TripleTake Live

Date: June 1, 2019

Attendee and Guest: Kelly Coughlin, CEO, EveryDay CPA - David Ronquillo - PART 1

Greetings, this is Kelly Coughlin, CPA, and CEO of EveryDay CPA providing tax accounting and revenue solutions to individuals and businesses throughout the U.S. In today's podcast I am going to interview a former grizzly bear. Yep! In a former life, for 30 years, he was a grizzly bear who took the shape of an IRS Officer, seizing assets and pursuing DOJ tax lien foreclosures. If you have done business with this man, that is, if you poked this bear you probably were having a bad day. He has proved positive to my mantra that the IRS can be either a black bear or a grizzly bear, but regardless, a bear. And do you know how to tell the difference between the two? If you climb a tree to escape the black bear climbs up the tree to eat you. The grizzly bear simply rips the tree out by the roots and eats you. Regardless, don't poke the bear. David Ronquillo, did I say that name correct David?

David: Yeah, Ronquillo.

David Ronquillo began his career as a revenue officer in 1980 in Seattle. He has held positions as Field Collection Group Manager and Senior Collection Policy Analyst. Currently, he is helping tax professionals increase their knowledge and skills representing clients who are dealing with the IRS Collection operations. David, I want to welcome you to the EveryDay CPA Podcast and want to first ask you, in your past work, did you prefer climbing the tree or ripping the tree out by the roots?

David: Well, Kelly, I have never had it described that way as that grizzly bear but it's certainly a lot easier to just simply rip the tree out by its roots because you will bring down the taxpayer out of the tree to do what you need to do.

Kelly: Well done, alright. So, you prefer the rip the tree out method?

David: Yes, it's always more effective. We try to be effective when we are with the IRS.

Kelly: So, is it fair to say, David, that you have done your fair share of ripping the tree out?

David: Very much so because the Austin district was one of the top districts in the country that did seizures and my group happened to do a lot of them. So, that's what we were focused on, it was the enforcement and the collections. So, yeah, there is a lot of trees that I ripped out.

Kelly: Great! Alright, let me just ask a handful of questions here David and if you want to go a certain direction, feel free. But I am going to ask some questions that I think are kind of practical real-life issues that taxpayers that have poked the bear, I suppose, that they have to deal with. Let's talk about LLCs, for instance, does running your business revenues and expenses through a single-member LLC offer the taxpayer, that single member, any protection from IRS collection?

David: Not really, not to any great degree. The IRS, they have various procedures for dealing with LLCs and I would always recommend to a tax practitioner, if his client is an LLC, to read the internal revenue manual procedures. There are a number of pages to it as to how revenue officers should be dealing with the LLC. The single member, it depends on what type of tax that is owed. Generally, what the IRS sees is that the LLC will have employees and they will run up employment tax. Back in January of 2009 the IRS council came out with an opinion that effective after January 1, 2009, the trust fund recovery penalty would be used against the single member, against the individual to collect the trust fund portion of the employment tax. Prior to that the IRS just said that the individual and the LLC were one and the same, whereby, the individual would have to pay the full amount of the employment tax, both the trust fund and the non-trust fund.

Kelly: Well, that kind of applies to seed corps too, it Is that the executive team, maybe not shareholders but board members, for employment tax they look through to everybody for that, correct?

David: Exactly. With the seed corporations, they look at the individuals that are responsible for making sure that the employment tax was paid and then who basically did nothing to see that it was paid. On the trust fund recovery penalty there is two standards the IRS has to meet. One is responsibility and the second is called willfulness. So with the individual responsible for ensuring that the employment tax was paid, and if they weren't then were they willful? Did they know about the tax and what did they do or not do to ensure that the tax was paid? And when you look at a business entity, corporation or an LLC, the IRS is to look to all the individuals that may have had a place in dealing with the employment tax. So, it doesn't necessarily have to be a corporate officer, it could be somebody that they just hired, the chief accountant, for example, who is responsible for making payments, paying the employment tax, making the FCDs. They could go after that individual. I like to use an example in my teaching, it is that if you had two corporate officers, a president, and a vice president, it was a construction company, and one of them spent nearly 100 percent of their time in the field, you know, managing construction projects, even though they may be an officer, if they were not aware of the employment tax or they really had no control over the funds they would not be held liable for the trust fund recovery penalty.

Kelly: Okay. Well, the whole topic of employment tax is one of almost a subject of a separate podcast which we could focus on but if we continue on that, let's say that you have outsourced. With many small businesses, they outsource to, say, I'll mention some names, QuickBooks, being the top one, and then Gusto, and a couple of these other ones that are in the payroll tax area, if you have outsourced it to them, how deep do you have to get in to first make processes to get assurance that, let's just pick on QuickBooks for instance, Turbo Tax or Intuit, I should say, that they actually have made the distributions and payments of employment tax or once we outsource that, is it kind of not in the employer's risk category at this point?

David: The Corporation or the individuals running the corporation, they cannot outsource the responsibility for making sure the employment tax is paid. What the IRS would expect them to do is that if the FCD is due on a Wednesday that the officers, whoever is responsible for ensuring the employment tax to be paid, would check their bank statements or get some verification from, QuickBooks for example, that in fact the FCD was made. And if it's not made then the expectation is that individual would take some action to contact, QuickBooks, in this example, to find out, well, why didn't they get paid, you know. If the company had money in the bank account, well, why wasn't it paid? So, they can't outsource their responsibility.

Kelly: Alright, so they should go through one additional kind of review monitoring to make sure that (a) the funds came out of the account, which they most likely did. The question is, where did those funds go, and maybe check online to see if the FCD got paid and if there is any balance too; maybe not every time but maybe the first couple times, every disbursement, but then maybe quarterly. You develop some procedures around that activity. Is that a fair statement?

David: Exactly right. Have some procedures developed to verify that if somebody else is making your FCDs, that in fact they are being made.

Kelly: Okay, so that's enough on payroll. But, my initial question was really not on employee tax, it was more about income tax, due. Because your question was, well, it depends on the type, whether it be LLC, it does appear true. So, we agree that there really is no protection for anybody on the payroll tax thing. But on the income tax side, LLC versus not LLC, is there any protection in asset recovery, when you were in that business, if the business activity and the tax liability created was created by an LLC, single-member LLC, versus just a schedule C - sole proprietor?

David: On an income tax situation where the individual owes this 1040 tax, well, the LLC is considered a separate entity from the individual so any assets owned by the LLC are protected from any type of enforcement action by the IRS. What the individual has is an interest in that LLC, that's what he owns, so what the IRS would have to look at is, what is the individual's personal assets? So, for example, the residence, vehicles, bank accounts - personal, not LLC, but personal, okay? To get at the LLC, they would have to go after his member interest in that LLC, and that's for income tax.

Kelly: Right, so if there is no financial assets in that LLC, let's say there is $10,000 tax due, there is no financial assets in there, there is only property, plant and equipment or let's just say equipment, but the sole member has $100,000 in cash, can they seek recovery from that $100,000 in cash?

David: If the $100,000 in cash is in the LLC's bank account…

Kelly: No, it's in the individual.

David: Yeah, they can go after that. Yeah, if it's in their personal account, yes, the IRS can go after that, LLC regardless, they can go after that, the individual's personal bank account. You've got a bank account, a Bank of America, where he writes checks to pay the mortgage and pay for groceries, yeah, the IRS can go after that.

Kelly: What about if it's a dual member or more than one member LLC?

David: Then here that gets a little bit more tricky and, quite frankly, I would have to go back and read the rules on that.

Kelly: Okay.

David: It's almost, you know, they would be filing a 1065, a partnership, and with a partnership, the general partners are equally liable for the debt of the partnership. But going the other way, the partnership is not liable for the debts of the individual if they owe 1040 tax. I would have to go back and look at the IRM on that.

Kelly: Okay, but you are saying when you would seek recovery from assets it really didn't make any difference whether that was an LLC or a single-member LLC or not. You would order the owner of those assets, regardless, is that what you are saying?

David: Exactly, exactly. There are ways that the IRS can, you know, if there are the indicators of not everything is being run above board, the IRS can go after the LLC or go after the individual, okay?.

My name is Kelly Coughlin. I am a CPA and the CEO of EveryDayCPA. And I am a failure. I am a successful accountant…but I am a failure entrepreneur.

Today, I could talk to you about my career working for BIG companies…a BIG accounting firm, PWC; a BIG investment firm, Merrill Lynch, and a BIG bank, Lloyds Bank. I've had a happy and successful career in Seattle, Minneapolis, New York and London. Or I could talk to you about what we do at EVERYDAYCPA…with our STAR services…I could show you how we use Sun Tzu and Michael Porter from Harvard business school in our business strategy work. And I can show you how we can get the federal and state government to pay about 30% of your costs to start a business. And if you have past tax liabilities and we can get it reduced by over 50%. Or I could show you how we use ACCOUNTING debits and credits as weapons of MASS DESTRUCTION of your competition. And RISK, I could show you how to minimize the risk of contingent loss and risk of audit…I could do all that…But I'm not going to do any of that.

What I AM going to do is talk about why I am a failure…or rather why I WAS a failure….in the entrepreneur space. About 15 years ago, I started down the path towards SMALL business startup…how hard could that be…I was educated (CPA and MBA)…I had great BIG company experience. I had some capital. I couldn't help but succeed. RIGHT? Wrong!!. It was a path to FAILURE!! Eventually, I succeeded. I love the quote from a very successful venture capital guy in Silicon Valley. "Fail often, so you can succeed sooner." In 2013, I sold a financial technology company I started in Minneapolis. The financial cost, risk, and rewards were big; but the non-financial costs were even greater and unfortunately VERY difficult to recover.

I AM going to talk about why the enormous price that is paid in startups…not financial…but intangible…unhappy shareholders during the failing years…nervous vendors and bankers during lean cash flow quarters…and then the personal stuff…the day to day stuff that causes failed marriages,...poor relationships with children…and unhealthy diet and exercise. These are the true costs.

It is helping entrepreneur wann-abe s mitigate these costs that is my sweet spot passion today. It is what I call TNT: Tactics, Need Timing. Based on my experience as a FAILURE, getting TNT right…or wrong…will determine what the true cost will be. Is the cost limited to financial investments and opportunity cost, that is the cost of not doing something else, while you are pursuing this new idea or dream? Or Is the cost fully burdened with the carnage from failed relationships with vendors, spouses, and children coupled with bad health and diet?

Tactics Need Timing. What TACTICS will you utilize to implement your plan? How will you incubate your business? Will you outsource to start it or will you do it yourself? Are you going to quit your job or work at night and weekends? Are you going to use your own money or try to get other peoples' money?

NEED assessment is important. Does your market NEED your products or service versus your competitors. Who are your competitors…who are your substitutes? And if you say you don't have any competitors, you definitely need help. People have millions of places they can spend their money. So, in a sense every product and service on the planet earth is your competition. I referenced Michael Porter earlier. Every business owner and frankly anybody involved in the revenue side of an enterprise should understand Porter's Five Force Analysis on their business. Porter's Five Forces are Rivals, Substitutes, Suppliers, Buyers, and New Entrants. These are the five forces that need to be understood before launching a business.

And that leads to last one, TIMING. It's the one most easily controlled and fortunately most important. In 1812 Napoleon had his million-man Grand Armee ready to take on the Russians. Napoleon was a brilliant military strategist…but he made a critical tactical mistake that cost him about 600,000 men's lives and ultimately some historians say, cost him the war. His TIMING was bad. He launched his march on Moscow way too close to the winter season in Russia and ridiculously cold weather completely harmed his ability to win. Bad timing. In the startup world, it translates into, for example, maybe if your wife is due in six months, don't leave your job yet to start the deal. Rather, outsource some things and work the deal at night.

Tactics Need Timing (TNT) doesn't NECESSARILY determine whether your path is one of failure or success. Rather, TNT determines how rough the road is…how many people did you hit and hurt along the way…and how happy and healthy you are during the journey and how happy and healthy you are when you finish and arrive.

So, today we certainly help all small business owners with STAR services…strategy, tax, accounting and risk management. We have found that many small business owners simply don't have the financial resources to pay for CFOs, CPAs, and marketing experts…they are expensive…I know this…I sold these expert services while at PWC….and I BOUGHT those services at Lloyds Bank.

But WHAT I PERSONALLY REALLY LOVE TO DO is help the entrepreneur family, with a startup idea they want to monetize; or the entrepreneur who simply wants to STOP working for THE MAN; or the entrepreneur who is retiring and wants to stay in the game, in part frankly because he knows he knows the stats…it is more likely he will die within 24 months if he gets out of the game.

Some of you know, I like to box and I like to run 5ks and 10ks. And my performance has waned over the past ten years in these areas. But fortunately, there are a few things that ONLY gets better with age, experience and wisdom. And this is one of them. The clarity that TACTICS NEED TIMING must be considered before launching a business…and getting this right, will determine not only what the easily recoverable financial cost will be…but more importantly, it will determine the personal and relationship cost that no business transaction will ever recover. Thank you for your time.

Hello this is Kelly Coughlin, I'm the CEO and a CPA with EVERYDAYCPA. We work with small business owners on strategy, tax, accounting, and risk management throughout the US. I personally like to work with soon-to-be or wanna-be new business owners. So, I am always on the lookout for innovative and cost-effective solutions to help business owners create, launch and manage a new business…and increase the likelihood of success.

And that lead me my guest today, RYAN ASHE, the founder and creator of BIZBOOSTIO. Ryan are you there?

Ryan how are you today?

Ryan, I sent you an email when I heard about your group and said I would like to interview you and ask you five questions on your vision for BIZBOOSTIO. I gave you in advance the categories…but I did not pull CNN debate moderator trick and give you the questions in advance. Is that correct?

Yes…

So Ryan, since you are the brains and the idea guy behind BIZBOOSTIO.

My first question is:

KELLY: WHAT Any new business or new business idea, has to be filling a need or void in the market. Let me just ask it simply, WHAT is the need or void is BIZBOOSTIO filling.

That's a great question Kelly. I could not agree with you more that any new business entity that is just starting up needs to fill a void - or in this case a need. A need that I don't feel is being addressed. For instance, in high school you weren't given a class to teach you the basics of personal finance well the same is true for small businesses and start-ups. In this great economy that we are having, there are more small businesses opening than ever before BUT how many of them have the business knowledge or networking connections to maximize their chance of success? That's where we AS A COMMUNITY…step in. We AS A COMMUNITY want to offer the know-how, knowledge, and experience they aren't finding other places…COST EFFECTIVELY. We want to offer this through our community of other business owners and expert advisors. Unlike other groups that focus on small businesses, we want to focus on the business itself and not totally what nonsense is happening in D.C. We are there for the business owners all the way not just when we want more MEMBERSHIP money from them.

KELLY: Is there any company or organization that's doing this now? Or something similar the groups of business organizations that come to mind are

· NFIB, ROTARY and LINKEDIN

· Are these organization in your space, if no why not…if yes, why are you better

· Lets start with ROTARY

· NFIB

· LINKEDIN

RYAN: Let's take that one at a time because they may have SOME overlap they are very different in their approach and I would like to point those differences out.

A. Let's start Rotary I think that Rotary does a good job on a LOCAL community level but that is really the extent of it in practical terms. The simple truth is we don't live in the pre-digital world anymore. The world is now flat and we don't have to look at it like Pandora's box has been opened - on the contrary, it is a GREAT opportunity. For example, if you are opening a restaurant for example in Columbia, MO in the Rotary model you can talk to other local businesses and that's great but how great would it be to be connected to other restaurants owners across the country to be able to innovate and share experience of what has proven to work and what has proven not to work - Your business will greatly be enhanced and you can provide your customer with a vastly better experience. This is true for not just the services but for ALL start-ups and small businesses.

B. As for NFIB, they are really large but with an organization, their size and age comes bloat. We at BizBoostio want to stay lean and strong for the business owners and not have a top-heavy structure filled with fat cats eating up the money that should be used to benefit the members. Also, 80-90 of their focus is on legislation and although I will say they have supported good bills throughout the year they pay little to no attention to the business owner COMMUNITY. The most common thing I hear from former members of NFIB is "I only see them when they want more money". I also don't like the outdated high-pressure sales approach they use they have used the same script for over 50 years completely unchanged in a door to door model that is completely outdated and completely misses the modern digital business market completely.

C. Linkedin is great in some ways but what it lacks in my eyes is the dedicated community of business owners not being constantly shilled to and having their data sold without their knowledge for profit. Linkedin started as a place to get a job…and has tried morph into a networking deal…but they really don't want people connecting on the planet earth…they want to connecting virtually….we think nothing replaces human connection. Bizboostio is not primarily a digital marketplace but a vibrant, dedicated COMMUNITY who's sole purpose is to grow and educate business owners. We are kind of the synthesis of NFIB, Rotary, and Linkedin…with a little bit of social meetups and Facebook thrown in…we are taking out the bad elements from all those and leaving the good but adding some great things.

KELLY: You mention Facebook…I want to talk a few minutes about FACEBOOK…a lot of business people are disgusted by the noise from the Facebook audience…and the bias and shadow banning going on by FACEBOOK content managers…Is there are an online social media component to this? Do you see this being a replacement to FACEBOOK for business owners?

RYAN: That's exactly what it is. Facebook is so out of touch and bloated that it offers very little to help a budding business or any business for that matter. AND you don't want to get me started on the data-stealing issues they have going on at Facebook. Plus who needs all the scammers and trolls that fill the Facebook platform. It's a true shadow of its former self.

KELLY: How will people use this…how do they CONNECT with other people. You say a business owner will be able to get help from other business owners…how do they actually go about that

RYAN: They begin by listening to our podcast. Then they simply go to www.bizboostio.com where we have additional information. They simply sign up and then we integrate them into the bizbootio culture and give them the networking tools to connect with other business owners and BAM you are on your way to success. As we are still expanding out we are giving early adopter rates and will offer them exclusive specials in the future as we roll out more features.

KELLY: My next question has to do with money…I know you are doing these podcasts and these are free, correct? What's the revenue model for you and BIZBOOSTIO?

5. We expect to charge a reasonable monthly fee of $40 to $50 bucks to access the community. Although I don't see it as a "monetization" model but an instrument to improve the lives of as many small businesses as we can. Because unlike some of those other organizations I spoke about a few moments ago we realize it's not just about numbers on a balance sheet. It's about mothers and fathers, Sons and daughters - family, and at Bizboostio we want to help make your business life succeed because we know when it succeeds your family succeeds and when families succeeds America succeeds.

KELLY: Well Ryan that's sounds interesting…for me personally and professionally, if BIZBOOSTIO could be a noise free, troll free, shadow ban free version of FACEBOOK for business owners that would be great…and I personally thinking charging a membership fee is a start to doing that…free attracts everyboday and I would not be interested in this if it this included EVERYBOY.

So, how do people find you…are taking members now…how can they join.