Realm Business & Tax Advisory

Not having a financial advisor can be extremely expensive Here are 3 real examples I’ve seen recently where not having proper advice cost people a lot of money: 1️⃣ Business owner paying unnecessary taxes Client owns a business in California generating $1.5M+ in annual profit. Still operating as a sole proprietor. What that means: • No PTET election • SE tax on every dollar earned • $0 QBID deduction (no wages) • No retirement accounts set up With proper planning: ✔️ Entity restructuring ✔️ PTET optimization ✔️ Retirement account setup ($70k deferral) ✔️ QBID optimized (50% of wages) This client will save well over $100,000 THIS YEAR alone. They weren’t doing anything “wrong”… They were just still working with a budget tax firm who provides no planning 2️⃣ Inherited IRA mistake pushing income into top tax brackets Client inherited an IRA that requires distributions within 5 years. Four years in → $0 withdrawn. Now all of it must come out in year 5, pushing income into the highest tax brackets With planning: • Distributions could have been spread over 5 years • ~$25,000+ in taxes saved • Additional offset by maxing: – One spouse’s Solo 401(k) – The other spouse’s pre-tax 401(k) Instead, everything is now forced into one high-tax year. 3️⃣ Executive missing on all fronts Client makes 7 figures as an executive between salary, RSUs and bonuses Issue 1: withholding is way too low and has been paying over $10k in underpayment penalties a year Issue 2: not maxing out 401(k), Mega backdoor Roth 401(k), HSA, backdoor Roth, or deferred comp plan. This is leaving a ton of tax savings on the table Issue 3: not selling and locking in RSUs each year, and now the company is down 30%. They could have taken that and reallocated through a 10b5-1 plan. 4️⃣ Charitable giving done the most expensive way possible Client donated $50,000 cash to charity at year-end after selling investments to get the cash Better strategy: ✔️ Donate the stock to a Donor Advised Fund ✔️ Get the same income deduction ✔️ Avoid capital gains on the investments ✔️ Rebuy the stock and reset the basis Because they live in CA and earn $1M+: • 20% LTCG • 3.8% NIIT • 11.3% state tax 👉 Missed tax savings on the entire capital gain None of these clients lacked intelligence or success. They lacked coordination, proactive planning, and ongoing advice. Great financial advice isn’t an expense It’s often the highest ROI investment you’ll ever make

We are doing something that I believe is pretty unique to the financial planning world For the 2025 tax year, 80% of our clients will be using the same CPA firm to get their taxes prepared, and we pay the bill Our vision has been to bring taxes in house for a long time, since we handle so much of the tax planning work and review all clients returns anyways But there is so much that goes into doing taxes in house; hiring, software, compliance… that our goal was to do the next best thing (kudos to those who do it that way) Find a firm who was willing to partner with us to handle 300+ individual returns Not only that, but fulfill our vision of us being involved… which was for us to review a copy of all returns BEFORE they get filed From March 15-April 15 my calendar is completely cleared to do nothing but review returns as our tax team is getting them done and over to us to review At the same time, I will be doing a majority of the tax projection work for 2026 I have nothing but the utmost respect for accountants and the work they do, but we’ve been tracking tax return errors for 4 years and consistently the number is 30% for our clients, and most of them are not the CPAs fault (that also includes self filers) As the comprehensive financial planner, we are the ones who know the most about our clients full picture, and getting a second set of eyes on returns ahead of filing can mitigate a ton of things that could be missed The goal is not only to reduce tax return errors, it’s to create a collaborate experience for clients where they have one person/team facilitating everything for them, for one cost paid to us We worked together for 2024 tax year with about 60 clients, and we are going 4-5x that this year, and I can’t wait Will be providing updates!

It really is crazy out there We have a new client who owns an S Corp Hasn’t run a salary payment in his second year of running his solo business It’s QBID eligible (non SSTB) and his income is over the threshold We tell him to reach out to his cpa to get payroll setup, get to a reasonable wage, add a solo, and make a ptet payment (since he is in a state he can still elect into) CPA’s only response is that he shouldn’t do any of that because it’ll add $20k more of SE tax He Said since he’s still so new he doesn’t need wages… (no QBID without wages) Wild With all the planning, he will end over up $25k ahead tax wise and most importantly now be compliant What is up with allowing $0 salaries in S Corps? At least 20% of the business owners coming to work with us have $0 salaries