Pamela Kornblatt might be the only person that can talk about Taxes without fear and angst in her eyes. Born into a Tax Family her early April always fell between March 15th corporate tax day and April 15th tax day or the most dreaded day of the year for the average American. Not many people actually want to hang out with their accountant on a regular basis but Pam’s personality and enthusiasm for her job and helping others. On Thursday, March 10th Six Degrees Society is partnering with Pam Kornblatt and Tax Strategists to learn the 101 of Taxes.
1. You’ve had quite the career, with a stint in Finance (first Investment Banking and then working at a Hedge Fund), Teaching and now Taxes. Can you tell us a bit about your journey from one to where you are now?
I come from a line of tax men (my father’s father and then my father) so it’s not so surprising that I ended up in the tax profession, I guess it’s in my DNA. From as far back as I can remember, I have always loved numbers and anything analytical. At Duke, I majored in Economics, a field I love because it marries quantitative analysis with real world applications. Upon graduation, I decided to work in investment banking mostly because that was the cool thing to do at the time and because of the fancy perks (free meals? free cars home? client dinners at fancy restaurants? Sign me up!). When a hedge fund recruited me with an offer I couldn’t refuse (more money, no more all nighters spent trying to get a few winks under my desk), I jumped at the opportunity.
After several years (and more than several pairs of expensive shoes), I realized that while my life had all the trappings of success, I was lacking meaning and purpose in my work. I made the (brave? reckless?) choice to leave finance during a time when jobs were hard to come by to teach math. Teaching middle and high school math at an all girls school was full of meaning, connection and a whole lot of fun. Eventually, my dad realized he needed a succession plan for his business and I have always wanted to be an entrepreneur, so I joined Tax Strategists. The winding journey that has lead me here has taken many unexpected turns but each one has prepared me for my current role in different ways. I get to use my nerdy, quant side in my work and I find meaning in helping people navigate the ever changing, ever complicated tax system. My teaching background has been unexpectedly useful too: my favorite moments come from helping to break down a complicated or confusing tax issue into more digestible pieces, so that my clients leave feeling enlightened and empowered.
2. Taxes have been a part of your upbringing but for the normal person they are something that are dreaded each year. Can you offer any advice to business owners to make taxes less daunting?
Organization is key. Self admittedly, I have a list of all my lists and get a thrill from color coding, but in my experience the most daunting part of the process for most business owners is gathering the necessary documentation. Rather than waiting until tax time to do it, set yourself up for success by keeping good records throughout the year. Your solution for keeping yourself organized can be high tech (I highly recommend using QuickBooks and keeping it up to date) or low tech (one of our clients uses a spike like the ones used for orders in old-school restaurants for all his receipts to keep them in order and out of his pockets). Hiring a bookkeeper is another good strategy – you can find good ones at very reasonable prices (especially compared with the headache of handling your books by yourself). If your business isn’t too large, often an hour or two of bookkeeping per month is all that’s needed to keep everything in order. Also, when you file your taxes, make a list of everything you provided your tax preparer the previous year (or any documents you relied on when you prepared your own return). As documents come in, keep them all together in a file along with the list. That way you will know exactly what you need (and if anything is missing). If you work with a tax preparer, make sure the person is someone you like and feel comfortable with. Also make sure that whoever you work with will take the time to answer your questions so that you fully understand your tax situation and any related choices you may face. Part of a preparer’s job is to make filing your return as painless as possible (I would say fun, but maybe I’m overreaching).
3. You joined your father at Tax Strategists. What is your favorite thing about working with your family? Does it ever make it challenging to separate business from family?
When I joined, I had a feeling it was going to go one of two ways: either be totally amazing or totally disastrous. Luckily, it has been totally amazing. My family has always been incredibly close and we see ourselves as a team. If you asked me to say what I am most grateful for, I would say my family without hesitation. My favorite thing (though it is hard to pick just one), is that I never have to hold back and can always give my honest opinion. Even when we disagree, we don’t ever let it get personal because we know that we have the same goal in mind and trust one another. Also, he sees his role as passing the torch to me and derives great joy from my excitement about the business that he has built. My brother recently graduated from college and I am already trying to convince him (unsuccessfully so far) to join the business. I think the fact that my family sees ourselves as a team makes it hard to separate business from family but also unnecessary because we are all “rowing the same direction”. Then again, you may want to ask my mom and brother whether we monopolize the dinner table conversation…
4. Do you have any rules of thumb you follow when filing your taxes? What are the benefits of working with a professional vs. doing them yourself?
One of the biggest myths about taxes is that the rules are black and white when in fact there is a whole lot of grey. (This is why the IRS refers to “reasonable” and “unreasonable” positions rather than “right” or “wrong”. If you’ve ever had an argument, you know that it is often hard to agree on what is “reasonable”). Asking four different preparers to prepare the same return would result in four different tax returns. Tax laws are exceedingly complex and always changing. Adding to the complexity is that every person and business is different. This is all to say that it is hard to give any “rule of thumb” regarding taxes (other than stay organized!). Given the complexity of taxes, I think all but the simplest returns should be prepared professionally, especially returns for anyone who has their own business. Just as I would never treat myself for a medical condition or represent myself in a court of law, so too should anyone not familiar with tax law prepare their own return. Working with a good professional will help you minimize the amount you’ll pay in taxes by knowing what is reasonable for you to claim without exposing you to unnecessary audit risk. We have worked with many clients who have way overpaid in taxes or have been audited for taking positions on their returns that we would never have advised them to take. Obviously, working with a preparer is an added cost but often a good one will more than make up for their fee by knowing the law well enough to ensure you pay no more than you have to.
5. If you were to share any advice with the 21 year old you, what would you tell her?
I have so much advice for my 21 year old self (starting with pssssst: you don’t know nearly as much as you think you do) but I probably wouldn’t tell her any of it. In my life, I have learned most of the best lessons from making mistakes, falling down (sometimes on my face) and messing up so I strongly believe in the importance of learning the hard way. With that disclaimer aside, here is what I would tell her: Trust your inner voice and your gut (no one but you can decide what is right for you – not your mom, your dad, your best friend, your boyfriend – only you and you alone). On a related note, focus on building a life that feels right to you rather than one you think looks good to others. As trite as this sounds, money does not buy happiness and finding purpose and meaning at work is paramount (do not take this to mean that work will always be enjoyable or you will never have to do things you don’t want to do). Life is not linear – it’s messy and unpredictable. There is beauty in that – embrace and take advantage of the unexpected. Know that you don’t know much and that’s OK. The older you get, the more you’ll know how much you don’t know. Ask for help when you need it. Learn to take a compliment – say thank you and smile and don’t act like you don’t deserve it. Own your awesomeness.