Craig Cody is our guest this week on The Dental Up Podcast and he sits down with Shaun to talk about some of the mistakes Dentists and Business Owners make that lead them to pay more in taxes or miss out in huge deduction opportunities. We learn how he went from working with the NYPD for 17 years to becoming a well-known CPA. Learn about some new Tax Codes and other great financial information on this week’s episode of The Dental Up Podcast.
You will also hear on this Podcast:
-Why evaluating your financial situation is important.
-An Introduction to “The Progressive Dentist Podcast hosted by Craig Cody”
-How failing to create a strong financial plan can backfire in the long term.
-How Craig went from working at NYPD to becoming a CPA.
For more information on Craig Cody, CPA Check out the links down below!
Visit www.CraigcodyandCompany.com/DentalUp and get a Free Paper Copy of his book for you to check out!
Facebook: https://www.facebook.com/CraigCodyandCompany
Instagram: https://www.twitter.com/craigc2742
Website: https://craigcodyandcompany.com
[bg_collapse view=”link” expand_text=”View Full Transcript” collapse_text=”Hide Transcript” ] Host: Ladies and gentlemen, this is The Dental Up Podcast, brought to you by Keating Dental Lab, a full-service, award-winning dental laboratory. Each week, you’ll learn tips and techniques from real-world dentists, bringing you in-depth interviews, motivating stories, current events, and sports. Here’s your host, Shaun Keating. Shaun Keating: Hey, everyone. Shaun here. Welcome to another episode of The Dental Up Podcast. Our guest this week graduated from Cortland College, earning an Economics degree. He then served on the New York City Police Department for 17 years and retired as a Lieutenant in September of 2000. He’s known online as The Certified Tax Coach and co-authored an Amazon best seller titled Secrets of a Tax Free Life. Currently practicing from Garden City, New York, please welcome Craig S. Cody, CPA. How’s it going, Craig? Craig Cody: It’s going great. Thank you very much for having me today and I’m definitely honored to be the first non-dentist on your podcast. Shaun Keating: That’s so cool. Yes you are, man, and that’s neat. We always thought we were going to get some different people on that weren’t dentists, but I just wanted to be a value to The Dental Up Family here, and I think you have some neat things that you have going. We’re excited about hearing about you and we’ll put all your info on the show notes. Hey, I always like to start off a little bit talking about sports. Now, you into baseball at all? The Yankees are kind of one of the top teams? Or no, no baseball? Craig Cody: Yeah, I’m like 0 for 3. I’m a Met fan, a Jet fan, and a Knick fan, so I’m not doing too good. Shaun Keating: No, dude, that’s awesome that you own it, though. I know a lot of New York Met fans and, heck, I remember Doug Heffernan, The King of Queens. That show, I love it. Kind of reminds me of myself a little bit, but he’s a die-hard Mets fan, too, and all those years of… it’s been since like the ’60s since they’ve done anything really good. Back when Tom Seaver I think was on them. Craig Cody: Well, speaking of Tom Seaver, that’s the big talk in New York is Tom Brady just trademarked the term “Tom Terrific”- Shaun Keating: Oh, you’re kidding? Craig Cody: And that’s the nickname that Tom Seaver was known as, Tom Terrific. Shaun Keating: No kidding? I bet they’re going to fight over that. Craig Cody: Well, apparently, they never trademarked it, so- Shaun Keating: Oh, you’re kidding? Craig Cody: I don’t think it will be much of a fight, so [crosstalk 00:02:40] it looks like Tom Brady has got it. Shaun Keating: That’s crazy. Tom Brady, man, I’ve never heard that, Tom Terrific. Come on. Craig Cody: I’ve heard The GOAT and it’s true. You got to give the guy that much, but that’s the big sports talk around here. Shaun Keating: Oh, absolutely. Craig Cody: Tom Seaver was just diagnosed I think with Alzheimer’s, so- Shaun Keating: Oh, you’re kidding? That sucks. It sucks getting old, man. Once you get older, it’s [crosstalk 00:03:08] who knows what’s growing inside you. It’s just like tomorrow’s a mystery, yesterday was history, man. We got today, baby- Craig Cody: Enjoy it. Shaun Keating: I live it hard every day like it’s my last. It looks like we got a little bit of a fire drill in the background, huh? Craig Cody: Trying to figure that one out, but yes, we have an unplanned fire drill. I don’t see any fire engines and I am on the second floor, so I can always jump. Shaun Keating: Yeah, you can jump out that window, just snap a leg. You’ll be all right, man. It’ll be good. All right, dude, so let’s go ahead, man, let’s go ahead and Dental Up. Tell me a little bit about your practice here. Now, I’m talking… you have a podcast that… actually, you host your own podcast and it’s titled The Progressive Dentist Podcast- Craig Cody: Sure, yes. Shaun Keating: Tell me a little bit about that if you could. Craig Cody: Sure. We launched that about five weeks ago. It’s geared towards the dentist that is not only interested in growing his dental practice but is also interested in other things outside of dentistry to grow as well. In addition to dental guests, we’ll also have different people in different industries regarding different types of investments and talk about leadership and just giving them the information that the dentists need to improve their overall financial life. It kind of dovetails with what we do as a practice. Our practice focuses on tax planning and we’ll talk about these pearls that dentists can use to save some money. Shaun Keating: Now, you’re a CPA. Man, that’s pretty neat. You did that after being in the police force for 17 years. You went and got into economics. Tell me a little bit about your school and how that all worked out. Craig Cody: Sure. I left my first round of college in Cortland after three years as an Economics major. I joined the police department and I followed in my Dad’s footsteps. My dream was to become a Chief at that point and at some point maybe run the department. You get old, life changes. It’s a civil service-based thing, so they didn’t give a test to become a Lieutenant for like 10 years, so I was a Sergeant for like 10 years waiting for a 10. You grow and I decided I kind of got hooked on taxes and so I went back to school for my Accounting degree. When I left after 17 years I went to work for an international firm and I always loved the planning aspect of it. Sitting down with people, especially business owners, and showing them ways to do things a little bit differently and saving some money. Craig Cody: I had a great run in the police department. I learned to communicate with people. You could be in midtown communicating with some corporate chieftain, and then I might be in a more impoverished area and dealing with the guy with the lemonade stand and having to talk to him. I think I really learned to communicate with people and we used that really in our practice. CPAs are not known to be the best communicators. I do have a pocket protector, so we’re known more towards the pocket protector. It’s important to communicate because if you communicate you can save some money. My recent book, which I’m going to offer to your listeners is The 12 Biggest Tax Mistakes That Cost Dentists Thousands. We go into 12 mistakes that we see dentists making. Dentists, we could typically save somewhere between 15 and $40,000 a year in taxes. Shaun Keating: No kidding? With me, when I started my company back in 2002, I worked for a company for 17, 18 years or whatever and never had to worry about any of that part of it. I just ran the lab. I was a Crown and Bridge Manager, and I didn’t have to worry about any of that, but when I started my company, my first meeting I had when I was going to start it and I met… his name is Marcelo Sroka and he’s my accountant. He worked for a big accountant firm and he was like one of the head guys, but my friend owned a restaurant and he owned several restaurants and he had Marcelo as his tax man. My first thing I knew, because I’m not good with money and numbers… my first meeting to start my company was with an accountant. Shaun Keating: I remember we ate at a IHOP pancake house and we sat down many, many years ago now it seems like, and to this day, it was the best decision I ever did. A lot of dentists, they’re very frugal and they like to do their books and they like to do their charts and they like to do everything on their own a lot of them. A lot of them don’t like to delegate those things, but I think the most important thing they should delegate and not worry about the money… It’s like they say they can’t afford a good accounting firm, you can’t afford not to pay a good accounting firm because they can make or break you. Shaun Keating: Six months in, this accountant firm that I had, we went through our business model and everything else. I went and got SBA loans and I had all this stuff set up and it’s just so organized. To this day, I still meet them once a month. We got and have a lunch and we talk about things we can do to help alleviate taxes, to help better prepare for our estimates on taxes, and where we’re at growing. It’s one of the most important aspects of my company, and any great company has an accounting firm doing their numbers because you’re responsible for them. You can’t be, “Let’s right this off, let’s right that”… you got to be by the book, but you got to be able to know everything you can by the law to help you pay the least amount of [crosstalk 00:08:57]- Craig Cody: Exactly. Shaun Keating: Taxes, if you can. Craig Cody: Two good points there. Number one is you meet with him every month and you guys talk about stuff, which really that’s a rarity and that’s a great thing. The other thing, we talk about doing it ourselves. Well, in my office I have a bone saw and pliers, so I could do amputations and I can pull teeth, but I don’t. It is important to work with somebody that really knows what they’re doing and it comes down to the time value of money. The one thing we cannot get more of is time. Shaun Keating: Especially the law is changing and everything else, even with this Trump Administration the last few years, we’re not really sure which way on certain things. It’s just so important to be on top of it, on top of all the new laws and all the areas that… there’s R&D credits. There’s so many different things [crosstalk 00:09:50]- Craig Cody: Exactly. Shaun Keating: That you can be doing, and as a dentist, if you can only really get in their mind and tell them, “Yeah, it’s going to cost you this much, but we’re going to help you save this much and tax preparedness and everything else.” I think it’s one of the most important things for any business, and especially a small business starting out. I probably… we’re paying the top dollar with the accounting firm I use, and I did it from the beginning and just child-like, not even knowing, but I just knew I wanted to be in good hands and not knowing… I always use to say like the first few years, I go, “Marcelo, take it easy on these bills, man, because they’re pretty big bills, this and that. You got to take it easy.” He was like, “Shaun, I’m doing what we have to do.” Shaun Keating: He kind of brought that up recently. We had lunch the other day and he goes, “You don’t ask me about that anymore and now you’re just asking me what we can do to pay less taxes.” I remember my old company I worked for. I think it was like… I just don’t get it. Sometimes the big, big corporations when you have so much monies, and I think we were at $160 million at that time we were doing yearly. I’d do the P&Ls each month, the owner and our CFO at the company at the time. I remember the last year when I left in like 2002, we were doing our P&Ls for 2001 and we did like $160 million, but I remember the whole nut in the federal tax that we paid through the whole thing was like 680 grand. I’m thinking [crosstalk 00:11:28]- Craig Cody: Wow. Shaun Keating: I pay out millions already and I’m not even a tenth of… It’s just weird, but I think as you get big corporations, it’s not loopholes but there’s so many things that legally you just have to have that [crosstalk 00:11:44] bit of volume of sales. Craig Cody: If you’re a big corporation, you have a team of people that are working for you. If you’re a typical dental practice, you typically… you don’t have a number of attorneys or tax attorneys working for you so it’s important that you have the right people helping you out. Whether it’s your legal attorney, your CPA, the right lab you’re dealing with, all those things are important. We talk about 12 of those things in the book and the main thing is failing to plan. When you talk about it, you speak with your CPA every month. That’s a great thing. Shaun Keating: Well, and also [crosstalk 00:12:21]- Craig Cody: How many [crosstalk 00:12:21]- Shaun Keating: My CFO here at work, they work in conjunction through the month and it’s like I love it with him that every time I talk with my lawyer, he’s like 800 an hour, unless I get one of his associates. I talk to him for 15 minutes and I’m at 200-plus dollars and I don’t like talking to my lawyer. My accountant, I buy him a lunch and we’re good to go each month and he don’t charge me on it, but he really takes pride kind of with helping me start my company because he worked for a big conglomerate for all those years of the head guy, and actually in the last few years, he went and started his own company. He goes, “Shaun, I really admire you, how you started yours and I’ve seen other people, clients do it.” He finally did it after all this time where now I got him and I think his price has went up even more. No. Shaun Keating: It’s important. It’s one of the most important things that I did in my company is you get a CFO, but the very first thing was to get an accounting firm to do all of my numbers from the very beginning and I don’t ever have to worry about any of that. I just sign my names on all these documents each year and it’s so important. That’s why I said I accepted to having you on this because you’re an accountant and you work with dentists and you know the ins and outs. I know there’s a few other CPA-type guys that I’ve seen on Dentaltown and on Facebook. Most dentists are kind of skeptical. They’re thinking, “My aunt’s doing it”, or, “I’m doing it and I’m doing it through Charles Schwab”, or whoever, H&R Block or stuff like that. It’s like, “No, you should be doing tax preparing, planning, and everything else.” It’s daily, weekly, your numbers as they go up, they go down, and things like that. Hats off to you, man, for [crosstalk 00:14:20] sure. Craig Cody: Knowing your numbers are important to make good business decisions. If it’s okay with you, we could run through a couple of these mistakes that we see dentists making and- Shaun Keating: Absolutely. Craig Cody: Maybe they’ll pick up a few pearls, so- Shaun Keating: Perfect. Craig Cody: The first is obviously failing to plan because people wait till January to have a conversation with their accountant, and at that point the year is over. There’s not a whole lot you can do, then people saying, “I can’t do that because I’ll be audited.” It’s like if the tax code lets you do something, do it and document it so you’re okay. Shaun Keating: Absolutely. Craig Cody: Probably one of the biggest mistakes is working out of the wrong business entity. How did you decide to be an LLC or an S corp or a partnership? What was the thought process? Or was it you called your attorney and he said in your state the best legal entity style for you is to be an LLC or an S corporation? Did your CPA and your attorney, did they have a conversation? Another big one is with the new tax code is qualified business income. That’s the 20% deduction that the new tax bill is giving business owners. Craig Cody: Now, unfortunately for dentists, if your taxable income runs over 315,000, so if you make the 315 to 415, that’s taxable income, that deduction phases out, but there’s a lot of people still that [crosstalk 00:15:44]- Shaun Keating: Don’t want to lose it [crosstalk 00:15:44]- Craig Cody: They make that cut and if they don’t know what the criteria is for getting and taking advantage of that deduction, it could cost them a lot of money. Then, we have retirement plans. Are we operating? Do we have the right retirement plan? We’ll run into the person that says, “Well, I don’t want to have to contribute for my employee”, and that might cost them 3% but they’re in the 33% or the 24% bracket, so what is it really costing them not to make that deduction? Are you hiring your kids? Is your wife doing work for you? Does it make sense to hire your wife and then have a retirement plan for her also and put away another $19,000 a year? Are you looking at that? Craig Cody: The tax court has ruled you can hire your kids as young as seven years old. I typically like to wait until they’re around 11, and now your kids can make up to $12,000 a year and pay no federal tax. Shaun Keating: Exactly [crosstalk 00:16:44] It’s amazing, and then also with your 401(k)s, your contributions, depending on how many employees you have and what they’re contributing, what the staff and the ownership and their kids, it’s so much to it. It really is and I remember doing that stuff way back in the day and I’m a knucklehead. I’m not real smart, but I got the sharpest-run… I have a company that’s run like a Fortune 500 company, from the top to the bottom, man, and I’m just a knucklehead from Huntington Beach, California, man. It’s just amazing and it’s just you plug in the numbers and then now, I think some of the new ones that came out, it’s almost… you can’t write off your entertainment and your meals and stuff. What’s going on there? Craig Cody: Well, meals are still 50% deductible, entertainment is no longer deductible, but there are things out there. There’s the home office, and are you spending 15 hours… most people I know are spending more than 15 hours a week working at home, doing work at night, doing billing, whatever it is. That opens up travel from one office to the other. It opens up the home athletic facility, so do you have a pool? Now, that can be deductible on the home athletic facility. Do you have a home gym? Shaun Keating: Exactly. Craig Cody: These are all things that add up. There’s another one we see all the time is a dentist will buy a practice and then they’ll start working with a tax preparer, and then maybe next year they’ll be working with a different tax preparer, and then nobody is ever taking the depreciation or the amortization on the good will involved when they purchased that. That can be 20, 30, 40, $50,000 a year in deductions. Shaun Keating: Exactly. Craig Cody: You need to work with a professional and you need to communicate with that professional. The more you communicate the more that person, as long as he’s not just putting the right numbers in the right boxes, will be able to help you keep more of what you make. Shaun Keating: Absolutely. It amazes me in how the whole system works and I think I was listening to some TV last night and it was one of the guys in government, working for the President, and they were talking. It was the Jared Kushner kid. I’d never heard the guy talk before, so I was sitting there listening to him and this reporter was kind of drilling him on all his businesses and he was saying now when he started, he had to drop this business and this business through the government. He was talking about all your businesses and what you make and the taxes. He kind of gave a snapshot on the American tax code. There’s professionals out there that… you’re not breaking the law, you’re just getting the most benefit of everything you can through the law of the land. Shaun Keating: It’s like the smart ones are the ones who are doing the tax preparation and the planning and they go through that tax code with a fine-tooth comb and they get every single thing they can. You’re not breaking the law, you’re doing everything you can to use it to your advantage the best you can, and you need people that know what they’re doing to get the most out of it. Not saying you’re going to cheat on your tax or anything, you’re going to use everything you can to the letter of the law of the tax code to your advantage. I bet there are so many people and dentists and business owners that are probably getting 60, 50% of the true benefits that they could if they knew if they did this. Like I said, with the R&D credits, with the hiring, and the different things. Shaun Keating: It is really… I just always remember, man, “I don’t want to pay taxes”, but you do. I love… the more taxes I pay, the more I’m making, so I’m excited. I really don’t have a problem with my tax because I know I’m doing everything I can to pay as little tax as I can by the law, but the more I pay, even like with my technicians, I love it, man. “No, I’m making a 150 grand. I’m making 200 grand.” I love the more they make. I know that because that’s the more I’m making. That’s just basic, and guys don’t get that. They don’t want to pay their people more and this and that. I think you take care of your people, you pay them well, you just go the extra yard, treat them like family. You want them to all make more money. You want them to make as much as they can because in this life and industry, the more you make, the more you pass it on. Shaun Keating: I don’t know, I’ve always looked differently at it. Lawyers, not so much loving those guys. You need them, you need the best ones you can get, but not real excited about them. Accountant, love the accountant. He is my right-hand man. He happens to be a good friend, too, now after all these years. It’s your lifeline and just for him to be the smart nerd, to be a… a lot of dentists are kind of nerdy dudes and I’m a dental nerd, too, and I love to nerd out on dentistry, but I love an accountant nerd that just is the bookworm. He studies the new laws every day, every month. Especially new administrations come in and this and that, but you got to know the letter of the law and all of this and all these tax codes, you need to not just know the… you need to know everything inside and out. Shaun Keating: It’s just nothing better for you as a business owner to have someone that’s just the cream of the crop, five star, the best of the best. “Well, I don’t want to pay them”. You pay them. It’ll come back tenfold to you because you’ll sleep better at night and everything else. I’ll shut up. Keep going there. Craig Cody: Well, we’ve pretty much hit them all. I think the last one we missed was medical benefits. What are you doing? Do you have a Section 125 plan so you get the deduction, which is pretty basic? Certain types of entities could have medical expense reimbursement plans where… a lot of industries, the kids need braces and you have to send them someplace to get braces and braces are 6 to 8 grade a pop. Or older people, they need new implants and stuff like that, and so there’s ways to make that deductible, which is not always… come into play in the dental industry, but it does come into play with other business owners. Then, are you looking at the real estate that you own? Are you looking to get the biggest bang for your dollar as far as depreciation and cost segregation studies, which is a way to accelerate the depreciation on your building that maybe your dental practice operates out of. Shaun Keating: Exactly. Craig Cody: There’s a lot of things and it all comes down to really communicating with your CPA, and like you said before, Warren Buffett, Bill Gates, Trump, they have a team of tax advisors working for them- Shaun Keating: Exactly. Craig Cody: So why can’t the small business owner out there have the same thing? Shaun Keating: Absolutely. No, I’m with you 110%, man. Cody, man, good job, dude. I think this… I’ll definitely get your stuff, your info on the show notes and maybe if you have a special on your book or something, let us know on that and we’ll post it up there. Heck, send me a couple of those out. I’d like to [crosstalk 00:24:12]- Craig Cody: Sure. Shaun Keating: Look at them and maybe I can give them to some of my accounts. I’d love to do that. I’ll pick up some from you, for sure, too. Craig Cody: If they go to my website, which is craigcodyandcompany.com/dentalup, there’ll be a link there and they can actually get a free paper copy that we’ll mail out to them. Shaun Keating: Beautiful. That’s awesome, man. No, that is so cool, dude. I think it’s one of the most important things in any business, not even a dentist, just any small business, medium business, large business. Get a great tax attorney or a great accountant to do your stuff because it’s just so much better than just getting by on the average joe down the street. I just feel that way in anything. I try to find someone that’s at the top of their field and that’s going to plan with me and everything else on how we can best reduce our taxes and that’s important. The less taxes, man, that’s what we all want, right? Craig Cody: Exactly, and then it comes down to return on investment. What are you paying? What is your investment? If I told you I could give you a 400% ROI versus your broker… if your broker says you could get 400% ROI guaranteed, you’d go in a minute. Shaun Keating: Heck, yeah. I’d go with 5%, 8%, baby. Come on. I like a little return. I’m not greedy. It’s amazing, and I don’t even know how it all works. I’m just amazed on what these guys go through and all the laws and all that and just the whole thing. It’s so important. We’ve never been late on a check in almost 20 years and we’re just so sound, structured so well, and it’s all because it started off with the accounting at the very beginning. Shaun Keating: You dial that in and that was the most important thing was for me to get a CPA in here to run my company with me. She’s my right-hand person and we love that, and then my next biggest hire was my marketing person, but my first one was my numbers person. I think any company, you need that for your foundation and for longevity because a lot of companies don’t even make it after two, three, four, five years and we’re going on our second decade here. I look forward to many more decades. I think with the dentists, man, if they can get some good CPAs working for them, I think it’s just a very, very important thing for the success of your company. Shaun Keating: Craig Cody, CPA from Manhasset, New York. Where the heck is Manhasset at, dude? Is that in one of the five boroughs [crosstalk 00:26:52] or what? Craig Cody: We’re in Long Island, right outside of the city. I’m 20 miles and an hour and a half from Midtown Manhattan. Shaun Keating: No kidding? You’re over there by Bethpage Black, that little golf [crosstalk 00:27:07]- Craig Cody: Exactly. Not too far from there. I’m a little bit closer to the city than that, but yes, that’s the infamous golf course. Shaun Keating: That’s awesome, dude. Well, hey, man, thank you so much for coming on The Dental Up Podcast. Hey, if you need any dental work, man, I got a ton of doctors out in New York. Give me a call. I’ll hook you up, baby. Craig Cody: Well, thank you very much, and I appreciate you having me on. Shaun Keating: All right, dude. Craig Cody: Take care. Shaun Keating: Have a good one. Bye-bye. Craig Cody: Bye. Host: Thanks for joining us on The Dental Up Podcast Show this week. Make sure to follow us on Facebook, Instagram, and Twitter, or search The Dental Up Podcast on iTunes for our weekly feed. Don’t forget to visit keatingdentallab.com/promo for exclusive offers. Keating Dental Lab is a full-service dental laboratory and we’re nationwide. We’d love for you to send us a case so we can show you the Keating difference. Host: If you dig what you heard, please leave a review on iTunes, and we’ll be back next week. [/bg_collapse]
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