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 [00:00:56] Miriam: I am excited today to have Charles Reed with us. [00:01:00] And you can see on if you’re watching the video, you can see his company is called, Get Payroll.

[00:01:05] I love the name because it tells exactly what you do. And if I’m not mistaken and did my math, right, you have had this company in payroll related services for over 30 years now, is that correct?

[00:01:17] Charles: That’s correct Miriam. Yes.

[00:01:19] Miriam: All right. Well, you’ve been, you are a senior executive. You’ve been an entrepreneur for over 50 years with financial leadership. I think some of the things I’m really interested in, in the context of this conversation are your involvement with the IRS and your understanding of compliance.

[00:01:37] And before I lose my listeners, We all have to pay attention to this money thing, because it’s gonna mess us up if we’re not careful. So whether you have a business or you don’t have a business, this is an important episode to listen to because Charles is gonna talk with us about some of the changes and some of the things that are going on, and we’re just excited to have you.

[00:01:59] Charles: [00:02:00] Thank you, Miriam. It’s a pleasure to be here. Thank you for having me.

[00:02:02] Miriam: Absolutely.

Inflation Today

[00:02:04] Miriam: From a financial person’s perspective, what you are seeing in the inflation, recession space, and how that’s impacting what you’re doing with your money and your thoughts and your spending let’s, let’s just start there and then we’re gonna go, you know, wherever the conversation takes us.

[00:02:23] Charles: Obviously inflation is here with a vengeance. I remember it very well in the eighties. Cuz I’d bought a house with a 12% mortgage rate. Oh my gosh. It was variable. So it, it, it, it was going down. So I remember the last big one and this one is just as bad. It’s not going to get better immediately. The only saving grace is the employment market it’s still full employment.

[00:02:46] If you want a job, you can get a job. The jobs are available and easy to find, and they’re paying more every day. Because of inflation. Employers are finding that if they have don’t raise their pay they’re not attracting people.

[00:02:59] Obviously we’re [00:03:00] in the payroll business. We see those rate changes come through every day. So we, we see what’s happening with average wages and so on and so forth. And that brings one in interesting thing. Minimum wage is basically a non-existent item. It’s out there.

[00:03:16] It’s the law. And a few people really try to use it, but the vast, vast, vast majority of people don’t pay anybody at minimum wage.

Advice for the Younger Generation

[00:03:26] Miriam: Yeah. What would your input be for younger people? People between the ages of 25 and 40, you know, in that age range where they’re like, oh my gosh, – they haven’t lived through some of these periods to know how it plays out.

[00:03:42] And they’re just seeing their costs go higher and higher. And they’re sort of going, ah, I don’t know what to do here.

[00:03:51] Charles: This too shall pass. Yeah. Inflation will recede prices will stabilize. They will stabilize at a higher point, but your [00:04:00] earnings will be higher. So you shouldn’t be worse off in the end. In the meantime, it’s difficult, it’s a pain and you’re going to have to be careful.

[00:04:12] You need to work hard and you need to invest. You need to save and yeah, it looks like that savings isn’t doing much, but if you invest it in growth stocks, preferably then over time it will overcome inflation and you will become wealthy.

[00:04:29] I taught high school for five years – I taught intro to business every morning.

[00:04:33] Before work, I’d go in and teach one class, then come in and run my business.

[00:04:37] Miriam: That’s awesome. Awesome.

Invest Early

[00:04:38] Charles: It was a lot of fun. They kept me young and I talked to ’em about compound interest and invested and so on. And one young lady was working at McDonald’s and I said, okay, would you miss $10 a week outta your paycheck?

[00:04:52] She said, nah, not really. I said, good. Invest that. Every week invest that. And [00:05:00] when you turn my age, I was in my mid fifties, I guess at the time -you’ll be rich. And she thought that was a great idea. I saw her about five, six years later at the grocery store and we chatted for a bit and I said, have you invested, been investing that $10?

[00:05:17] And she said, no.

[00:05:19] Miriam: Oh,

[00:05:21] Charles: so, and it’s an opportunity that you have when you’re young that you don’t have when you get above 40 as much, because. Time value of money, compound interest between 18 and 40- you’re looking at doubling your, your investment three times over minimum on average. Yeah. So it grows and it grows and it compounds. Einstein said, you know, compound interest is, is the greatest force in the universe.

[00:05:51] Yeah. And it is a wonderful thing. So to young people. Work hard invest.

[00:05:58] I had lunch with Lee [00:06:00] Iococa here. A number of years ago, gentleman, that ran Chrysler, who was Ford Mustang and then Chrysler and he said, it’s, it’s really easy to get rich in this country, Charles, just work half a day, every day. It doesn’t matter whether you work the first 12 hours or the last 12 hours.

[00:06:18] yeah. Now that was semi in gest, but the idea is work hard, save and invest. And over time, you’ll be amazed at what happens.

[00:06:29] Miriam: Yeah. I couldn’t agree more. And I love that you pulled out the Einstein quote because in my mind I was like, I’m pretty sure Einstein said this and I was gonna try and cobble it together, but you got it.

Inflation for Business Owners

[00:06:41] Miriam: Okay. So for our business owners out there, what kind of insight would you be giving them about inflation and what’s going on?

[00:06:50] Charles: Raise your prices. Your clients will understand your customers will understand. They’re getting it everywhere. They know it. Don’t be greedy obviously, but you’ve got [00:07:00] to cover your costs.

[00:07:01] You’ve gotta keep your profit margins up. You can’t afford to give it away. So yeah, you’re gonna have to increase the prices. You’re gonna have to increase them several times. We, we did a major price increase earlier this year. And we got one person who said really? And I said, 9% inflation. And he said, eh, okay.

[00:07:24] mm-hmm so they understand they’re living it too, just like you are. And you can’t afford to let inflation drive you out of business.

[00:07:33] My father was an independent businessman. And number of years ago, he was talking about raising his prices and he was talking about a little of this and a little that.

[00:07:42] I said, double your prices. He said, I can’t do that. I said, double your prices. And if you lose half your clients, you’re gonna make just as much money and work half as hard. Yeah. So he did. And he got more new business inquiries than he’d ever gotten in his life.

[00:07:59] Miriam: Why do you [00:08:00] think?

[00:08:01] Charles: Because he did a great job for his clients. He had provided great value. Some of his clients, he hadn’t increased their price in 30 years. Mm-hmm okay. So he was well under the market, he was cheap and once he raised his price to a more reasonable level, they looked at and they said, we’re getting a good value for our money even now.

[00:08:22] If you’re not in commodity business, then pricing is much more flexible. Our business, we, we sell based on our, our compliance expertise that our competitors don’t have. So we’re not competing with them. We’re offering a service that they don’t offer in addition to payroll. So we’re not competing with ADP or Pay Checks

[00:08:46] we’re competing tax attorneys and these kinds of people. So it’s a whole different world.

Tax Compliance

[00:08:52] Miriam: Yeah. So take a second and explain- what I had heard was just a huge amount of people being hired to create [00:09:00] compliance and that things were gonna get a lot more difficult for many more people. What is your understanding of what is happening with tax compliance and how does that impact business owners?

[00:09:13] Charles: The inflation reduction act, which is. Oxymoron. It does not reduce inflation. It increases inflation has in a number of tax increases, and in addition it add allocates another 80 billion a year to the internal revenue service.

[00:09:33] Of which at least 50 billion is supposed to go to enforcement.

[00:09:39] Which means a lot of agents and, and a lot of audits and know it’s not gonna be on billionaires and millionaires. It’s gonna be on you and me. It’s going to be on small business. Small business is frankly, under audited. The chance of an S Corp being audited at the moment are four tenths of 1% per year.

[00:09:57] Okay. So it, they [00:10:00] are under-audited, but it’s going to be a huge change in the number of IRS agents.

[00:10:07] I spent three years on the IRS advisory council, now, the IRS for the most part, they’re good people. They’re mothers, fathers, brothers, sisters, sons, daughters. They’ve got families.

[00:10:20] They want to do their job. Yes. They’re civil servants. Yes. They get their 30 days of vacation. Yes. You can’t fire them and no, they do not have the same drive to do the job that independent business people do because it’s our, it’s our livelihood and we have to make our own, they’re just going for the next GS.

[00:10:41] And most of that’s based on seniority, but they’re not bad people for the most part. The laws are written by the Congress. So if you’re not happy with a tax law, don’t take it out on the IRS. Take it out on your Congressman.

[00:10:57] He wrote it. Or his staff did and [00:11:00] he voted for it. So the IRS is just the enforcement arm for federal tax laws that our Congress writes.

[00:11:10] But you are going to have to be far more cautious about compliance moving forward. Now it’s not gonna happen this year. They gotta find 87,000 people to hire. They have to find 87,000 people that wanna work for the IRS.

[00:11:28] And when you think about that, now it has a lot of advantage.

Finance Education

[00:11:31] Miriam: Yeah. So something that I noticed that your company does that I find as a differentiator – you provide some form of protection against that.

[00:11:40] Charles: Well, our unique selling proposition is compliance. I’m a certified public account. I’m a us tax court practitioner. And what that means is I can represent my clients in us tax court without being an attorney. I have a bar card from the us tax [00:12:00] court. I can go down to the court, stand up in front of the judge and say, I’m representing Joe blow and put on my case and my defense against the internal revenue service.

[00:12:13] I haven’t lost a case yet. I’ll lose one sooner or later. I promise you. But at the moment, my record’s perfect. I had three tax court cases on my desk until yesterday and they acquiesced in one and just said, we’re gonna, we’re just gonna give it to you.

[00:12:28] So good. I

[00:12:29] won, I won that one.

[00:12:30] That one’s my client’s happy

[00:12:32] Miriam: I think that that’s something that is very, very scary to people. You get a letter from the IRS and sometimes I’ve gotten ones that are. Talking about a small change that’s been made, but I tell you what they sit on my counter for two days until I have enough Moxi to open it.

[00:12:50] Charles: my wife and I went into business together 30 years ago. And we take, I take as a CPA, a, a form 28 48 on every [00:13:00] client that said IRS limited power of attorney. And it allows me to advocate for my clients, which is part of our compliance. So we get a copy of the certified letter. Via certified mail to our office.

[00:13:13] I’ve been a CPA for almost 50 years. I’m very, very good at this. In most cases, I know more than the IRS agent that I’m dealing with because this is an area I specialize in.

[00:13:27] Sure. And IRS agents change in various areas over the years to get more experience, they get transferred from department to department to department. So you’re unlikely to find an employment tax IRS agent with 30 years of experience, I have that I’ve studied it. I’ve studied the law.

[00:13:45] I fought these things for 30 years, so they can’t pull the wool over my eyes. They can’t intimidate me. I try to tell my clients not to talk to the IRS because [00:14:00] they’ll get upset because it’s personal. Let me talk to the IRS because it’s not personal to me. Right. Because when it gets. You get upset. ,

[00:14:10] Miriam: it’s so true. Especially talking about money, you know, all of these things are a recipe for getting in your amygdala space in your head where it’s that fight flight or freeze.

Financial Discussions for Partners

[00:14:24] Miriam: And one of the conversations I wanted to go with with you is as a financial guy, talk about the kind of conversations. Partners should be having about money, whether you have a business or not.

[00:14:38] Charles: My wife and I were in business together for, for many years before she passed, I believe there’s two things that make a marriage work, because a marriage is a partnership.

[00:14:49] And it’s communication and compromise. You have to have both.

[00:14:54] If it’s really important to her and not important to you, let her do it her way. It’s really important to you, but not [00:15:00] important to her. Do it your way. If it’s not important to either one of you just flip a coin, the only real argument is if it’s real important to both of you.

[00:15:08] So you have to compromise, but communication with your spouse, they’ve gotta know what’s going on. I get innocent spouses in here whose husbands have done stupid things on tax returns.

[00:15:21] I haven’t yet had one where it’s the wife. And I’m not trying to be sexist here. It’s just my experience.

[00:15:26] You have to know what’s going on in that tax return, because if you sign it as a spouse, you’re responsible.

[00:15:33] Yeah. If you think it’s wrong, don’t sign it. Refuse to sign it, then go see your divorce attorney, but don’t sign tax returns just cuz hubby says it’s right.

[00:15:44] Know what’s going on? Know what you, what you’re signing, know what you’re being involved in because if you sign that return and there ends up being money due years later, the IRS is not gonna go, oh, well, , that’s ok.

[00:15:59] [00:16:00] No, they’re gonna say we’re gonna take it outta your paycheck. We’re gonna take your bank accounts. We’re gonna take your retirement. We’re gonna take everything except your first born.


Business Ethics

[00:16:46] Miriam: Yeah. What I hear you talking about is ethics and, paying attention to what your name and your reputation and your energy are attached to.

[00:16:57] And this holds true within companies too. I [00:17:00] would like to believe that companies are all above board, but obviously they aren’t all, or there wouldn’t be anything for the papers to write about and there’s this, that, and the other happening.

[00:17:09] And somebody knows somebody gets a gut feeling somebody, ah, looks the other way, one time.

[00:17:16] What I hear you saying is if you live long enough, that stuff comes back to bite you in the end.

[00:17:22] Charles: It does. And I see companies quite often where there’s internal fraud. Mm-hmm I have a, a local doctor who’s bookkeeper retired, and one of the other girls in the office said she wanted the job.

[00:17:36] Well, she went to jail for embezzling several hundred thousand dollars and the IRS seized his retirement accounts and bank accounts and everything else. So, and that’s not unusual. I see that several times a year, internal fraud.

[00:17:52] So if you own a company, you need to be extraordinarily careful about who you trust with anything.

[00:17:58] It’s one of the reasons to that [00:18:00] why I exist is to outsource payroll. Sure. So you don’t have to worry about. You approve it. And I process it – we get this all the time where that person’s supposed to make the tax deposits doesn’t make them covers it up for years.

[00:18:13] Finally gets caught. Well that money’s long gone. They’ve spent it. So yeah, you can put ’em in jail, but that doesn’t alleviate you from having to pay the IRS for that money that was stolen.

[00:18:25] The IRS doesn’t care. Somebody stole it from you. You still have to pay them. Yeah, they, they have no, they have no sympathy for that.

Leadership in Business

[00:18:36] Miriam: You’re someone who’s been in business for over five decades. Talk to me about beliefs or actions that are important to you as a leader, you lead your company. Let’s talk about leadership for a little bit.

[00:18:52] Charles: I’m also a Marine.

[00:18:54] Marine veteran, combat veteran, and in the Marine Corps, one of the ways to [00:19:00] talk about leadership is mission, men, self. You accomplish the mission at whatever the cost. You accomplish, the mission. Then you take care of your men. Then you take care of yourself.

[00:19:18] I remember this being brought back very specifically to me, I was in, in Girlilla warfare school, in Northern Okinawa, and we’d been out in the field for about a week. It was a two week course and we hadn’t had a hot meal living off of C rats and you know, hadn’t had a shower.

[00:19:33] And finally we got brought out a hot meal and the Lieutenant who was our platoon commander made sure every one of us got fed before he got a plate of hot food. Yeah. So he’d been in the field with us. Nobody could have stopped him if he’d gone first, but he wouldn’t .No. That’s leadership.

[00:19:58] So my job is [00:20:00] to, and, and now is to make sure that my clients business gets done. Payrolls, get processed perfectly on time.

[00:20:08] Every time. Then it’s to take care of my employees. My job as CEO is to make them happy, make their job easy.

[00:20:19] The easier it is, the more efficient they are happier my clients are the more money we make. Then I can take care of myself.

[00:20:29] Miriam: Simon Sinek wrote a book called Leaders Eat Last, and I love that you even gave that example and he must have hung out with some military folks to get that. He’s a very humble man and I love his business books and his insights are Hey, park, your ego at the door and serve your fellow man, which I think is what I hear you saying,

Enjoy Life

[00:20:49] Miriam: yeah. So tell me at this stage, in your life, what concept or idea are you currently chewing on

[00:20:58] Charles: I enjoy life. I, [00:21:00] I enjoy what I do. I enjoy the people around me

[00:21:03] Being a widower. I, yeah, the house gets lonely sometimes at night, but I I’m a lifelong learner, so I continue to learn, continued read. I don’t watch TV. I read. But at this point in my life, I want to enjoy my life. Enjoy the people I’m with. I’m not near as confrontational as I was when I was 20.

[00:21:24] But you know, coming outta the Marine Corps, you, you tend to be confrontational.

[00:21:29] Miriam: There’s a little bit of that.

[00:21:31] Charles: The best, the best thing that ever happened to me was my wife. She, she moderated me a great deal and taught me a lot. She was a wonderful people person and taught me a really much better way to handle and understand people in civilian life mm-hmm it was the best decision I ever made in my life was marry Ruth.

[00:21:51] Miriam: Yeah. And look at just the ripples that came off of that decision. I, I think that, you know, that’s a good lesson to all of us [00:22:00] that the decisions we make have far reaching consequences.

[00:22:03] So make, make good ones,

Decisions Have Consequences

[00:22:05] Charles: you know, absolutely decisions have consequences.

[00:22:09] If you made bad decisions in college, they’ll haunt you all your life. I have some decisions I’ve made in my life that I. I regret not investing more when I was younger, frankly. , I’d be a lot working today. Yeah. But then I have decisions I made like asking Ruth to marry me that I am forever ecstatic about having made that decision and gotten a yes from her.

[00:22:34] Yeah. How long were you guys married? We were married for 45 years before she pass. Wow. Wow. That is a testimony to your ability to listen and to compromise and to work with her. So that’s good. Well, yeah, I’m not sure. She’d agree all the time, but yes. . Oh my goodness, Charles, since you’re a reader, what’s a good book.

[00:22:57] You’ve read recently or a book you would [00:23:00] recommend besides your own. We’ll have, we’ll have in the show notes, your own books, but

Recommended Books

[00:23:04] Charles: one of the books I’m rereading that I would recommend to. It is, it is a new translation of the meditations of Marcus aureus. Mm. It is called the emperor’s handbook.

[00:23:17] I mean, obviously the, the meditations go back 2000 years. Sure. If you watched. So gladiator, I think it was mm-hmm with Crow. Mm-hmm that movie, the first emperor that died was Marcus a this sure. From that time period.

[00:23:33] Now for your people who are in business. I recommend Michael Gerber’s The E-Myth Revisited.

[00:23:40] Miriam: Ah, I just read that. Yes. It teaches you how to work on your business. Not in your business,

[00:23:46] not in your business.

[00:23:47] Charles: I buy it by the dozen, literally a dozen a time and give it out to clients. Yeah, it is required reading for every new employee in my company.

[00:23:59] Miriam: Tell, [00:24:00] explain to me why you’re giving it to your employees.

[00:24:02] Charles: If you’ll read that and reread it. I reread it every few years. It comes down to policies and procedures. Yes. Okay. Who makes the recommendations to change those? the CEO doesn’t, it’s the people who are doing the work on a daily basis. Mm-hmm , they’re the ones that see the problems.

[00:24:22] Those are the people that need to understand why they need to bring it up, why they need to champion changes and why following policy and procedure, which is an everchanging volume, is so important.

[00:24:37] So they’re the ones that have to say, this is an exception. We need to decide how to handle it. So they need to be intimately involved in the business and in the policies and procedures and in the changes in those manuals. So, yes, I want them to be aware of the, what, why and how, of what we’re doing, not just their [00:25:00] job.

[00:25:01] I can’t know everything. I’m not the smartest man in the room.

[00:25:06] My job is to hire the smartest person in the room and listen to the people who work for. me Because they know what’s going on far better than I do. If they’re yes. People, I’m not going to get real input. I’m not going to get real change. I’m not gonna get told what the problems are. Right. Okay. And I have to know, or I can’t fix the things that I can fix as a CEO if I don’t know they’re broken, I don’t know to fix them.

[00:25:36] Miriam:

A Force for Good

[00:25:36] Miriam: How do you see yourself as working for a force for good in our world?

[00:25:43] Charles: Well, you know, I think we, I think as a company, we do a great job and provide a substantial service to our clients and to make their life easier.

[00:25:54] I also employ a number of people and provide them with a way to have a [00:26:00] family, take care of their families, grow, prosper, save for retirement. We’ve got a 401k, we’ve got other things.

[00:26:08] I personally have set up a scholarship. We mentor at one of the high schools here in Dallas, and we have scholarships and I’ve set up a, a special Memorial scholarship in my wife’s name, and it will be a a legacy in her name for some extended period of time.

[00:26:29] Miriam: So, you know lots of ways you’ve given it a lot of thought and you are trying to impact your world in a multitude of ways, which is one of the reasons I like to interview people on this show who are trying to do good.

[00:26:44] I I’m like, oh my gosh, don’t make a bunch of money and then be a jerk.

[00:26:49] Make a bunch of money and then go do something for your fellow man or your planet.

[00:26:55] You cannot take it with you.

[00:26:58] Charles: You cannot. [00:27:00] Okay.

[00:27:01] And when you’re gone, you’re going to be quickly forgotten as we all are,

[00:27:07] so it’s what you do while you’re alive and your philosophy and dealing with nature and your fellow man- those are the important things.

[00:27:19] You know many of my heroes are, are gone. Yeah. And are seldom are remembered. So. Life goes on.

[00:27:27] You have to live with it.

[00:27:29] Miriam: So do good while you’re still alive and kicking. You can bless the people around you-

[00:27:34] Charles: -very much so. Yeah. Yeah.

[00:27:36] Well, thank you so much for spending time here. Why don’t you tell my audience just how they can reach you or find you? Sure. Get payroll.com.

[00:27:47] My email is CJR@ get payroll.com. And if they’ve got a payroll question or a payroll tax problem that they really gotta talk about [00:28:00] 9 7 2 3 5 3 0 0 0 0. And ask for Charles.

[00:28:07] Miriam: Wow. That was brave. Giving your phone number is always brave. well, Charles, I I mentioned before we started that we wanted to gift a charity donation in your name and you chose mercy ships.

[00:28:21] That is a charity that gives free surgeries to people in need off the coast of Africa. And so we’ll be sending that off today in your name, or if you’d like, we’ll put it in your wife’s name and thank you for your service and thank you for your time.

[00:28:38] Charles: My pleasure, Miriam.

[00:28:40] [00:29:00]

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