In an industry focused on transformation and creativity, finances aren’t usually the top of mind for business owners. However, understanding how to expense your retreats and save on taxes can do so much for your business. Michael Markiewicz is the founder and owner of Markiewicz Enterprises, LLC, a New York-based financial services company specializing in CPA services, consulting services and asset protection. He joins host Catherine Kontos to share his expert tips on how to cut costs and determine taxes for your retreat expenses. Don’t miss out on useful and practical advice you can use for your next planned company trip.
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Tips On Expensing Your Retreats And Travel With Michael Markiewicz
We have Michael Markiewicz, who is the Founder and Owner of Markiewicz Enterprises, LLC, a New York-based financial services company specializing in CPA services, consulting services and asset protection. They have several years of experience in providing financial guidance to entertainment professionals like Scott Rudin and Sidney Lumet. Thank you so much for being here, Michael.
Thank you for having me. I’m honored to be here. I’m looking forward to having a good discussion with you, Cathy.
I’m looking forward to finding out the nuts and bolts of stuff that most retreat leaders don’t like paying attention to because we’re in a creative transformational space. All we think of is what impacts we will have on the people that are there with us. The truth is we’ve got to know the nuts and bolts of the accounting, the financing and the legal aspects.
That’s why I brought you onto the show to tell us a little bit of the details that maybe we don’t know and we’re losing money not knowing this information or we could be saving or making money in other ways. You are American-based. I want to know a little bit about you and how you fell into the accounting business. You’re doing accounting for a lot of the entertainment industry as well. I know there’s confidentiality with that as well, so I won’t ask for names or anything, but I’ve seen a few pictures. Tell me a little bit about you so people can know who Michael is.
I’m from Boston originally. I started my career in Boston after I finished graduate school with Deloitte in Boston, which at the time was one of the big eight and now the big four. I spent quite a bit of time with them. Over the years, I worked both inside public accounting and outside of public accounting in Boston, New Hampshire, Vermont and New York.
Having said that, I’m very Northeast focused and based, but I work with clients all over the country and all over the world. My footprint all over the world touches every continent except for Antarctica because I don’t think there’s a lot of business to be had there. There is a lot of business to be had and a lot of clients with specific needs all over the world. I pride myself in saying that I have a fairly sizable client throughout the world. Also, within the United States, it pretty much covers the whole country in terms of what I do.
Now, you would ask me a little bit about working with people in entertainment. At one point, I had worked with what’s called a business management firm in New York. There are business management firms that are primarily in the entertainment capitals, such as New York, Nashville and Los Angeles. There are probably some in other places, too, but that’s where they’re mostly based. I ended up working for one, at one point, some many years ago in New York. That’s how I got my introduction to working with people in entertainment.
What does that mean for business management? Business management for people in the entertainment industry and for people in the sports industry encompasses all of the traditional CPA work, accounting, bookkeeping, and tax returns. We did a lot more and I do a lot more for our clients in those fields because, as you said, Cathy, you’re a creative. Those people are predominantly creatives.
A lot of creatives want to focus their energy on the impact they can make on their creative creativity, their careers and so forth. They want somebody and need somebody to manage all of the financial aspects of their lives, such as day-to-day bill payments. We do that. We make sure their insurance is correct and the right kind and up to speed and that their estate plan is in place, that they have the proper wills. They have trusts and the like.
By the way, I work with a lot of other professionals to implement those things. In addition to that, we work with their financial advisors to make sure that the focus of where their investments are directed is in line with their own ethics and their own feelings about what they would like to invest in and what they might not like to invest in.
In addition, with the financial advisors, I partnered with a group and what they do is they work with my clients in conjunction with me to prepare a full financial plan and implement strategies that protect their assets from swings in the market and real big downsides and take advantage of the big upsides. That’s what we mean primarily by asset protection.
There’s another piece to asset protection which is the legal part of it. Some of the trust and estate attorneys that I work with implement asset protection trusts to protect assets from creditors or families or what have you. When I talk about business management and asset protection, I’m talking about that large circle of things that need to be taken into consideration, not only for people in entertainment but certainly for people in entertainment. I have found working with people in the entertainment industry that many of them don’t have the knowledge to do all of these things. They need to hire someone and engage someone to help them with that or even if they do, they don’t have the time and don’t want to focus their energy on it.
As an entrepreneur, we know that there’s stuff that we know. There’s stuff that we don’t know and we need to hire professionals. There’s stuff that we know, but we don’t want to do and we hire professionals to do it. In the niche that we’re in the retreat world, accountants are very valued. Lawyers are very valued because these are things either we don’t care to do because it’s not our forte or we don’t know how to do.
One of the things you mentioned there that I’d like to know is that we often do, in the retreat planning courses that we have and our clients as well. We do offer them a pricing spreadsheet for them to figure out their pricing so they can know what their profit is. They have to think about early bird pricing and how to include that in their general pricing, so they don’t lose money in the end in case there are no shows or they don’t sell out, etc. If somebody came to you and said, “I have this retreat that I’m planning,” because it’s always like a new launch, “These are my expenses. What do you think I should price it?” would you be able to help with something like that and guide them to get the profit they’re looking for?
That is something I could help people with. It’s backing into it, so to speak, because you know what the fixed costs are. In any analysis like this, the fixed cost are the fixed cost. Those are whatever they are, but then, there are always going to be some variable costs. The variable costs, we have to look at those and assume, for example. You have this number of people that are going to attend. What are the variable costs for whether it’s 100 or 200 or 500 or however many it’s going to be? From there, you have to look at your profit objective.
You take those fixed costs, those variable costs and you can run different scenarios because of the different number of people that you have. Look at what you want for a profit and back and what you need to charge for the various different numbers of people that you could have at one of these retreats. That’s something I could help them with.
Variable cost, can you explain what it would be an example in your words?
Let’s go back for a second to fixed costs because fixed costs would be things like a rental. You’re going to have to rent a venue. You’re going to have to pay for utilities. You’re going to have to pay for a number of other things that we know are fixed. You have staff, so you have people. Human capital, so to speak, and you have food. That’s going to vary depending on how many people you have. There are many more variable costs, but those are some examples of what I would call variables.
A lot of creatives want to focus their energy on the impact they can make with their creativity. They need somebody to manage all the financial aspects of their lives.
We explain that to our clients as well, but for the people who don’t know, I want you to explain it so they can understand why this would make a difference in the bottom line and could have a tremendous impact. That could make you or break you. Am I correct?
A lot of retreat leaders often practice retreats within the United States, but what if they travel internationally? Let’s say Greece, for example. They go to Greece. There are taxes in Greece. I don’t know what else there might be. Is there a way of saving some money or tax write-offs that they can use on these international trips?
A lot will depend on who the person is putting the retreat on or what entity it is. Where the person and that entity are based? For example, if they’re US-based and they are doing a retreat in Greece. Let’s say they are US citizens or permanent residents in the United States. The United States is one of the few countries that taxes income worldwide, regardless of where it’s earned.
If an American hosts the retreat in Greece or in any country and let’s say they generate a profit in Greece, that has all got to be reported on their US tax returns. Having said that, if they’re doing this in Greece, assuming the Greek Government assesses a tax on them doing that there, the nice thing about a country like Greece in most of Europe is we have tax treaties, which avoid double taxation. The Americans would get a tax credit for the amount of tax that they pay in Greece on that same income.
Is that something that they have to apply for at the airport before leaving or is it something when they come back, they apply for it with an accountant?
It’s not a matter of applying for it. You don’t have to apply for anything. If you are paying tax in Greece and you’re an American, in the United States, somebody is going to file a pre-tax return to pay. They’re going to have them pay Greek taxes. In the United States, we file the tax returns for that individual or that entity. Sometimes, it’s one and the same.
We include the income from that retreat that we look at how much they paid for tax in Greece. We take what’s called a foreign tax credit on their US tax return. You don’t have to apply for it. You just have to do it on the tax return. It has to be documented, obviously. You have to have the facts and there’s the exchange rate differences and all of that. You report it on your tax return as a foreign tax credit.
What if there is no treaty? As you said, in Europe, there’s a treaty. What if it’s in China, Africa or Mexico?
Except for perhaps Mexico, we don’t have a tax treaty with countries in Latin America. I’m not even sure about that. I’d have to look it up. If an American is earning money in Argentina or Brazil and they report it in the United States, they don’t get a tax credit for what they paid to that country because we don’t have a tax treaty. There is something called double taxation.
Whatever taxes they pay there, it’s gone.
That Brazilian Government takes it and says, “Thank you very much.”
The person that would know this would be the accountant.
I would say that the majority of my clients are very forthcoming about everything that they have and what they’re doing. I have some that are not, so it’s like pulling teeth trying to get information. “What did you do in Argentina? How much money did you make? What was the bottom line?” It’s very interesting how there are people, there are clients and some of them are mine, where we have to extract that information.
Obviously, people want to declare as much as possible of their expenses to get a return on it. What would be considered an expense? I’ll give you an example. You tell me yes or no. Would it be considered an expense if they traveled? We’ll stay with the same country. Suppose they traveled to Greece to check out the venues, speak to suppliers that are doing the activities, whatever it is, all their suppliers. Would that trip, airline ticket, the hotel stay, the food, transportation, all that be considered an expense?
The simple answer to all of that is yes. Those are legitimate business expenses.
What if they brought a guest with them like their better half? Would that be considered?
You have to do an allocation unless the better half or the other half is involved in doing some of that work when they’re there. If they’re scouting venues and talking to the people, assisting the first half, so to speak, then yes. You can write up the whole thing, but if not, you have to allocate between the person doing the business and the person not doing the business.
Having said that, let’s say that they rent a hotel, but the person doing their business would rent that same hotel room anyway, then you can write off the whole hotel room. The airline ticket for the significant other would not be deductible. The food for the significant other would not be deductible, but the room would be because you’re renting the same room no matter what.
The nice thing about a country like Greece and most of Europe is that they have tax treaties, which avoids double taxation.
That’s good to know because some people probably don’t realize that they can deduct if they’re working. When I travel with my husband, he’s always helping me. He’s either filming me because we do podcasts and we also do video podcasts. I drag him everywhere. He’s observing for me as well. He’s my second set of eyes, making sure I don’t forget any questions to ask. He gives his opinion on the food, on the suppliers. Would that be considered work?
He’s working for you. I don’t know whether you pay him or not, but even if you didn’t, he’s doing things for you, for the business purpose of that trip. In that case, whatever the expenses are for travel and meals for him would be deductible.
If you bring staff, is there a limit as to how much you can claim? Let’s say I decide everybody’s getting paid for this trip. What if it’s a retreat? Meaning they’re coming. They’re not necessarily working the whole time. They’re working maybe 20% of the time, but the rest is a retreat that I’m offering to my employees. It’s a benefit that I’m giving them. Would that be considered an expense fully for everybody?
You have to be a bit wary of it, but I would approach that is, let’s say they’re only working 20% of the time. They can’t do that work unless they bought an airline ticket to go there. That airline ticket is deductible. If they’re only working 20% of the time or 25%, whatever that percentage is, you have to do a little bit of an allocation. They’re going to rent the hotel room anyway. I would say that the hotel room is deductible. For meals, I allocate 20% of it. Any other incidentals, do 20%.
Even if the rest of it is for team building, it’s for company culture to build company culture team building. There’s going to be some training and all of that. They’re not working because training, locally, you’re paying for that time. You’re paying for the trainer, the facilitators, or the meals during the training. Let’s say 20%, they’re working the rest of the time. It’s a retreat for company culture, team building, some training, etc.
The whole thing is all deductible.
If it was like a vacation for 80% of the time, then it’s not.
Right. I wasn’t clear before on what the other 80% was.
I wanted to clarify that because I know there’s a difference. I wanted to make sure that people know the difference between I’m giving a paid vacation to my employee versus they’re coming there for training and team building, etc. There is a difference. I know there are a lot of companies now that sent off their employees to work somewhere else for like a month. It’s the latest thing. They send them to Costa Rica for a month to work there. Not because they need to be in Costa Rica but because it’s like a benefit that they’re giving them.
They’re like, “Do you want to go to Costa Rica?” “Yes.” “Do you want to work there for a month?” Yes.” You get to discover the country, the culture, etc. They send them off. They pay for their lodging and everything. I don’t know if you’ve ever come to something like that. If you’ve ever seen something like that, but that exists.
It’s interesting. I haven’t. I don’t have any clients who have done that. Usually, these are much larger businesses that have the resources to do that for their employees. In terms of where my business is, I’m not working with very large companies because I’m a relatively small organization, so the larger companies want much larger accounting firms.
I don’t have any clients that do that, but I would imagine that the way these companies structure it, I can’t speak for certain, is they look at it as being a fringe benefit. The fringe benefit is a deductible item. They’re paying the employee or paying for the employee to do something and travel to another country and it’s a fringe benefit. If they’re deducting it, they’re deducting it. I think that they do.
Let’s say a company does well. Is there any reason why a corporation or a company shouldn’t send their employees on a retreat where they could get the team-building training, set up the company culture, all of that great stuff that happens there, and come back all reset? They’re all excited about the new or existing vision that maybe hadn’t been solidified. They’re a lot more productive. The comradery is up there. When we’re talking money now, is there any reason for them not to do that? Would they lose money or would it be all a write-off and benefit from all the stuff that the retreat brings back to them?
Personally, I’m a big fan of companies doing this for their employees, these retreats. The reason is everything that you said. It’s to enhance the vision, solidify it, and remind people of what the vision is. It’s also about goal setting and getting people psyched and excited about what they’re doing and about the company they’re working for. I know that if I work for a company and they send me off to a month of retreat in Costa Rica, for example, or Greece, I would think, “This is such a great company to do that.” I’m not sure I answered all your questions on that, but I am a big fan of companies doing these things for their employees because it does help with the culture. It helps with productivity.
In the past few years, the morale has been low, so I think it would be a great way to boost that morale and bring back hope and all of the tough stuff that we went through in the past couple of years. Let it go and start a new beginning with the corporation because it was a rebirth for not only people. It was a rebirth for the companies as well. They had to figure out how they were going to survive the past few years. It would be a great way to mend everything back together again or rebirth the company. It is a tax write-off form in the end. That’s what my point is. It’s a tax rate write-off, so do it. That’s what I was saying.
A lot of companies don’t. As you were saying, in the last couple of years, many companies saw their revenue drop because of that because of the pandemic. The productivity wasn’t there because people were working remotely. Not to say that that doesn’t work for a lot of people and a lot of companies.
A lot of people were also sick.
It’s a combination of different factors that some companies may not have the resources to do something like that because of everything that happened over the last few years. If they do, they should do it. I’m a big fan of that.
The fringe benefit is a deductible item. They’re paying the employee or paying for the employee to do something and travel to another country.
It’ll pay back in many ways. Have you been on a retreat?
Not recently, but yes, I have. A number of years ago, I attended a week-long retreat up in Northern Maine. It was called National Training Laboratories. It was called the Human Interaction Laboratory. It wasn’t necessarily business-related, but it was truly transformational. People came from all over the country. During that week, there were some tough moments where you had to dig down deep and look at all the things blocking you.
There were a lot of tears and a lot of complaining, but at the end of it, everybody came out of it a much better person. That was hugely transformational for me. I’ve done a couple of others in Arizona. I can’t even remember the name of the organization, but I did a couple with them. They were phenomenal. I love those kinds of retreats because I feel so re-energized and recharged when I do those things.
The goal is to go in one way and come out another way a changed person enhanced a person from everything that you experienced over the past few days. For me, that’s a very successful retreat. When you see that transformation happen to you but also witness it in others, it’s truly a gift. Michael, thank you so much for being on my show. It was very informative.
I appreciate your time on all this. I’m looking forward to continuing talking to you. We have a relationship beyond this show, so I’m looking forward to seeing everything you’re going to accomplish. I know you’ve been growing your business quite a bit in the past few years. I want you to keep thriving. That’s all I wish for you. Thank you so much for being here again.
Thank you, Cathy. Thank you for having me on. I appreciate it. All those same wishes for you.
Thank you so much.
I look forward to speaking with you again soon.
- Michael Markiewicz
About Michael Markiewicz
With over 35 years of experience in providing financial guidance to entertainment professionals, family offices, small businesses, and C-level executives, Michael Markiewicz is the founder and owner of Markiewicz Enterprises, LLC, a New York-based financial services company specializing in CPA services, consulting services and asset protection.
As a CPA and certified financial planner, Michael provides premium services, with particular expertise in providing production accounting services for films in all stages of development from pre-production through post-production. Included in those services is the application for pre-certification of film tax credits and the final application for credit funds to be received. Other focuses of his practice are outsourced family office administrative services and business management for sports and entertainment figures. Outside of his practice, Michael is a successful investor, speaker, and is very involved with many philanthropic endeavours.
Michael graduated from Tufts University with BA in Economics and Sociology. He received his MBA and MS in Accounting from Northeastern University. As a CPA, PFS (Personal Financial Specialist), and CFP, he is a member of the New York State Society of Certified Public Accountants, the American Institute of Certified Public Accountants, and the Estate Planning Council of New York City where he recently served as a Board Member. He is also the Finance Director of Marriage Equality USA and a member of the National Gay & Lesbian Chamber of Commerce.
Outside of his professional life, Michael studies and plays guitar enjoys singing, artist in oil and other media, loves movies and the theatre (where he is also an occasional investor) and is a huge animal rights activist. Michael also serves on the board of Moving Windmills Project, Inc, and acts as treasurer, a non-profit organization where the mission is rural economic development and education in Malawi, Africa.
Michael lives in Chelsea (Manhattan) with his husband Mark and their beloved wirehair dachshunds, Maggie and Lily.