As the dust settles after a challenging tax season, accountants, CPAs, and financial advisors are often left wondering how they can better serve their clients while expanding their practice.
Mark Kohler, partner at KKOS Lawyers, thinks the best opportunity on the table for scaling a firm is in advisory, and the way to win advisory clients, he said, is to gain knowledge that “wows” them.
“[Clients] don’t want the accountant who was up in the band [in high school],” Kohler said during his presentation at GrowCon 2024. “They want the accountant under the bleachers who smoked pot!”
Kohler presented strategies for thinking outside the box as an advisor to the hundreds of accounting professionals in attendance at GrowCon 2024, held on May 6 at the SouthBank hotel in Jacksonville, Florida.
The presentation covered 5 key strategies for tax advisors, with Kohler noting that one of the biggest challenges for advisors is that the strategies clients need aren’t taught in traditional college programs, from the undergrad up to law school.
Kohler was one of 13 industry insiders who shared their insights in presentations at the conference.
If you weren’t able to join us in Florida, then you’re in luck. Today, we’ll look at the highlights from Kohler’s presentation. If you’d like to hear his presentation, as well the other 12 presenters from GrowCon 2024, in full, you can access the all of presentations from both days of GrowCon here.
Let’s dive into Kohler’s strategies and other highlights from his presentation:
1. Embrace the Trifecta Approach: A Holistic Financial Strategy
Kohler noted that for firms that want to scale, the days of basic number crunching are gone.
Today’s financial landscape demands a more integrated approach, combining legal and tax advice to build lasting client relationships and unlock new business opportunities.
Kohler introduced the trifecta strategy, which emphasizes the importance of creating a seamless financial plan that encompasses all aspects of a client’s financial affairs.
This comprehensive approach not only ensures privacy and avoids probate through revocable living trusts (RLTs) but also fosters trust and loyalty with your clients.
Essentially, Kohler breaks out a client’s finances into two buckets: the assets side and the deductions side. The assets include tax free sources like Roth IRAs, HSAs, Foundations, Group 401ks, plus the after taxed assets: houses, crypto, and that everything that may be contained in an LLC.
All the assets and deductions flow down into the client’s 1040, Kohler said. This holistic framework makes it easy for the client to understand what you do, and illustrate to them how you’ll help save them money come tax season.
2. The Power of Structuring: From S Corporations to Real Estate Investments
Most of Kohler’s clients who have ordinary income are “getting killed with self-employment tax.” Some accounting professionals think that using an S-Corp is too aggressive because they need to show more payroll in the case of being audited. But the so called “risk” is so so worth it,” as it could provide tens of thousands of dollars in savings, he said.
If your clients are earning over $50,000 annually, it’s time to introduce them to the benefits of operating as an S Corporation. Using an S-Corp allows your client to take 50% of their earnings and report it as their payroll, and they can continue to report that payroll figure as their earnings grow. Kohler recommends flatlining the payroll total at 10% to 15% and putting the rest of the earnings back into the business.
“If your client is doing numbers, find something to save them and they’ll LOVE you,” Kohler said.
This structure, along with smart payroll strategies, can significantly reduce self-employment taxes. Kohler dove into a framework involving K1s, Schedule E, and Schedule C, highlighting the potential of multiple LLCs for asset protection.
Kohler also highlighted the underestimated tax-saving potential of real estate investments, encouraging advisors to guide clients toward wealth-building opportunities beyond traditional 401(k) contributions.
3. Maximize Tax Savings with Real Estate Losses
When clients need to save on taxes, accounting professionals need a long term strategy, Kohler said. The 401k is a start, but real estate is a major opportunity for savings.
The best rental tenant you can have is yourself, and Kohler recommends that every accountant own the building where they practice.
You can then rent that space to your S-Corp, and if you have continuity of ownership between the LLC that is renting and owning, you can take 100% of the depreciation.
Kohler also highlighted the value of short term rentals because you can write off the depreciation as long as you put 100 hours of use into the property.
“You need to be locked in on this element,” Kohler said. “You need to be able to answer it immediately because dentists, and everyone else, need to have a place to operate.”
4. Empower Through Education: The Main Street Certified Tax Pro Advisor Program
Education is key to transformation, and wives, kids and teenagers can teach business and financial principles that you can then write off as payments to family.
Kohler also recommends having your children serve as board members of the businesses you own so they can pay for college using that salary, and you can prepare a business continuation plan for them to take over the business when they’re ready.
5. Innovate with Self-Directed Retirement Accounts and Unconventional Investments
In a world where financial landscapes are constantly evolving, staying ahead means exploring unconventional investment avenues. From rental properties to crypto mining, self-directed retirement accounts like Roth IRAs and solo 401(k)s offer higher returns than traditional methods.
Your retirement funds can be invested into anything, Kohler said. That includes gold, silver, small businesses and the like.
Kohler has invested the funds in his Roth IRA in cows in Idaho and his HSA in a small real estate property in Chicago. If you, or your clients, form an LLC, those funds can be invested.
Kohler explores these options more fully in his presentation, providing insights into the projected $2 billion in client funds managed by Directed IRA, a project of his that invests retirement money somewhere other than Wall Street.
Conclusion: Redefine Your Role as an Advisor
Kohler’s presentation is a call to action for accountants and financial advisors to transform their practice through innovative strategies. By using out of the box strategies for finding tax savings, prospective clients will be desperate to work with you. Join us in redefining your role as an advisor, where the emphasis is on providing value, fostering growth, and nurturing long-term relationships.
Are you ready to take your practice to the next level? Dive into these strategies and watch your client relationships—and your business—flourish. Check out Kohler’s full presentation here, and if you’re ready to elevate your skills and add advisory to your repertoire, call 435-344-2060, or schedule a consultation online here.