A Conversation with the Dental Realist Podcast

Luckily tonight we’re going to class the joint up and we have a guest with us tonight. So let me introduce our guests or our listeners. He is the president and founder of Craig Cody and Company. He is the co author of Secrets of a Tax Free Life and he also used to be in law enforcement, and now he’s transitioned into being a Tax Coach. Cody, welcome to the podcast in which we’re happy to have you. Thanks for being with us. So. Well, we’re probably just going to dive into some questions, but I think one thing the three of us had been wondering is how did you go from a career in law enforcement to a career in working with taxes and accounting and things like that,

Before I went into law enforcement, I was an economics major and then I went and I followed in my dad’s footsteps and I joined the NYPD, it’s a 20 year retirement, so at some point we have to kind of think about, OK, what am I going to do next? And I thought I wanted to go into financial services, but I figured,  there’s a million cops, they go into financial services, I need to do something to differentiate myself. And I said, well, I’ll become a CPA first. And when I got my CPA and I really like this and then I got into taxes and here I am today.

Yeah. I can’t pick a better person to be involved in tax planning as a law enforcement officer. I would want someone just like that doing my tax planning. So anyway, I’m Marcus.

Sometimes we feel like we’re kind of unique as small business owners. Is there really a difference in, in CPAS? I’ve heard some CPA’s market themselves as catering to healthcare, catering, catering the dentist. Does a dentist need a different kind of CPA than the general business owner?

I honestly don’t believe they need a different type of CPA than a general business. We’re all running a business. I think any CPA that is good and deals with business owners should be able to deal with any nuances in the dental healthcare field.

What are some flags that might indicate that a business owner might need to replace their current CPA? So what kind of things would you see and kind of want to look out for?

We do a lot of tax planning at our firm. So when I have somebody that’s kind of unsure, what they  want to do,  because it’s hard to break off relationships.  I’ll ask them when was the last time your CPA had an idea that’s going to cut your taxes? I would normally get the glazed over look and they ay never. So that kind of points  people right direction sometimes. Perfect.

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So explain to me, Craig, if you would, the difference between a Certified Tax Coach versus just your run of the mill accountant. I’m a CPA, I’m a certified public accountant and then I went and I continue to go for ongoing continuing education in Tax Planning, to become what’s called a Certified Tax Coach, which is  the designation given by a group of people that meet certain requirements. And so we typically focus on the proactive where most accountants, CPA’s, you know, they put the right numbers in the right boxes, you know, they are very compliance oriented, but they’re not looking forward to see what can we do, what can you do a little bit differently to take advantage of what the tax code says you can do. So that’s really the difference between the accountant and somebody who’s also a Certified Tax Coach. Someone that is being proactive.

It’s interesting because when I first got out of school or the three of us first got out of dental school was 14 years ago and I had an accountant for the first year or two of my career and about a, I guess it was probably a couple years in. I just felt like things weren’t. He wasn’t being aggressive enough and the only reason I started working with him because the dentists, they shared an office with, he used him to and just kinda, you know, I was looking for an accountant. He said, you know, here’s your guy. Well it came back that he wasn’t being as aggressive with this other dentists either. And he ended up owing 100,000 dollars in taxes at the end of one year. And I had bought my practice and I decided that was a good time to transition to someone new.

And I’ve actually been really happy with my accountant for the last decade or so. Um, so I, I understand that that is a tough, a tough conversation to have when you decide to change accountants. But I would, I would say if anyone isn’t happy with the accountant that they have they contact Craig. So, you know, it’s a tough conversation, but I will really recommend because it’s tough to get rid of someone else that’s working for you, but they are, I don’t know. Craig, would you agree that the accountant works for us as the business owner, is that how someone should look at it?

Yeah, he works for you. He should be part of your team and he should be communicating with you. And it was really a lot of it comes down to communication. You need to communicate throughout the year, you can’t go to one guy in March or April and expect that he’s going to do a whole lot for you. Yeah. All right. So you need to communicate with him during the course of the year and he needs to communicate with you during the course. Of course. Yes.

Yeah. I had an experience when I first got out of school. I used an accountant when I bought my practice, I just kept using the accountant at the firm or that the office had been using and um, putting self employment tax and uh, I got nailed. It was a huge headache trying to get that taken care of that won’t happen again.

So for some of our new listeners, would you, would you recommend it’s best to have a CPA that’s someone located there in the same town as you? Is it more beneficial to meet face to face? Can most of these things be done long distance to an accountant? For instance, somebody who’s in a different state, but it’s a great accountant and has a great reputation.

Ten years ago I would’ve said to you, you need somebody that’s local. But today with skype and zoom and Webex, you can meet with anybody across the world.  I’m in New York, we have clients in California! We do monthly calls with our clients and we set them up and use a time that works for both of us. We’ll take a  45 minute time slot and go over with them what we need to go over. It’s just like you’re in a room next door. So technology has really made a big difference.

Certainly, I would agree.

Yeah. So is there a big difference I would imagine as an account you have to be educated on different tax codes for different states. How, how different our different tax liabilities state to state, because I always hear people in Texas and Florida, there’s no income tax but like that. So how does that affect you as an account?

So when, when we work with clients in other states, we make sure that we, we brush up on nuances in that state. The good thing is I have, I’m part of a group where I have access to people in basically every state in the nation. So if I have somebody in California, you know, it’s my first client in California, I’ll talk to somebody I know in that state and say, OK, what else do we need to look at it? And you know, there’s all sorts of manuals you can give you state specific stuff, but just have to be able to learn when they learn what might be a little bit different. And every state has a little bit of a nuanced version of the tax code.

It’s interesting. One thing that I think is kind of interesting is, you know, as a business owner, everybody says I’m a lawyer, you know, you should do this and buy this and do that because it’s a tax write off and there’s, you know, you always get that and then all of a sudden when you get and your own your own business, you find out that yeah, you can write certain things off. But it’s only a certain percentages of things. Of course, it’s not like you can write off a hundred percent of stuff. So what is the proactive way we could approach tax planning and how it can minimize your taxes.

What we do is we look at things that you’re currently doing it, what you’re not doing correctly. So if the code says you can do it and people are not doing it, then they’re already spending the money but they’re not getting a tax deduction. So were able to find a way to make it as legally deductible expense. Now you’re not spending any more money, but now you’re getting a deduction because you know, if you’re in a 35 percent tax bracket and you spend a dollar, you’re only getting thirty five cents back, you still lost sixty five cents. But if you’re already spending it down, you’re not getting any benefit. Now you know, you find a way that you can legally write that down

So a big issue with a lot of our listeners as well. I was pretty much all of our listeners because we all have student loans and dental school. Student loans are outrageous right now. So one thing that is debatable I guess is whether you pay down all your student loans as fast as possible or is it better to pay the minimum monthly payment on those student loans for 30 years or whatever and then invest that other money or use that other money in a different way, what’s your opinion on that?

That really does come down to personal preference, what somebody wants to do and because you know, you may not get to deduct that interest and once again, if you are you’re only saving thirty five cents for every dollar you spend on interest. Whereas if you pay it off sooner, you save all that interest that you would have had to pay down the road. But it’s a personal preference versus the person that says I pay six percent interest on this loan, but I know and over time I will have eight percent interest on my investments. But it’s really a personal preference and I think, you know, we find a lot of dentists rather pay that debt off sooner than later.

When you pay that loan off, you don’t get a deduction for the actual principal reduction. So you know, you still have to pay taxes on that money. Yes you still pay tax on the money you used to pay down the loan.

Can I ask a follow-up question on that? Um, ever since I’ve been out of dental school, of course, you know, we always thought dental student loan interest is a tax deduction. However, I’ve always had a problem with that. I guess I make too much money. That I can’t even write off my student loan interest. We do find that, that is a problem for dentists that they fall into that weird, that weird category where we make too much to take advantage of some of those student loan interest deductions.

A lot of people fall into that category where they’re making over that threshold number and they can’t deduct that interest. All the more reason, to actually pay the debt off down sooner than later and you know, it’s a happy dentist when he’s paid that loan off.

Yeah, that’s a long time. You pay and that it feels like we’re going to be paying forever. So yeah, I’ll be thrilled about. I may be dead, but I’ll be thrilled that off my life insurance might be able to pay it off.

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