their tax package so that they can deduct it on their personal taxes. if they're itemizing or what now in the future, they won't have to, but that's one of those necessarily that like, we just ensured to do that. And she was like, oh, I didn't realize you couldn't deduct those through the business. I'm like, yeah, it's not, and it's not an operating expense either, and that's why we also don't put it above, you know, we put it below the line, that's. um, because you don't need to do charitable contribution stuff. Brain, That's great. That's good. That's good. That's great. So that's, that's a nice, nice little bonus there. as part of the one B, BB. So I encourage all bookkeepers, please separate that out and, make sure, make sure to highlight.'cause 'cause some people, you know, I've worked with taxpayers, I've, I've audited folks, you know, they did tithing, they did tithing outta their business. and it's, sometimes it's a lot. It's like five or 10% of their, their business income every month. You know, they, they remit to their church. And so, , sometimes I've, I've looked at the books of records and I was like, yeah, this is the tithing amount, right? And the, the client didn't know how much it was. They would just give the p and l the tax repair. Oh, it just came out, however it came out. They're like, wait, is that money? So make, make sure, you know, I encourage all folks, please note that the financial, so your clients can see kinda what's, what's really happening there. cause sometimes those tithing contributions can be a lot, you know, and, and it would, it would take people back more than once. So, yeah. so it's important. It's important. Absolutely. Yeah. the self-employed health insurance deduction, was that a secure 2.0 thing and is that staying? no, that's, it's funny. That's been, that's been a tax deduction for a long time. and it's funny actually, a lot of people miss it. So I, I would encourage'em by any tax repair. Ask your clients, especially you're self-employed at small business folks, do they have health insurance? some states still penalize for not having health insurance. California's unfortunately one of 'em, the feds no longer do. But that, that still doesn't mean the states don't. and you get, you get a dollar for dollar tax deduction for any, self-employed health insurance that's paid for the, uh, the sole prop, you know, the, the person or their family. So I, I, I'll be honest, I've done audits where that was one of the first things I asked about was, Hey, like you're self-employed. Do you have health insurance? I'm not even seeing a deduction on here. And sometimes I'd have to adjust. The deduction in the client, in the, in the oddities favor because their tax repair, you know, they, they pay like 20 grand a year for supple health insurance plan from covered California. It's huge. It's huge. And the guy's like, wait. paying it through my business, so Yeah. not get caught. And even if you are like, maybe That's correct. just thinks it's business Yeah, so it's a diff, it's different treatment. So definitely split that out That's correct. line if Yes. through the business, if they're not, highlight that on their, as a question, on their little cover thing. If you're doing a tax package like I am, or creating notes for your clients to give to their tax repair, like this is how we stand out. That's great. And it's, it's, it, I'm, like I said, it's usually expensive depending on what state you're in. I mean, some employed health insurance is not cheap. So, like I remember one time I, I, I saved a guy, I think it was like a 25,000 deduction. I mean, you know, it's such a simple thing. All I had to do is ask a couple questions, Hey, what's your health insurance? You know, you got ten five or something, you know, what's going on? And he is like, dude, you're like, I've been working with a tax professional for years. You're like, the only guy's ever asked about that. And I was like, dude, I just saved you some money, dude. So, you know, that's a, that's a very powerful deduction. You're right., Definitely, definitely keeping on that. That's, that's still, that's still going on. Nothing's been changed by that. That's been a deduction for, for a long time. And, and I think it's, honestly, it's only anecdotal. I'd say it's one of the more easier deductions that's missed. Yeah, especially if like for me, like I came from corporate, so for a long time that was never anything that I was on my radar until I became self-employed. And that's probably the same issue with your clients. Like if they worked corporate, this is a new thing, why would they even think to bring it up? Because that's not a deduction as an employee. You That's great. your great. health insurance premiums. Right, Well, so yeah, so as an employee, and this was negotiated under, under the Bill Clinton era. so health insurance premiums are, are actually non-taxable for income tax purposes for from, from an employer, from a WT employer. So, you know, if you made 150,000 but your health insurance premiums, god forbid, we're 50,000 a year, you know, your W2 wage and that box one's only a hundred grand. You know, you still gotta pay resource Medicare, but yeah. You know, there's no additional deduction for it though, what about the portion that you pay out of your paycheck? Yeah, that's included. That's a good, so actually fun fact, your, your W2 will only reflect what you pay. It won't actually have the employer contribution on there. Yeah. So like, if, if your health insurance costs 50 grand, the employer pays 25, you pay 25, you know, 50 say 50 50 cost sharing arrangement, I'm not sure it's a lot of Obamacare anymore, but don't quote me on that. so you'll, you'll only see the reduction in your taxable income on your W2 box, one of 25,000. The employer, whatever they're contributing, whatever their, their match is, won't actually come up on there. So I, I'll tell you folks, whatever, whatever you're paying for health insurance, your employer is probably putting in more that you don't see. You know? So, , it's not cheap. It's not cheap. if you have really good plans like. Yeah. Yeah. Yeah. Good PPOs. And so, yeah, I mean, it's, it's, I think I was looking somewhere, you know, I think one of the cheaper plans here in California for a family of five is like. For good health insurance. It's like four grand a month, or six grand a month or something. I was like, wow. you do like the health exchange get a good plan there, I was paying over, like, I was paying close to two grand a year, a month, for just me and Wow. a plan comparable to Yeah, in corporate where I was only paying a couple hundred dollars a paycheck. You know what I mean? exactly, exactly right. You know, it's like, and, and I will, you know, I like, I came from the Fed, they had decent health insurance plans, so, and they weren't, they were good coverage and they weren't like terribly expensive. You know, you, you hear all those stories about like, you know, Facebook and Apple, they're, they're like, oh, we cover the employer employee portion a hundred percent. You know. But yeah, go Government's an exec like that. But do what you can to Yeah. health insurance. Please. you're listening to this, go back to my You know? with, Carissa Martino.'cause she is my health insurance broker. And she will hook you up. Yeah, I might need, I might need her contact information if that's cool. Because she'll, what she'll do is like, sit down with you and talk about like what health needs you have. Like if you have people in your family with any conditions that need a certain level of health insurance versus like, if you're like me and I go to the doctor, like maybe once a year, like you can be on a different plan, you know what I mean? Depending on your health needs. And she'll match you with. Options that fit your needs that are as a self-employed individual that are affordable. So now my insurance is way less than I was paying from the health exchange with a plan that's Oh my God, that sounds awesome. it's like, or it meets the needs that I have because I wasn't utilizing that whole plan. Like it would've made sense if we were on medications or surgeries or whatever, but it just wasn't the case. So, Yeah, I would, I would love to have her contact info. That'd be awesome. Thank you. I appreciate it. let's see. Anything else here? I mean, let's see. There's no tax on overtime pay. I mean, I don't know, you know, for all your, for all your public safety employees out there. so overtime used to be fully taxable. Now it's not that OT pay is exempt from tax, but you send, kinda the same thing with tips. You get a, a tax deduction for the amount of your wage. That's, that's overtime pay or premium pay. it's up to $12,500 of overtime pay. for anybody that's not married filing joint, it's 25,000 for married filing joint folks. So, I imagine all the families out there, you, if you got, you know, firefighters, you got police officers, that kind of thing, security, personnel, I mean, hey, being able went out the overtime. That's, that's nice. It helps, you know, just for, just for context purposes, you still gotta pay your social security Medicare on that. But, Anybody, anybody out there who's a safety employee, keep, keep that in mind. Talk to your, you know, talk to your taxpayer about it. Or, I guess Mr. Turbo, as we call it, TurboTax these days. Yeah. there's some stuff about the passer entity tax that might be a little bit above sort of, I mean, tell me, do, do you, do you see passer entity stuff like with your clients? I mean, I'm sure maybe you do because their tax payers recommend they do it, that kind of thing? Or, or, or not too much like in the, but well, it definitely counts for partnerships, but like, I think a lot of people, I don't, that's kind of a conversation that happens with the tax repair and doesn't really affect the bookkeeper yeah. as I know, unless we end up seeing like an income, a tax expense. Right. But as far as I've Right. aware, most of my clients have probably opted out of that, also I haven't Okay. That's, that's fair. That's fair. Yeah. I guess I would encourage anybody who, is kind of paying a lot of state income tax or, or local income tax, you know, especially in California, you know, like I have a lot of clients, I'm pretty much recommending them to do the past rent to do tax. It's crazy. They've already like not done it, you know, and I was like, oh, just, you know, could have saved some money, you know, like 12, 15 grand and put oil, oil tag, you know. that. What are the bene like? What is, what is pass through entity tax? And for anyone that listening is like, I'm clueless on this, like, um, Okay. Okay. So, so let me, lemme give, lemme give a broad overview. We'll, we'll take one step back. So you might have heard in the news something about salt cap or salt deduction. Right? So SALT stands for state and local tax. so at the federal level on your federal income tax return, you get to deduct what you pay in state and local income taxes. So under the previous regime it was limited, though you can only deduct $10,000 a year. Okay, so like here in California, like me and my wife's tax burden for California income taxes over 10 grand years, you know, so we were limited to what kind of benefit we could get. So what's nice about the one BBB is, uh, the, oh, so it's increased that deduction cap to $40,000 now. So that means that, a taxpayer who's paying up to $40,000 in state low income tax can, can now get a deduction for that on their, on the federal tax return, assuming they itemized their deductions, you know, itemized deduction, standard deduction. So it's gonna, it's gonna kinda depend, if you're paying that amount and in say, low income tax, you're probably, definitely itemizing for sure, you know, more in interest to all the rest of stuff. So, one, when this cap was introduced, the way that states, they kind of wanted to, have a mechanism to assist partnerships, corporations, people with the passive entities, that kind of thing, and PA and meeting their state tax burden essentially is they, they invented something called the passer entity tax, which means. You're paying the, the shareholder or investors state income tax burden at the entity level, and it, it, it flows through to them. It's a way to get around the state local income tax deduction, on the federal return for itemizing, your deductions. You know, 'cause like I said, a lot of folks, they'll pay more than 40,000 a year. Anything above 40,000, they won't get a tax deduction for it. So pay it at the entity level, get the benefit at the entity level. It reduces your federal income tax, you know, and then it pass, it passes through as a tax credit, to the individual investor. So it's, it's a pretty powerful mechanism. I would say, like I said, I have a couple clients, they are paying state income tax that's well in excess of, of the $40,000 cap. So I'm gonna recommend they do the passive entity tax. They get the state federal tax. They're still, you know, paying their state tax burden just through their entity. They get a tax credit for it. It's all, you know, it, it's very powerful, very powerful deduction in my opinion. it's pretty, pretty useful, And I, and I, I feel bad. Like, like, like I said, she was with the previous CPA and I'm like, dude, you were, you were well in the territory to take advantage of this and you didn't, you know? And just to simplify it for people listening, like where would, what would trigger them to this up to a client? Like without knowing their personal tax situation? Or is that something that you would have to be privy to? Or is it again, something kind of like, well. Do you have self-employed health insurance? It's like, along with that question, are you paying a lot of local state taxes on your personal, I would say, it might be a topic for a bookkeeper to bring up. Like I said, it, it delves a little bit into the tax space. So I, urge caution, but, , if you have a business that has a lot of taxable income and the, the client, you have lives in a state with income tax. It might be something to bring up. for example, I've got, you know, one of my clients here, let's say she runs a consulting business and she's got taxable income from just that entity. I think it's like 600 k. You know, and that's what prompted me. Oh, okay, I'm gonna go take a look at a return. And were, they're doing passive tax. Oh no, they weren't. I'm like, you kind of have a taxable income to kind of necessitate this, especially in California, which is one of the most onerous stay income tax regimes in the nation. that's my two, two points. If there's pretty healthy taxable income for the entity and they live in a state with income tax, I think it's a point of point of conversation for sure. And, and I think an analysis should be done, you know, for all you folks live in Nevada and the other places that don't have seen tax, you can take it or leave it unless you have, unless you, I will say another, another mechanism of the pass or entity tax is to pay, pay the tax obligations of folks that are not residents of your state. So, you know, you, you might be centered to California, but you have a shareholder somewhere else. The entity can withhold their, their essentially their state tax burden for them, you know, versus having to have them file a return and do all that. Um, I think in some states that's even mandatory. So like they have to, the entity has to actually have some withholding Okay, So what you're saying is like if there's a an entity that was formed in Florida, for example, but the shareholders live in Arizona, California, a bunch of, Yeah. Places with income tax. that Florida entity yeah, withholding. Income tax. yeah, yeah. For, for non-resident shareholders, to, to meet that obligation because they, they're, they have income that's, you know, they're, it's being sourced to different state.'cause Florida doesn't have state income tax, but like California and Arizona does. and the, the entity gets a tax for that, for, for that withholding IT stuff, you know. Um, yeah. Yeah, there's some, there's some nuances. It, it can come in handy, especially if you're talking about businesses that have like multi-state operations or multi-state, shareholders, that kind of thing. It starts to become more part of the conversation, for sure. where it Yeah. more like It definitely makes sense, or it definitely doesn't. So for example, like. If your taxable income at the entity level at, let's, let's use a real life example, sort of like this might Okay. to a lot of our listeners. you have a client that's an S corporation, or maybe you are an S corporation, right? Your business is, has elected s corp status. So you're paying yourself a W2, but your business is still like, has maybe 60 to 80 K in taxable income after you've paid your, your, your owner wages, right? so then you're gonna owe income tax in this, on the state level. would it make sense for that entity to do the pass Serenity tax? I, I would probably say not depending on the shareholder's situation. Like if they had multiple entities that have 60, 80,000 taxable income, then you might start getting into that, into that scenario. and, and here's one, here's one caveat with the password entity tax, for example, in California. So if the entity's gonna elect the password entity tax, it has to be withheld at the highest marginal rate in California, which is, I think it's point, I think it's 9.3%, nine 3%. So like, you know, say $80,000 of taxable income, if you do the, the, the 9.3% rate on that, it's like 7,440. But say your taxpayer right at, at the individual level isn't paying the top marginal rate. You know, you, you basically might have overpaid. get it? On the state withholding you can, or you can carry it forward. You know, you can carry it forward as a, as a, a state tax credit essentially. So you'll, you'll get the benefit eventually. But, for cashflow purposes may not always make the most sense, you know, for example. and it's something you So go ahead. ahead of time. So it's like we're filing right now for 2025. Yes, withhold Passthrough entity tax, it's too late. We gotta do it for Yeah. See, and that's, and that's correct. So that's, that's where California sticks is as well, is, you have to elect into the pass their entity tax withholding regime, by usually June, June 15th is, is usually the date. So like I already told my client, I was like, dude, we should have done this back in June 25. You know, we can't even use pass text now. We're gonna have to wait till 26 and we're gonna do it this year for 26, you know, to get you that benefit. And, and like I said, I asked her, I was like, you, your CPA should have done this. I mean, you, you have the income to justify it. You know, she's, like I said, she overpaid probably by 15, 20 grand on federal income tax just 'cause they didn't do this. It's, it's a simple thing, but it helps. so it's a conversation to have. Definitely. As far as like the, on the entity level, it something that is like easy to, it goes along with like 9 41 contributions, like FICA and social security. Is it easy to just like, log on and pay it? Like how does, how do the mechanics of it work for the, from the entity standpoint? Because that might be something the bookkeepers get involved in, right? that's, that's correct. Yeah. So, like, for example, if you're, if you're facilitating or handling tax payments for your clients, so a lot of the times you're gonna have a voucher that's prepared by the tax preparer or, you know, there's, there's a, there's a form, there's a voucher that's part of the tax return and. I always encourage a CH through my tax software to be able to take it just automatically. But some people, they do pay it manually. You'll have to go to the state tax agency website and actually pay it and, and let them know, Hey, this is a form 38 0 4 payment, you know, pass entity tax election. You got, it's gotta be paid by a certain date. you know, there's, there's nuances like that. So definitely if, if you have a bookkeeper handling tax payments or facilitating tax payments for their clients, you know, you're gonna wanna be in close contact with the tax preparer and make sure you understand, hey, this amount has to be paid in, you know, it has to be paid by, paid in by this date. Like there's, there's nuances like that. something that like if the tax repairer is already like helped the client strategize around this, they should be sending like vouchers the reminders, like when the tax deposits are due like quarterly basically. Okay. Yes. And, and I would, I would even go to the extent, if you're seeing stay tax expense on in the books, I would even go to the extent to separate it out. You know, you have say your franchise tax and then you have the passive entity, elected tax. You know, give that way. The preparer can instantly see on the p and l, oh this has been paid. I can go in and look at the details, see what's going on. Right. if you just lump it all into a state tax, like it might, you know, things get forgotten or like, hey, what, how much of that was an elective tax versus franchise tax? What's going on here? You know? so I would encourage you as bookkeepers to, to do that as well. That helps us on our end, you know, break it out, what's, what's the normal, you know, $800 fee you year to California and then what's the to elective tax? And being able to separate that out. Yeah. useful. The bookkeeper does. That is worth the wind gold. Awesome. cool. Well, know we're kind of like, we've been chatting for a bit, but are there any other like big things that you wanted to tackle, about the bill or other tips and tricks for bookkeepers that you're like, I'm already seeing this as a potential issue this tax season? That's a good one. I will say I, this is only anecdotal, you know, 'cause I do a lot of, I do a lot of consults with prospective clients that either have a bookkeeper and they're, they're maybe not happy with the survey. So they kind of, you know, they want the all in one shop. They want the, the CPA doing the books and the taxes altogether. Like, and it's, it's little things sometimes, like for example, I notice a lot of bookkeepers, they're not reconciling POS systems with the books. They'll just record like net deposits as, as, as revenue. And it's like, wait, you know, I gotta go to the square. I gotta reconcile everything. You know, what's fees, what's sales tax payable, what's revenue like to, to make the numbers jive, right? To make sure they're, they're reliable. but I, I've been seeing more of that come up lately, you know? so I encourage folks like, yeah, you gotta make sure you're reporting all that correctly and like, get into Square, like get into the thing, get the report, please do that. You know, um, of your clients. as you know, there's such a power burden. other You know, too, is it's easy to, because sometimes clients will. You know, forget to give you access or be resistant to giving you access to all these systems. Bring that up on your discovery calls of like, we are going to require bank access, payment processor access, POS access, because we need to be able to pull the right detailed reports without bothering you. And so it's like you can, you can ask for that. That's great. That's great. So please, please do that. and, and it's like, and I've seen it a lot in audits as well, where, 'cause the Iris gets the information, they get the ten nine Ks and they get all that stuff. And then you try and go to the books and I, I tell you where, where the books were reconciled, which is rare, I'm gonna be real with you. When the 10 99 K square and the books did not match, that was, that was pretty common. it instantly made me like a little more skeptical of, okay, like, are these books. Hmm. You know, it's, it's a small thing, but it matters, especially in a, in an IRS examination. and then vice versa, right? When I had square the books, you know, bank deposits, everything was matching the p and o matched to the penny. Oh, it's beautiful. You know, because it's just like, okay, now I know, like these, these, these guys have done a good job. This, this, this whole package is just a little more reliable. You know, sales tax ties out, square ties out, bank read solutions tied out, you know, everything's been, been, been reconciled correctly. I know you and I talked about it in the previous podcast. It's like, it, it's, it's, it's this, it whole picture, perception and and perspective. It matters. You know, the, the whole package has to be reliable or else, you know, we're, the iris can question things. Well, why is that like that? Why is that like that? Or like, Hey, we just, we straight up don't believe you. There's, this is incredible. This is incredible evidence. This is, this is incredible testimony. The books don't show this huge, huge factor in whether you owe nothing or you owe a lot, you know, huge, huge attorney factor. side of the purpose of reconciling that, not just for tax audit potential, but when you don't reconcile the payment processor and the point of sale and all of that, if things aren't reconciling, likely your client's not getting all the money that they should be getting. Like that's usually the issue. Like it should reconcile. There's always gonna be like deposits in transit and things like that, but you should be able to identify them. That's one thing that we've had a really difficult time getting all of that to like really tie out with Shopify whenever there's like. different payment processors.'cause it's, you start adding all these things, it's really hard to trace like, okay, well why is there still a balance in here? Like, 'cause we have to use clearing accounts and stuff and Shopify makes it really hard to see like where the fees are coming from and all of that stuff. So it's like, there's definitely like some challenges with that. But the reason you know, you have to do that work is to ensure that like this was what was sold, this is what the client is owed, and you're putting your faith in a payment processor and sometimes they screw up. it's funny you bring that up. I, I work with a few different payment processors, you know, for, for some of my different trades clients and that kind of thing. And, and seriously, you're right, the reports like aren't accurate. Like they say they took this fee on this day and then it comes up with a bank like three days later and you're like, wait, dude, I already journaled this. This doesn't even match. It's not even the same amount, same day, you know, it's crazy. So truthfully, do the, do the reconciliations, please get in there because sometimes it, you know, and you have to go hunt for the answer because you're like, wait, what the, what the paper processor gave me actually doesn't match what happened, you know? Uh, that was surprising to see. I will say. in my corporate days. We used, like, don't remember what payment process, it was like a credit card processor.'cause we had like a physical store. but like that was part of my job was to reconcile the, the actual deposit hitting the bank and anything on their statement, like making sure that whatever wasn't in the bank yet was just in transit. And then we'd verify that it came in the following month. And it's like, there was times where the amounts were $50 off, a hundred dollars off. And I literally had to call the payment processor and be like, why? They'd be like, oh, whoops. That was a mistake. You're right. You were owed that Exactly. It's, It's you know, this is, this is why reconciliations are so important. It's, it's, it's small things like that, but it's like, you know, for a business, those small things add up it's truth, for sure. you know? Well, So, yeah. for coming on and chatting with us about tax and how we can be better bookkeepers and help our clients more and bring things to light and stand out. I hope if you were listening to this, you found it valuable. And comment below the YouTube if you're watching on YouTube. any questions you might have for Adrian and all this time I'll make sure he gets 'em. I'll go back to the old video and, and, and, and field some questions to, to see if there's anything lingering. but yeah, thank you so much for taking the time, to come on here and chat tax with us. I really, really appreciate it. Selfishly, I like to Absolutely. the conversation. Absolutely. Thank you for having me. I enjoy, I enjoy our conversations, you know, look forward to doing it again. Thank. wants to connect with you, reach out, maybe refer to you or whatever, are you taking tax clients still? What's the story and where can people connect with you? Yeah, yeah. No, I am, I'm actively taking on individual business tax clients. and Serena mentioned, I, I'm a one stop shop. You know, I do books and books and taxes for folks, personalized white glove service. The best way to reach me is on my website, www.alcpa.com. Awesome. I appreciate you so much, Adrian. Thanks for coming on. absolutely. Thanks for having. We'll talk to you soon.

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