Welcome to another enriching episode of Bartelle's Money Talk, where Theresa and Johnny Bartelle dive deep into the intricacies of personal finance and business management. In this episode, they are joined by Charles Reed, a seasoned CPA and financial expert, who shares invaluable insights on starting and managing a business, understanding tax compliance, and avoiding costly penalties.
The Journey of Entrepreneurship
Charles Reed, with over 30 years of experience, emphasizes the importance of choosing the right business entity. He explains the tax implications of different entities, such as sole proprietorships, partnerships, and corporations, highlighting the importance of making informed decisions early on. Reed’s journey from a $1,000 startup to a seven-figure business underscores the significance of hard work, strategic planning, and continuous learning.
The Essential Four: Accountant, Lawyer, Banker, and Insurance Agent
Reed strongly advises aspiring entrepreneurs to seek professional guidance before starting their ventures. He outlines the critical roles of a CPA, lawyer, banker, and insurance agent. Each of these professionals plays a crucial part in ensuring the legal, financial, and operational stability of a business. From setting up the correct tax structure to protecting assets and ensuring compliance with local laws, these experts provide the foundation for a successful business.
The Perils of Tax Compliance and Penalties
One of the key takeaways from the episode is the importance of understanding and adhering to tax obligations. Reed explains that tax penalties can arise from simple arithmetic errors, late filings, or missed payments. He shares a compelling story of a client who incurred over $2,000 in penalties simply for not filing a necessary franchise tax report. Reed’s advice is clear: know your obligations and seek professional help to avoid unnecessary penalties.
The Hidden Benefits: Tax Credits for Paid Time Off
Reed introduces the lesser-known Section 45S tax credit, which allows small businesses to claim a credit for providing paid time off for reasons covered under the Family Medical Leave Act (FMLA). This can be a significant financial relief for small businesses, emphasizing the need to stay informed about available tax benefits.
Preparing for the Unexpected
A particularly enlightening part of the discussion is Reed’s advice on preparing for unforeseen circumstances, such as the death or incapacitation of a business partner. He stresses the importance of having a buy-sell agreement in place to protect the business and ensure smooth transitions. This proactive approach can save businesses from potential legal and financial turmoil.
Dealing with the IRS
Receiving a notice from the IRS can be daunting, but Reed advises not to panic. He emphasizes the importance of understanding the notice, responding promptly, and seeking professional help if needed. Ignoring IRS notices can lead to irrevocable consequences, so timely and informed responses are crucial.
Continuous Growth and Adaptation
Throughout the episode, Reed’s commitment to staying current with technological advancements and industry changes shines through. From being the first green payroll company to embracing crypto payroll, Reed’s business exemplifies the importance of innovation and adaptability in staying competitive.
Conclusion
The episode is a treasure trove of practical advice and insights for both aspiring and seasoned entrepreneurs. Charles Reed’s experiences and expertise provide a roadmap for navigating the complexities of starting and running a successful business. By seeking professional guidance, staying informed about tax obligations, and preparing for the unexpected, business owners can build a solid foundation for long-term success. For more detailed discussions and expert advice, be sure to tune in to Bartelle's Money Talk with Theresa and Johnny Bartelle.
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Personalized Guidance: We understand that everyone's financial situation is unique. That's why our coaching adapts to your specific circumstances, ensuring that you receive customized advice and strategies tailored to your needs.
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Thank you for considering "Bartelle’s Money Talk" and Bartelle's Financial Coaching. I look forward to hearing from you soon.
Warm regards,
Johnny and Theresa Bartelle
Founders of Bartelle’s Financial Coaching
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