Fast Break: From Reactive to Ready – Tax Planning That Works

Matt Cranney

Welcome to Fast Break. Today we’re diving into a topic that can be a real headache for small business owners. Taxes. Tax season can often be a time of stress and confusion, but it doesn’t have to be.

We’re joined today by Brooke Weitzer, a partner at Baker Tilly, a leading advisory tax and assurance firm. Brooke is a tax expert with over 20 years of experience helping businesses navigate the complexities of the tax code. She’s here today to share her insights and guidance on how small businesses can approach tax season with confidence.

According to a recent survey by the National Small Business Association 45% of small business owners find the tax code too complex. And 33% say they’ve had to pay penalties for tax errors.

With Brooke’s help, and listening to our episode today, we’ll explore how to avoid common tax pitfalls and make taxis in more of a breeze. Brooke, welcome to Fast Break.

00:57 Brooke Weitzer

Thanks for having me.

00:59 Matt Cranney

OK, this is a topic that we get a lot of people sort of talking to us about in terms of we did one episode with a colleague of yours, a couple of years ago, and it was one of our best listened to episodes. And I think that’s just in light of how fast things move in the world of taxation and our tax code. And so we are thrilled to have you.

So, Brooke, before we kind of dive into some of the questions that we’ve heard from people that they would be curious to hear more about, tell us a little bit about yourself and your role at Baker Tilly.

01:29 Brooke Weitzer

Yeah, so like you said I’m a principal at Baker Tilly. I specialize in flow through personal service individual returns and try to do a, you know, a broad array of returns to understand all the complexities out there. I’ve only ever worked in public accounting. I’ve never done a financial statement audit. I knew from the go that wasn’t for me, so I have a passion for tax. Which sounds pretty nerdy, but it keeps me interested in the ever-changing tax law arena.

I am married with three kids, my oldest Beckett, who’s 4, and I have identical twin girls. Eva and Mia, who are 1.

02:05 Matt Cranney

So you have nothing on your plate. Life must be pretty quiet and looking for just love under new hobbies. Obviously I’m. I’m kidding. And before we dive in deeper today in spirit of full disclosure, Brooke also does my tax return and we and we love working with Baker Tilly and Brooke.

Brooke, I am curious as we think about our topic today and we think about some of the biggest challenges that you’ve experienced and seen and heard about at your firm small businesses face. When it comes to taxes, just the tax season in general, right, and, stress of a deadline all those things.

So can you talk about some of those big challenges that you that you see?

02:44 Brooke Weitzer

Yeah, I would say the biggest challenge for a business owner, small business owner is you’ve got so much on your plate, you’re handling all the items. In your work and then you have this little thing called taxes that you have to stay up to date with as well. So I would say, you know, you should have like everything in your business. You don’t want to be an expert in it, but you want to have a general base in which you can incorporate kind of tax saving strategies.

So it’s important to have a good tax advisor that kind of understands your business can help you make informed decisions and kind of work together to implement those types of strategies. You should really think about, you know, your tax advisor as an extension of your business, you know, we’re here to help.We’re helping to have your business grow and succeed and you know you want that person to have a specialization in the industry and in your entity knowledge.

I would say that you just have a lot on your plate, but just, you know, getting that general knowledge so that you can have your invite, you know, feed your advisors those little tidbits to help you strategize in the tax-side of it is big.

03:49 Matt Cranney

I’m feeling like when you say like have a good base knowledge or you know enough to sort of be engaged in the conversation, what maybe just a couple of like really practical ways people can build their knowledge, their base knowledge of our tax system?

04:03 Brooke Weitzer

So I think getting down and sitting down with your advisor at the year end and just say, OK, talk about your business and you don’t even have to talk specifically about tax. Let’s think about a service firm who comes out and says, you know what, these are the biggest things that I’ve had issues with the over the, you know, year we’ve had different clients that aren’t paying timely. We’ve got, you know, understanding the expenses and we have problems with inflation and costs and all that type of stuff.

It’s good to take a step back and not think about tax, but then think about how your business flows and then a good advisor will come in and take that as an example of to say, OK, if you’re having problems not hiring employees, well, let’s talk about how we can get some independent contractors and what that might look like and then they can implement that that on the tax side to have an independent contractor versus an employee. If you need to outsource some of your payroll or your HR, your different operations.

It’s just sitting down and thinking about what you’ve done over the past year and what your horizon looks like coming up over the next 12 months to say it might not even in general be about taxes, but about how you’re running your business. And then a good advisor will then be able to give you like suggestions along the way that will help.

05:19 Matt Cranney

How can they start with the business, and then get to tax versus start with the tax and then talk about the business through the lens of the tax.

I’m also curious as well Brooke to dive into the piece about building an effective partnership right because that’s essentially what it is like you know, we talk a lot at M3 always about we want to be an advisor, not a vendor or you know in our words, a broker.

We want to be that extension of your team as well because we know then enough about our clients business to know how our business of insurance applies to their business. And it sounds like it’s the same thing for you.

Can you talk a little bit more about some of what defines like a really amazing partnership.

06:02 Brooke Weitzer

It’s really coming to us with questions and staying curious, like saying I’m exploring on bringing on a new partner what that could mean for me. Or I’m thinking about expanding and opening a new location, what does that mean for me?

And you want to get your advisor in in the beginning instead of they might be able to structure, bring on a new person into your small business in a certain way that’s more taxed. They might be able to structure you buying or leasing or doing something when you’re talking about expanding your businesses.

So anytime you’re making like those bold business decisions is always best to have us, even if it’s just, it might not even apply but it’s like the first time that you see something or the first time that you’re addressing an issue that’s come up to you, just float out an email.

We’re happy to say, hey, you know from a tax perspective, this doesn’t really matter or if you’re opening a business, this is what I would recommend for your type of structure, because that would lead you to XYZ.

So before you make some business decisions, it may have a tax position that you want to understand and protect yourself from.

07:09 Matt Cranney

The theme there Brooke is sort of how can we be proactive, not reactive together? Right. So I love how you say, hey, when you’re thinking about bringing on a new partner, when you’re evaluating going into you know a different state, that’s the right time to engage your advisor. Not. Hey, Brooke. Guess what I did? I already brought on 4 new partners. Can you help me?

07:33 Brooke Weitzer

Yeah, this isn’t one of the times where I would ask for forgiveness. There’s sometimes when you want to go to your parents and say I did this, then you know, like get better. In this circumstance, it’s not better to ask for forgiveness if you set yourself up for success in the beginning.

First, you got to build that foundation. Part of that foundation should be taxes, and you should always be in the lens of like how this apply to me from the tax perspective.

07:55 Matt Cranney

Well, I think if anyone listening, they’ve already got the all the value of probably out of the podcast already based on just even that part of our conversation.

But I’m curious because one of the big things people asked about what are some of the common mistakes, I’m curious in your experience and working on so many businesses and helping them with their tax position, what are those mistakes that can maybe lead to those penalties or audits that we can get ahead of?

08:21 Brooke Weitzer

So I’d say the first broad one is if you’re a single owner running an active trader business, you should not be reporting your business income or losses on a schedule C. Instead, you should really be setting that up as a separate filing entity. Because a schedule C is kind of an automatic audit risk, especially if you’re running a loss through there because you’re running a loss through your individual return. It’s not something the IRS like, and they’ve been on that radar for the past 10 years. So, that’s an instant red flag.

You’d want to set something up if you’re a single owner, you would think about something from like an S Corp Structure. So you’d have the single owner. It would file a separate return and then you’d be able to really incorporate different things like qualified business income and deductions. You’d be able to have a full set of accounting that would you all sign off on at the end of the full income statement. Full balance sheet, something like that.

Really thinking about a trader business or even a rental activity and making sure that you’re incorporating all of the activity into you know one entity.

Another one is if you are filing a separate return like an S corporation, return C Corporation return or even a partnership return. You should always extend your return. The IRS pulls on audit first in. So if you are the first one to file here, return, you’re more likely to get audited by the IRS. The closer that you can file to the extended due date is a more advantageous for you, and you’re less likely to be audited.

Along those same arenas you want to make sure that you e-file your return. If you file your tax return. You’re likely to catch mistakes during the e-file and upload process, because your system will catch like, hey, your balance sheet doesn’t tie. Know they’ll be able to see common issues that the IRS would automatically flag and catch them before it gets to them.

I would say another area that I see often is make sure that you’re paying your estimated tax payments timely and correctly. So you want to make sure that you’re calculating what you should be paying, because there’s different ways in which you can pay your estimated tax payments. And there’s different deadlines for the IRS versus if you’re paying at the state.

There’s different deadlines if you’re being an individual versus a business return. And I would say the biggest one on the business side is the fourth quarter estimate really is due on 1/15 of the next year for individuals. But on a business that could be 12/15 or could be 12/31 or you want to incorporate kind of the deductions you have into that return.

I would say an automatic notice from the IRS is if you’re not making those estimated tax payments by the due date and then correctly for the amounts that are due by that due date.

11:11 Matt Cranney

You know when you talk about an extension and we do that here at M3 as well, that’s been a new thing, a newer thing for us. It’s so funny, the challenges it has to your mindset of, well I was always somebody from personally that was filing as early as I could just to get it sorted, done and dusted and move on. Get your refund as quickly as you can, and all those kind of things. But it’s almost like you have to sort of look at your.

And again, I don’t know if this is the right way to say. So clean me up if I’m, but it’s almost like there’s a mindset for personal taxes, and what happened before you own a business. And there’s a mindset once you become that business owner that you have to just learn to think about everything differently.

11:47 Brooke Weitzer

Yeah. And I will say it’s a mindset switch because if you go back 10 years, everybody was like if you file on time, that’s the best thing you. You know and all that. But over the past 10 years, the IRS said, no, there’s a lot of tax law changes that are happening. A lot of things that need to be incorporated into your tax return.

So the IRS actually looks at it favorably, saying you’re taking the time and you’re looking and saying, I understand all of the changes that are happening, I’m going to incorporate them and I’m going to take my time to do so. You know, the IRS put the extension process out there and made it very easy for this reason and you will get things throughout the year in which we didn’t have previously. there used to 1099s If you think come to you, there’s been more corrected 1099s over the years. Then you’d like to think about from your financial advisor, from somebody that you’re working with within a business.

So you want to be able to get past that point where here’s the deadline of 1099, which is January 31st. But they have, you know, to the end of February to correct it. So if you get a corrected one, you want to be able to have the time to go back and you know, fix that.

Another thing the extension really does that a lot of people don’t know about is if you extend your tax return. And then you file. So let’s say that your return was due March 15th and you filed it April or May 15. But then you get a correction from somebody and you’re like, oh, I need to restate my tax return because now it’s incorrect because I have new information that I didn’t have before.

The IRS allows you to do when you extend your tax return is just supersede your return so you can go back in and refile a tax return and the IRS doesn’t even look at the previously filed tax return. When if you wouldn’t have extended, you would have to go through this long process of amending your tax return and the IRS looks at.

It’s like you have your one file and then you amend it so they have something to review it against and that they’re not just superseding or overriding your previous file. So it’s a mindset that people have to get used to, but it’s well worth.

13:51 Matt Cranney

And what you’re helping our audience understand today is. It is a relationship. It is an active thing to be managed and sort of the idea of a deadline really isn’t the most helpful mindset because it’s not an event, it’s a full-on process, right?

It’s a constant thing that we need to be mindful of in our businesses, not just you know, heading into tax day, but sort of throughout the year.

14:19 Brooke Weitzer

Just because you do get a notice from the IRS or a state taxing authority doesn’t mean that what they’re sending you is correct. So you know that was the first question of how do we avoid the notices? Do we avoid the penalties and interest?

And I will say, hey, you might still you might do everything correct and you might still get a notice. And that’s okay. We get them all the time. You just need to send that notice to your tax, you know, advisor and then we can look to say is this correct and then we can respond to that.

14:44 Matt Cranney

I’m so glad you came back in with that group because I think, there’s still a part of it where, people want to do the right thing. You know, people don’t like, you know, getting a letter from the principal, right or getting, you know, called in the principal’s office or whatever it feels like when you get that sort of official looking letter through the mail. And I love your sort of call to, hey, this is just something where when you have an active partnership with your tax advisor, that it’s just a step in the process that needs to be sort of verified and then, you know, recommended next actions taken and your advisor’s gonna be the best one position to help.

One of the statements that I love a lot is sort of an ounce of prevention can be the pound of cure, right? You sort of called to that a little bit today in terms of talking about the tax not as a season, but as a process. And I’m curious though, what advice would you have for audience listen today on how people can best stay organized and prepared throughout the whole year to sort of make tax season? Whether that’s, you know, original deadline, extended deadline. But to make that less stressful and to really lean into that sort of process mindset versus event.

15:58 Brooke Weitzer

I would say that you’re just making sure that you’re keeping your books and records up to date. So a lot of small businesses don’t really keep up with their financial state statements on a monthly basis.

To help you facilitate that, you would want to have a separate checking. And if you have a separate credit card that feeds into that checking account in which you can pay your expenses and earn your business miles and your rewards and all that kind of stuff.

You really want to make sure that you’re linking your credit card to that checking account, and then you have basically all your income and your expenses running through that one credit card or that one checking account. And by keeping your activity within, you know your debit card or your credit card, you can actually be making your business decisions throughout the year.

You’re like I’m at Home Depot. I need this for my business, so I’m using my business card. when if you don’t have that and you have to go back through your personal checking account or your personal credit card, you had to say oh well, I went to Home Depot back in June I need to make sure that I have my office supplies that are there and accounted for.

If you take the headache out of building your financials at the end of the year and really and just incorporate all the activity into those structured accounts, it helps you say okay. I can go back and I know that I’ve got all my receipts because I made that business decision at the checking counter, when I checked out.

17:20 Matt Cranney

Is there anything Brooke just from maybe as people think about. OK, I’m engaging with my tax advisor. We’re expecting our tax advisors to hold up the definition of partner. How do we do that as people that are working with you like, what are some of the things when you work with somebody who like, great. One, you said, obviously, stay organized, and that’s great. Is there anything else that defines like a really great partner on the client side?

17:44 Brooke Weitzer

Yeah, I would say, you know, be honest about what you’re spending those expenses for too, because a lot of time on the personal side, you’re running through personal items and that might not be a business expense since.

So you know, we can tell you the gray area and we can tell you the risk associated with those gray areas. And saying, you know this from a business perspective doesn’t really qualify for to be an ordinary and regular business expense. Or we can say, you know, you got a truck and we need to understand what your business use percentage is out of that.

So being honest about that meals, entertainment. So meals has a different deductibility than entertainment does, where that’s non deductible. Understanding if you go out and you do a charitable contribution in the business world, that might not be a true charitable contribution. That might be advertising to you.

So having those discussions around us where you, if you have a general understanding of deductibility and what you do in your business and how you want to bring out yourself to the community. We can then partner with you to set up your accounts correctly when you’re doing your financial statement and then say, hey, you know, this is entertainment that’s not deductible. But if you look at it this way and you do it a certain different way than this portion of it could be deductible. The meals that you have, the drinks that you have associated with that, those little nuances that you know, just be honest. Tell us what you’re doing, tell us your long game. And then we can, like you said, partnership to maximize those tax amounts.

19:13 Matt Cranney

Yeah, and I love Brooke how our conversation instead of it feels all very connected. Because you know, when we go back to what we talked about earlier in our conversation, it was how can how can we talk proactively about the business so that your tax advisor knows about your business and so rather than waiting to tax season to say, here’s how we think about our charitable contribution strategy or here’s how we think of our client entertainment having that conversation with your advisor beforehand so that when it comes to the season where we’re looking at like, hey, what are we looking at here and what was the.

There’s already an inbuilt knowledge from the advisor side to go like hey, so when we talked about this at the start of the year you told us you were going to think about it that way. It play out that. Oh, it did great. OK, that’s. Great. That’s the kind of thing that comes from. I’m a big as people who listen to podcast I’m a big Brene Brown fan, and she talks always a lot of time about buttons in the jar. And it feels like what, you know, we’re sort of capturing here, Brooke is the idea of how can we have between the tax advisor and the small business. You know that’s getting ready to pick an advisor, be a part of an advisor. How do you continue to put buttons in the jar together?

Last question I promised before we’re headed to sort of the close and you know a true statement for us in 2025 as it relates to probably life in general, but certainly tax code is that things are infinitely more complicated today than maybe they’ve ever have been. Maybe that’s a recency thing and just in our minds and people 100 years ago be like, you have no idea. But in general, like things are very complicated now in in this day and age. And so as we get ready to close out this sort of part. Our conversation I’m hoping Booke that you can maybe get really, really practical for our small and growing business audience on what sort of top three, top five things they should be thinking about as they think about their tax advisor and their tax work in 2025.

21:04 Brooke Weitzer

Yeah, I would agree with you. Things are significantly more complicated now than they have been previously, and it’s due to constant changes. Constant changes in tax law. Constant changes administration, inflation, businesses, tariffs, you name it. It all ties together these days. And so, you have to really take a holistic approach to that. And it can’t just be in a vacuum, especially when you’re running a small business.

We know that there’s a change in. There’s a change in the government and there will be tax law changes in my mind in 2025. The way that you incorporate them into your business is you’ve got to be ready to be nimble, to take action on when those tax laws are going happen.

Everybody has a crystal ball that’s different and we can’t tell what’s going to be happening in the future. But you just go in with the mindset is there will be tax law changes in 2025 even if they make those tax law changes at the end of 25, they could make those retroactively until January 1, 2025.

So you don’t even know what you’re going to need to do for your tax until the end of the year. So the thing that I would just really press upon you is you have to keep your financials up to date. You have to keep everything ready so that when these changes are incorporated we can look to see what’s going to apply to you.

There’s different levers in which we can pull that we can do that once we know what’s going to be happening. Keep your records up to date, especially in 2025. Be ready for those tax law changes. And just be ready when items come to you and be ready to have those conversations. Because like I said, we might even have to go back and change 2024.

22:50 Matt Cranney

You’re sort of calling us to control we can control. You know we can’t control what the government is going to do from a tax perspective. That is now, at this point outside out with our control. And so what we can control is keeping immaculate records. What we can control is building a great relationship with our tax advisor. So that, if something out with our control happens, ie: new tax code, a different, you know, tax increase, tax, decrease, whatever comes. To your point, we are ready and able to respond in a nimble fashion because we are prepared.

23:27 Brooke Weitzer

Right. And I would say, you know, the big things, like you said, if you want to have ready, and at your disposal of things that you know that you can incorporate into 2024. Make sure you’re using the qualified business income deduction. If you’re a business. Look into that. Iif you’re a business, look into the past through entity election for Wisconsin, or if you’re in a different state, make sure you’re looking at the little things that you know. While we don’t know that they’re going away, they could possibly go away, so make sure your maximizing those types of things.

Depreciation might be a big one that may or may not change the. Research and development credit. So these are just little things, you know, keep in the back of your mind that if you don’t know what they are, go ask your advisor.

24:10 Matt Cranney

Yeah. Well, and again, that’s a great place I think to finish this part of the conversation, Brooke, which is, if you’re listening today. And you’re evaluating in your mind, man, I I’m so glad I have that kind of relationship with an advisor. Good. Great. We’re so excited that you do and we encourage you to maybe lean deeper in if you’re somebody that’s listening today and you’re. I don’t have that kind of relationship with my advisor. Well, it’s time to get busy building that relationship, and leaning into some of the things that you know, Brooke has shared her wisdom with Today. That one nonnegotiable is having a ton of buttons in a jar with a great tax advisor that you trust, and really enjoy working with.

OK, Brooke, thank you so much for sharing your wisdom and guidance with us on all things tax related so now, we’re going to pivot to our fastest break set of questions, as we always do to close out our conversation, give our audience a chance to get to know you. A little bit better. And so I’m going to shoot you a bunch of rapid fire questions and we’re just looking for a quick off the top response. That OK.

25:13 Brooke Weitzer

Yes, let’s do it.

25:15 Matt Cranney

Alright, perfect. I’m assuming it’s not the most recent tax code, but favorite book that you’ve read in the 12 months.

25:22 Brooke Weitzer

It’s funny that you said Brené Brown because I listed dare to lead by Brené Brown.All about staying curious, asking questions and having those difficult conversations.

25:31 Matt Cranney

Love that complete the sentence for you. Leadership is.

25:36 Brooke Weitzer

Building up those around you.

25:38 Matt Cranney

The most impactful coaching advice that you’ve ever received.

00:25:41 Brooke Weitzer

Be yourself and be open to feedback.

25:45 Matt Cranney

Your favorite podcast that you would recommend to our audience?

25:48 Brooke Weitzer

Morning Brew Daily is just a 30-minute talk show on the latest business economy and it just has some random funny tidbits in there.

25:56 Matt Cranney

They are so funny. I get I subscribe to the newsletter. They’re incredible writers and content creators that make the news fun to engage with. So definitely check out morning brew. OK? Can’t live without it app on your phone.

26:10 Brooke Weitzer

My Kindle app it’s, you know, I like to read a lot of books, so be able to reading them anywhere. As a busy mom is helpful.

26:17 Matt Cranney

I love. Last thing you did that truly scared you?

26:19 Brooke Weitzer

Carried and delivered Modi twins. So is a high risk pregnancy with a lot of risk for NICU time, and so we’re past that. They’re happy and healthy. And in the 90 percentile for health and weight. But it was scary.

00:26:34 Matt Cranney

Last question, if you have to give a Ted talk. What would be the title?

26:38 Brooke Weitzer

The power of women in tax.

26:41  Matt Cranney

I love that. I love that. As I said, I would at least one viewer. And my mom.

26:48 Brooke Weitzer

I can’t wait to meet your mom sometime.

26:50 Matt Cranney

Yeah, yeah, she’ll be here soon. So that’s the end of our fastest. And so before we wrap up, I’m hoping you can share with people how they can find out more about you about Baker Tilly and how maybe what the best way is. To begin a conversation with Baker Tilly about potentially becoming that advisor.

27:06 Brooke Weitzer

Yep. So you can find me on. I have an unusual last name which makes me easy to search for. So it’s Weitzer. W-E-I-T-Z-E-R, and Brooke is not that common either, B-R-O-O-K-E. Definitely reach out to me on LinkedIn. Also you can find me on Baker Tilly’s website I have a whole bio on there.

27:26 Matt Cranney

Thank you so much for being willing to join us today on Fast Break and sharing your insights, thoughts and push for us to think very differently about Our tax advisor and the tax process in general, this is An incredibly valuable and important and meaningful conversation, and I know our audience is going to really appreciate it. Thank you so much for being with us.

27:50 Brooke Weitzer

Thanks for having me. I appreciate it.

This has been Fast Break brought to you by M3 Elevate. I’m your host, Matt Cranney.  Thank you for joining me.

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