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Here are the three ways to get 2023 off to a great start so you can deliver even more massive value than ever before.
The new year is upon us; everyone is determined to make 2023 the best year ever. We welcome January with so much enthusiasm and determination, yet we drop our lofty goals before the month is out.
Willpower alone isn’t enough for the masses to stick to their gym routines or diets. Resolutions to do better fail before they start, and if you’re going to fall back on your old routines by February, you won’t see any lasting change.
What would you do differently if you wanted 2023 to be your year?
I am seeing tax planning becoming more predominant in the planning profession. Heck, even Edward Jones offers tax planning and mails out 1099 letters. To differentiate yourself from those guys, you must up your game and get your practice to the next level.
Here are three easy ways to level up your practice in early 2023.
Stop relying on willpower
One of the central tenets of my philosophy, the Perfect RIA, is that willpower alone is not enough. If it worked, everyone would have six-pack abs and step away from the dessert tables in favor of carrot sticks and broccoli.
New Year's resolutions are hands down the worst part of the new year. Resolutions are willpower dependent and a massive waste of time. If you paid for a gym membership in 2022 but never went, paying for a gym membership in 2023 won’t change anything.
If you’re hoping to do the same things you’ve always done but expect different results – that’s the definition of insanity. And you’re not crazy, so let’s employ some forcing mechanisms this year instead.
It won't get done if you think it will be cute this year to finally get on top of your own taxes and start planning for your clients.
Instead, you must say: By January 30, we will send out the 1099 and the RMD letters.
You’ve put a dream on paper with a definite deadline. That, my friend, is an actionable goal, and you’ll make actual progress.
You could also hope to attend a tax services summit. That sounds like a nice thing to do to help your level up your business.
However, if you want to go, sign up now.
Follow your own advice
You need to treat your business with the same tender care you’d give a client’s small business. This means you need to follow your own planning advice.
You can’t go around recommending tax strategies to clients if your own taxes are a wildcard in April. You can’t be spinning the IRS slot machine while crossing your fingers, hoping for a tax return instead of owing a bunch of money. That’s poor form.
If you recommend that clients review their taxes every quarter, you should too.
Hire a CPA if you have not because then you’ll have to operate under the forcing mechanisms of a) paying them thousands of dollars to do the work; and b) providing your homework by the CPA’s deadline.
You’re likely getting your revenue by the first week of each quarter. This is when you should update your personal spreadsheets, track your income and expenses for the year, and compare year over year. Get your revenue planning dates on the calendar for each quarter of 2023.
You should also doublecheck that you’re putting enough money (by percentages) into your retirement accounts and toward personal development.
Any discussions you’re having with your small business-owning clients must be documented within your own finances.
Deliver (more) massive value
You don’t need to go crazy with your tax planning value adds.
Tax planning strategies should not be reserved for your highly affluent clients who spend most of their days sipping Bahama Mamas in the Caymans. There are plenty of tax planning opportunities for your salt-of-the-earth clients – and you’d do them a disservice by overlooking them.
When it comes to tax planning, it comes down to this: How much are you controlling your income from year to year in high-income years? And how are you pointed down in low-income years? Plus, what’s your plan for pushing income back up?
For ultra-wealthy clients, you need to have a plan for where they are now, not for when their income may drop a tax bracket. If you have clients who will always be in the top bracket, even in retirement, you must plan accordingly now.
Eventually, your clients will need to pay taxes, especially if they have no intentions of selling their business or giving away their net worth while still alive.
1099 and RMD letters
I will send 1099 letters to every single client by the end of the month. Small and simple is better than nothing if you’ve never done a 1099 letter.
Here’s all you need:
Mr. and Mrs. Client, here’s a list of all your accounts and the tax forms you should expect from every single account to give to your CPA.
That’s it. And there’s a lot of value right there.
Minimum distribution letters are also a nice touch. RMDS are changing dramatically this year, and you should reach out to your clients and tell them about it.
Don’t feel bad if you can’t do everything I recommend. An all-or-nothing attitude won’t get you far when building your business.
Instead, focus on one or two things you can do right now to move that needle. Once you get those things done, move on to the next one.
Get your 1099 and RMD letters out the door by the end of the month.
Reach out to connect with a tax preparer if you don’t have one yet.
Book your spot at the Retirement Tax Services Summit, which is offered by a firm I co-founded. You’ll want to get your hands on the RTS 2023 Tax Guide. This guide is hands-down one of the most valuable documents I have. It's printed and laminated on my desk and accompanies every meeting.
Why? Because tax questions will come up and I want to answer those questions right away.
Micah Shilanski, CFP®, is a financial planner who achieves the impossible. Micah is recognized as a leader in the concept of lifestyle design for financial planners and has spoken at conferences across the country. Micah is an advisor with Shilanski and Associates, a founder of Plan Your Federal Retirement, and a co-founder of The Perfect RIA.