Beyond the Case
A podcast where global leaders from the Harvard Business School Owner/President Management (OPM) community join in a personal capacity and share the real decisions, failures, and mental models behind building enduring companies.
This podcast is independent and not affiliated with Harvard Business School.
Beyond the Case
Prepare Today for Tomorrow’s Exit: Tax Planning and Succession - Vikas Garg
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Vikas Garg built VG CPA PC from a basement practice in 2005 into a firm with offices in Virginia, Washington, DC, and New York. A chartered accountant, CPA and HBS OPM participant, he shares how becoming an entrepreneur changed his understanding of numbers and why tax planning, succession and exit preparation need attention long before they become urgent.
Vikas recalls a Harvard lesson that changed his firm: having the courage to refuse a client’s demands when they compromise your standards. Alongside his wife and business partner, he has built a team that can make decisions without his constant involvement. His reflections connect financial discipline with personal priorities: protecting your integrity, trusting capable people, and making room for health and family.
Here are the Top 10 Takeaways from the conversation:
- Evaluate a business’s future potential alongside its historical financial performance.
- Involve financial advisers in strategic decisions early, while you still have options.
- Address succession and wealth transfer before growth makes them more complex.
- Prepare for an exit years in advance so your business structure supports your goals.
- Protect your standards, even when doing so costs you a client.
- Divide leadership responsibilities according to complementary strengths.
- Give experienced people the authority to make decisions without waiting for you.
- Step away from daily operations regularly to gain perspective on the business.
- Use peers’ experiences to ask better questions, then assess what fits your circumstances.
- Build health, family time and delegation into your definition of success.
Hey everyone, welcome to another episode of Beyond the Case. This is a podcast where global leaders from Harvard Business School's OPM community join in a personal capacity to share the real lessons, life principles, mental models that go behind building enduring companies. My guest today is Vikas Garg. He was originally in OPM 65 for Unit 1, and now he's going to do Unit 2 with my cohort as part of OPM 67. So it's a great way to speak to you the first time, Vikas, and hopefully, you know, there's a lot more conversations we can have on comp on campus next month as well.
SPEAKER_01Yes, nice to meet you. So any nice to introduce before we are meeting officially in uh Harvard.
SPEAKER_00Yeah. Vikas, do you want to give a quick overview on who you are, where you come from, uh, what business you're in, so the listeners can understand your journey? Okay, sure.
SPEAKER_01So let me just introduce by profession. I've been children as CPA. And I did ICWA back in India when I was in India. Then we moved back to US back in 2003. And I started my practice in 2005. So that started from what we call the garage business from the basement. That's the first thing we started it, and then it came with from my roommate. He said, Because why don't you study your own practice? Who was running IT firm? And we thought, okay, let me just think over. Honestly, he just said, let's register a company first. We registered, and that was somehow, I don't know, from there we just keep growing, keep growing, keep growing. We saw so much potential and we are growing now. So right now we are the offices in uh Virginia, DC, and New York, and we serve all types of clients from individual to the corporate taxation. You can think over whether it is a small business or a billion-dollar company. Our client range everywhere. Majority of the things we are specialized in IRS audit representation, initial audit, and MA. These are the three things which is our specialty now.
SPEAKER_00Got it. Um as an accountant, as someone with accounting professional background, you have been trained to recognize risk. And then as an entrepreneur, you've had to take risk. So tell us about how these two distinct different instincts pull you in different directions and how you keep a balance.
SPEAKER_01I'll just say simple way, uh back in 1995 when I joined my CA, okay, after I passed in 98, I joined the company LG Electronics. I was very energetic and everything. You know, what the accounting profession teaches you, you love it first. And then back in 2003, I joined one of the entrepreneurs in Dalmir groups, and that changed my whole perspective. I was working directly under them. The way they look the numbers, how they, as an entrepreneur company owner, look the numbers of the even chart account look at is two separate things. As an accounting profession, you can think, hey, this is your number and everything. And when you produce your books, it is just a validation the company CEO knows. So when you're running your business, know your financial number yourself. You don't need to even ask somebody. So you you have a sense of feeling as the owner. So accounting profession don't need to tell you. So it's basically accounting profession work on the past and history. CEOs work on the future.
SPEAKER_00That's a thing I can say. And what do you think? You know, in your experience, you've seen the financial statements for many businesses now. So what do you think are some of the successful entrepreneurs doing better than the others when it comes to creating lasting wealth? Like, what are the quality of decisions they take? And are there any strategies they are implementing which are benefiting them more from a wealth creation perspective?
SPEAKER_01From see, when you look at the financial numbers, financial is the past, it's not a feature. So I'll explain, I've just seen the OPM ignite, I just came from Dubai. Okay. So there is a they invited, I forgot the name of the person, they invited a person, okay, and they were talking about the consultant and accountant what they generate a report. One of the reports were even the emirates airlines. You might have traveled multiple times on Emirates, right? Yes. So when they were introducing Emirates, Mackenzie did one study. For Emirates, it was in the planning phase. They say the way you are want to do emirates in Dubai, you will not get any travel or something, you will lose the money. By getting airlines, you're dumping the money in the spin. That's what the Mackenzie told them. And he was explaining this thing into the whole OPMS ignite. And he said, we make a decision, we move forward with Emirates Airlines. We did not listen to the consultant. We move forward. When we move forward, emirates is one of the profit-making entities for them compared to all other airlines. So when you look at the financial, so there's a two thing. One is your tangible, what you see, one is the second thing, intangible assets. So the financial is showing only the tangible, not the value what the bitches have. So many times, even if you see the profit numbers, what shows on the financial, not necessarily that is the right indication. So my thing got changed from accountant to the entrepreneur, how you look at the business.
SPEAKER_00Do you think business owners, when they get so focused on saving for taxes, they can often lose sight of taking good business decisions? And if so, you know, are there any tips you have around what entrepreneurs or business owners can learn from that? Okay. The business owner can learn a lot of things from the taxes.
SPEAKER_01So what many of the decisions we see from the business owner, some of the business owners just keep looking from the growth point of view. They completely neglect or ignore the tax saving opportunities. They are so much busy inside. Then the role comes from the CFOs and those kinds of things. If you have the right kind of CFO on your team, he will be keep looking at your tax saving and everything. But if your CFO is not proactive like how you are, then you will lose a lot of money on the tables. We have seen so many times that people are losing money. Not because they are not doing the proactive planning. Like if you're not doing the, like if you're in in US, you are not doing the trust uh formation and everything, you're gonna pay heavy taxes. So business owner is making wrong decision, yes, if they are not looking at the product. And their future should align with your CFOs.
SPEAKER_00So I guess what you're trying to say is have a conversation with your CFOs on on the strategy ahead so they understand CFOs and outside CFOs.
SPEAKER_01So basically, there's many groups out there, you need to talk to other peers as the CEOs, other peers CEOs, and see what strategy they are doing it and make sure they understand what strategy they are putting and ask those questions to their CFOs. Hey, one of my friends is doing this, why are we not doing this? So out of 10, if you ask why we are not doing this, he will explore and he may bring you some value on that.
SPEAKER_00You also spoke about trusts right now. And my understanding, I I know very little about trust, but from what I understand, they're set up as a mechanism to minimize taxes when you are passing on wealth from one generation to the other in order to protect against liabilities.
SPEAKER_01It's a both thing. One thing is you protect your liabilities, that's the one thing. Second thing is you are avoiding the generation tax. So just for the audience purpose, how the trust works, if any asset you transfer, right now is a $15 million limit, every year it got fluctuated. So $15 million per person can transfer to their family. So if you're a husband and wife, you can transfer the $30 million. So let's say if you transfer $100 million to your assets to kids when something happened. So first $30 million is tax exempt, there's no tax. On $70 million, there's a 39.6% tax. So you're talking about almost 70 million times 39.6%. So if no planning then, if you do the planning, what trust does it? So let's say you open a company now, your company valuation may be as of now, maybe 5 million. And you keep growing the company, company, company after 20 years, the company valuation may reach to 100 million. So if you open the assets now, trust now, and transfer the stocks into the trust name. Transfer it right now. So out of 30 million, you are using only 5 million as of current valuation. So after 20 years, when the asset transferred in the kids' hand, so they are getting only 5 million, not the 100 million. So you can skip 39.6% on 70 million. So that's how the trust planning goes behind the scene. So whenever you talk about all the rich people, they say, hey, they are not paying taxes, they are not paying taxes, they just keep generating uh assets. The reason is all the assets are sitting in the trust. And they don't distribute out to the asset remaining trust. Let's say the first generation come, five people come. Second generation come five can become 15 or 30, 50. Four-five generation of the people just stay on the trust as a beneficiary and they don't pay any transfer tax.
SPEAKER_00Wow. And so the trust can make income as well, just make out distributions as well.
SPEAKER_01Yeah, so it's a trust makes the income and it goes to the all the beneficiaries. So you are avoiding all that transfer tax.
SPEAKER_00Incredible. Outside of trust, are there any other surprises that most business owners face when they're trying to sell a business? You know, worked so hard for all these years, and you must be seeing so many clients.
SPEAKER_01Yeah, a couple of things. Uh what I see it, maintain the scene, the clients are uh so basically, let's say if you have a simple owner, first thing you do, go and open the S corporations. That's the first thing 90% of people do it. Okay. If you are thinking you want to sell the company down the line, you need to think five years ahead of the time. Because there's a $10 million capital gain exclusion. If you're the C corporation. So let's say if you think, oh, I'm developing my company, I want to sell it out to private equity or somebody. So you need to plan five years ahead, convert into C corporation, and remain as a founder manager. So after five years, if you sell the company, you are getting $10 million break. No tax on the first $10 million. And that's $10 million per owner, per founder, correct? Per company, per entity.
SPEAKER_02Yeah.
SPEAKER_01Yeah. So you are basically avoiding almost $2 million. And second thing is many times you have the AR and all of the things that are sitting in the company. So it taxes the order income. You can plan it and put in the sale consideration in the capital gain. So the way you structure it in the SIR, all the AR and everything becoming a capital gain.
SPEAKER_00Brilliant. There's a lot to learn here with us. Yeah, it's a knowledge bank.
SPEAKER_01Yeah, so it's a basically we call it a QSBS election.
SPEAKER_00Yeah.
SPEAKER_01But this has to be implemented five years ahead. And the second thing is uh one of the things we have seen is your real estate, right? So whenever you are doing the asset holding the asset, you know how the 10th have you heard about the 1031 exchange or not?
SPEAKER_00Yes, yeah. 45 days to buy a like.
SPEAKER_01So basically, let me give you some background. Many of these uh billionaires, what you see, the real estate owners, they are not paying any taxes. You might have heard hey, they are transferring the asset to the kids' name and everything, they're completely avoiding all the taxes. Their main strategy works like this they buy the building, they sell it out, and they use the 1031 exchange and they buy another building. They keep buying the building. And when something happens, asset transfer back to the kid's name, right? So when you transfer the kid's name, fair market value on the date of transfer is the cost basic. So let's say you bought the property for 1 million and you keep accumulating it, buying, selling, buying, selling, buying, selling. After 20 years, you sold the last property, let's say $50 million. And so you got the $49 million capital gain, $50 minus one. But if you do the step-up basis route, whenever the asset transfers the kids' name, so the kids will sell the property. Fair market value on the date, the kids are getting a property, will be their cost basis. So they completely bypass $49 million capital gain. There's no tax on that. So basically, trust part, uh, there's our step-up basis. If we work properly, you can just completely bypass so many taxes. So this is what uh I don't want to mention the name of the person who is the real estate type consequent in this country. That's how they're avoiding all this tax.
SPEAKER_00Have you ever felt uh that you don't see eye to eye with a client on their business practices? Those must be very uncomfortable conversations. So, as a professional, how do you still encourage your client to listen to your professional opinion and still keep your calm? I will bring uh Das here.
SPEAKER_01Professor Das, honestly. This is one of the questions I ask uh uh Fabina and Professor Das. I have the challenge on this question before I went to Unit 1. Okay, once I went to the unit one, I asked this question, the clients are not listening, they are forcing us to do a couple of things, and we are getting the pressure. He just asks one thing. Can you have the client let go? Do you have the your courage to have no to the client? And if the client says, I'm going somewhere else, let it go. That gives me the confidence of the Harvard Unit 1 class. From the date till now, our team are so strong, if something is wrong, we are not listening to anybody. And right now, impression is the impression we got on the client, if anything is coming out from our team, they are correct. Just listen to them. So it's went into the opposite side. So we are simply saying this is correct, we are not going to go on the incorrect side. So that changed the whole. Oh, just listen them and whatever they think, follow them. So that's the impression we have. We lost a couple of clients by that, but that's a good indicator on our side.
SPEAKER_00Because in your business, uh, are you the key decision maker, or do you think today you have uh decentralized decision making to a point where uh you know your team could interact with your clients and help them feel comfortable as well?
SPEAKER_01Basically, right now there are two key people in the company, me and my wife. So we both started together. She's one of the co-CEO in the company. So I handle mostly right now. My focus is towards the technical side and manage those things. My wife handled all the customer relations, HR setting with the office. So that is her day-to-day uh looking over the operation side. So we have offices here, about 15 uh leaders here, about 40, 45 employees in India. So that's how we manage it. And we have the every department has a their own uh department head. So I mean, there's another person who is like almost 20 years' experience with CA profession audit site. We have the audit director who is almost like uh she retired from territories at the age of 55. She's like almost 35 years experience. Taxation is another one, we have like almost 15 years old employees. So it's almost decentralized. I'm just getting mostly on the critical issues. So let's say when we got a couple of clients issue who don't want to listen to us, they talk to us whether to retain them or to let them fire them. So those kinds of decisions are coming to us. But if I'm going anywhere, this will be keep running automatically with the leaders, what we have, except few key decisions.
SPEAKER_00Business seems to be very fast-paced for you. You must be feeling like you're busy all the time. So, what amongst all of this growth and this constant running around gave you the inspiration to consider OPM at Harvard? I mean, why consider going back to executive education in the middle of all of this growth? One thing is Harvard gives you relaxation.
SPEAKER_01Relaxation means they're giving the option to think outside the box. You are resetting your mind and resetting your clock. So when you come back, basically you say, you have so many problems, you go there for three weeks, you come back, you have the solution for all the questions. You don't see any questions. That gives your when you meet with the like kind of people, it's awesome. It's like hard. I don't know, you can also feel it's hard to explain. If somebody asks you, what did you learn? Hard to say, What did I learn? It's in our brain. It's like experience is sitting in your brain. You can't identify what did you learn. I just the same OPM ignite, I mean my wife both went there. She used to ask, you went there for three weeks, what did you learn? I was not able to explain. Now, three days she learned a lot with all OPMS. Like we have 200 OPMS there and 50 spars. So we all in the same hotel. So I asked her after three days, what did you learn?
SPEAKER_00You say, like, I learned a lot, but I can't explain how what did I learn. Very well said. From your unit one, is there anything I you mentioned Das. Was Das your uh the professor who made the biggest impression on you, or was there any case or any conversation you had which are still still?
SPEAKER_01I have the Das, I have the Afghani. I honestly I forgot many of the professors' name, but it's got inbuilt inside. Like uh if you remember this uh Dr. Joan case, yeah. That toothbrush. Yes. So he just have one thing it's spin, it's been spin, it's spin. So he went inside uh all of them. So he went all of them, so that's the impression you get it from them. But there's many cases, and there was one other case was Oyo, that's uh Ritesha Gavan. When he went up, he went down, and he suddenly went up. So those kind of cases are in built. So whenever you uh like something happened in your day-to-day business, some challenges come, you think, oh hey, it's not you. It's so many business owners went through the challenge. And you as a live example, hey, this guy went to this, this guy went to this, this guy went to this. You somehow find a solution for the challenge.
SPEAKER_00Because if if you could speak to a younger version of yourself now, you know, from 25 years ago, after seeing everything you've seen in life, all your experiences, what would you tell the younger version? When I was young, I was fully focused on the company growth.
SPEAKER_01Okay. Now, when you are at this stage, we are missing like uh you don't need to work like uh we work like 15, 16 hours a day to grow the badger. So, what will tell hey, you need to work strategically and keep your time. If you think you are going to work more than 10 hours in a day, dedicate, uh delegate your work to the other people and keep your time, your health and everything continuous. Your exercise should be keep continued. Healthy food should be there, social life should be there. Don't neglect your spouse and kids. Make sure you met one hour at least every day with the kids and family. Give the dedicated hours, and that will give you the boost and energy for your day-to-day business growth.
SPEAKER_00Last question. I don't know if you like reading. Is there any book you've read that has influenced you that you want to just share with us the name of?
SPEAKER_01I'm not reading the books, but uh I follow one of my friends. Now he's becoming a friend also. So his name is Pramin Ratur. So when I was doing my CA, so he was our teacher and then becoming a friend was a path of him. So he's called as a motivation guru in India. Pramin Rattor, and uh what he does, you know, the burning coil, he always goes to the different, different companies, the motivation factor. He forced all the employees to fire to work on the burning scroll. You can just search on the Pramid Rathor uh motivation and you can see how much so the energy he put it inside you is credible. So that's what I always keep watching him in different, different stories. So whenever he goes to some company, how he gives a lecture, I watch him a lot.
SPEAKER_00Have you tried walking on fire with him as part of one of his overalls? No, no, no.
SPEAKER_01If I'm if uh I've never been to Delhi after that, but if I'm going to meet with him, he will definitely force me to go. Uh walk on the fire. And people are doing it. So, like he goes to the company, he puts so much energy, so much fire inside you. And people walk like this. It's like general public like us, and I don't know how what he does in how much fire he put inside you. So, same fire he put in the company is called motivation.
SPEAKER_00He put you like full of motivation inside you. Well said. Thank you, Vikas. Much appreciated your time today. And there's a lot of wisdom you shared, a lot of strategies as well. So I'm sure anyone interested in learning more will either read up on it or they can reach out to you as well. How do they reach out to you, Vikas, if they want to speak further?
SPEAKER_01They can just call us 703 880 8412, our office number, and they can always reach out.
SPEAKER_00Okay, sounds good. Thanks, Vikas.
SPEAKER_01Okay, sure. Thank you.
