The Best Strategies for Navigating Financial Management Challenges with Emil Abedian

Watch the YouTube version of this episode HERE

Are you a business owner who is looking for advice on success? In this episode of the Maximum Lawyer Podcast, Tyson interviews firm owner Emil Abedian, who shares his inspiring entrepreneurial journey. Emil shares how networking within his community helped with the success of his business. For Emil, he connected with Amermian’s and Swedes in Los Angeles to help get connected to those who share his background and culture. It can help get your foot in the door to meet individuals who share many similarities, especially if you are looking for potential investors or even customers. In order to become successful in business, you need to dedicate time to network and get your name out there.

A successful business will also include a focus on processes and people. A business needs to have a defined and streamlined process to ensure operations run smoothly. It is easy to take shortcuts and pay someone to develop the process for you. But, Emil shares the importance of the process coming from yourself since you are the person running the business. In relation to people, it is important to have people on your team that will work to make your business better.

Listen in to learn more from Emil!

Episode Highlights:

• 01:20 Transition to California 
• 06:18 Starting His Own Firm
• 12:26 Delegating Responsibilities 
• 14:25 Understanding Your Business 
• 16:16 Retirement of CPAs 
• 19:10 Specializing in Law 

Resources:

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• Subscribe to the Maximum Lawyer YouTube Channel
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Transcripts: The Best Strategies for Navigating Financial Management Challenges with Emil Abedian

Tyson Mutrux 00:00:02 This is maximum lawyer with your host, Tyson Matrix.

Tyson Mutrux 00:00:12 Me? Welcome to the show.

Emil Abedian 00:00:13 Thank you so much, Tyson. Appreciate it.

Tyson Mutrux 00:00:15 So it was good. We got to chat a little bit before and I want to start with the the Swedish part. As you said, you don't look Swedish. I don't think you sound Swedish. So. So explain explain the connection to Sweden. I don't.

Emil Abedian 00:00:28 Look Swedish. I don't sound Swedish, but I think I am pretty much Swedish. But I was not born in Sweden. We moved to Sweden when I was a baby, I was born, I'm Armenian, originally born in Iran in 1980, right after the Iranian revolution. So my parents took us. I'm the youngest of three kids, so they took us to Sweden because of the Iran-Iraq war, the revolution happened. So I grew up, I spent most of my life in Sweden. I graduated there, I went to university there. I worked at Ernst and Young there a couple of years before I decided to move to California 2007.

Emil Abedian 00:01:01 So I got here. My siblings were moved out here way before me, so I just came out here to see what's happening. Apply for a job. I got a job at the larger firms. You know what? Why not? And I met my wife at that time. And the next thing you know, you're married, you have babies, and the firm was created, and there's no going back to Sweden. Yeah.

Tyson Mutrux 00:01:20 No. Yeah. Definitely not.

Emil Abedian 00:01:22 But yeah, that you have a point. Anytime I say I'm from Sweden, I have to explain this because they look at me like, what the hell? Don't lie, man. You're short. You're the dark hair. You don't look anything like Swedish.

Tyson Mutrux 00:01:32 It's funny because I had to clarify because there's some things in there, insight brief about you. I'm thinking like. Well, I don't know if that makes sense.

Emil Abedian 00:01:39 It's lying already to us. No, not.

Tyson Mutrux 00:01:41 If you're lying. I thought maybe that I had I done the research and gotten it wrong.

Tyson Mutrux 00:01:44 But do you think anything about your background. Because you're very entrepreneurial. It seems you've got your own two companies, or at least a part of one company, and then the other one outright. Anything about your background? Do you think that gives you an advantage over you know, competition.

Emil Abedian 00:01:59 I think growing up in Sweden really helped me because you're coming to a new country as an immigrant. Even though I was very young, I was not a baby, but I was like 2 or 3 years old when we moved to Sweden. I spent most of my time in Sweden most of my life, but my parents are still immigrants, or I was an immigrant also, but they came at a later age and I saw them struggling. My dad used to have a restaurant back then in Sweden. My mom was working with three kids and I saw their struggle. And I don't know, it may be that really helped me to really work even harder, but it's not only about working harder, it's I saw my dad with his business, really uneducated.

Emil Abedian 00:02:38 I think he stopped to school at sixth grade and when we moved to Sweden, he didn't know the language. He didn't know anything. It was a brand new country and he like six months or a year in, he opened up the business, the restaurant. So I think that has taught me a lot. But also in the area in Sweden where we live, there's a lot of immigrants We interacted with a lot of lot of different kinds of people Swedes, you name it, Arabs, Somalians from millions of places. I think that taught me a lot from with diversity, being able to deal with different kinds of people and living in LA. As you know, it's a very diverse, diverse place. And I think I think that's been really, really helpful to me.

Tyson Mutrux 00:03:18 So that's interesting. And I mean, whenever I heard that, I heard community was kind of what I heard, you know, you and obviously diversity is important to, but it did seem like more of the community, part of the community aspect of it was pretty important.

Tyson Mutrux 00:03:33 And I do wonder if, because you've moved or you moved to the States and you've you've got two established businesses, how much does the community have an effect on, I guess, the success of your business or your success in general?

Emil Abedian 00:03:47 So where I live right now, I live in LA, in in Glendale, Glendale area, where there are a lot of lot of Armenians that live in Glendale. Originally I'm Armenian Armenian from Iran, raised in Sweden, and there's not many Armenians in Sweden. So when I first moved to move to Glendale, I was kind of in shock to what the hell? Where all these Armenians coming from. But Glendale has been very helpful for me, obviously, because first of all, as you mentioned in the community, people want to work with people they feel comfortable with. That's one portion. But pretty quickly I got involved with the Swedish American Chamber of Commerce, which got me a lot bigger connection because there are a lot of Swedes here in LA, specifically in LA area, that are doing business, and very successful.

Emil Abedian 00:04:32 Swedes are moving out to California. And by being part of the Swedish American Chamber, I get in contact with them regularly. And that's really, really been helpful for, for my, my growth of the operation. Definitely.

Tyson Mutrux 00:04:44 It seems like you've, I mean, proactively sought out you a membership and groups or whatever, but I mean, is that part of your recipe for success? Because I will tell you, like whenever you came in, we talked to each other briefly. And then when I came in, we chatted like, you're very approachable. And I do wonder if just proactively, you know, reaching out to people, proactively being involved in communities, like, I guess, what what role does that have in your success?

Emil Abedian 00:05:10 I don't think it's intentional, honestly. Like the Swedish American Chamber was just a coincidence that happened by I used to work with a bookkeeper who used to send me text work back in the days when I first started, and he called me one day and he didn't even know that I was from Sweden, called me, oh, Emil, I have a tax line here.

Emil Abedian 00:05:27 He's a foreigner. I have no clue what to do. Can you talk to him? So. Yeah, sure. Where is it from? He's from Sweden. So. Are you kidding me, man? I'm from Sweden and Norway, so I talked to him. So he became my client. And then he started referring me. Another Swedish client who is still, by the way, part of the Swedish American Chamber. So you know what? You got to come and see us. So that portion was just a coincidence. But I like talking to people that that that's for sure. I that that's the part of my job that I really like that talking to people to see what could be done, filing a return or doing bookkeeping. That's not the sexy part in what we do. So is it intentional? No. But is it helpful? I think definitely, yeah, it definitely helps.

Tyson Mutrux 00:06:09 So I want to I want to shift gears a little bit. I want to talk about the two businesses just for a second because I want to I want to make sure people have a better understanding as to what you're what you do.

Tyson Mutrux 00:06:18 And then I wanted to dig into some more of the details. Talk to me about the two different companies and the differences between the two.

Emil Abedian 00:06:23 So when I first started, this is back in 2009, and if we go back a little bit. So I moved out to California from Sweden in 2007, and I got a job at the larger firm in, in Woodland Hills in California. I started working there and I had already met my future wife, my wife. Today. We were getting married in the summer of 2009. April of 2009 I got laid off from my job. This is during the financial crisis, and about 20 to 30 people at that time got laid off the same day.

Tyson Mutrux 00:06:52 I was in law school at the time, and it seemed like a bloodbath.

Emil Abedian 00:06:55 Yeah, it was not fun. And at that time I was here less than for two years, so I didn't know a lot of people. I didn't have connections. I said, what the hell am I doing? I'm getting married in a month or two.

Emil Abedian 00:07:07 It was the weekend before my wife's wedding shower. So I started applying for jobs, obviously, as anybody would do, but I didn't want to go into the private industry. I got a lot of offers to as an accounting manager or other other positions at private firms, but that was I always wanted to have my own firm eventually, even though at that time it was too early for me, sure, but there was no opportunities. So I say, you know what? The hell with this. I'm just going to open up my firm. It is what it is. Whatever happens, happens. And if I don't do it now, I might never do it. So we went to Sweden and Paris for our honeymoon and came back July of 2009. I just opened up my own firm with zero client, zero paying clients. I had clients, but none of them were paying because it was a brother and sister cousins. And then I was working with zero clients that were still working 70 to 80 hours a week, at the point where my wife was getting worried at one point where we just got married.

Emil Abedian 00:08:03 Are you cheating on me or what's happening here? Yeah. Saying, no, honey, don't worry. This is this is what it takes for me to just get get up and run.

Tyson Mutrux 00:08:10 Did you work on the honeymoon? I got to ask you that because I didn't know.

Emil Abedian 00:08:12 Because I opened it up after I came back.

Tyson Mutrux 00:08:14 Okay, gotcha.

Emil Abedian 00:08:15 Okay. I didn't do anything. I didn't know if.

Tyson Mutrux 00:08:16 You were trying to, like, put together a business plan while you're in Paris. I didn't have a business plan. Oh, okay. I didn't have most people don't.

Emil Abedian 00:08:22 Yeah, yeah, I just came back, and then I got introduced to another accountant who had an office, so I just rented a space from him. My first rent was 300 bucks. Pretty good.

Tyson Mutrux 00:08:34 So especially in LA.

Emil Abedian 00:08:36 Yeah, it was fantastic. It couldn't be any better. So. So I just started and I didn't know any people. My point why I'm going back that far is I took on any type of clients.

Emil Abedian 00:08:46 I remember going into the office on a Sunday for 100 bucks. Tax return client? Sure, I had to. Look, I didn't have any source of income. Looking back, would I do it again? Probably not. I was going to.

Tyson Mutrux 00:08:59 Ask you that because I was curious about, like, was that a mistake? It was.

Emil Abedian 00:09:02 A mistake? Yeah, it was a mistake. But at that time, I felt like I didn't have any option because I didn't have connections. I didn't I didn't really know what to do. This. I was new to the country. My English. Yeah, I was speaking English, but it was still a lot worse than what it is now. Even now it's not great and I either. So would I do it again? No, I would be a lot more strategic with what kind of client I was taking. So growing that firm, I grew it for three years, took on any type of client, and three years later I merged with a retired, retiring CPA.

Emil Abedian 00:09:34 Oh, by the way, still is with the company. He's 78, 79 years old. He comes in and reads the news later. newspaper.

Tyson Mutrux 00:09:41 He has fun. Don't tell.

Emil Abedian 00:09:42 Him that. It's a social.

Tyson Mutrux 00:09:43 It's a social.

Emil Abedian 00:09:44 Group. Yeah. So we we merged our practices, and he was. He wanted to slow down. So I took over the practice and started running the practice at that time. But that was not as helpful because he had been running his firm the way I have been running it in the past three years. He helped anybody who knocked on the door, anything the client wanted, the way the client thought. There's no reason systems or processes in place. So we went through a massive, massive change after that. Not directly because it took me a while to settle in with a new practice, because his firm was about 3 or 4 times bigger than mine at that time. So 2 or 3 years in, we went through massive change. We fired a lot of clients.

Emil Abedian 00:10:22 I think we went from seven, 50, 800 clients to less than 500 clients.

Tyson Mutrux 00:10:27 How painful was that?

Emil Abedian 00:10:29 it was not painful at all, actually. It was just scary. Yeah. At the beginning was scary. I was shit scared. What the hell? I'm. What is going to happen? But once he was done, it was the best thing I ever done. Because those were the clients that took most of my time. And that opened up so much more time for me to do, to serve the clients that really wanted the service, that really appreciated the service. Yeah, so it was not painful, but it was scary.

Tyson Mutrux 00:10:54 Well, I wonder if there's a lesson in the fact that you end up partnering with someone that is was pretty much just like you and how you ran the firm.

Emil Abedian 00:11:05 I would not do it again. I was just lucky with the partner. Sure, totally. And if it was any other person, this transaction would have been a disaster. He was, and he still is very, very helpful.

Emil Abedian 00:11:16 And he really wanted to make sure he helped me. He was not in it to make more money than he had had done in the past. He was in it to help me to kind of make sure the practice could continue, and in a good way. But the client tells were not really great. Sure. So the lesson from that was I would probably not buy another practice.

Tyson Mutrux 00:11:36 Not at all. Yeah, really? Because I was going to ask you if you thought that would be a wise,

Emil Abedian 00:11:41 Strategy because any practice you buy, you're going to have good and bad clients. Sure. That that's the reality. There's I it would be impossible to not impossible that but very, very difficult to find a practice where all you're all the clients are matching your ideal ideal client. And there are plenty of clients out there, especially in our industry. As an accountant, there's lack of accountants. So why not just spend the marketing dollars instead of all the headache and the transition and all that, and just try to get your own client and the client you want to work with and that appreciates you.

Emil Abedian 00:12:13 So I would not buy another practice. No. Interesting.

Tyson Mutrux 00:12:15 Okay. All right. So eventually though you kind of worked your way. You're not you're still involved in that that part of the business. Right. But you're of a lesser role. So how did that take place.

Emil Abedian 00:12:26 So so we we changed evolved throughout. And then pretty much right after the the merger, we hired a senior accountant at that time who really stepped in and put the sweat, sweat into the company. And about six years, 5 or 6 years in, we made her partner so totally And step back. Not a partner anymore. And we made Seibel, who is now running a billion and totally in the partner. Sure. And the idea obviously she deserves it first of all because she really put in her hard work. She had two young kids at that time, and she did what it needed to be done. And she gradually she grew her responsibilities and the role in the company. And now she's running a billion and totally and totally and is the old OG partner, right? We kept his name still, and until last year I was still involved.

Emil Abedian 00:13:23 We were I was still running a billion and totally until last year, where I decided that I only want to work with lawyers now.

Tyson Mutrux 00:13:29 How did you get the firm to a point where it was running without you?

Emil Abedian 00:13:35 It's about the people. And it starts with Sibel, my partner, and downwards. And it's impossible to run a firm yourself, doing everything yourself, obviously. So it's about the processes and the people. As we discussed a little bit earlier just before we got on here, here. So you got to have the processes in place and it's painful to put the processes in place. It's not easy. For the longest time, I wanted to find a shortcut to get the processes in place. I want to buy them. I want to hire people to do it for me. Yes, you can hire people to help you, but the processes have to come from you. In my opinion, you have to be involved. Putting the processes together, at least the idea of the processes. You can hire people who can put them together and draft them and write them up and all of that.

Emil Abedian 00:14:22 But for the process portion, I don't think there's any shortcuts in my opinion.

Tyson Mutrux 00:14:25 Yeah, I agree that when I see quite a bit as people will will have someone do build the processes out for them, but they don't understand them, so they don't know what they are. And that's a massive problem if you don't understand fundamentally, like if you don't understand your processes, you fundamentally don't understand your business 100%.

Emil Abedian 00:14:43 And so there are two kinds of people that could write your processes, write the external people, coaches and business advisors, and internal people such as your business partners, managers, whoever. I believe more in your internal people doing it for you, but you still need to be involved. It's your firm. You need to come up with your the way you and your firm want to work. So bottom line is there are no shortcuts. You have to go through the pain to put the processes and systems and processes in place. And then the second portion is hiring. You've got to hire and you will fail.

Emil Abedian 00:15:14 You will fail many many times. I don't know in the past, if you go back one step after right after Covid, our business boomed significantly.

Tyson Mutrux 00:15:22 That it did.

Emil Abedian 00:15:22 Yeah, it was just crazy different reasons. A lot of businesses needed more advice and help. They were scared. But also a lot of older CPAs decided to just retire.

Tyson Mutrux 00:15:33 Oh, interesting. I wouldn't have thought that was an element of it, but that yeah, it's interesting.

Emil Abedian 00:15:37 Because everything changed. Yeah. Now instead of doing in-person meetings, had to learn to do meetings over zoom. You need to use the technology more often.

Tyson Mutrux 00:15:46 Contracts. Everything.

Emil Abedian 00:15:47 Exactly. So you know what? I'm going to do it for another couple of years. The hell with it. And just kind of finish.

Tyson Mutrux 00:15:52 The thing that frustrated me the most about Covid or one of the most. Obviously, it was a terrible time, but I felt we had a massive advantage electronically because we've been doing it for several years at that point, and it forced everybody else into that age.

Tyson Mutrux 00:16:04 And it that that part frustrated me the most because now we didn't I don't think we had lawyers. I don't think we had a lot of people leave the industry. We obviously did have some, but it doesn't seem like as many as the CPAs did.

Emil Abedian 00:16:16 The reason for CPAs is a lot. I don't have the statistics on it, but there's a big portion of CPAs that are in in older ages like retirement age. And CPS typically don't retire at the age of 65 or 67. They work late until 70, 75 or whatever. So there are a lot of older CPAs and those are the ones that really left. Not all of them, obviously, but a big portion and not enough CPAs are getting into accounting. So there's a big gap in between there because it's not sexy. No accountant who wants to go to the bar and say, I'm an accountant.

Tyson Mutrux 00:16:47 Well, you know, I think I think that that is the perception that is put out there on movies and things like that. I doubt it's really like that.

Tyson Mutrux 00:16:55 I'm sure there's it's a lot more exciting than that. But that's great for you because, I mean, you're going to have an advantage over the next two decades at least.

Emil Abedian 00:17:03 At least. Yeah. The only challenge here is the hiring portion. If you can find as a firm. And it's the same for lawyers, it's not much different. If you can find a formula for hiring people, whether it's offshoring, outsourcing or internally, your your business is going to drive. And I think that that's the same for law firms also, because there's going to be a lot of a lot of lot of business. And the more the tax code and the business world gets complicated, the more advice businesses need. So there's a lot of opportunities for sure.

Tyson Mutrux 00:17:35 I think one of the coolest things that I like in our firm is when we get to the point where we were hiring for positions from within, where people were being promoted from within, and we had one where we had it was, we wanted to move up for different people into different roles.

Tyson Mutrux 00:17:51 So they were all getting promoted, and then we're going to hire a new person, but they were all contingent on each other, so we had to go like one person at a time. Are you interested in this role? We think you'd be perfect for it. Great. Next one. Next. And and all four ended up, saying, yeah, we want these positions. And they all got moved up. It was the coolest thing we had to announce, you know, for promotions at the same time and then hiring a new person. So it was like that to me. That's one of the coolest things we've done as a firm.

Emil Abedian 00:18:16 I've tried that and that, in my opinion at least, that's the best way of hiring and just promote within. I tried hiring at manager levels from outside instead of promoting, seniors to managers. It's nowhere close to being as successful as hiring internally. What do you.

Tyson Mutrux 00:18:34 Think that is?

Emil Abedian 00:18:35 First of all, the people, let's say seniors being promoted to manager, They've been with you for a few years.

Emil Abedian 00:18:39 They know your systems, they know your processes, they know your business idea. So it's they know you and your operation. And I think they get more motivated. You motivate your team members by promoting them. Who wants to stay where they are for the rest of their life like that? That's not motivating. Sooner or later they will leave you. Okay.

Tyson Mutrux 00:18:56 So I do want to ask you about the new company. Let's talk about that for a little bit because you like you obviously you've been drawn to lawyers, right. And so you started the new company that's that's focusing just on lawyers. What's what was the reason for that?

Emil Abedian 00:19:10 Again, I think it was a coincidence that it was lawyers and not any other industry. But pretty quickly I decided that I want to be specialized, even though it took me many years until I got to that point. But when all this mess with the merger and I was getting clients and doing everything for them, and I was just working day and night, the merger happened in 2013, January 1st of 2013, and my first child, son, was born January 31st of 2013.

Emil Abedian 00:19:38 So the first 6 to 12 months, I didn't see him. And that kind of was a wake up call. And you're like, Emil, we cannot do this. This is just the first kid, even though we got stuck on the second one. You know, we don't only have two, we don't have one. It sounds like I have a lot more, but you can't do this because I had gone through that with my dad. My dad worked as long as I can remember. He was working like seven days a week, 9 to 10 a.m. in the morning to 1112 at night because he had a restaurant. So I didn't want to do that mistake, but I was there at that point. Sure. So I need to change this to create a business that fits my lifestyle. And how can I do that? I can't do that by taking on any kind of client, like satisfying anybody who needs help. It's not just not doable. Let's specialize. And what can I specialize? It's not about just saying I'm specializing in entertainment industry or dentist.

Emil Abedian 00:20:30 Okay. What do you do for them? You got to be able to provide the value that not many other accountants are doing before.

Tyson Mutrux 00:20:36 You go further. It sounds like you had an issue though early on though where and I wonder how much of it had to do with you seeing your your dad working so many hours where it sounds like early on you were working so much that it had an effect on your marriage. Would you say that because you said your wife was asking, hey, you know, you're starting to question your working so much? Did. Do you think that you carried some of that, seeing what your dad was doing into the business early on?

Emil Abedian 00:21:02 I think so, because I was a little bit younger when I moved to California, when compared to when he moved from Iran to Sweden. He was probably late 30s. I was late 20s, but I don't know, it might be that immigrant mentality that you're in a new country. You got to make it like no one's going to help you and you just step up or get to get back to where you came from.

Emil Abedian 00:21:24 So that made me work harder, definitely. But yeah, I think I think seeing growing up and seeing that from my family, that hard work is part of our life. That probably is part of what? Why I started doing what I was doing. Yeah, but I'm glad that I realized that that's not the only solution. Like, you could be successful. You could run a firm, you could have a restaurant. I'm not specializing in restaurants, but comparing to my dad without having to work seven, seven days a week, 12 hours a day. You don't have to do that.

Tyson Mutrux 00:21:56 Different world. Completely different world. Yeah. That's when you when you mentioned that your dad ran a restaurant, I was thinking, man, that's a tough life because that's I don't I don't think people realize how hard it is to run a restaurant. So when you go to a restaurant and you complain, listen, sometimes I just suck it up because I that's it's tough running a restaurant. Restaurant life is different.

Tyson Mutrux 00:22:15 It's just a different.

Emil Abedian 00:22:15 It's probably one of the toughest, toughest industries out there.

Tyson Mutrux 00:22:18 Yeah, it's funny because like, sometimes I don't know if you do this because you lived it, right? I my, my parents didn't run a restaurant, but I, I've worked as a dishwasher in one before. And I saw the effect on the owners how it's a it's a tough life. Like there are times where like I will just if I have a bad experience, especially at a small restaurant, if it's like if it was like a chain, I don't care as much. But if it's like a mom and pop shop, if I have a bad experience, I sometimes I'll just be like, you know what? I'm gonna chalk that up as I had a bad day because that's.

Emil Abedian 00:22:48 Tough and I appreciate that. And that's the reality. My dad didn't have a huge restaurant. There was a mom and pop. There were two, two partners running around in operation. It was a pretty successful business.

Emil Abedian 00:22:57 But. And yeah, I didn't have to go work somewhere else because I had I had a job there and he wanted me to work for him because that was the only time we really could spend time together. Yeah. So I remember growing up anyway. Anyways, from 8 or 9 years old, every Sunday or as many Sundays as possible, I was spending, spending time with him at the restaurant. We're going in together, working together, having lunch together. So that was our kind of bonding time. Yeah, but yeah, I think that that has really built built my character, when it comes to working hard. Yeah, but is it the right way? Is it you? Do you have to really work super, super hard? I don't know, I think it's yes you do. It's a lie to say that you won't. You don't have to work hard when you open up your own business or your law firm, but it's more important to taste today's society. Work smarter because there are so many resources that we didn't have 30, 40 years ago.

Emil Abedian 00:23:52 With the technology, with the offshoring, everything is available, you name it. If we can think about it, it's out there.

Tyson Mutrux 00:23:59 Do you incorporate your kids into the business at all, where you bring them to work and let them do things?

Emil Abedian 00:24:04 Yeah, they're still young. My youngest one is eight, oldest one is 11. He's turning 12 soon and it's hard for them to do accounting work, obviously. But they come in, they do shredding, they shred paper. Even though we have a shredding company. Come pick up the, the papers. But I put aside a bunch for him when they come in. I got them a small shredder. So, yeah, I want them to learn, and I talk about it. And remember, growing up, my dad didn't talk too much about money or actually business. But I don't care, I don't mind, I want them to learn at the early stage about money, because it's a big part of our lives, and I share most of the things with them, like what revenue is, what is it? We're going through a transition right now.

Emil Abedian 00:24:46 Actually, that is not official yet, but it will be official by the time we air. So maybe we can talk about it. Yeah, let's talk about it. So the obedient and totally and portion is actually merging again.

Tyson Mutrux 00:24:58 Interesting as of to breaking news okay.

Emil Abedian 00:25:01 As of today actually we're signing the documents later today.

Tyson Mutrux 00:25:03 Oh my gosh.

Emil Abedian 00:25:04 So we merging with the larger firm but 3035 employees. So we're talking about that merger. For example I talk to my kids about that merger. What's happening. Why are we doing it. Because they wonder that this is you've been running this firm for 15 years. Like don't sell it, don't merge. They think I'm selling it. It's not really sell. And I explained to them, why are we doing it? So they can learn and I want to share with them. So I think it's important.

Tyson Mutrux 00:25:28 I think that's I think that's important too. I've got kids the same ages, so not exactly, but in the same range. So 13, nine and eight.

Tyson Mutrux 00:25:35 So they're we're our kids are right in that same same realm. And we so we're we are always trying to explain why we're doing certain things for example like we're out here on work. But we brought them out. And so we talk about that. And so today's a work day for daddy, you know. And we brought them out I don't know if you saw them whenever. Yeah. We we had them we had them here for a little bit. But my wife felt more comfortable kind of taking them and not not letting them make a bunch of noise. But I think getting them involved in all this, it's a good learning experience at the at the least, it doesn't mean they have to start a firm or anything like that. No, but I think it's a good experience for them because no.

Emil Abedian 00:26:08 School will ever teach them this. No, no school will ever teach them the podcast portion of the dad's business, for example. Right. And especially today with it's relatively easy for kids nowadays compared to when our parents grew up and even when we grew up.

Emil Abedian 00:26:23 So seeing that for them to only see the good side of this world. Everything is easy. Yeah, we live in a good area. We have good, nice cars, we travel. But that's not the reality. Always. That's not always what the life is about. And if we don't talk about it, they don't see dad's hard work. Because you work hard. I'm sure you work very, very hard. You fly across the country to do these kind of events and masterminds. It's good for them to see that we do this traveling. We do this, we do that because there's hard work behind it. So please learn it. And so don't take it for granted.

Tyson Mutrux 00:27:00 I'm laughing because you're right. And I think that that is 100% spot on. But I'm laughing because one of the first things my oldest son said when we got out, he was like, you have this much time to hang out whenever you come to these things. And I said, well, because we came out a few days early, I was like, no, we don't normally have this much time to hang out.

Tyson Mutrux 00:27:18 We came out early because you all that's that's why we have so much time.

Emil Abedian 00:27:21 Just because of that comment. You need to work hard.

Tyson Mutrux 00:27:23 Exactly right.

Emil Abedian 00:27:24 Put him to work.

Tyson Mutrux 00:27:25 Exactly right. But I want to go back to, lawyers specifically. Why you why you focus on them? because I think that that's smart. You you started a niche down. You started to attract the clients that you wanted and not the ones that you that you don't. So how is that helped you in your business? Or has it. Maybe it hasn't.

Emil Abedian 00:27:42 It has significantly. So I joined this group providers. It's a it's nationwide. Yeah I know what providers. Yeah. Yeah it's huge in California. but it's part they're part of most of the most of the country and providers are it's a networking group for accountants, lawyers, financial advisors and some other, some other professionals, but mainly those three professionals. So there are a lot of attorneys there. And getting in there. One started for my client and they they saw that we're doing a good job.

Emil Abedian 00:28:11 And the next thing we know, we have a bunch of attorneys in our book. And that was again, not intentional. It just happened. Yeah, the networking portion was intentional. I wanted to do networking because I didn't know a lot of people, so I needed to get to know people. So I noticed lawyers really need this help because typically they're fantastic lawyers. They're good in courtroom, they're good drafting agreement, they're good. They sell cases, they're aggressive. But when you talk to them about accounting and financials, it's like they don't understand a word of what you're saying. And that was a surprise to me actually, because you would think lawyers, you know, they're they would understand it. But majority of lawyers don't, which is fine. Sure. Later on, I realized that's actually fine. That's not a problem because they're great at what they do. Let them do what they do. Why do we have to spread as spread as thin? So we got in more and more into attorneys and attorney accounting.

Emil Abedian 00:29:04 Attorneys accounting is a little bit different. As you know you have the trust accounting specifically in California. I don't know if you're familiar with the Tom Girardi's case in California. No. Talk about it. Hot shot the pie attorney committed a lot of fraud. Stole stole clients funds.

Tyson Mutrux 00:29:19 I think I do know about this case. It was a ton of money. Like.

Emil Abedian 00:29:23 I don't know, hundreds of millions.

Tyson Mutrux 00:29:24 Yeah. It was, it was an amount that I was this was what, five years ago.

Emil Abedian 00:29:28 About five years ago, 4 or 5 years ago. And he's still he's still in court right now. I think he just in the days during these days getting sentenced 14 or 16 years, something like that. Don't quote me on it. So after that, after Tom Girardi's case and that became a huge case, by the way, he was married to Beverly Hills housewives, one of these younger, younger girls. So it became even more, more, more a bigger case. So after that, the California State Board revamped their entire trust accounting rules, which made it a lot more stricter for lawyers.

Emil Abedian 00:30:01 So that was another trigger. Now we started getting just the state Bar was doing free marketing for us based basically because the attorneys were scared and now they have to sign off with their license renewal that their trust accounting is correct.

Tyson Mutrux 00:30:16 I think that most states have that requirement, don't they? Or.

Emil Abedian 00:30:19 Yes. But there's an additional layer right now where I don't know exactly the wording of it, but they made it a lot more complicated. And you have to sign off and it's a lot more stricter. And starting February, well, in a few weeks already, they will do random audits of trust.

Tyson Mutrux 00:30:36 I was I was does random audits to where like they go through that's I think that that's important. Oh they.

Emil Abedian 00:30:42 Do that. So California didn't have that.

Tyson Mutrux 00:30:44 So I would I know Iowa does it not Missouri does not do it Illinois does not do it. There you.

Emil Abedian 00:30:47 Go Iowa. Some states have it already.

Tyson Mutrux 00:30:49 Exactly. Yeah.

Emil Abedian 00:30:50 So California did not have that. And they try to implement it for many, many years.

Emil Abedian 00:30:54 But they never had the politicians kind of support for it until the time Girardi's case where where they push it through. So starting next month it will be random audits. So now attorneys are even more scared. Sure. So that led us to get into more and more into attorneys up to now where we do the trust accounting very, very good. So we got our name out there as the law firm, specialist accountants. And the way it held my firm is it's standardize my firm a lot more. U.S. attorneys, there are million different attorneys. You have pi. You have immigration. You have workers comp. You have business attorneys, estate state planning attorneys. But we understand their issues. That's how it really helped me. When I get a lead calling me, I'm talking to them before even they tell me what they want. 85% of the time I know what they're looking for. I know what their issues are, so I need to listen to them, just confirm my understanding and then give them a solution.

Emil Abedian 00:31:50 Whereas if I do everything, if I do doctors, dentists, architects, restaurants, lawyers, you name it, manufacturing companies, every single company or industry will have its own issues and its its own complications, where I will have to sit down and learn it every time, where it obviously will take a lot more time from me and my team to do that. So doing one thing and doing good helped me from my perspective, but also it helps me provide value to my law firms because now I can help them. I'm not only doing their bookkeeping and tax filing and call it today. We are clear consultants you're familiar with.

Tyson Mutrux 00:32:28 Yeah. Yeah.

Emil Abedian 00:32:29 So I love clear. I wish there was something like that in the accounting.

Tyson Mutrux 00:32:33 I am curious because I think this will be helpful for people. What what do you like so much about Clea?

Emil Abedian 00:32:37 It's so organized and it's it's so correct. And it's not good for attorneys.

Tyson Mutrux 00:32:42 No, that's what I was wondering. Okay.

Emil Abedian 00:32:44 So it's not yet even though they came out with a pie, part of it, it's still growing.

Emil Abedian 00:32:50 I, we're not using Clio for personal injury attorneys, but for hourly billing cases, it's fantastic because it's the setup is right and it's easy to use, and it does so much than just billing. So as a clear consultant, we run Clio for our clients if they want us to do that. So that's another layer of value that we want to provide. We do the billing for them. We do the collections for them. We if they want to, we pay their bills.

Tyson Mutrux 00:33:17 Collections is big.

Emil Abedian 00:33:18 That's collection. Let me clarify that. So collection is not a form of collection agency okay. More of just following up to make sure they get paid.

Tyson Mutrux 00:33:27 Okay. Gotcha. Well that's still that's still crucial.

Emil Abedian 00:33:30 It's I think that's even more important than the collection agency part because 99% if if not more we collect. Yeah, but it takes time. Yeah.

Tyson Mutrux 00:33:39 Because you don't want to get to the collection agency. Exactly. Yeah.

Emil Abedian 00:33:41 So as a lawyer, especially if you're solo or just a couple of couple of partners firm, you done the work.

Emil Abedian 00:33:48 They don't want to run after the client to collect. They don't feel that it's right to do that. Yeah. So they just throw us in the in the mix and we do that on their behalf. So we do that for clients and also the trust accounting. Obviously it's huge what we do with helping them being compliance with the state bar regulations. And then we wrap up the year with very involved tax planning, which I think it's for me, that's the most fun part. That's when I get involved with most of my clients. because Is.

Tyson Mutrux 00:34:18 That the most overlooked part, you think?

Emil Abedian 00:34:20 I think so, yeah, I think so.

Tyson Mutrux 00:34:22 By lawyers is what I.

Emil Abedian 00:34:23 Mean by by any really by any CPA really providing services because majority of CPAs are doing their bookkeeping. Don't don't see the clients the prepare to return February, March. They see the client, they sign the return and they don't see them until next year again, which is, in my opinion, a waste of knowledge, waste of experience because CPA sits on so much information, because I see my clients numbers every year, every month, really we do it monthly basis.

Emil Abedian 00:34:50 I talked to them. I know so much about them. Sometimes I feel like I'm more a therapist than an accountant. Yeah. So for me to not utilize that knowledge that I have about the client, the experience I have with other law firms and help my clients, I would feel like it's waste of waste of knowledge and waste of time. So a lot of CPAs are not doing it. They prepare a return. And I think that's where the biggest, biggest lack is for, for clients getting the value from CPAs that see them get the advice because the feed you will pay your CPA if it's the right CPA, if they help you, provide you the value, you will save multiple of that. It's not even a question of how much the CPA can help you. So we put a lot of effort right after October 15th deadline. we for the tax deadline October 15th through the end of December. We spend a lot of time talking to our clients. Several times during those two and a half months, probably 3 or 4, maybe 5 or 6 times.

Emil Abedian 00:35:49 We do the projection based on current situations. Okay. Tyson, if you don't do if we don't make any changes, we don't implement any strategies. Your liability will be 200,000, let's say. Sure. But we have these strategies for you. Let's do this kind of things. And there are millions of things you can do anywhere from low hanging fruit from hiring your kids, for example, which is a good strategy from tax perspective. But in my opinion, I use that for teaching my my kids about the money. Okay, we go back to that.

Tyson Mutrux 00:36:18 But I do I do want to come back to that because I've heard I've heard both sides of the story on on that.

Emil Abedian 00:36:23 So let's come back to that.

Tyson Mutrux 00:36:24 Yeah. Come back.

Emil Abedian 00:36:25 To it. So anywhere from low hanging fruit really you put kids on on payroll. You save 3 or 4 or $5,000 per kid. Yes, it's great, but it's not going to change your life, but to a lot more complicated strategies, from retirement plan implementation to even more complicated strategies such as investment tax, tax incentive investments that you can invest and get deductions at the same time.

Tyson Mutrux 00:36:49 So let's stay let's stay on this this topic then. And that's the the end of the year, that tax planning, the things that lawyers can do to really shift it where they're not having to pay a big nut or just reshaping things in their advantage. Let's start with the kids. So what is the right way of doing it? Because and I think that the and by the way, I've seen the other side of it is the things I've seen like on like YouTube shorts and like TikToks where people are saying, oh, don't do this because X, Y, and Z, I'm sure there's a right way of doing it. So if you're going to hire your kids, what's the right way of doing it?

Emil Abedian 00:37:25 So each state has its own rules for how old the kids can be and how many hours they can work. So each state, we got to be specific with each state, but just ignore the fact of how many hours and all that. But let's say my son is 11 turning 12.

Emil Abedian 00:37:39 I'm paying, I think, 7 or 800 bucks a month for him. He comes in maybe once, sometimes even twice summers. He comes in more often. He helped me with shredding. He helps us with the mail. He makes coffee. He just goes around and help anybody that wants and can't do bookkeeping, obviously. But whatever, anything else, administration work and I think I can justify seven, 800 bucks a month for what he does. The important thing is to be able to justify the rate you're paying your kids. Like, I can't pay him $20,000 a year, like, what is he doing for $20,000, but for 7 or $8000 a year for what he does, I can justify it. And when you do that, you're able to deduct deduct the pay, what you're paying to your kid from your business income. So that goes down with, let's say $10,000. If you pay your kid 10,000, your income goes down with $10,000. If you're in a 40% bracket, that will save you $4,000 in taxes.

Emil Abedian 00:38:36 Your kid does not need to pay tax income tax for up to 14,000in change, so you could pay them up to 14,000 with them paying zero tax, but you saved 40% tax on whatever you pay them. But if you have an entity, if you have a corporation or an LLC or as a part tax, as a partnership, they have to pay Social Security Medicare tax on it, which is 15, roughly 15% for employer employee. So employers you as a company employee is the kid. Obviously you're still 25% savings in the bracket there. You could structure it if you have a sole All proprietor. Your spouse and kids don't need to pay Social Security Medicare taxes, so it depends on what structure you have. I will not create a sole proprietorship just for this purpose, but if you are already a sole proprietor, then you save a little bit more compared to if your corporation.

Tyson Mutrux 00:39:27 So I've heard of people putting like kids in like marketing materials and things like that. And you know, paying them a set amount is that is that a strategy that you could use.

Emil Abedian 00:39:38 If they really in marketing? Yeah. With our other operation, not not law firm operating the general practice, we have a kind of a cooking show business. They do they do similar to podcasts, but it's for for chefs and they have cooking shows. So what they do there, this owner's kids is actually a part of the marketing. They're part of the marketing. It's on the flyers on the website. So if IRS comes in and questions it, there's legit proof that this guy this kid is on is on her marketing material. But in a law firm, how would you. I'm just thinking right now, how would I use my kid for my CPA, for his marketing, right? I don't that doesn't make sense.

Tyson Mutrux 00:40:17 I got I've got an idea as to how he could do it, and we didn't pay our kids to do this. So this isn't a this is an example you could use. But we did some videos. It was during Covid and we were we asked we had our kids do some videos about what I do for a living, and we and we had them talk about some other different things.

Tyson Mutrux 00:40:34 I could see a scenario where you have it was fun. People liked it and they the kids loved it too. Like we posted them up and we posted it and all that where I could see something like that you could do, but you'd have to do it like on a regular basis. So there's ways of doing it. But you're right. I mean, it would have to be like a regular social media campaign, almost like like people do with animals, like on Instagram and stuff. I have like a I think you could do something similar to that. I don't know, I don't feel super. I like that with that.

Emil Abedian 00:41:01 I didn't I didn't think about that.

Tyson Mutrux 00:41:02 So I think you could do it. It's just a you have to do it. It's got to be a plan. It's got to be planned. It can't just be some willy nilly, you know, a couple posts a year.

Emil Abedian 00:41:11 As any other business expense, when clients ask me, what can I deduct? You can deduct anything that we can justify as a business expense.

Emil Abedian 00:41:19 Sure. Like really a car might not be deduction for me, but might be deduction for you because I'm not driving for my business for example. Right. But you're driving a lot for your business. So that's a deduction for you but not for me. Same with the kids. Like my kids might not be deductible, but yours might be because you do a lot of social media and they help you and they put it up. They might not not even be on camera. They might be behind the scenes. Let's say they're 15, 16 year old. They actually shooting the the movies or the films. What are some of.

Tyson Mutrux 00:41:45 The most clever things you've seen that people have deducted, that have had a justification for it?

Emil Abedian 00:41:50 Clever things we had one year, they deducted. I didn't take this deduction though, by the way. So they bought a car and it was not for the purpose of a car. So it was more like a marketing cost because personal injury firm bought this car to test the damages that it caused.

Emil Abedian 00:42:13 It was a Tesla. Sure. So they wanted to sue Tesla.

Tyson Mutrux 00:42:16 Oh, interesting.

Emil Abedian 00:42:17 Okay, so we were not able to take that because they never actually crashed it or did anything with it. Yeah, but I can imagine if they actually buy it and let's say they crash it to test the seatbelts or whatever the seats or whatever the braking system, that could possibly be a good, good deduction, but not as a car, but more as a research or marketing or some other. What if they disassembled it?

Tyson Mutrux 00:42:45 Yeah, yeah. But okay, so then I then I've got like all these follow up questions because yeah, let's say you disassemble it and then you have the mechanics put it back together and then then can you then use it. I mean that's one of the things. Or do you have to then turn around and sell it?

Emil Abedian 00:42:59 Well if you sell it then it's pointless because if you sell it then you get recapture. You capture the deduction. So there's no point doing that but the Disassemble it.

Emil Abedian 00:43:08 I see it's hard to say. It comes back to each each specific case and what the justification is.

Tyson Mutrux 00:43:13 It sound like a lawyer. It depends.

Emil Abedian 00:43:15 Yeah. You know, I work with. I work with lawyers. Yeah, I learn from that. Yeah, it's very nice. Seriously, it's very difficult. And it might be deductible for one person but not the next person. So we our tax planning is a very, very custom, custom made. we don't bookkeeping is a lot easier to scale and, kind of standardize versus tax planning because tax planning is very, very personalized. I talked to each client specifically about their plan about the implementation, whereas bookkeeping, we can standardize a lot more obviously. So it's difficult. It's there's no clear answer to what could be or what's not deductible. But one answer that I always give my client is, can we justify this? If IRS knocks on the door, ask about this deduction. Do we have a reasoning or did we just pick it from from the above and just put it in the tax return.

Tyson Mutrux 00:44:06 You know, what I find interesting about bookkeeping is because we had to interview a lot of different bookkeepers for our injury firm, and the number that don't understand how personal injury works, how we pay out the money and then we get reimbursed at the end. It just it was it was fascinating how few accountants and bookkeepers did not understand how personal injury attorneys, how their business works. And so, like we would ask, it was funny because we would ask the, you know, do you understand how personal injury litigation works, all that. Oh, yeah. We could we could completely help you. Okay. Walk me through it. and they couldn't they they had no clue. And I always try to analogize it in a way to like a construction company where, like, if you're building a building, your construction company, you're going to front a bunch of costs, even though a lot of them finance it. But we'll set that aside, you know, so you you finance it, and then after you sell the house, you're going to get the money back.

Tyson Mutrux 00:44:59 I try to explain to them and sometimes they would understand it. But why do you think so few bookkeepers understand. Like what? And I'm specifically talking about injury lawyers. Like why? They just don't understand how injury lawyers work and how they operate.

Emil Abedian 00:45:14 And it's not only for injury lawyers, by the way. It's for many different practice areas where they have trust. Accounting accountants are not they don't know trust accounting. Majority of them. There's a lot of them who knows about it. But majority don't know trust accounting. They don't understand. And it comes back to what we discussed a little bit earlier. But specialization. It's not only that. It's simplified my operation with processes and systems and doing things the same way, but it helped me, as you said, provide the knowledge and experience to my law firms because not many CPAs are doing it and it comes back to specialization. Like, I don't know all the ins and outs of the manufacturing industries, the industry. I haven't done it well. We might have had a couple of smaller ones in the past.

Emil Abedian 00:45:59 So I don't take on manufacturing businesses because that's not my specialty. Why would I get into manufacturing when there are millions of law firms out there that need my help? I just take take whatever. It's, whatever I know. Actually, that's a that's some good friend of mine. Attorney. She's a trust attorney, state planning attorney. And in California, she keeps telling me that the human being are trying to do learn things that we don't know. But why? Why don't we just do things that we do good and improve that and become specialists in that, and let other people do what we don't do instead of wasting time trying to learn. That's not working everywhere. Obviously, we want to develop our brain and we want to learn new things. But in business, I think that's very relevant.

Tyson Mutrux 00:46:43 I agree, I think we should clip that part of it, and that's a post because I 100% agree with you. That's I'm a bit of a tinkerer too, I do, I like learning new things and all that.

Tyson Mutrux 00:46:52 So to a fault sometimes I'll do that. But you're 100% right. In reality, we should just say, okay, I don't know how to do this. I'm going to go. I know someone who does a meal does this really well. Let's hire a mule to do it. I don't have to worry. I don't have to waste of time to learn any of that and do it the wrong way anyways, because I'm going to make a ton of mistakes learning it anyways.

Emil Abedian 00:47:10 Unless you really want to learn it for your own sake and you know that, that's perfectly fine. Like you want to learn to play piano, then you're gonna learn to play piano, obviously. but, in business, I think, I think you just stick to what you do best and to going to answer your question about why so many accountants don't know it. They just never learned it, and which is fine. But they should not try to get love from clients. Yeah, because that creates more problem because that law firm is not going to stay with them.

Emil Abedian 00:47:38 They're going to spend a lot of time trying to learn it, trying to help the client. Six months in, the lawyer will realize that this CPA doesn't know what they're doing, so they will start looking for someone else. This wasted the money. They wasted their time, and they're back to square one. All right.

Tyson Mutrux 00:47:53 I've got a silly question, I think so, you know, like I've seen like I think it's QuickBooks or who does the accounting software that you can QuickBooks Or like the one that they do the tax returns. Is that TurboTax TurboTax. All right. So you see in like, okay, we'll we tell you whether or not you're going to the likelihood of getting audited or something like that, which I thought was kind of I think it's kind of funny when you see something, if you look at a tax return, are there certain things that you see are like, oh, that's a red flag, because I wonder if, like, you have your own human gauge to determine whether or not this is going to get audited or 100%.

Tyson Mutrux 00:48:25 It's what are some of those things that people know to, to look for, to make sure that they're not doing?

Emil Abedian 00:48:31 Number one thing, I typically, by the way, typically most of lawyers are is corporations, smaller law firms, whether they're LPs, and then they have an S corporation in between the LLP and, and personally but majority of S Corp and as an S Corp you're required to take a reasonable salary from your company. That's an IRS guideline because if you don't, you're cheating the IRS about 15% because the earnings from your S Corp is not subject to self-employment taxes. So that's why IRS requires owners of S Corp to take reasonable salary compared to your industry, and what you do for the business to pay the payroll taxes on on the payroll portion. And you can save on the other. One big red flag is when I c return $3 million revenue, let's say $1.2 million net profit, zero payroll. Yeah. And that that line item is the first expense item on your tax return on an S corporation return.

Emil Abedian 00:49:27 So that's the number one thing I do correct your payroll because if you don't, sooner or later they're gonna knock on your door. And instead of doing maybe 100 and 1020 thousand payroll, IRS will reclassify your entire profit. Profit to payroll if you don't have reasonable payroll. Wow. So that's a major thing that I would recommend all s-corp owners to be really careful with, with their reasonable salary.

Tyson Mutrux 00:49:49 So we have a lawyer on the hot seat. A lot of times we'll I'll do one of my first questions if I, especially if I sense that there's a cash flow problem is, is I'll say, do you are you paying yourself a salary? And it's not because of that. It's just because usually they they're not paying themselves a salary. They're just sucking everything out of the business. Every time they get paid, they just take it. And that's called I caused a bunch of cash flow problems. So I think it's interesting how to me a red flag is your for different reasons is that you're you're not you're not paying yourself a salary because you're causing yourself a bunch of cash flow problems.

Tyson Mutrux 00:50:21 But so then there might be a double whammy. So you have not taken a salary. And so you've got massive swings in cash flow, which causes a bunch of problems. But then you get popped by the IRS because you got your your earnings got reclassified as, as a, as I guess it's called.

Emil Abedian 00:50:37 As wages.

Tyson Mutrux 00:50:38 As wages, wages. And then you get you get a double whammy at the end.

Emil Abedian 00:50:41 Plus penalties and interest. So it's going to cost I seen pretty bad situations where they don't take payroll. So that's the first thing we fix when we get a new client. One of the first things we fixed that you got to get on payroll.

Tyson Mutrux 00:50:53 Is there a certain percentage that you recommend? Because I've heard a lot of different things. Should you be at a certain percentage of overall revenues or profits, or how do you look?

Emil Abedian 00:51:01 So depending on the profit again depending. Yeah sure. But but let's say if you make $200,000 in profit or in profit. Profit, profit. Yeah.

Emil Abedian 00:51:09 In net profit when it comes to payroll, I'm just looking at the profit because you can make $3 million revenue. And you know, that's why I.

Tyson Mutrux 00:51:16 Call it an ego number. Revenue is an ego number. Yeah. Exactly. Yeah. That's all it.

Emil Abedian 00:51:19 Is. So let's say 200,000 then probably about 50% of that is reasonable. But if you make $2 million profit then you don't need to take to 50% payroll. I typically max out the Social Security limit, which is about 165 to $170,000. If you make those numbers a couple of million dollars, and then the rest is profit distribution, because there's nothing else for the IRS to get. The majority of benefit is in the Social Security that IRS takes from you. The remaining amount is just Medicare and which is like 2.9%. So they don't typically go look at it once you maxed out your Social Security limit. Gotcha.

Tyson Mutrux 00:51:56 Have you ever heard of prophet first?

Emil Abedian 00:51:57 Yeah. So I wanted to actually mention that when you started talking about the payroll.

Tyson Mutrux 00:52:01 Yeah, yeah. So what are your what are your thoughts on on prophet first I.

Emil Abedian 00:52:03 Like part of it, but not everything from it is.

Tyson Mutrux 00:52:06 Interesting. I want to hear about the parts.

Emil Abedian 00:52:08 I like him I, I like Mike by the way.

Tyson Mutrux 00:52:09 He's like Mike. Yeah, but what do you, what do you not like? You know.

Emil Abedian 00:52:14 Especially for smaller firms, whatever he's talking about because he talks about buckets, right. He talks about your your income bucket tax bucket investment bucket. He talks about all this bucket. And specifically for smaller firms it will create so much administration work. If you make 100,000 or 200,000 profit, first of all you need to take about 100,000 I'm assuming depending on what part of the country you live. But I'm assuming around 100,000 is fair for a lawyer to make, at least as a payroll. Then the rest could come to you as a profit and then you have another 100,000 left. You got to split those up in so many different buckets, the administration becomes a lot more difficult.

Emil Abedian 00:52:52 Instead, what I like is I like the payroll portion because that's that's the key. First of all, from IRS requires it. But from cash flow management perspective also I need 100,000 to survive. Okay. I take that out from the company. Whatever it's left end of the year we pay out in bonuses or distribution the remaining amount. I think you have to have a floating kind of plan because your goals are 100% different from mine. I might be I'm not younger than you, but if I'm younger than you, I'm looking to buy a house. Then my investment bucket would be a lot bigger than my, I don't know, travel bucket or my tax bucket or whatever buckets they're out there. So we need to look at each individual person's goals and customize it if that's part of the tax planning. Sure. But I like the idea as a whole. But some of the details are, in my opinion, a little bit too detailed, to be frank.

Tyson Mutrux 00:53:43 Okay. I we're where we kind of drew the line was, I'm not setting up an outside bank account to then transfer the funds into for like the tax planning.

Tyson Mutrux 00:53:52 Like I I'm just not doing that. I'm keeping it in that because. And I understand the ideas. You keep your. It's out of sight, out of mind. You're not. But I'm not just that's just another it's a it's more administrative work then I'm just not going to do like we're just so you just.

Emil Abedian 00:54:05 Keep it in the we.

Tyson Mutrux 00:54:06 Keep in our main. Not in the same, not in the main account. We have a separate bucket inside of our main account. Bank of America. I guess I shouldn't tell people which bank I bank at, but the I'm. We did initially set up an outside local bank to transfer the funds into, and we just were like, we're not doing this anymore. This is just we're not doing it.

Emil Abedian 00:54:23 That's what I'm talking about. It creates so much more work. And after a while, people stop doing it because they get busy with other things. So the idea is great. I like my in college. It's a it's that one. And then he did the clockwork.

Emil Abedian 00:54:36 Clockwork didn't do the the pumpkin pumpkin patch.

Tyson Mutrux 00:54:40 Yes. I have not read that one. Yeah it's good. It's good.

Emil Abedian 00:54:42 Yeah I started I read that very early. That was one of the triggers for when I switch gears in my operations, start firing clients that we didn't like. So yeah, he's he's awesome.

Tyson Mutrux 00:54:53 So what are some other. I want to make sure we hit some other red flags. Some things that people that lawyers do that it's a no no. And obviously I'm not talking about the obvious ones like shouldn't be taking client money. You know, it shouldn't co-mingle funds all that stuff. But are there some some that are not as commonly known.

Emil Abedian 00:55:09 So the biggest issue that we see is co-mingling with trust accounting. Yeah, that's first of all a problem from IRS perspective. Because if you don't move funds from your trust account to your, to your operating account when it's earned, it means you're not recognizing it as income, because trust money is not your money and you're not. It's kind of two buckets.

Emil Abedian 00:55:30 When we do accounting for our clients, we have two sets of classes one trust account, one operating account. It's still in the same QuickBooks or accounting software, but if you don't move that over to your operating account, you cheated IRS, you deferred income. What I see December settlements a big settlement comes in December. You know let's forget about this until January. You can't do that. Like you got to move it over to your overture operating again as soon as possible after it's earned. So that's the biggest issue that I can see, both from IRS perspective, but also from from the state bars or so.

Tyson Mutrux 00:56:01 Just because I know I'm going to get a bunch of questions about this. Can you still claim it, let's say for 2425. Right. So let's say you had some settlements that came through. The checks came in late in the year, like on the 27th, 28th. Do they need to rush by like the 31st to make sure they transfer that money over? Or can they just claim it on 24 and move it over in early 25? Is that is that still possible? No, I.

Emil Abedian 00:56:24 Would not do that at 2 or 3 days. I think it's very reasonable to keep it in the in the trust account. So 2 or 3 days. I'm not worried. It's when it's longer than 15 days. Ten, 15 days. You got the settlement 15th of December and accidentally you forgot to move the funds over until January 2nd. That's a no no, but you got the funds December 2728. Right before Christmas or right after Christmas before New Year's. I'm not pushing it that much because it's it's so close, like it's got to be reasonable. So what the IRS is looking at is this reasonable 15 days is more than reasonable to say that you had the time to move the money 2 or 3 days. It's not as reasonable.

Tyson Mutrux 00:57:06 Gotcha. Especially for, for companies or the states where they're auditing to where is I mean, they're going, hey, what's going on here? That's that's a big one. I do from a business standpoint, I do wonder and I want you to look, thinking from the lawyer's standpoint, what do you what are your thoughts on the auditing though? Because with the IRS they're going to audit you if you are if they see issues, right, with a random audit.

Tyson Mutrux 00:57:32 I know of a firm in Iowa, I that's why that's how I know that they have this auditing rule. It was like a 3 or 4 week process where they were like in it for like 3 or 4 weeks. It was a big deal that they passed with flying colors, no issues at all, but it was just a lot of time and effort from them. It was extremely stressful. So I do wonder from a from a business standpoint like what do you what are your thoughts on it?

Emil Abedian 00:57:58 Was this an IRS audit or, it was a it was a state law state audit. Okay. So I haven't seen state audits yet because California is not mandating until it's not implementing until next month. But I started my career as an auditor. So back in Sweden, in, in, Stockholm, I started as an auditor, not as in tax. And we were going into companies and they were hiring us. So it was not a random audit. Obviously they hire us for bank purposes and all that.

Emil Abedian 00:58:25 We were digging into the details, man. We were looking at every single thing that we could. And that was frustrating from clients. And that was not even random audit. They hired us to do that. And I you could feel the frustration because they were spending so much time working with us, providing us a document. So I can just imagine how this state bar audits will be. First of all, you're not welcome to get there for firms don't want you to be there as an auditor. And they're there. They're trying to dig out. They're trying to find mistakes, find issues. So I can see that being a huge, huge issue and frustration. And just from business perspective, it's going to suck. Suck your time and resources for sure.

Tyson Mutrux 00:59:03 Quick timeout. Yeah. So I want to ask you about counsel to counsel. Tell me about this. What's the what's the point behind it. What was the why. What made you want to to write the book. Yeah.

Emil Abedian 00:59:13 It's been in my one of my goals for the longest time.

Emil Abedian 00:59:16 I never got to it until last year when I actually actually started writing it. But it's been back on my mind. I've been planning it. I mean, drafting it kind of ideas what I want to write about and the kind of the outline has been there for many years. And the reason is I want to show my my story. I want to write about my firm, but I'm comparing it to a law firm. So counsel. Counsel is but counsel is based. The title comes from council counsel CPAs as being a counsel providing service to counsel, which are lawyers, and I want to compare those to CPA firm emails, CPA firm council, CPA to a law firm. What I've done, mistakes I've done, growing to where I am right now, even though I have a long way to go to where I want to be. But I've taken a few steps and show and we're I'm showing examples from live client examples of mistakes that I've seen, but also success stories. So my clients and whoever reads it when whoever want to read it can see that.

Emil Abedian 01:00:17 First of all, if I'm doing this mistakes, there are better ways of doing it, but also get motivated by the ones that did it right. Yeah, just I love telling the story and I know we're running out of time, but it's about this law firm client, that of mine, and they give permission to me to talk about it. So West Coast trial lawyers in California. So one of the partners, Allen, called me up. This is ten years ago. Probably call me up to this office in downtown La Semel. I knew him from a different partnership. He used to be have another firm which they split up and he partnered up with Neema instead. He called me up. Emil, can you come to our new office? We want to talk to you. See how we can help us. This is way before Covid where people were actually going into offices at that time. I walked into this beautiful office downtown LA. Huge high rise, I don't know, 4 or 5000ft².

Emil Abedian 01:01:05 And I knew that they had just opened up. So I was a little bit surprised. Even before walking in and opening up the door the office was set up for, I don't know, 40 or 50 people. I don't know how many people was. All the desks were set up. Everything was set as beautifully done, but nothing was there like no people, nothing. And this is a weekday. Not to say, Allen, what's going on? Like, what is this? This your office or. Yeah, this is our office. So where are the people? What's happening? Don't worry about the people. They will come. Just tell us how you can help us, what you can do for us because we want to grow. That was really motivating because I saw that they started this operation, their law firm, as a business. They had put their investor hat on from day one, even without having any employees. So I think that's a very good learning, learning experience that we're talking about a little bit about counsel to counsel that and not everybody can do that.

Emil Abedian 01:01:55 Obviously it's about financials and the you know you got to have the resources to do that. But if you can and you believe in yourself, I think you need to put your investor hat on from day one and not try to put on five, ten years after you open up the practice, because you will get used to old habits, which is not impossible to change by the way. You can always change and make it better. But anyway, this was a motivating story that I like. I usually like to share when when we talk about firms and investors.

Tyson Mutrux 01:02:24 I really like that I'm tempted to to want to end it there. Just because that is a is a great lesson for everyone.