Does Your CPA Think Like a CFO? – Episode #400

As costs rise, finances become increasingly complicated. Today the accounting services a practice owner needs must go beyond compliance work like bookkeeping and taxes. You also need help with strategic planning for the future. On this episode of the Dentist Money™ Show, Ryan interviews Jaime Staley whose firm, PJS & Co., offers comprehensive CFO and Controller services.

Show Notes
PJS & Co.
Cultivating Business Growth podcast

 

 

 

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Podcast Transcript

Ryan Isaac:
Hey everybody, welcome back to another glorious episode of The Dentist Money Show, brought to you by Dentist Advisors. Who else would it be? A fee only, no commission fiduciary, comprehensive financial advisor just for dentists all over the country. Check us out at dentistadvisors.com. Today on the show, I have a new friend, Jaime Staley, CPA from PJSCPAs. That’s pjscpas.com. We talked about bookkeeping, budgeting in this high inflation period of time, some common mistakes and problems that people run into when they’re not doing proactive accounting planning the year before budgeting. This was so helpful. Fun new friend of the show, really grateful for her and her time and her expertise. Thank you for spending time with us today, and thanks to all of you for tuning in. As always, if you have any questions for us, if you have money questions you wanna be pointed in the right direction from an educational teaching, non-salesy standpoint, that’s what we’re here for. Go to dentistadvisors.com, click the book free consultation button. Let’s have a chat. We will point you in the right direction. And thank you for being here. We’re excited for the show today. Enjoy the show, everybody.

Announcer:
The Dentist Money Show is brought to you by Dentist Advisors, where we recently launched an affordable subscription service called the Dentist Money Membership, which a lot of dentists are using to support their personal financial strategies. To learn more about the Dentist Money membership and get started, visit dentistadvisors.com/money.

Announcer:
Consulting Advisor, conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a registered investment advisor. This is Dentist Money. Now, here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to The Dentist Money Show where we help dentists make smart financial decisions. I am your host, Ryan Isaac. I’m here with a new friend of the show, Jaime Staley from PJS & Co, CPA firm. Jaime, thanks for joining us. How you doing?

Jaime Staley:
I’m doing great. Thanks for inviting me on the show today. I’m excited to be here.

Ryan Isaac:
Yeah, I’m glad we connected. Did I say the name right? PJS & Co.

Jaime Staley:
You got it. Great job.

Ryan Isaac:
Okay. So we are just meeting for the first time, which I think is super cool, and our companies have a lot in common. We work with some of the same people, same audience. And so I’m kind of excited to dive in here. Let’s just start with an intro. Who is Jaime? Who is PJS? What’s the story? Because we work with a lot of small businesses, dentists are small business owners too. I like the backstory of, where did you guys start? How did it begin? How was it built? How did you jump in? So, take me away. What’s the story here?

Jaime Staley:
Yeah. I’ll start with myself a little bit. I am an accountant by trade. I went to school to become an accountant. I jumped right in who, you know, at the time, big five accounting firm, I was interning there in the tax department, didn’t love tax and moved into like an accounting role. I had a really great experience there, but really wanted to get into more of the industry side of accounting. So I went to the Tribune company, where I spent about 10 years of my career doing different things from being a financial analyst to become an accounting manager, and then was a controller at one point. So kind of moved around within that company, and it was a great experience. I stayed home for a few years after I had my kids, and then met the partners I’m working with currently through the previous firm.

Jaime Staley:
It was really focused on moms who wanted to get back into the working world, but didn’t wanna work that like fifties, the hour of CPA world. Life, it’s very draining. It’s really hard to do with a family and just that balance was really a struggle. So when we started this firm back in 2016, we really wanted to focus on having CPAs that have really good experience and wanted to help small businesses and help them grow and use our knowledge. We got a lot of experience in school. We went out and had a lot of experience, so we didn’t wanna just throw that all away. We wanted to invest that into other companies and help them. And yet we didn’t wanna work that tough schedule.

Ryan Isaac:
Yeah, really fine schedule.

Jaime Staley:
So we really connected. Yeah, and it kind of works great because smaller businesses don’t need you to work 80 hours a week.

Ryan Isaac:
Thank goodness, yeah.

Jaime Staley:
The small amount of information and wisdom you can give them can really help them blossom and grow, and they just need it, so it was a really good connection. So it just really worked well. We would try to learn or we would look for small businesses and we would connect our CPAs and just kind of create that. And in doing so, I started working with dentists over 10 years ago, so it was, you know, they started real small, and we were very focused back then on really just doing some of that historical accounting, right? Making sure they knew kind of what was happening. So we started small, very basic, but then we started to grow.

Jaime Staley:
They purchased many more practices. They needed to get payroll set up. They needed accounting, they needed good financials. We started to grow. They had 6, 7, 8 practices, they needed to start planning ahead, right? You can’t just live in the past, you gotta look to the future. So we started doing more things with them. We started strategically planning, budgeting the future, what is that gonna look like? How does that help us make decisions today? And so we really kind of blossomed into growing with them, helping them really look forward and how they can do that. I think dentist owners have a lot of great opportunity, but they don’t always have that financial background. In dental school, they get a lot of really good direct experience being a dentist, but then they become a practice owner…

Ryan Isaac:
So much.

Jaime Staley:
And it’s a whole new ballgame. There’s so much more than just being a good dentist. And I think we can really help them think through some of those things, have good conversations with them and really just help them grow their practice.

Ryan Isaac:
Cool. I want to jump into all that, but I’m actually just curious, what made you want to get into accounting when you started all this? Like what was it for you, is it family of accountants? Are you a numbers, math person? Like what interests you?

Jaime Staley:
There’s a little bit of all of that. So I was always a numbers person. I liked numbers, problem solving. When I was in high school, I took a bookkeeping class and like loved, we had like little checkbooks and we were writing checks.

Ryan Isaac:
You just loved it? Yeah.

Jaime Staley:
Like it was just… Yeah, totally loved it. I’m totally the accounting nerd.

Ryan Isaac:
That’s so cool.

Jaime Staley:
But like, I also got into it, my aunt and uncle were both CPAs and I kind of laughed because part of it was that, I went shopping with my aunt one time and she’s buying all this stuff to decorate her house. And I was like, oh my gosh, like $300 mirrors to put on the wall. I’m like, that’s awesome. Like she’s got this great job, she’s making good money and she can go spend it. I’m like, that’s awesome. I wanna do that. So that’s a little bit [chuckle] of the backstory. But then once I got into it, like I love the numbers and the problem solving of it. So it was just something that I really enjoyed. So I’m glad… Like you don’t know in those high school years, like what do I wanna do with my life?

Ryan Isaac:
No, no. I wanted to be a rockstar.

Jaime Staley:
Awesome. Well, my son is going into high school and he wants to be a famous YouTuber, so…

Ryan Isaac:
Why not? Yeah.

Jaime Staley:
I’m just like, okay, those are good-to-have dreams. I love that. But what else maybe you would do?

Ryan Isaac:
Take some classes along the way. See what happens, buddy.

Jaime Staley:
Yeah, please. Yeah, but it’s fun.

Ryan Isaac:
That’s really cool. I’m curious. I can put myself back in the times when we started our company. Again, all we wanted to be was independent financial advisors. And just being independent, not working for an insurance company or bank was kind of the main thing. Meeting our first few dentists is what really changed our whole trajectory. But I remember those early days, and do you remember some of the thoughts you had when you started meeting dentists and seeing like, I had no idea what their lives were like, as entrepreneurs vary aside from the clinician world that they live. Like you said, they go to school for almost a decade learning clinical skills, and they keep up on that, but then they jump into this entrepreneurial world where there’s just not only stuff they weren’t trained on, but most of them don’t like it either. It’s just not their interest level. So, do you remember those early days of just discovering the world of dentistry and what was that like, thinking maybe this is a group of people I’d like to dive in and help out?

Jaime Staley:
Yeah, it was definitely interesting. I feel like the dentist that I was working with was very interested in the financials. I feel like some I meet and they’re kind of like…

Ryan Isaac:
Sure. Yeah.

Jaime Staley:
I don’t understand this. I just wanna know enough to survive and get through. I don’t wanna dig in. So the first one I had an experience with, he was very, he was pretty financially astute, like understood financials. I can still remember like walking them through the balance sheet and they’re kind of like, I don’t know what this is. And I’m just like, no, we’ve gotta look at it. Let’s look at it. So just trying to teach them along the way, yeah, you’re not gonna understand a balance sheet the first few times you see it, but that kind of consistency of looking at it over and over and, hey, here’s what I’m seeing. Do you see this? And then walking through a profit and loss statement.

Jaime Staley:
So I remember like him absorbing a lot of different things and then asking lots of questions. And I know I started learning things like, oh, I wanna see my dental supplies at this percentage, and benchmarking, and different things like that. So as I was like, I’m teaching him about the accounting side, and the financial aspect, he’s like showing me and kind of walking me through, here’s what I’m looking from the dentist owner side. What are my percentages? I wanna have a net income profit. What are my percentages of payroll? What are my percentages for lab fees? And just he was very good with those benchmarks and was always kind of targeting that. So I know that was something we always were kind of looking at. I’m not happy with that percentage. I need to work on that with my team or things like that.

Jaime Staley:
So I know I learned a lot as we kind of started and just got into that accounting of it. And then every new practice that was purchased, we’d be looking at those same things. I don’t necessarily start out with all the exact percentages you want, but working toward those. So I think it was a really good learning experience on both sides, because like I said, they were absorbing all of the accounting side and probably not all of it. We had lots of great discussions about cash versus accrual when I wanted to switch ’em to accrual accounting and nobody wants to do it. It’s very complicated. But then you run into issues where like, trying to explain differences is very hard when it’s all cash basis. So diving into that and like getting them to a point where they’re like, yeah, maybe we should do that, and here’s why it makes sense, so…

Ryan Isaac:
So cool.

Jaime Staley:
There’s a lot of good learning, I think, back and forth.

Ryan Isaac:
Yeah. One more curiosity. This is like more of my… I’m like indulging my own personal curiosity here, but this is so fun. Were you surprised by anything when you started learning the world of dentistry? Is there anything that stands out and you’re like, that surprised you about their life or their financial life or how their business is ran?

Jaime Staley:

They make a lot of money if they do things well.

Ryan Isaac:
So you weren’t expecting like the high level of income. I don’t think I was either. I was pretty surprised by it.

Jaime Staley:
Yeah, they make a lot of money if they’re doing things right. I have some dentists who are not making as much money as they should, but if they kind of have things pulled together, they can really make a lot of money, and then helping them understand what to do with that money, I’m sure you run into that a lot. Like what should I be doing with this? Should I be paying off loans? Should I be investing it?

Ryan Isaac:
Totally.

Jaime Staley:
What should I do first? And so they start to really ask a lot of questions and we can help them. But I’m sure you guys have a lot of really great guidance too, on like, where do you put the money? We can analyze different things like what are the options? Where can you put it? And I feel like just surprised that they weren’t sure what to do with it either, right? Like not sure. Like, well, what do you think I should do? And well, it’s your money. Like what are your goals?

Ryan Isaac:
Yeah, what are you gotta do with it? Like, I don’t know, that’s why I’m talking to you.

Jaime Staley:
I might do something different than you might do. I don’t know. So we try to dig into, like when we talk with a lot of our dentists, practice owners, we try to figure out what they’re doing. What are their long-term goals. Why are you doing what you’re doing today? It’s not usually just about the money. Maybe it’s about really good patient experience, really good services, trying to create that retirement nest egg in the long run. And how do we make sure that there is money along the way, but then there’s that nest egg, so yeah, it’s been very interesting. I will share one funny story though.

Ryan Isaac:
Yeah. Please.

Jaime Staley:
When you were like, oh, what were you surprised about? And I wasn’t surprised about this, but at one point I went to, I think it was here in Chicago, the Midwinter Dentist being here. Huge thing.

Ryan Isaac:
Huge. Yeah.

Jaime Staley:
And I know I’ve always had the thought like, I should have maybe been a dentist. I would have made so much money.

Ryan Isaac:
I thought the same thing too.

Jaime Staley:
And then I walk around one of those big convention halls and think, nope, nope, could never have done this.

Ryan Isaac:
Not enough for you?

Jaime Staley:
Like you see all the very specific implant things. And I think, oh gosh, I would never be able to do it.

Ryan Isaac:
I couldn’t have done it either.

Jaime Staley:
So it takes a very specific type of person. I was like, I don’t think I could be in people’s mouths, and I wouldn’t enjoy that. Like that would be stressful for me. And so I literally would see some models of things and I was like, oh, nope, nope. Definitely glad I went the accounting and number problem solving route, that was definitely a wise choice for me.

Ryan Isaac:
That’s hilarious. You and I had the same thought early on in my career. This was like 15 years ago. I remember the running joke between us was, I said I should have just been an ortho with two locations. I feel like that’s the… Ortho two locations was like the tagline I would joke about all the time. That’s funny. I wanna ask you about something that you were saying just a little bit ago, which is the difference between backward looking, just catching up on financials, kind of accounting styles versus what a dentist really wants and needs, which is forward looking planning from a tax perspective, cashflow perspective, overhead. Can you talk about that difference? Dentists want that and they know when it’s missing, but I’m not sure they know how to describe what it means to be forward looking or proactive. Can you put some words to that and describe it a little bit?

Jaime Staley:
Yeah, sure. I think that it’s important. I think the one misconception too is like, I don’t care about what happened in the past. That’s not important. And it is important because that’s what you’re gonna use to project. So people are like, I don’t care, that already happened. It doesn’t matter. And it may not fully matter, but you gotta start somewhere, right? Starting with a blank piece of paper versus starting with here’s what happened for the last six to 12 months, it gives you a better perspective. So having good historical information is key to being able to start to look forward and where you can be and where you wanna be. So I think you have to have that good solid financial history, which not all dental practices have, which I’ve learned as I’ve brought some dental practices in and their financials may be just they’re reading them, but they’re not telling them what they need because they’re not recorded properly.

Jaime Staley:
I had one instance where the doctor had a lot of concerns. He’s like, it’s profitable. Everything says that I’m profitable, but I don’t have any cash. And it turns out that that doctor didn’t take pay for himself, but they’re not accrual basis so it’s not showing up anywhere. So it looks like they’re profitable, but I was like, but doctor pay is very high. So when we kind of did some estimates, or like you aren’t profitable if you would have recorded a piece for doctor pay, because if you’re looking at the financials and you are a doctor, you should have doctor pay there or someone employed…

Ryan Isaac:
Yeah, you’re an employee. Yeah.

Jaime Staley:
Yeah. So if it’s not you, it’s gotta be someone. So you have to have that kind of look… You have to look at that. And so I feel like depending on how your financials are created, you just don’t necessarily have an understanding. So having kind of that person who can help guide you, having advisors that can really help you make sure your financials are in good shape. A lot of people have bookkeepers and bookkeepers can go do a great job of getting the data in, but they are not gonna be looking kind of from that higher analytical perspective of, does this make sense? Are we getting everything recorded properly? That kind of thing. So I think that’s really important to make sure that you understand that your financials are accurate, otherwise you’re making decisions based off of inaccurate data. And again, he had this struggle like, we don’t have cash, but it looks profitable. Like, why is that? That doesn’t make any sense, and so trying to work through that. And another forward thinking story. Last fall, I was working with a dental client and they were having a great year. Their percentages were close to… Net income percentages were close to 20%. We’re talking 15% to 20%. They were just killing it. We’re doing…

Ryan Isaac:
And just for the audience, you’re saying 15% to 20% on top of the line item doctor pay that they were already receiving out of the P&L too.

Jaime Staley:
Correct.

Ryan Isaac:
So they’re getting their pay plus 15% to 20% of profit, which is a very healthy practice. Yeah. Very cool.

Jaime Staley:
Yeah. So they were doing amazing, right? So we were living in this world of, hey, we’re killing it. We’ve got a lot of money in the bank, we’re doing a great job. And you start planning for the future and you plan for the future sometimes based off that feeling, right? Hey, we’re killing it. We can spend so much money next year. So we go into the budget process, we’re all excited because we’ve got all these big plans, but things changed, right? We were like, ooh, this doctor’s moving on. This doctor’s gonna move to a different office. And we have controls about how are we gonna budget for revenue and production for the year? And so we start putting all the numbers together and the numbers didn’t look so hot for the next year.

Jaime Staley:
Hey, we’ve got a loss at first go of like, putting this together. And I think it’s just a very good example of how you feel isn’t always what’s truly happening. So we took a lot of time to review the budget, go through all the expenses, make sure we’re cutting where we could cut, adjusting production, looking at that, and like planning for the future. Now, had we not done this, like most dental practice aren’t doing a huge budget, they’d have lived in that spend mode all the way through now until they would’ve hit a point of like, where’s all the cash? Like, what’s happening? So I think one of the biggest benefits, especially of budgeting is just, it gives you that perspective of, hey, we’ve gotta look at what we expect to happen based off of how many doctors we have, how many days of the week are they in office?

Jaime Staley:
How is that gonna look for next year? Because today isn’t, again, what may happen next year. And so I think you kind of get lost in that, hey, we’re doing awesome today. We’re killing it. That’s what’s gonna happen tomorrow. And that’s when you start to, if you don’t plan ahead to say, hey, yeah, we are good. We are in the same place in six months. We can spend the money, we can afford these other things, if you don’t stop and do that, in six months you’re in a not so great place, because you’ve just lived in this high spend, we’ve got plenty of money, we’re killing it. You know, business life cycle.

Jaime Staley:
That’s not true anymore. And then you start to pull back and they’re like, wait, what’s going on? Especially during these times, which we’ve got inflation, right? We’ve got really high payroll costs. You know, all of that has to kind of be embedded as well. What you’re paying your employees today in October isn’t the same of what you’re gonna be paying them potentially in March and April of next year. So I think it’s hard to sometimes look to the future, but it paid off for this dental practice, they would’ve been in a world of hurt today if we didn’t go through that planning and it was not a fun process to find out all the big plans we had.

Ryan Isaac:
It’s not a fun truth to uncover.

Jaime Staley:
No. But better to uncover it in November the year before…

Ryan Isaac:
100%.

Jaime Staley:
And deal with it and have the ability to make changes before you’re in a really bad place. So I think it was a tough situation. A lot of things had to get cut out of the budget, but now they’re managing, they still have profitability at the bottom line because they took that time to do those steps of budgeting and looking forward and seeing where they could adjust.

Ryan Isaac:
How are you facilitating this in terms of like, just logistically, how often are you having these conversations? I think that’s probably something that’s lacking maybe in the accounting world. And I don’t think it’s the fault of the people, it’s just that’s kind of the business model. You get to a point where you have to file so many returns just to run a good business and there’s not a lot of time for these kind of like planning sessions. And I’m just projecting, I don’t know, I’m not in your world, but it does seem like people want more planning from their accountants, but the business model of accounting typically doesn’t lend itself well to a lot of time spent planning like that. How does it work with your firm? How are you facilitating that?

Jaime Staley:
Yeah, I think that’s a very good comparison of kind of previous accounting firms or tax firms. ‘Cause I feel like they are very tax return based. Right? We’ll take care of your tax returns. We do thousands of tax returns and you come to us and we’ll do tax returns and sometimes we’ll do planning if you really begged for it, but we don’t really have time. So like, unless you really are asking for.

Ryan Isaac:
It’s not the business model. There’s not like like, if you pay this much…

[overlapping conversation]

Jaime Staley:
Yeah. It’s like pay, if I can get more tax returns then I, you know, it’s more quantity.

Ryan Isaac:
Totally.

Jaime Staley:
And I think today I think there’s a shift for sure. And for our firm, we’re trying to work with smaller number of clients and kind of providing a more overarching service so that they’re getting everything they want from us. We don’t have to provide all the tax services, but we can, and we’re finding to, you know, we have really good working relationships with a lot of different advisors that our clients have, but we are starting to find that there’s sometimes just a disconnect with how we work versus how others work. You know, and we really wanna be responsive. We really wanna be proactive. We really wanna get answers to questions for our doctors. We really want them to be able to plan ahead. And sometimes those firms can’t move at that same pace.

Jaime Staley:
So like we end up struggling to have… Like get the information we need to kind of work with the clients. So we are finding it helpful if we can be in charge of that proactive tax planning and we wanna look at it and what are your options? Because not all companies can give you that level of attention because they just have too many clients to serve. We’ve definitely seen that with a lot of the tax groups that we work with, is they’re so slammed during tax time, we only provide tax prep services for clients we work on, like we don’t do just prep. You know, like you can’t come to us and be like, “Hey, can you do our tax return? We’re a business. Here you go. Here’s the data.” If we provide the accounting services, we’re providing some of those, you know, virtual controller services, then we’ll do your tax return. You know, as long as we have capacity, you know, we’re very intentional about what we’re doing because we don’t wanna say that we can do things for you But not have the actual time…

Ryan Isaac:
Totally.

Jaime Staley:
To do a good job. So we really try to focus on that. So I think that’s a good comparative. I think there’s a lot of firms out there that just, it’s quantity. How many can we get done? Versus quality where we are really trying to provide a really good Overarching quality service.

Ryan Isaac:
Yeah, your industry is probably a lot like mine, which mostly for the longest part of the history has been mostly transactional product kind of like, we’re just moving through stuff and it’s not consulting kind of based, you know, as the foundation, like a planning foundation and then the, you know, in our world the products of insurance investments or whatever in your world, the actual tax prep and filing. It sounds like you’re breaking the mold of the tradition of the industry and trying to spend more time with fewer people, which is also what a lot of dentists want too. They want to be more profitable on fewer people so they can spend more time having higher quality service. I think most service providers, that’s kind of like an ultimate goal. Cool that you’re able to do that. You were talking about inflation. One of the topics we were emailing about and what everyone’s just feeling right now. I swear everyone’s P&Ls are 10% more expensive year over year now. And then I wonder is like, is this the new normal? Is the 30% people overhead the new normal? It used to be low twenties, but…

Jaime Staley:
Yeah, 20.

Ryan Isaac:
Crazy. So can you talk about just what you’re seeing with everyone’s practices being more expensive, the cycle that we’re in with this. Just what you’re working on, you know, big mistakes, red flags, pros and cons, stuff you’re working on and just this high cost environment that everyone finds themselves in now.

Jaime Staley:
Yeah. I mean, I think unfortunately because of the inflation, they’re just, you know, they’re losing buying power at all the practices. So everything is more expensive. Their margins are cut. So you have to be very careful. You have to consider… I know there’s the fine line of raising fees and what that could help do, but could also hurt. Right? Patients may not come back. Renegotiating those insurance fees, ’cause I know some of them like, it doesn’t matter how much I increase my fees, I still get the same amount from my insurance.

Ryan Isaac:
Yeah. Or dropping them.

Jaime Staley:
Yeah, dropping. Like they’re looking at dropping PPOs because they’re just not paying as much and they need to have enough money. So I think they’re considering all things, looking at expenses, where can we cut, what are the unessential things we can cut because we have to really, you know, cut back and look at how are we gonna stay profitable, right? Because it’s taking a big hit and cost of labor is super high and getting good people is very difficult. So I feel like…

Ryan Isaac:
Hard to do.

Jaime Staley:
I feel like they’re dealing with all of those different things and we’re trying to work with them to look at expenses they can cut, how can they, you know, one of my clients has brought some of the work on the accounting side even back in-house so that they could save some money so that they could, you know, they’re like, well, we have some good people that we know and can count on, so we’ll have them do that while you guys continue to do kind of that higher level service that we really need. So just looking at where you can shift and where you can save money. I know they’re pushing a lot on some of those benchmarks, the doctors I work with really try to push on those dentals supply benchmarks. Hey, we wanna keep them on the low end. And they’re doing a good job. Again, we did a lot of cutting in that November, December time period. So it was very painful then. And so we’re kind of seeing the fruits of that now where it’s not as painful as we believe. So I think it’s something all businesses are dealing with and hopefully it doesn’t last forever.

Jaime Staley:
But yeah, the payroll costs that are usually 25% are closer to 30% and it’s expensive to get good doctors and it’s just everywhere you look you gotta see where can we save money and still kind of provide that good service because they all wanna provide that quality dental care. It’s really their main goal. So what can we do? ‘Cause we don’t wanna cut things that are gonna impact the patient experience. What can we cut to make sure they’re still serviced, but we can cut spend expenses in other areas. So through that.

Ryan Isaac:
You’re probably seeing it from a lot of fronts. I was gonna ask, this is a little bit different topic, but I’m sure you get this all the time. We hear this all the time and it’s almost a little bit of a pet peeve only just because, not from the people asking, but from the misinformation that gets passed along in like Facebook groups and seminars from people selling stuff, is this kind of myth that there’s accounting and tax secrets out there for the dentists that most CPAs don’t know about, that somehow are gonna magically take you, despite the fact that you’re like top level income earner statistically from a career category in the whole country and then like slash your tax bill somehow that there’s like these hidden tax secrets, you know?

Ryan Isaac:
And I’m just kind of curious if you’d like to talk about maybe when you, I’m sure you hear that pushback or that concern from people, the difference between proactive tax planning, what you can do to reduce your, I mean, these are higher earned income professionals, you know, so we’re not running hedge funds, we’re not flipping houses and we’re not in real estate categories, so it’s earned income. What’s the difference there between that mentality of like, there’s gotta be like tax secrets out there that I’m missing that my CPA doesn’t know about or whatever versus like, yeah, there’s a list of proactive things you can do that maybe you’re not, but it’s not, you know, there’s not this like magic tax bullet out there waiting to be…

Jaime Staley:
Right. If you just…

Ryan Isaac:
Loaded up?

Jaime Staley:
If you just hit this one firm, they’ll save you millions.

Ryan Isaac:
Yeah, find the right…

Jaime Staley:
It’s Like they always wanna find that. I definitely…

Ryan Isaac:
Yeah, I get it.

Jaime Staley:
Have a doctor who is outside like the box, like whatever. Very Outside. He’s like, yeah, I’m gonna do this crazy thing even though it costs a lot of cash and you’re like, okay, well, does it make really good sense? Like, this really seems farfetched. And I’m like, so you start to really question like, is that the best idea?

Ryan Isaac:
Totally.

Jaime Staley:
But I do feel like they want that, but we really try to focus on what they can be doing. Right? There’s ways to save in retirement and not pay taxes now. There’s ways to de defer your income and pay taxes on that later. So what can we do? You know, we are working with, one of the doctors too, he owes himself about a lot of cash back from not taking pay in the past and we’re trying to, he’s like, how can I get this money without paying any taxes? And we’re like, well, you’re gonna have to pay some taxes somewhere. It’s a lot of money. But like, what can we do? Can we put it in a 401k? Can we look at different plans like that because there are ways to save on taxes, but you just have to kind of exhaust the actual ways to do that because there are no magic… You’re not saving millions of dollars in that way. I know I had a lot of doctors start to get into crypto for a while. I don’t know if you had that too.

[chuckle]

Jaime Staley:
They were like asking all kinds of questions. I’m like, nobody knows the answer to these questions. Like I don’t know that you’re saving millions. Right? They’re like, oh, crypto, I’m like gonna save millions on taxes. They’re not. I’m like, okay, I’m not sure how that’s gonna play out, but obviously we saw it turned out if you didn’t buy and sell at the right time then you probably took a pretty big hit. But again, they’re doctors with high income, they can take advantage of kind of crazy out there opportunities because maybe it could triple their money. So I feel like they are a little bit more willing to go outside the box to do things to earn more money, or maybe not earn but multiply their money…

Ryan Isaac:
Yeah, attempt to.

Jaime Staley:
In places where maybe the regular person would be like, eh, I don’t really know if that’s the best plan for me.

Ryan Isaac:
Totally.

Jaime Staley:
But there are definitely ways to put your money into different tax savings plans that do reduce your tax now and really can help you save. So there’s a lot of things out there.

Ryan Isaac:
Yeah. I mean, we’re constantly, I don’t know if this is right or wrong, I mean, I think this just experience has taught me that we’re constantly telling people, one of the biggest ongoing like year to year proactive deductions you can take is just having the right size retirement plan in the practice. Whether that’s a small little IRA something or a big cash balance pension plan, whatever’s most appropriate. But always making sure you have the maximized, biggest, most appropriate retirement plan. It might not be hundreds of thousands of dollars unless you have a pension, but over a multi-decade career that it adds up a ton. It’s huge. And then if you’re taking advantage of any other thing that you can do, you’re putting money in HSAs if that’s appropriate for you. You know, charitable contributions, other write offs through the practice, things that come off the P&L, working with someone who knows dentistry on the tax and accounting side, who knows how to categorize things the right way, expense things the right way, those little… They don’t feel like a lot compared to the big sexy book tour kind of tax people things they do, you know? It’s always funny to me when you get some like real estate mogul do like a book tour on tax strategies and then market to earned income dentists, just like…

Ryan Isaac:
But there’s a list of those things and doing them all at the appropriate times and places in your life they add up over years and years, but it’s not gonna wipe it out to the extent that you’re not gonna feel the pain of a tax bill if you’re a high earner. So, that’s fine. Thanks for addressing that. I’ve been wondering too as we’re talking about the concept of just keeping like a clean P&L. You said earlier that if you don’t from the beginning, if you just don’t even have a foundation of knowing your data and knowing your numbers, then it’s gonna be really tough to make any forward looking decisions or even looking backwards to see what actually happened. Do you have any tips or like common mistakes people make with just their bookkeeping alone? Like sometimes I’ll get a P&L and I’m like, this is hard to see because you have one category for every payroll thing and there should be like 12 here or something, you know, or one marketing category. Do you have any thoughts or ideas on just keeping a cleaner, more helpful P&L?

Jaime Staley:
Yeah. I mean, I feel like you need to have categories that make sense to you that you wanna manage. So to your point, if you put everything in a big category, you’re like, well, our payroll is this amount, but you can’t look at, you know, maybe staff payroll versus hygiene versus, you know, you don’t have a…

Ryan Isaac:
Spouse and kids and doctor and associates.

Jaime Staley:
Yeah, it’s comparative. So having that comparative is really helpful. So I feel like we try to break it out so that you have those categories, so you can see that lab fees, you want separate dental supplies, you want separate doctor pay, obviously hygienist, like those bigger items, you really wanna have separation. So if you are just putting everything to payroll because you know it came through ADP, you’re losing a lot of valuable information that doesn’t take a big cost to separate out, you know, we create a lot of integration and through automation so that we create those accounts and they’re just, you know, they’re pushing over into those buckets. But then when you start budgeting for next year, you can be like, hey, what was that percentage we paid on staff payroll? What was that on hygiene?

Jaime Staley:
What was, you know, back office versus front office? Like the more… There’s a fine line between a lot of detail where you’re like separating so much that you’re like, you know, I think one of the… One time when we got into their chart of accounts, they had, you know, lab fees for Dr. A, lab fees for Dr. B, lab fees for Dr… And I was like, okay, this is like, you know, and it wasn’t just lab fees, it was like 17 different things. And I’m like, this P&L is…

Ryan Isaac:
Too much.

Jaime Staley:
Overwhelming to look at because it’s not the right way to do it. I mean, it helped them find certain things, but I was like, but looking at it overall is not helpful. So, you know, we talked about different ways to handle that within like QuickBooks online, if that’s what we were using, hey, we can class those so we can pull a report if you need that data, but let’s look at your P&L in a cleaner way so we can compare that. So yeah, I think there is definitely good ways to handle, you know, that chart of accounts so that you’re getting the information you need without having it so kind of clustered that it’s kind of a mess and you kind of just turn off. Right? Like I’ve seen some where you’re like, I can’t even look at that. Like, I don’t know what’s happening. So, I like in some of the financial tools too, you can collapse things or expand them. So a lot of times we look at things very collapsed, but like under advertising we’ll have separate subcategories so we can monitor those different subcategories. You know, are we spending enough, or how much are we spending on like new patients, you know, welcoming them, giving them a welcome bag and things like that versus, you know, internal marketing within the firm or how much are we spending on, you know, going to other doctors and trying to get clients depending on what type of dentistry you’re in, you know, orthos go to other doctors and work with them to promote their practice.

Jaime Staley:
Hey, send the clients our way. So being able to get, I mean, you wanna have enough granular detail that you have some information to see, hey, this is how much we’re spending… Trying to monitor what the outcomes are. Like, hey, we’re spending a lot of money on other doctor’s office. We’ve got zero referrals. Do we wanna still spend a lot of money? So I think like the secondary step to some of that stuff is monitoring, hey, do we wanna spend the money there? If we’re looking at trying to save where we can, we wanna spend where the money is beneficial and bringing in revenue and production, but if it’s not, so somebody’s gotta be looking at that. Because otherwise how do you make the decision? Should we keep putting, you know, we have a billboard somewhere, is it paying off?

Jaime Staley:
We’re spending a lot of money, is it worth it? You know, so tracking it, which is not always easy to do and somebody has to be responsible for that, but when you’re trying to be very specific about what you’re spending your money on, if it’s generating production, that’s a good thing, right? If it’s not, hey, you can cut back on that. So I definitely think it’s important to look at those financials, compare them month to month. That’s one thing we’re looking at too. Month over month, like every month of the year, are we spending $3000 a month on billboards? Okay, that’s working. That’s not working. You can just kind of get a better sense for where your money’s going. And if it makes sense to continue to spend there.

Ryan Isaac:
Well, last question, and then I want to ask how people engage with you and what the process is like. The question would be, you were talking about budgeting earlier, forward looking, I think you were talking about a client in fall. When is the appropriate time to start forward looking like next year’s tax budget based on kind of what’s happening right now in revenue and trends? And how do you pull that off with clients?

Jaime Staley:
Sure. We usually recommend doing a meeting in like mid-year, like the July time period. You know, we got like a half a year of data to get a sense of where things are going. And then again, in kind of that October, November time period, again, the year’s not over. You can’t exactly predict what’s happening. But by November you kind of have a good sense, you can annualize, hey, we think we’re gonna land here. What are those implications? How much taxes did you already pay in estimates throughout the year? How much are you gonna owe if you didn’t pay estimates or in addition to those estimates? I feel like especially doctors, like you mentioned high earners, they can sometimes rack up a pretty big tax bill…

Ryan Isaac:
Totally.

Jaime Staley:
And if they’re not paying those estimates regularly, you know, that can be a really large sum of money, which they’re usually not happy about. So I highly recommend getting those planning meetings in because half the battle is just knowing, hey, I know I’m gonna owe X dollars. Like yeah, it still sucks, but I know in November, and it’s not…

Ryan Isaac:
Better than March.

Jaime Staley:
April 10th and my tax person just told me I owe all this money and I’m really ticked off, which is what I end up hearing a lot of. So yeah, we really try to do that. So, I mean, we are not exact, but we can give them a ballpark, hey, you’re gonna owe this amount, you should pay this much in estimates in January. And then we’ll give you kind of that final look once we get the tax return pulled together. You know, I’ll see a lot of tax returns get extended too, and doctors don’t totally know that they gotta pay the money still in April, even though it’s extended. They’re like, I’ve extended that till October. I’m like, yeah…

Ryan Isaac:
But you still owe it.

Jaime Staley:
But it’s money [0:39:14.9] ____ too. And if you don’t pay that money now they’re racking up interest and fees. And so I definitely think there is a ton of benefits to that planning ahead. So we really recommend that July, November time period for taxes. And then like the budgeting time period, we usually start in that October…

Ryan Isaac:
Cool…

Jaime Staley:
Or try to have it final by December. You wanna do it early enough, but not so early that you don’t have some of the information you need to plan. So that’s usually the timing.

Ryan Isaac:
Thanks for that. I think think some of that too just goes back to a business and service model that accommodates for that though that isn’t just transactional. And I think a lot of people hearing this will be like, yeah, I don’t feel like I’m getting that service from my current accounting team, you know, which might mean you just need to ask some questions. And I think a lot of times people have the wrong expectations on their tax preparer too. They’ll hire a tax preparer and then be mad that they’re not doing like proactive meetings throughout the year and like, well, you didn’t hire that. You don’t pay that person for that job. You know?

Jaime Staley:
Right, exactly.

Ryan Isaac:
You’re gonna need to contact them and communicate and work that out and be like, is this part of your service model? Should I expect this? Can I pay you for this? Or, you know, then other people decide they need to find someone. So what’s the process like if someone wants to have a chat with you, how do they reach out? Where do they find you and what’s that kind of initial process like to see if you and your firm would be a good fit?

Jaime Staley:
Sure. We also have a podcast. So we have a Cultivating Business Growth Podcast that can be found.

Ryan Isaac:
That’s what it’s called, Cultivating Business Growth?

Jaime Staley:
Yeah, Cultivating Business Growth.

Ryan Isaac:
Cool.

Jaime Staley:
Yep. It can be found anywhere you find your podcasts.

Ryan Isaac:
Awesome.

Jaime Staley:
So we do that twice a month. We also have a few dental series that are out there, so you can go back and kind of look to those. We offer a lot of good just general information on how to run a small business if you’re just looking for some information and just wanna learn more.

Ryan Isaac:
Cool.

Jaime Staley:
So we love doing that. But then if you wanna reach out to us, you can reach out at pjscpas.com. We have a great website. We have a lot of information so you can learn a little bit more about us. We offer services that range from that kind of historical accounting if you’re just needing to get that caught up. But our goal is to kind of get you to that more proactive, forward thinking place. So we like to do V controller services. We even do virtual CFO services to help you kind of propel your business forward and your dental practice and not just do that historical. So we love to really work and grow with our clients. So, yeah, you can go there. We offer a free one hour discovery call where we kind of just talk, listen to what kind of things you’re going through, what your challenges are, and what you might need help with. And then we kind of talk through how we might be able to help you and see if we’re a good fit for each other.

Ryan Isaac:
Very cool. That’s pjscpas.com?

Jaime Staley:
Yes. You got it.

Ryan Isaac:
Okay. Awesome. Well, thank you for spending time, going through this. Oh, here’s what I was gonna ask you when you were talking about that. Is there, I know you like to spend time with kind of a small business crowd. Is there, I don’t know, like a revenue or a complexity ceiling for your team that you’re like, that’s somebody else, you know, you’re of a size where we’re not, that’s just not our specialty. Is there a way that you define that or have like a limit on that? Or is it case by case?

Jaime Staley:
It is not case by case. It depends on what kind of services you need us to do, whether we have the bandwidth to help you, but we’re probably the sweet spot is probably that like one to 50 million, like after 50 million, you really probably start needing bigger and, you know, more, you know, in-house, but it doesn’t mean we couldn’t help you from a higher levels perspective if you don’t have that to guide you, but you would definitely need to have at that point some internal accounting folks because…

Ryan Isaac:
Yeah, you got your own team.

Jaime Staley:
It wouldn’t make any sense to be paying us to do some of those things.

Ryan Isaac:
Okay. So that covers 98% of the dental industry.

Jaime Staley:
So we’re definitely a million up, you know, like usually at a million it starts to make sense to have somebody helping you. And then yeah, I would say…

Ryan Isaac:
Cool. Very cool.

Jaime Staley:
Well, it’s been such a pleasure to chat with you today.

Ryan Isaac:
Yes. Thank you.

Jaime Staley:
Thank you for inviting us.

Ryan Isaac:
Thank you Jamie. Hope we’ll do this again in the future. And again, that’s pjscpas.com. Thanks for spending time, and thanks everyone for tuning in on another episode of The Dentist Money Show. We’ll catch you next time. Bye-bye.

Cash Management