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We're chatting about the people, places, events, and flavors that make Johnson City, Tennessee a lovely place to live. An interview show hosted by Colin Johnson.
Proud member of the Maypop Media family of podcasts.
0:00:00 - (Colin Johnson): This is the home of Marissa and Mitch McGarry, and they love it here and it's awesome. And I'm your host, Colin Johnson, and I sell real estate with the Colin and Carla group and Keller Williams Realty. And I'm excited for you guys. Today we have a dude on the podcast that could maybe, just maybe save you a bunch of money. Welcome to the podcast. Thomas Dehart. How are you?
0:00:21 - (Thomas DeHart): I'm doing well. Colin, how are you?
0:00:23 - (Colin Johnson): I'm great. Thanks for coming on.
0:00:25 - (Thomas DeHart): Thanks so much.
0:00:26 - (Colin Johnson): How many podcasts have you done in your life?
0:00:27 - (Thomas DeHart): This is number one, if you don't count recording ad libs on the phone with the kids in the car.
0:00:36 - (Colin Johnson): That sounds like fun.
0:00:37 - (Thomas DeHart): It is fun.
0:00:38 - (Colin Johnson): We should jump into that. But we're going to pause first thing. Johnson City Living podcast. What most do you love about Johnson City in our area?
0:00:49 - (Thomas DeHart): It's a great question. I think it would have to be the people. Obviously, my soon to be wife lives here and a lot of family and friends and friends that are so close that they're hard to distinguish from family. So once you lay down roots here, it's really hard to get away, I think.
0:01:15 - (Colin Johnson): Yeah. Who does this soon to be Miss Dehart?
0:01:19 - (Thomas DeHart): It is Miss Shawna Grag. Shawna Gragg is the program manager of the Balladeer children's program, ballad Health.
0:01:28 - (Colin Johnson): That's cool.
0:01:28 - (Thomas DeHart): So, yeah, she's doing great work over there, helping ballad families have good, solid family connection time, and I think it's helping retention and recruitment. So it's part of the ongoing effort to improve local health care. And I think she's playing a good part in that.
0:01:48 - (Colin Johnson): That's cool. And you're getting married in 32 days.
0:01:50 - (Thomas DeHart): 32.
0:01:51 - (Colin Johnson): I believe by the time this comes out, it's going to be less. Are you ready?
0:01:54 - (Thomas DeHart): I'm ready. I'm ready.
0:01:56 - (Colin Johnson): You're so ready.
0:01:57 - (Thomas DeHart): We've had it planned for a long time. It's time to just do the plan.
0:02:03 - (Colin Johnson): Did you plan it out cause you're an accountant?
0:02:05 - (Thomas DeHart): No, honestly, Shawna has done, I would say, at least 70% of the planning. I think that's pretty typical.
0:02:15 - (Colin Johnson): That's great.
0:02:16 - (Thomas DeHart): The guy you want to be there, involve, supportive, but it's also know when to just say yes. Yes, dear.
0:02:24 - (Colin Johnson): Right. Know your role.
0:02:27 - (Thomas DeHart): Right. So, yeah, she's. And that's, that's in her DNA, planning stuff out.
0:02:33 - (Colin Johnson): I like it.
0:02:33 - (Thomas DeHart): Execute.
0:02:34 - (Colin Johnson): Yeah. My wife is a planner. Carly can get down to the. She loves to plan.
0:02:37 - (Thomas DeHart): Yeah.
0:02:38 - (Colin Johnson): And I don't.
0:02:39 - (Thomas DeHart): You're free spirited.
0:02:40 - (Colin Johnson): I'm pretty free spirited.
0:02:41 - (Thomas DeHart): That's a good way to be.
0:02:43 - (Colin Johnson): I like to plan some, but I'm more fly by the seat of your pants. Kind of like this podcast.
0:02:48 - (Thomas DeHart): Yeah.
0:02:48 - (Colin Johnson): Knows what we're going to talk about.
0:02:49 - (Thomas DeHart): That's right.
0:02:50 - (Colin Johnson): So insight CFO is the name of your company?
0:02:53 - (Thomas DeHart): That's right.
0:02:53 - (Colin Johnson): How old is this establishment?
0:02:56 - (Thomas DeHart): So the unofficial birthday was February 22, 2022.
0:03:04 - (Colin Johnson): Ooh. Okay.
0:03:05 - (Thomas DeHart): Just had to do it that day.
0:03:06 - (Colin Johnson): 222 22.
0:03:08 - (Thomas DeHart): Exactly. So I wrote some letters just to try and get some interest going. Didn't really go anywhere, but I always just say, that's the day because of the awesome date.
0:03:20 - (Colin Johnson): I like it. Yeah.
0:03:22 - (Thomas DeHart): And I did do something.
0:03:23 - (Colin Johnson): There you go. So we're two years in, right? What were you doing before this?
0:03:28 - (Thomas DeHart): So that's a part of the story, I guess.
0:03:32 - (Colin Johnson): All right, let's. We're jumping ahead. Let's talk about the origin story. Where were you born?
0:03:36 - (Thomas DeHart): And so, Boone, North Carolina.
0:03:38 - (Colin Johnson): Nice. Right over the hill. Are you a professional snowboarder or skier?
0:03:42 - (Thomas DeHart): No. It is cool. You do ski trips in school over there? That's a normal part of fourth grade.
0:03:49 - (Colin Johnson): Yeah. We're going to go skiing today.
0:03:50 - (Thomas DeHart): That's all right.
0:03:51 - (Colin Johnson): Gotcha.
0:03:52 - (Thomas DeHart): That was cool. I loved it, but now it never became, like a regular thing for me.
0:03:58 - (Colin Johnson): Gotcha. We got to go to the park. Rotary park was our. Hey, we're going to Rotary park.
0:04:02 - (Thomas DeHart): Yeah, my son got to do that last year.
0:04:04 - (Colin Johnson): You guys get to go to ski. That was my bad. So you grew up in Boone?
0:04:11 - (Thomas DeHart): That's right.
0:04:11 - (Colin Johnson): And then how did you make it in across the border to Tennessee?
0:04:17 - (Thomas DeHart): So, a close friend of mine from my home church youth group, she was a senior when I was a freshman in high school. She came over to EtsU. They do a great service for North Carolina kids who are on those border counties. They let them in for in state tuition.
0:04:38 - (Colin Johnson): Gotcha.
0:04:39 - (Thomas DeHart): It's a great way to get away from home without going all the way. Those mountains make it seem a lot further than it really is.
0:04:49 - (Colin Johnson): I said Appi State the other day, my wife corrected me. She said, people don't say Appi State, they say app state.
0:04:55 - (Thomas DeHart): Now, I never heard that term until I came here, and then everybody referred.
0:05:00 - (Colin Johnson): To it that way as app state.
0:05:01 - (Thomas DeHart): As Appy State.
0:05:02 - (Colin Johnson): Appy State. Here, I gotcha. In Boone, they call it App State.
0:05:07 - (Thomas DeHart): Yeah.
0:05:07 - (Colin Johnson): Gotcha. Appalachian's a lot to say. That's a mouthful.
0:05:10 - (Thomas DeHart): It is. It's a mouthful, yeah. But it. You gotta get.
0:05:14 - (Colin Johnson): And that was too close to home. So you're like, I'm. I'm branching out. I'm going to Johnson City.
0:05:18 - (Thomas DeHart): That's right. I did get a small scholarship, so that helped make the decision a little more palatable to my parents. They want me to go to.
0:05:26 - (Colin Johnson): So if you're listening and you live in a border county of Tennessee, you get to go to in state tuition and Etsu, something like that, right?
0:05:34 - (Thomas DeHart): Yeah, it. Yes, many of February and rides North Carolina and Virginia border counties.
0:05:40 - (Colin Johnson): That's cool. So when did you graduate from EtSU?
0:05:45 - (Thomas DeHart): So the first time was December of 2014.
0:05:50 - (Colin Johnson): Okay, you say this like you've graduated five times.
0:05:54 - (Thomas DeHart): No, just two.
0:05:55 - (Colin Johnson): Just two. Okay. So what did you tell me about your second degree? What was your first degree?
0:06:00 - (Thomas DeHart): First degree was philosophy. Minor in history.
0:06:04 - (Colin Johnson): Okay.
0:06:05 - (Thomas DeHart): So kind of the liberal arts route. Very thought provoking. Interesting. Not as commercially viable as it turns out.
0:06:16 - (Colin Johnson): What's your philosophy on allowing students to go to school and get degrees that aren't financially viable options?
0:06:26 - (Thomas DeHart): That's a great question. That is a great question. So.
0:06:29 - (Colin Johnson): Cause you're investing money into and being an accountant, you. You want to see a ROI return on investment, right?
0:06:36 - (Thomas DeHart): Correct. So I don't know if I could develop, like, a cogent political position on it, but a good, like, what I think I'll tell my kids when they're at that point, I'll just try and see, like, how into this thing are they, like, are they just going to school to party and have fun and maybe do a little bit of classes here and there, or are they, like, really into something? Like they are going to be the next, you name it.
0:07:09 - (Thomas DeHart): And my thoughts are, if they're not super into something, maybe go to, like, a trade school, you know, like a northeast state, get a good job, you know, something that can make.
0:07:23 - (Colin Johnson): Or a couple of years for free and see what they like there, maybe. And maybe they do want to do electrical or plumbing or carpentry or.
0:07:30 - (Thomas DeHart): Exactly.
0:07:31 - (Colin Johnson): And those guys now are anybody. I'm not being sexist. People graduating in those trades are killing it. Yeah.
0:07:39 - (Thomas DeHart): I was talking to the lady at great clips giving me a haircut yesterday, and she said that she went to cosmetology school for free in green bull right out of high school. And, you know, it's probably making 20 plus dollars an hour cutting hair. That's pretty good, you know, not bad, not bad. One years old. Yeah, it's better than I was doing.
0:08:01 - (Colin Johnson): Yeah. And your hair looks great, by the way. Did a good job. Did a good job. Yeah. I think it's interesting that the, like you were saying, it's kind of, you got to make a decision there.
0:08:11 - (Thomas DeHart): Well, you know, and let the kid kind of guide your advice, I think.
0:08:16 - (Colin Johnson): Do you feel like the guidance counselor guided you well with the philosophy and history? What were you thinking of doing before you said, hey, I'm gonna go into accounting?
0:08:25 - (Thomas DeHart): I think where my thoughts were at the time was maybe going on to do law or something post, you know, post bachelor degree education, not maybe teach or something. Yeah, I think philosophy would have been a great bachelor's degree for law school. So I don't think it was completely out of touch with, like, a sound plan. I just didn't go down that road.
0:08:55 - (Colin Johnson): Yeah. Gotcha. And then my next question. And you can say, pass if you want, but how involved were you, like, with your church and, like, having people help you decide and praying over you and that kind of thing, like, for your cause? I've got one. Both of them. We've got two in school now, but one of them just started Etsu, and we're like, hey, just tell the Lord. Ask the Lord to direct you in what you're going to do, and then maybe that's where you're at now, when.
0:09:23 - (Thomas DeHart): He took you where you are. I love that question. I think at that time in my life, I was very spiritually immature and probably did very little thinking in that direction. Same, I think I had amazing mentors, parents, grandparents who were praying over me. And so I think that saw me through, but same, it wasn't. I wasn't the source of my own success at that point.
0:09:57 - (Colin Johnson): All right, you rewind. You get to talk to your 18 year old Thomas self. What would you tell 18 year old Thomas?
0:10:04 - (Thomas DeHart): That's a great question. Humility. I don't know. Maybe just a single word. Just adopt a posture of humility, because life's going to throw a lot at you, and every time you approach something with pride, you're going to fail.
0:10:27 - (Colin Johnson): Agreed. It's a downfall of man for a reason. Yeah, for sure. Okay, so you said, hey, this isn't very marketable. I'm going back to school. Gonna go deeper in the hole.
0:10:38 - (Thomas DeHart): That's right.
0:10:39 - (Colin Johnson): Let's go get our masters or bachelor's. Bachelor's in accounting.
0:10:43 - (Thomas DeHart): That's right.
0:10:44 - (Colin Johnson): Nice.
0:10:46 - (Thomas DeHart): That really was an outcome of finding out that I was gonna be a dad. Oh, congratulations. Yeah, I was 25 at the time, and it kind of just been bebopping around call center jobs. I mean, I love call center. Started at act right, $8 an hour data entry kind of work.
0:11:09 - (Colin Johnson): Got a nephew who did that, and.
0:11:10 - (Thomas DeHart): He'S working his way up, and, you know, it's a start. Right? It is what you make it. And Walmart did the CenturyLink call center here in town, and that's where I was when I found out, okay, I'm gonna be a dad. Time to kind of turn it up a notch.
0:11:30 - (Colin Johnson): Nice.
0:11:31 - (Thomas DeHart): And I'd taken principles of accounting one and two at northeast state, and just. It clicked for me, but I also clicked more with, like, entrepreneurialism. At that time, I was trying to start a business, but I knew it was time to just lock in on something secure.
0:11:47 - (Colin Johnson): Yeah, I love it. That's great. And then. So when did you graduate with your accounting degree?
0:11:53 - (Thomas DeHart): So that would have been 2019. Nice.
0:11:56 - (Colin Johnson): Okay.
0:11:56 - (Thomas DeHart): Yeah.
0:11:57 - (Colin Johnson): And then did you go to work for someone there?
0:11:58 - (Thomas DeHart): I did, yeah. So, for that, after two years of public accounting career, were at Rota Fromas.
0:12:06 - (Colin Johnson): Oh, yeah.
0:12:07 - (Thomas DeHart): Which is, I would say, one of the top three big names here in the tri cities, at least, and worked with them for a couple years.
0:12:18 - (Colin Johnson): What did you learn there?
0:12:22 - (Thomas DeHart): Rm. Yeah, that was a great first stop because they expected a lot out of staff accountants. They kind of expected you to step in and kind of manage the client account, do a lot more heavy lifting. I made a lot of phone calls to the IR's there on client behalf, was on a lot of power of attorneys for clients. I learned a lot there. And that's a pro and a con. Right. The pro is you get all that experience.
0:13:03 - (Thomas DeHart): The con is you're carrying a lot more weight on your shoulders, and when you stumble, sometimes you fall a lot harder in that kind of an environment.
0:13:14 - (Colin Johnson): Yes.
0:13:15 - (Thomas DeHart): So it was a great first stop for me, though.
0:13:18 - (Colin Johnson): That's great.
0:13:19 - (Thomas DeHart): Yeah.
0:13:20 - (Colin Johnson): When. I guess. When did you start feeling the itch to start something of your own?
0:13:26 - (Thomas DeHart): Probably before I even left RM, to be honest with you. But I wasn't there yet, financially, so I did go and work at Blackburn Childers in Seagal, here in town for three years after that. And BC's, there's a lot more, I would say, like, distribution of the workload.
0:13:51 - (Colin Johnson): Okay.
0:13:52 - (Thomas DeHart): There's a lot more structure, in a way.
0:13:57 - (Colin Johnson): Okay.
0:13:58 - (Thomas DeHart): Not to say anything negative on RM, but I think BC's just has. It's a well oiled machine over there.
0:14:04 - (Colin Johnson): I got some buddies that. Yeah, some over there, and it seems like they got it tweaked pretty well.
0:14:09 - (Thomas DeHart): They do. They do.
0:14:10 - (Colin Johnson): What would be. Yeah, sorry. Keep going. No, you're good, then. So you said, hey, I think I want to start my own thing.
0:14:18 - (Thomas DeHart): Right. And a part of the drawback for me of public accounting is that, and it doesn't necessarily have to be this way, but it's kind of like an open door policy. Like, if you're willing to come here and pay our fee, we don't really discriminate on, like, the industry you're in or exactly what type of business operation you have going on. Like figure it out and we'll get it done.
0:14:54 - (Colin Johnson): It may not be in our wheelhouse, but we'll figure it out.
0:14:57 - (Thomas DeHart): Exactly. And of course, she develops specializations over time. I think all the partners over there probably have things they're more comfortable in, but I, for me, I always felt the itch to be the best at something and to kind of just know not just a little bit about it, but to really be able to speak with confidence about whatever it is I'm working on. And that's hard to get in that traditional public accounting environment.
0:15:28 - (Thomas DeHart): But I think the critical piece of me wanting to start my own business was learning more about profit first.
0:15:41 - (Colin Johnson): I like it. I like it. So you started in 2022 and you're now a solo premiere, right. It's just you.
0:15:49 - (Thomas DeHart): That's right.
0:15:50 - (Colin Johnson): And you got to get after it and you got kids to feed and you got a new wife coming up. So you're a hustler, it sounds like.
0:15:56 - (Thomas DeHart): Well, I don't know if I'd fall into the hustler category. I am not afraid to fail.
0:16:04 - (Colin Johnson): Okay.
0:16:04 - (Thomas DeHart): I'm not afraid to, to give it a shot and to do my best.
0:16:11 - (Colin Johnson): Yeah.
0:16:12 - (Thomas DeHart): And I found, as I'm sure you probably have, too, that when we were talking about school and degrees and all that, but a lot of times you can get paid to get the education.
0:16:25 - (Colin Johnson): Yeah, for sure.
0:16:26 - (Thomas DeHart): Yeah.
0:16:27 - (Colin Johnson): Yeah. I think. And you get a lot of education on your own learning how not to do it.
0:16:33 - (Thomas DeHart): That's right.
0:16:34 - (Colin Johnson): What would be some tips for some people listening here may be thinking about they're working in the corporate world or a local firm, and they're like, I think I might want to start my own accounting business and, you know, or I may want to step out on my own and do something. What would be some tips, tricks that you would have in mind?
0:16:53 - (Thomas DeHart): Yeah. So Mike Michalowicz, the author of Prophet, first wrote another book called Fix this next.
0:17:03 - (Colin Johnson): Ah.
0:17:03 - (Thomas DeHart): And this is a book about, as an entrepreneur, you are kind of always going to be stuck on something in your business. He took this Maslovs hierarchy of needs approach, and the base level of the pyramid is really all about the generation of business. The actual sales piece of a business. I've heard Donald Miller has in his business, made simple program. He kind of refers to sales as, like, the engine.
0:17:41 - (Thomas DeHart): So I guess that's like, step one. Well, step one is to do budgeting and to know how much you need to make to keep the lights on.
0:17:51 - (Colin Johnson): There you go.
0:17:51 - (Thomas DeHart): Put food in your belly.
0:17:53 - (Colin Johnson): Worst case scenario, budget.
0:17:54 - (Thomas DeHart): That's exactly right. And so then step two is to really go out and generate business and to sell something to someone. Just identify a market and a need and to solve the need, things like accounting with enough Lyft, sell themselves. But that's not the case with everything. So, yeah, budgeting and then figuring out what it is you can be so passionate about as to go out and sell it, because if you don't believe.
0:18:31 - (Colin Johnson): In it, nobody else is going to either.
0:18:33 - (Thomas DeHart): That's right. That was my first sales job was at Centurylink. I was trying to sell Directv, but I didn't buy Directv. I did not pay for it. And I think, like, in retrospect, I don't know that DirecTV was the best product for me to sell, but I.
0:18:51 - (Colin Johnson): Should give it to you guys for a discount. So you have it and you talk about it and go, it's awesome, you.
0:18:55 - (Thomas DeHart): Know, because it's cheap on our end or nothing. And just, you know, make you lean into the product that much to make you feel like it's worth the full.
0:19:04 - (Colin Johnson): Price and wish you wanted it, too.
0:19:05 - (Thomas DeHart): That's right.
0:19:06 - (Colin Johnson): I wish it was available in my neighborhood.
0:19:08 - (Thomas DeHart): But I, you know, I don't know. I never believed in it strong enough to put my money where my mouth was back then. And I think that was a big part of my failure. You know, at that job, I think.
0:19:20 - (Colin Johnson): I'd have a hard time putting the satellite dishes on people. Hazards. I'm that guy. I'm responsible for all these ugly satellite dishes in town. You're welcome. Yeah, that'd be the hard part. Let's talk about profit first. Yeah, tell me about that concept.
0:19:36 - (Thomas DeHart): So, there's a lot to it, but the simplest version is really, it's healthy money management for business owners.
0:19:48 - (Colin Johnson): Okay.
0:19:50 - (Thomas DeHart): The idea is to stop putting 100% of your business money, or most of your business money, into a single bank account and to leverage bank accounts for different purposes. I'm sure it's probably a pretty typical thing they do at, like, higher corporations, bigger market cap companies.
0:20:15 - (Colin Johnson): But for smaller folks, like, let's say, Mitch and Collins start a widget factory, and we're cranking out 100 million widgets a year. Would be in our, let's say just gross sales are $100,000.
0:20:29 - (Thomas DeHart): Yeah.
0:20:29 - (Colin Johnson): What would, what would be? So we're getting, I guess, what would that be? 10,000 a month coming in? 8500. Something like that. Well, tell me about how we set up these accounts.
0:20:41 - (Thomas DeHart): Yeah. So the first thing, and I actually think service based is the easiest to talk about.
0:20:48 - (Colin Johnson): Okay.
0:20:49 - (Thomas DeHart): So if, if you're widget fixers.
0:20:52 - (Colin Johnson): Not widget fixers.
0:20:53 - (Thomas DeHart): Widget fixers. Perfect. Yes. So widget fixers.
0:20:57 - (Colin Johnson): Mitch, we're going on the road with a truck, fixing widgets, baby. It's gonna be good. What do you do? I fix widgets.
0:21:02 - (Thomas DeHart): That's right.
0:21:03 - (Colin Johnson): Nobody else who does that? No. You know, there's a hole in the.
0:21:06 - (Thomas DeHart): Market and in the widget.
0:21:11 - (Colin Johnson): Well played, man.
0:21:12 - (Thomas DeHart): So, at any rate, what you're gonna do is you're gonna let, you're gonna cash your checks every week fixing your widgets.
0:21:21 - (Colin Johnson): That's probably step one.
0:21:22 - (Thomas DeHart): The ideal is to let it sit there for at least a week, maybe two weeks, and that's going to go into an income bank account.
0:21:30 - (Colin Johnson): Mitch, we can't go drinking the first night. Got to put it in the bank.
0:21:34 - (Thomas DeHart): And.
0:21:34 - (Colin Johnson): Sorry.
0:21:35 - (Thomas DeHart): Bummer, no party. But wait, there's more.
0:21:40 - (Colin Johnson): Okay, great.
0:21:41 - (Thomas DeHart): After every week, or every two weeks, you take all that income money and you're going to send it to four different places, four different bank accounts like this. You got your profit account, your owner compensation account, a tax account, and then an operating expense account.
0:22:00 - (Colin Johnson): Gotcha.
0:22:01 - (Thomas DeHart): So the generic kind of formula approach is to do like 5% to profit, 50% to owner compensation, 15% to tax, and then 30% to operating expenses.
0:22:18 - (Colin Johnson): Okay.
0:22:18 - (Thomas DeHart): So you kind of run the business. You make all these widget repairs, but you're only using $30,000 of the 100,000 you make every year to do that.
0:22:31 - (Colin Johnson): Gotcha. And that's where expenses are. Plus taxes would be 45%.
0:22:37 - (Thomas DeHart): Correct.
0:22:38 - (Colin Johnson): Got it. Are you such a good accountant that I only have to pay 15% in tax? Because that sounds amazing.
0:22:44 - (Thomas DeHart): Honestly, I think when you look at it, you say, all right, I'm going to get taxed on 70% of the 100. So, I mean, just thinking about it conceptually, if you're going to report $70,000 of business income, you should be able to cover all that with $15,000 cash.
0:23:04 - (Colin Johnson): Gotcha.
0:23:05 - (Thomas DeHart): The problem can be that your tax advisor doesn't have you properly strategize to where you got more than. Well, you need less than the 15 to cover your taxes. It might take the whole 15. I do like it because, I don't know, like the nice way to put it, but you can be doing no strategy, and the 15 should cover you.
0:23:36 - (Colin Johnson): Gotcha.
0:23:37 - (Thomas DeHart): But with strategy, you can save some of that.
0:23:40 - (Colin Johnson): I liked it. I like it. I think having a plan on the front end is helpful. I think a lot of people do it on the back end. They go, typically, Mitch and I, we've been making or servicing widgets, fixing them for months, and we just, we get our money in and we split it 50 50, and then we, we just go and do our thing, and then we come talk to you at the end of the year and you go, man, you owe us. You each owe $7,500.
0:24:08 - (Colin Johnson): I'm like, well, I bought a new widget fixer, and that was my. I don't have the money, so I'm in trouble.
0:24:14 - (Thomas DeHart): Right.
0:24:15 - (Colin Johnson): And so we didn't plan ahead.
0:24:16 - (Thomas DeHart): Yes. So, yeah, it does a good thing because it takes that tax money out of the same pool of resources. It's in its own separate little bank account, and it, you know, preferably would have some interest being accrued throughout the year, too.
0:24:36 - (Colin Johnson): For sure.
0:24:38 - (Thomas DeHart): And the thing that's great about it is once you are kind of on the ball, you're typically going to write the check to the IR's, but then you're going to give yourself a refund on the same day. You're not going to have to wait for the IR's to write you a refund check because you've got more than you needed in your tax account.
0:24:59 - (Colin Johnson): That's cool.
0:25:00 - (Thomas DeHart): Yeah.
0:25:02 - (Colin Johnson): What kind of entity would you suggest that Mitch and I create to run this widget business?
0:25:10 - (Thomas DeHart): It's a great question.
0:25:11 - (Colin Johnson): Like, it would be an S corp or LLC or a limited partnership or. What are your thoughts on that?
0:25:19 - (Thomas DeHart): So there's two business owners. Your default going to be treated as a partnership if you do nothing right. And I would say that might be the right approach for the first $50 to $60,000 of gross income, because honestly, by the time you pay a full blown CPA strategy invoice, you're probably going to maybe lose a little bit on the investment in the CPA services once you start getting above 40, 50, $60,000 a year gross income. And it's clear this is no longer a hobby that we're calling a business because you don't want a hobby anymore.
0:26:06 - (Colin Johnson): That's right. But we still got to make money.
0:26:09 - (Thomas DeHart): That's right. So it's going to be a full blown business then typically for a service based business that you don't need to be like a doctor, a lawyer to do, I would say s corporation is going to be a better one. Best friend.
0:26:29 - (Colin Johnson): Okay.
0:26:31 - (Thomas DeHart): You can do that through an LLC.
0:26:33 - (Colin Johnson): Okay.
0:26:34 - (Thomas DeHart): So you make an LLC with the state of Tennessee, and then you just elect to be treated by an S as an S corporation or the IR's.
0:26:42 - (Colin Johnson): Does insight CFO help people set up these entities?
0:26:46 - (Thomas DeHart): Yeah. I have to be careful not to step into the managerial position.
0:26:52 - (Colin Johnson): Sure. So you guys gotta manage our sales, have our own board.
0:26:56 - (Thomas DeHart): Exactly.
0:26:57 - (Colin Johnson): Keep our own minutes.
0:26:57 - (Thomas DeHart): You know, you're just recording and reporting. And I know I help you basically fill out the form, but ultimately you're gonna have to say, yes, I wanna submit this. I wanna be an LLC.
0:27:10 - (Colin Johnson): And we should probably put out a disclaimer right now saying that we're not attorneys and we're not offering legal advice right now. We're just offering tax ideas. And it should. You wish to learn more about this, you should engage with Thomas directly.
0:27:26 - (Thomas DeHart): That's right.
0:27:27 - (Colin Johnson): And we'll make sure we get. Get your number on this in the show notes so we can send you some business for sure.
0:27:32 - (Thomas DeHart): Absolutely.
0:27:33 - (Colin Johnson): So we got our s corp. We're rolling.
0:27:35 - (Thomas DeHart): That's right.
0:27:35 - (Colin Johnson): And then we. There are different things we can do to start saving some money, too. What would be some. Give me your top three tax tips. Because if you're like me and October's coming and we've got to pay our, our year end deferred tax amount because sometimes we defer. So what will be some text advice for listeners on the, on the air right now? Top three tips besides putting it all in a separate account to begin with, which is brilliant and very necessary.
0:28:07 - (Thomas DeHart): Well, you know, I think a lot of the tax advice out there that you might be kind of, like, used to hearing can be, I don't know, a little more serving of the tax professionals desire to come in and feel like they're saving you a bunch of money when at the end of the day, it all kind of comes out in the wash. Like, the one I have in mind here is like, go buy a big piece of equipment and depreciate it all at once. Take section 179 or something.
0:28:44 - (Colin Johnson): Depreciation.
0:28:45 - (Thomas DeHart): Yeah. And here's the thing. If you're financing that equipment, what you've done now is you created an asymmetry with realizing a tax benefit, but now you've got a cash outflow on this payment and on a piece of equipment.
0:29:02 - (Colin Johnson): That is really depreciating as well, right.
0:29:04 - (Thomas DeHart): Exactly. Yeah. You're not. It's not a positive win. So to that.
0:29:09 - (Colin Johnson): So we should take cash. So Mitch wants a new tundra for our widget fixing business, and so we gotta. We should buy that with cash and then depreciate it, or. Well, just appreciate it with the payment over the next five years.
0:29:22 - (Thomas DeHart): My position on that tends to be, let's try and tie the depreciation treatment to the payment. That cash outflow.
0:29:31 - (Colin Johnson): Gotcha.
0:29:32 - (Thomas DeHart): So, yeah, you might pay a little bit more in taxes, but you're probably going to be thankful for it when your income's not artificially high in a future year. You don't have that.
0:29:41 - (Colin Johnson): Or if we go to sell the truck, the tundra, in a couple of years. Because he wants a new one.
0:29:45 - (Thomas DeHart): That's right.
0:29:46 - (Colin Johnson): He's always wanting these new trucks. I've been driving this jalopy around.
0:29:52 - (Thomas DeHart): Me too, man.
0:29:56 - (Colin Johnson): All right, so maybe there.
0:29:58 - (Thomas DeHart): But, you know, to give you some, like. So for an S corporation, number one would be reasonable compensation. You know, pay yourself. Pay yourself a reasonable compensation, not an unreasonably high compensation or unreasonably low. And obviously, that's an individual conversation you need to have with a tax advisor. But the thing is, if you can say, I can reasonably pay myself $25,000 a year, and there's $25,000 left to distribute to myself, well, you just avoided paying payroll taxes on that $25,000 that got distributed to you.
0:30:43 - (Thomas DeHart): That's only a real possibility when you're in the S corporation.
0:30:48 - (Colin Johnson): Can you leave that money there and not pay tax on it? No. Right. It's still.
0:30:53 - (Thomas DeHart): Yeah, you'd have to pay taxes on it.
0:30:55 - (Colin Johnson): But it's just corporate tax level and versus individual income.
0:30:59 - (Thomas DeHart): That's right. Yeah. It would be taxed either way. It's just a matter of, is it taxed and staying in the business account or taxed and sitting in my account as the owner?
0:31:09 - (Colin Johnson): Gotcha.
0:31:11 - (Thomas DeHart): I would say the other thing, if you are starting to have a lot of money and this kind of falls into your area of expertise, is really to look at maybe investing in real estate. We all know there's tons of tax benefits in real estate, but the other main thing you can do is you can own that real estate in a separate llc. Then you got your s corporation over here, and you can do a self rental, and you're taking a big pot of money from out of an operating entity where it might get caught up in payroll taxes.
0:31:49 - (Colin Johnson): Sure.
0:31:50 - (Thomas DeHart): And you're moving it over here to a passive income stream. So that'd be the second one for the people.
0:31:57 - (Colin Johnson): Pay yourself rent.
0:31:58 - (Thomas DeHart): Yes.
0:31:59 - (Colin Johnson): Yeah, I like that one.
0:32:01 - (Thomas DeHart): Honestly, this is personal opinion. A lot of people out there might disagree and I think it is also industry dependent. But I really like people to own their real estate as often as possible rather than paying rent just because you are saving money every time you make that payment and you're investing in an asset that's going to go up in value.
0:32:29 - (Colin Johnson): Agreed.
0:32:30 - (Thomas DeHart): And it just, it's kind of like what sets you up to be a winner financially in the long run.
0:32:36 - (Colin Johnson): And if you could find somebody like a bigger building where you could segregate some area of it and rent that out to even another entity, that'd be even, even better offset your total payment.
0:32:46 - (Thomas DeHart): Sometimes they're paying the mortgage for you by the time done.
0:32:51 - (Colin Johnson): Isn't that cool? Yeah, it is. Real estate is just if you. Yeah, historically it's just a tremendous wealth builder.
0:32:58 - (Thomas DeHart): It is.
0:32:58 - (Colin Johnson): And so we love helping people do that.
0:33:00 - (Thomas DeHart): And it's funny cause cpas I think, are very aware of that and tend to tap into it themselves and tend to push people that way because they see, you know, on pen and paper, black and white, what the results are, you know, and the wealthiest people in most communities are those who are heavily invested in real estate.
0:33:23 - (Colin Johnson): Yeah, I like it. So your last tip was calling and Carly.
0:33:29 - (Thomas DeHart): That's right.
0:33:30 - (Colin Johnson): I thought I heard, I heard that it was like, call Colin and he will help you find a place. That's perfect.
0:33:37 - (Thomas DeHart): Yes.
0:33:38 - (Colin Johnson): There you go. I like it. I like it. So tell me a little bit about your business and what you specialize in. I think you're talking about real estate income and maybe some construction stuff as well.
0:33:51 - (Thomas DeHart): Yeah. So the construction industry in Tennessee is doing fairly well. You know, I think you.
0:34:01 - (Colin Johnson): They're a little slow because we can't keep up with the demand. But yes, yes, it's a good business to be in right now. If you can build a house, come to Tennessee and do one because it'll be sold like that.
0:34:11 - (Thomas DeHart): That's right. And I think like the biggest challenges are probably more like labor supply and maybe even sometimes inventory, you know, having the materials. But there's certainly no shortage of consumer demand for construction.
0:34:28 - (Colin Johnson): Yeah. And across the country is the same. It's like we're 4 million houses short currently or something crazy.
0:34:35 - (Thomas DeHart): Yeah. And that. There's a lot to that. There's a lot to rain on that. But I would say, you know, construction is also unique in the sense that if you want to be a general contractor doing jobs that are more than $25,000. Eventually you're going to need that CPA reviewed financial statement to get a higher license limit. So a part of my desire to specialize and help people solve problems is trying to just focus in on this need, this construction contractor niche, provide some of those ad test services.
0:35:16 - (Thomas DeHart): Um, but then I think in the long run, really follow up with more of the profit first stuff and more of the legacy building stuff, and making sure that you're building an asset through your business and it's, uh, you know, something that you're going to be proud to leave, hopefully your kids someday.
0:35:35 - (Colin Johnson): Yeah.
0:35:36 - (Thomas DeHart): Um, and then real estate. I think any really good tax person is going to want to stay in and around real estate and learn as much as they can about real estate taxation. So that's where that piece comes in.
0:35:53 - (Colin Johnson): Gotcha. How. And now you're. Have you passed your CPA? You're a full on CPA. How did you lean towards construction and real estate stuff as opposed to all the many, many different facets of accounting out there?
0:36:09 - (Thomas DeHart): So really experiencing, even as a young staff, the demand there, the volume of transactions that some of these construction contractors are out here doing, getting opportunities early on, and being trusted to tackle tax returns that were probably bigger than I should have been working on at the time. But, you know, here, Thomas, you take this guy, stumbling my way through that, learning a lot, and getting to appreciate some of the nuance to it, especially in construction. There's some very specific accounting methods for that stuff on the commercial construction side that you just have to know what you're doing or you're going to mess it up?
0:36:58 - (Colin Johnson): Well, do you do even the minutiae stuff like if I'm Sam, say, Mitch and I, we got out of the widget business, we're building houses, and we go to Lowe's and I got receipts out the wazoo. Can I send those receipts to you? And you'll categorize, do that kind of stuff for a monthly fee as well? Or do you only want to see me once a year?
0:37:15 - (Thomas DeHart): Well, no, I definitely do bookkeeping, payroll. I try and be as full service as I can be and just kind of narrow the scope of who that's fully serving. But I will say this, that's why having a bank account, at least one, is so great. It's so much better to go off.
0:37:43 - (Colin Johnson): The bank statement, go off the bank statement, box of receipts, get a nice credit card receipt, like showing all the transactions for the month, and have one business credit card, maybe, you know, talking.
0:37:56 - (Thomas DeHart): About, like, early business lessons. You know, there was a time where I was trying to do everything for more of a flat rate or fixed percentage kind of billing, and I just learned that sometimes you can spend many hours accomplishing very little, and that once you kind of attach your value to your time, it clarifies the extent to which people should look at maybe doing things in a little bit more of a, you know, optimal way.
0:38:33 - (Colin Johnson): Mm hmm. Mm hmm. Yeah, I agree. It's. And what is it? A short pencil beats a long memory every day, every, all the time. So you could, like, take a little note about something or write on your receipt what and who and where this was for and why. And my wife, Carly, I just. Terrible about giving her receipts, but I. I'm on camera saying, I'm working on it, but I bought a little zipper bag just for receipts and have it in my car right now.
0:39:04 - (Colin Johnson): So I'm writing on those and working on getting better, even after 23 years of doing it, that's poorly. So what's something that I haven't asked you that you'd like to maybe share?
0:39:18 - (Thomas DeHart): Well, I would say maybe this is a point on which we can connect a little bit. My first, like, really, like, business endeavor that was an actual, like, success was really in the land business area of going out and just reaching out to people and saying, hey, my name's. It was yellow letter marketing. You might be familiar with it. It's literally you're just taking pen to paper and writing letters to people.
0:39:48 - (Colin Johnson): Gotcha.
0:39:48 - (Thomas DeHart): And you're using public data.
0:39:51 - (Colin Johnson): I'd like to buy your land.
0:39:52 - (Thomas DeHart): Exactly. I think realtors do this as well to try and get listings, so.
0:39:57 - (Colin Johnson): Or I'll door knock. Some people come up.
0:39:59 - (Thomas DeHart): Yeah.
0:40:00 - (Colin Johnson): Hey, Thomas, you want to sell your house?
0:40:01 - (Thomas DeHart): And it's the concept there. It's just like, I'm going to buy the land, and then I'm going to, like, sell it either really as quickly as possible.
0:40:11 - (Colin Johnson): Right. You know, holding land costs money.
0:40:14 - (Thomas DeHart): I never got into, like, you know, I know it's kind of a legal gray area, but, like, wholesaling, I never did anything like that. But buying land and then selling it at sometimes a pretty substantial markup. And I think land is uniquely positioned to do that because it's so much in the eye of the beholder. I've had land that people would say, I wouldn't give you $1,000 for that plot. That would get sold for 12,000 to someone else.
0:40:49 - (Colin Johnson): Right.
0:40:50 - (Thomas DeHart): So.
0:40:53 - (Colin Johnson): Somebody told me they're not making any more land, when you think about.
0:40:55 - (Thomas DeHart): That, don't tell China that.
0:40:59 - (Colin Johnson): Sure. They are making more land. Making trash land.
0:41:03 - (Thomas DeHart): That's right.
0:41:04 - (Colin Johnson): It's a good way to spend some trash. All right, let's hit the speed round real quick.
0:41:12 - (Thomas DeHart): Got it.
0:41:13 - (Colin Johnson): You and this fiance. Tell me your name again.
0:41:15 - (Thomas DeHart): Shawna.
0:41:15 - (Colin Johnson): Shawna. You and Shawna are going out to dinner for a date night?
0:41:18 - (Thomas DeHart): Yes.
0:41:19 - (Colin Johnson): Where are you headed to dinner?
0:41:22 - (Thomas DeHart): Probably La Coretta. Oh, about two minutes away from her house.
0:41:25 - (Colin Johnson): Nice.
0:41:26 - (Thomas DeHart): Yeah.
0:41:27 - (Colin Johnson): What's your favorite dish at La Coretta?
0:41:30 - (Thomas DeHart): I'm pretty basic. I'd stick with, like, an arrows compollo ACP. It's really hard to mess up.
0:41:36 - (Colin Johnson): I'm a speedy Gonzalez kind of guy.
0:41:37 - (Thomas DeHart): Oh, yes.
0:41:38 - (Colin Johnson): Just a taco, a little cheese burrito or. No, enchilada. Rice and beans.
0:41:45 - (Thomas DeHart): There's a siete hermanos. They rebranded recently, and I can't remember the new name of it, but they've got a pollo cancun. Ooh, that's very good.
0:41:56 - (Colin Johnson): Sounds like a beachy chicken.
0:41:58 - (Thomas DeHart): I like the idea. It is good.
0:41:59 - (Colin Johnson): That sounds good. Where are you going for pizza?
0:42:02 - (Thomas DeHart): Pizza. So I would say on any given weeknight, our number one, like, local restaurant choice would probably be Cootie Brown's. Okay, good call. Shawn is gluten intolerant.
0:42:21 - (Colin Johnson): Yep.
0:42:21 - (Thomas DeHart): And they have gluten free pizza. A lot of gluten free options. Burgers and pizza.
0:42:28 - (Colin Johnson): Carly likes that as well.
0:42:29 - (Thomas DeHart): Yeah, main street probably be right.
0:42:32 - (Colin Johnson): Main Street's a great pizza joint. Burger, burger. Yeah, if you're gonna get a burger.
0:42:37 - (Thomas DeHart): Honestly, probably pals.
0:42:38 - (Colin Johnson): So good.
0:42:39 - (Thomas DeHart): So hard to beat.
0:42:40 - (Colin Johnson): So good. Yeah. Yeah. I love their hot dogs. You ever get a pals hot dog?
0:42:45 - (Thomas DeHart): You know, I never have. Oh, I never had a pals hot dog.
0:42:49 - (Colin Johnson): Thomas. I don't know if we're friends anymore.
0:42:51 - (Thomas DeHart): Aw, man.
0:42:52 - (Colin Johnson): Better go get a pop hot dog after this. Hot dog. No onion, frenchie fry, extra salt, and a large sweet tea. It's like $7. It's so good. Not good for my heart, but delicious. Okay, how can our listeners connect with you online? They got tons of money they want to send your way. Well, for tax fees, because we love spending money on tax. Taxes. But you can help us save money.
0:43:21 - (Thomas DeHart): That's right.
0:43:21 - (Colin Johnson): You want to earn your fee, don't you?
0:43:23 - (Thomas DeHart): That's what I would think. You want to spend your money on me so that you save more money than you spend on me.
0:43:29 - (Colin Johnson): Agreed.
0:43:30 - (Thomas DeHart): Paying the IR's.
0:43:31 - (Colin Johnson): Yeah. So now is a great time to engage with you before April.
0:43:35 - (Thomas DeHart): Exactly.
0:43:36 - (Colin Johnson): Like, let's get ahead of this, folks.
0:43:38 - (Thomas DeHart): Well, and really, now is a great time looking at 2025. Right. It hasn't started yet. You know, we can make a lot of changes here.
0:43:46 - (Colin Johnson): Yeah. It's still not too late to do some stuff to offset some taxes as well.
0:43:51 - (Thomas DeHart): That's right.
0:43:51 - (Colin Johnson): Yeah. Before you. Yeah. You still got till the end of.
0:43:54 - (Thomas DeHart): The year, so I own. I'm available via email.
0:43:58 - (Colin Johnson): Okay. What's your email address?
0:44:00 - (Thomas DeHart): Thomasitecfo code in the show notes.
0:44:05 - (Colin Johnson): Mitchell probably do that if you're really nice to him.
0:44:08 - (Thomas DeHart): Well, I'm pretty nice to Mitch most of the time.
0:44:10 - (Colin Johnson): He likes gift cards. Cash is good. Okay. What about. Are you on the. On the socials?
0:44:17 - (Thomas DeHart): I do have a Facebook page.
0:44:19 - (Colin Johnson): Okay.
0:44:21 - (Thomas DeHart): And then I've got my personal LinkedIn page. I haven't gone through the trouble of doing a LinkedIn company page yet.
0:44:27 - (Colin Johnson): Gotcha. You can reach out on LinkedIn?
0:44:30 - (Thomas DeHart): Absolutely. Yeah. That would be a great place to connect.
0:44:32 - (Colin Johnson): Okay, what's your home address? So I can just come see you?
0:44:36 - (Thomas DeHart): I can't disclose that. Shauna would kill me.
0:44:40 - (Colin Johnson): All right. All right, cool. Hey, what gets you fired up? Because you've been kind of just, you know, perfect accounting. Very. Like, you did laugh some. You're kind of, like, a little bit high. Like, I got you a little bit up there, but what, like, you're jumping around. Besides, I mean, it's gotta be probably a marriage coming up. I'm gonna. I'm throwing you a bone right now.
0:45:02 - (Thomas DeHart): So.
0:45:03 - (Colin Johnson): Shauna, listen to this.
0:45:04 - (Thomas DeHart): Yes.
0:45:05 - (Colin Johnson): Let's get married.
0:45:06 - (Thomas DeHart): That's right.
0:45:07 - (Colin Johnson): Can't wait.
0:45:08 - (Thomas DeHart): Yeah. No, Shawna for sure. Lights my fire.
0:45:12 - (Colin Johnson): Yeah.
0:45:12 - (Thomas DeHart): There is no doubt about that little.
0:45:15 - (Colin Johnson): Door song, about that music.
0:45:18 - (Thomas DeHart): Speaking of the doors. Just music in general, I love. I don't get to do it as much anymore, but coming out here to local downtown venues and seeing live music. Yeah, that's a way to see me embarrass myself.
0:45:32 - (Colin Johnson): Got it. How many kids do you have?
0:45:34 - (Thomas DeHart): Two. Yeah.
0:45:35 - (Colin Johnson): And they get you fired up.
0:45:37 - (Thomas DeHart): Yeah.
0:45:37 - (Colin Johnson): They can get you fired up in good ways. All the way other ways. That's right.
0:45:42 - (Thomas DeHart): You know all about that.
0:45:43 - (Colin Johnson): Yeah. Yeah.
0:45:44 - (Thomas DeHart): I've got a six year old son and a three year old daughter.
0:45:46 - (Colin Johnson): Oh, congratulations.
0:45:47 - (Thomas DeHart): About to have a six year old stepdaughter.
0:45:50 - (Colin Johnson): Wow.
0:45:51 - (Thomas DeHart): It's gonna be. It's gonna be magic.
0:45:53 - (Colin Johnson): It will be fantastic. And. Yeah. And it's not easy, but it'll be great. It'll be great.
0:45:59 - (Thomas DeHart): It will be.
0:45:59 - (Colin Johnson): Any last parting words you'd like to leave our listeners with?
0:46:04 - (Thomas DeHart): I would just like to say thank you, Colin, for having me on.
0:46:07 - (Colin Johnson): Oh, man.
0:46:08 - (Thomas DeHart): Thank you for coming on, filling my questions, dealing with my bland accountant demeanor.
0:46:14 - (Colin Johnson): That's not bland. Not at all. Like, you've been very fun to talk to, for sure. It's just. Yeah, it's like. It's just cool how the Lord made some people like. Like me. I like to get excited, and then I. You know. And you're very consistent, which is perfect accounting.
0:46:32 - (Thomas DeHart): I'll tell you a secret. It's an anecdote here at the end. I'm prescribed Adderall.
0:46:37 - (Colin Johnson): Okay.
0:46:38 - (Thomas DeHart): And I had an exam yesterday where they checked my blood pressure, and they're like, your blood pressure is a little lower than normal.
0:46:44 - (Colin Johnson): Yeah.
0:46:44 - (Thomas DeHart): And I was like, well, that's weird, because I took my meds this morning.
0:46:48 - (Colin Johnson): Yeah.
0:46:49 - (Thomas DeHart): I don't know. It just. It takes a lot to get me going.
0:46:52 - (Colin Johnson): There you go. Well, but I'm excited, like, yeah, this college football get you going? You like college football?
0:46:57 - (Thomas DeHart): I did go see the bucks, whoop. Uva wise, so. Yes.
0:47:02 - (Colin Johnson): And they're playing North Dakota State, I think, this weekend.
0:47:04 - (Thomas DeHart): Yeah, I. I believe in them.
0:47:07 - (Colin Johnson): Yeah.
0:47:08 - (Thomas DeHart): But they're going to have to play perfect to have a shot at winning that game.
0:47:15 - (Colin Johnson): Okay.
0:47:16 - (Thomas DeHart): Yeah.
0:47:17 - (Colin Johnson): Interesting. All right. You heard it here. The prediction. It'll be out Friday. I love it. Well, thank you for being on the podcast. Thanks for you guys listening. I enjoyed our conversation. Till next time, I'm Colin Johnson with the Colin and carter group and Keller Williams. If you want to invest in real estate, we can hook you up with Thomas. He can handle the accounting. We handle the property management. We help you find the property, identify it, buy it. We could. We could probably sell it later on, do a 1031 exchange. He can tell you all about how that works.
0:47:47 - (Colin Johnson): There's just lots of avenues to make a good investment in real estate, even if it's your personal house. And we'd love to help you do that. So connect with me. Call me, email me, text me, send a carrier pigeon over. I would love to meet you and help you invest and move to Johnson City or the tri cities. We do all of them. Thanks so much and have a great day. It.