389: Insights into Tax Planning and Business Growth- with Eugene Marshall

[00:00:22] Lori Highby: Hey everybody, Lori Highby here. Welcome to the Social Capital Podcast. Our show notes are found at socialcapitalpodcast. com. To you, the listener, I want you to know that I appreciate you and I'm thrilled to have you here for another episode. If there's ever anything that I can do to support you, please reach out.

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The topic of relationships ties closely with marketing. Oftentimes I'm bringing on guests that have a strong marketing background. Today's guest is Eugene Marshall. Eugene is the founder and CEO of Magnolia Tax Services. He's an enrolled agent. Eugene is federally authorized to represent taxpayers before the IRS, and like CPAs and attorneys, have unlimited representation rights.

He Specializes in advanced tax strategies to reduce his client's tax liability through effective tax planning. Eugene has several years of tax experience, including preparing taxes for individuals and small businesses. Eugene is also an avid real estate investor. He owns a real estate investing company that acquires multifamily properties within the inner city of Chicago and has recently expanded to the Milwaukee market.

He believes owning real estate and having a small business is the cornerstone of building wealth. Eugene, welcome to the show.

[00:02:27] Eugene Marshall: Yes. Happy to be here. Very excited to chat with you and to ultimately give the listeners a good episode.

[00:02:32] Lori Highby: 100%. I'm excited as well. Taxes, not my favorite topic, I'll be honest, but it's unfortunately something that we all have to deal with, right?

[00:02:43] Eugene Marshall: There you go. There's a saying that goes, two things for certain, that's death and taxes. So things we should avoid.

[00:02:49] Lori Highby: The real estate investing, now that's something that's a hot conversation, but we can save that for another time.

[00:02:55] Eugene Marshall: Yeah, that's a nice, good cash flow hobby of mine.

[00:02:59] Lori Highby: Yeah, I'm just starting to dabble in that area. And there's a lot to learn, that's for sure. But I, you have the added benefit of knowing all the tax strategies to really lean into with that.

[00:03:09] Eugene Marshall: Absolutely.

[00:03:10] Lori Highby: That being said, let's talk about your firm. So what sets Magnolia Tax Services apart from other tax firms?

[00:03:16] Eugene Marshall: That's a great question.

Magnolia Tax Services is a tax advisory practice that ultimately specializes in tax planning, of course, tax preparation, tax debt resolution for individuals or small businesses that need assistance with solving a tax problem, and accounting and bookkeeping as well. What separates us From the average tax practices, we're actively meeting with our clients periodically throughout the year and the majority of our client book is all small businesses.

I want to say maybe 90 to 95 percent is all small businesses. We do have some individuals that don't own a business, but have the desire to pick up some rental properties. We do bring them on as clients.

And we also assist and consult them on how to analyze deals, source those deals as well as get the capital to fund those deals, and it creates an opportunity for us to also educate our clients on how to be strategic in markets like today, where the interest rates are are high well, higher than they have been.

Fortunately, we're starting to see things climb down a bit, but we do introduce other topics such as seller financing, subject to contract with the seller, wrap around mortgages, all these other creative ways to acquire properties that could ultimately benefit our clients tax position. So it separates us apart in short, is that we are actively looking at our clients financial position, and coming up with strategies to ultimately assist them with minimizing their tax bill.

And this gives us the opportunities for that business owner to reinvest those savings either back into the business, back into themselves or personal professional development and or into their future.

[00:04:58] Lori Highby: I think there's so much opportunity when it's planned out and done right for significant growth, as opposed to just, you know, dealing with what's in front of you today and then being more reactive as opposed to proactive.

[00:05:11] Eugene Marshall: Absolutely.

[00:05:12] Lori Highby: So what's the difference between tax planning versus tax preparation?

[00:05:17] Eugene Marshall: That's the million dollar question. So here, here's what happens. Most people, they don't even realize or understand or know that tax planning actually does exist. So here's what happens. Most people, The average taxpayer, they do not start looking for a new tax strategist or a new accountant until tax filing season, January, February, March. And as they're sourcing for this new person, they expect us to ultimately be able to wave a magic wand and get rid of any tax liability that they may have exposure to. Well, unfortunately it doesn't work like that. Tax preparation is nothing more, nothing less but a reflection of what you did in the prior year recorded on your tax return. So we're a bit limited to what we can do. Now, of course, there are some opportunities where we may say, Oh, well, you can still contribute to your, HSA account if you haven't filed taxes yet and we're not exceeding the tax filing deadline and filing an extension.

So there are some other last minute things that we can do, but for the most part, we're limited. And this is where tax planning, tax advisory really shows itself because this gives us the opportunity to meet with a client every quarter at minimum. And so if we're meeting with a client in Q1, Q2 Q3 Q4 and they're telling us giving us updates on how much revenue was coming into the business, how the business is performing. And of course, if we have access to their books, we should be able to see everything there anyways. But what this does is it gives us the ability to be able to say, Hey, Eugene, based on the amount of a net profit you have right now, your estimated tax bill is 30, 000 or X amount, whatever that dollar figure is. And it gives us the ability and the opportunity to put a plan in place that allows us to minimize their tax bill. So we consider tax planning proactive and tax preparation more so reactive.

[00:07:23] Lori Highby: Yeah, that definitely, definitely makes sense, and I've definitely uh, learned some of that the hard way. That, you know, there's only so much that you can do when it comes time to, preparing your taxes to try to minimize what you're paying out. And it's all about being proactive, a hundred percent.

[00:07:42] Eugene Marshall: Absolutely. Especially if you're a small business. So our definition of small businesses, any small businesses generating between 50, 000 to 4 million in gross sales, gross revenue. That's what we consider a small business. One of the easiest ways for small business to stay small is to have too many expenses.

And your taxes is another expense that we don't necessarily sometimes plan for. And so if we understand that what kills small businesses the most is the amount of expenditures that they're exposed to and also the lack of capital to keep the business operations going, then it's important that we do allocate a percentage of the income that the business is generating into saving money as well.

[00:08:27] Lori Highby: 100%. So in your bio that I read you're referred to as an enrolled agent. And honestly, I've never heard of that before. And usually when I'm talking with anyone that's in the tax space or the accounting financial space, they're deemed a CPA or certified public accountant. Can you explain to our listeners and to me what the difference is between an enrolled agent and a certified public accountant?

[00:08:52] Eugene Marshall: Absolutely. So when we look at the tax space, the tax industry as a whole, there's four types of people. You have your tax preparers that do not have to be licensed at all. This could be someone that just understands how to file taxes using a particular software. Don't need a license, do not need a degree, just need to be able to file taxes.

And then we have tax attorneys. And then we have certified public accounts. And then after certified public accounts, we have folks like myself, which are enrolled agents. And so the primary difference between an enrolled agent and a certified public accountant is our specialty is tax. And we get our designation directly from the department of treasury, which houses the Internal Revenue Service. Certified public accountants that get their designation, their license from state boards.

And we actually partner with a ton of certified public accountants because they don't have an interest in tax. And some of them don't know tax. And many of them, their focus is on the accounting portion. And a lot of folks stay co associate accounting with taxes when accounting is nothing more, nothing less, but understanding and being able to read and produce financial statements.

P and L's, balance sheets, cashflow projections, not more so taxes. Now there are a ton of CPAs, of course, that do get a master in tax or do get a focus in tax, but for us, that's our specialty. We're solely designated here to niche down in the tax space.

[00:10:32] Lori Highby: Love that. Yeah, it's interesting as a marketer, I think a lot of people just say, oh, you're in marketing. And I feel like that happens in your industry as well. Like, oh, you're in accounting, you can do all the things. You know, bookkeeping, taxes, you know, financial. But the reality is, I'd say most of people in our space, they can either go wide or they can go deep and they can have very specific strengths and zones of geniuses and expertise. Which it sounds like that's the path that you pursued, which is amazing, but it's really making sure that people understand that that's the right path to pursue if you have a specific need, find the expert in that space. That makes a lot of sense.

[00:11:11] Eugene Marshall: Absolutely. And a lot of folks don't know this, but if you've been audited by the IRS, nine times out of 10, that revenue officer is going to be an inroad agent.

[00:11:21] Lori Highby: Yeah. Did not know that.

[00:11:22] Eugene Marshall: We want to stay as far away from an audit as possible.

[00:11:26] Lori Highby: Yeah. I had that experience once early on, like five years into running my business. I had that happened and then, and you know, it happens to all businesses. At some point, I feel like if you are a small business owner, you're gonna get audited at some point, right?

[00:11:42] Eugene Marshall: It's possible. And a lot of folks are afraid of audits, but as long as we have the supporting documentation to back up anything, some of these audits are very simple and easy to navigate through.

[00:11:52] Lori Highby: I agree. Keeping your information organized makes it a lot easier to do.

Alright, so I'm going to switch to some more fun conversation topics now. If you could go back to your 20 year old self, Eugene, what would you tell yourself to do more of, less of, or differently with regards to your professional career?

[00:12:09] Eugene Marshall: I would have gotten a mentor much sooner.

[00:12:11] Lori Highby: Oh, that's my answer. Whenever someone throws that back at me, talk about that.

[00:12:16] Eugene Marshall: I would have gotten a mentor much sooner or actually, how about this? I'll put a small spin to it. I would have listened to my mentor more.

[00:12:26] Lori Highby: Sure.

[00:12:27] Eugene Marshall: Because we acquire mentors over time and some folks be like, Hey, how do I get a mentor?

Do I got to ask them to be my mentor? Some people by default just become mentors naturally. And I look at mentors as my own personal board of directors that, I can go to for counsel, whether it's personal, whether it's business, but these are the people that I've selected to help coach me, advise me in certain aspects of my life, because they either have the experience in this space, or they know somebody that does, and I trust their judgment.

And of course, I've done my due diligence. And so when you're in your early twenties and I'll speak for myself. I was a know-it-all right. I was a know-it-all knew everything. There wasn't much you can tell me and I listened to maybe 50% mm-Hmm. of the advice, 50% of the information and the other 50% I did it my own way. And me doing things my own way, costing me a lot of time.

[00:13:24] Lori Highby: Yep.

[00:13:25] Eugene Marshall: It costing me a lot of money. And sometimes it costs me some sleep.

[00:13:29] Lori Highby: Yup.

[00:13:29] Eugene Marshall: If there is a system that works, let's not reinvent the wheel and how about we just duplicate the system that's already there.

If there's a proven system that works, duplicate that system. You may need to twist it up a little bit and put your own spin on it, but there's no need to reinvent the entire world. And I did that a lot in the very beginning. And if I can go back in time, I get a mentor and I listen to that mentor more.

[00:13:53] Lori Highby: I wholeheartedly agree with everything that you're saying. I feel like you and I have lots of things to talk about after this episode. That being said, I'm going to pass the torch to you and give you the opportunity to interview me. What's something you'd like to ask me?

[00:14:06] Eugene Marshall: What keeps you motivated to do what you're doing?

[00:14:08] Lori Highby: Oh, that's, that's a big one. I have kind of a big vision document in my home office, that's got a number of things written on it. That big picture is, you know, to live the lifestyle that I want to live with having you know, positive cashflow and minimal work. So I wanna ideally retire early, but this is why I'm dabbling in the real estates investing space a little bit. Learning that, and then really leaning into my marketing expertise to try to give value as much as possible so that eventually I can get to a state where I can be more selective on the type of work I take on and who I am providing valuable resources to.

[00:14:54] Eugene Marshall: Absolutely. Well said. So for me, I'm huge on philosophy, huge on concepts and really changed the way that I present myself personally, the way that I present myself in my practice, in my business.

Are there any philosophies on your end that you've adapted and ran with and has actually had an impact on your success? As an example I've always said that I can have more than I got because I can become more than the person that I am right now.

The second one on the business side was money follows attention, and that's one concept I really took personal as a way to generate more leads for the business, grow my practice. So I'm just curious to know if there's any concepts or philosophies on your side that you've adapted over the years.

[00:15:46] Lori Highby: Yeah, that's a really good question. I like the question a lot. The first thing that came to mind when you said that is there's this motto that I really believe in, and this is something that keeps me moving forward and taking action is do something your future self will thank you for.

So whether it's a simple thing Today that's going to have an impact tomorrow or a big thing today that's going to have an impact a year down the road, I've tried to be really intentional about my actions and how they're going to have an impact on my future self, basically.

[00:16:22] Eugene Marshall: But that's good. I like that one. Do something for your future self and thank you for. I wrote that one down.

[00:16:26] Lori Highby: Yeah. I, I remind myself that if I'm discouraged from doing something or like lacking motivation, like, Oh, I'll just do it later. Like, well, no, cause then there's heavy weight on my shoulders.

The simple example right now, you know, Frickin 20 degrees outside, but if you got to put gas in your car, you know, and it's at night, you're already driving around. You're like, Oh, I'll just do it tomorrow morning. You know, you're going to hate yourself for waiting to do it in the morning. So just do it when the car's already warm and just like that little tiny thing can have such a big impact for how you start the day the next day. So, yeah.

[00:16:59] Eugene Marshall: Very true. And that leads into another concept for me, Today, not tomorrow, right? do something your future self will thank you for. And I want to tie that back into just taxes for a second. The best deduction in my professional opinion is a deduction that you can get that will fund your future.

That's some of the best way for you to get a deduction, lower your taxable income, but at the same time fund your future as well. My favorite tax write off is education. And I was talking to a client recently and she was saying, Hey, I've been making the same amount of money every year for the last three years, and I can't really understand why. We've launched new products. We got a good client experience. I really don't know why I'm stuck. And I said, Well, when was the last time you went to a conference? When was the last time you invested in a book? When the last time you perhaps invested in a coach? And it's been three years. And sometimes we fail to realize that the size of our practices, the size of our businesses, what's in our bank account is nothing more, nothing less, but a reflection of the value that we have, or that we bring to the marketplace.

So it's important that we find opportunities, we find ways to, you know, do something now that your future self will thank you for and get a deduction in the process.

[00:18:26] Lori Highby: Yep. Love that. Eugene, do you have any final words of wisdom to leave with our listeners?

[00:18:31] Eugene Marshall: Yes. Go all in on your goals, believe in yourself, surround yourself with other like minded success seekers. I've always been a huge believer in you are what you hang around in. Expand your network.

Don't get comfortable doing what works. Sometimes it's best to try new things while you're still doing what works so that you can ultimately reach new levels. And so that would be the best piece of advice that I can give anyone is to get out there and try.

Give it all that you can. There's so many people that I've talked to over the years. They have all these ideas and they're great ideas, but they don't take the first step and actually do something. And one of my mentors told me, she said that the wealthiest place in the world is the graveyard because we take our billion dollar, million dollar ideas with us because we never had the courage to be able to act on it.

And for you that's listening out there, if you have an idea, if you have something that you passionate about, go for it. Don't be afraid of failing. Don't be afraid of people asking, Hey, what happened to that small business? That idea that you were talking about?

It's okay. Because there's a lot of people out there that didn't have the courage to do anything to begin with, but you did. Whether it was success or failure, you did. And even if you did fail, you still came out winning because you learned something in the process that you can apply to your next venture.

So that would be what I'd end with.

[00:19:56] Lori Highby: I like that. I've always said shoot for the moon so that at least you can get halfway there and you've got some kind of momentum, you're learning lessons, you're making progress at some point, right?

[00:20:09] Eugene Marshall: Yep. That's true.

[00:20:10] Lori Highby: If anyone was interested in getting in contact with you, what's the best way they can reach you?

[00:20:16] Eugene Marshall: Yes. The best way to reach me is you can call directly into the office 414 285 2446. And or you can schedule some time directly for us to chat by visiting our website, magnolia tax services. com.

[00:20:32] Lori Highby: Awesome. We'll include all that information in our show notes. Thank you so much for being on the show today.

[00:20:37] Eugene Marshall: Yeah. Thank you for having me. This was great.

[00:20:39] Lori Highby: Absolutely. A huge thank you to Eugene for taking the time to connect with us. If you have any burning marketing or relationship questions, reach out. I'd love to answer them on the show. As mentioned before, let's connect on LinkedIn. I'm looking forward to hearing from you and I hope you enjoyed today's show.

I want you to go out there and get noticed.