Episode 157: Calculating Business Tax

income tax solo show Apr 02, 2021

On this episode I dive into a detailed example of how to calculate your business taxes in the third and final episode of my business boot camp.

 

If you haven't already, go back and listen to boot camp episode one and two before diving into today's episode.

 

Example: Elle graduated college this year and went straight into her photography business. Her business made $25,000 and she had business expenses of $7,000. Elle paid $100 in student loan interest (adjustment). She had no itemized deductions.

 

To calculate Elle's tax percentage:

  1. Calculate net business income = Business income - Business expenses

  2. Add in any other income. In this case, Elle does not have any but this is where you would add in other job income, spousal income, rental property income, etc.

  3. Subtract adjustments to get AGI (Adjusted Gross Income) = Net business income - Adjustments

  4. Elle does not have any itemized deductions which means she will only deduct her standard deduction ($12,200) in...

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Episode 156: Determining Business Income

income tax solo show Apr 01, 2021

On this episode I dig into quarterly taxes and how to calculate them for your business.

If you haven't already, go back and listen to yesterday's episode before diving into today's episode.

The first step is to understand what business income is. According to the IRS, self-employment income is income earned from carrying on a trade or a business as a sole proprietor, contractor, or some form of partnership.

Keeping it simple, if you're doing something that's bringing in money and you're listening to this podcast, you probably have a business.

For tax purposes, freelance/1099 income is the same as business income. Only our self-employment income is subject to self-employment tax (our share of Medicare and social security). This is a 15.3% tax on our net self-employment income (business profit, calculated after business expense deductions).

To be a deduction, the IRS says it must be an ordinary and necessary expense. An ordinary expense is one that is common and accepted in your...

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Episode 155: Finding Your Why

income tax solo show Mar 31, 2021

On this episode of the podcast I share the first of my three part series of the Unf*ck Your Biz boot camp. After this three part series you will have an idea of how our taxes are calculated. This will prepare you for paying quarterly taxes and not always leave you relying on your tax preparer.

 

As I shared on last week's episode, your tax preparer is not always going to be keeping you up to date and checking on you and your tax savings as they relate to personal life.

 

If you want to Unf*ck Your Biz you need to have a why. We need to know where we're going before we get there. You need to dig deeply into your why. A full why statement would read something like: I want to unfuck my biz because I want/need better cash flow so I'm less stressed out and have more money saved so I can pay off my loans and live financially free. Financial freedom means something different to everyone and will be your why for unfucking your finances.

 

The same goes for legal protection...

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Episode 148: The 101 on Use Tax

income tax interview Mar 11, 2021

On this episode of the podcast my guest, Amy Monroe, talks about use tax and the difference between income tax and sales tax.

This episode is brought to you by my FREE Tax Challenge. Taxes suck but we all have to file them. I'll walk you through the 5 steps you need to get your tax documents organized and ready to file. Sign up for this free challenge.

Income taxes impact a business's bottom line. These are what income tax brackets are based off.

 

Sales tax is subject to sales of physical goods and products. Learn more about the exceptions to this on episode 21 of the podcast.

Use tax is sometimes referred to as the other side of the same coin as sales tax. You can look at use tax from the point of view of a consumer and the point of view of a business owner.

If you bought something from an online retailer that didn't collect sales tax from you, technically at the end of the year you would self-report the use tax (the sales tax that should have been collected) because you are...

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Episode 141: Getting Ready for Your Tax Return

income tax solo show Feb 16, 2021

On this episode of the podcast I answer the question, "how do I file taxes?"

Get ready to file your taxes with my FREE 5 Day Tax Challenge filled with actionable steps you can do in 30 minutes a day, recorded Q&As, and downloadable template. Here are the 5 steps you'll find in the 5 Day Tax Challenge.

  1. Gather all your documents - bank statements, 1099 NECs (received from other people),1099 Ks (received from Paypal, Stripe or any other payment processor)

  2. Learn and understand your deductions

  3. Separate your expenses - go through all your bank statements and make sure everything is business-related. You should already have a business bank account. If you haven't separated your banking, tsk tsk, go through and highlight anything that's business-related.

  4. Make sure you sent out any 1099s - You will pay a penalty sending them out after February 1st

  5. Do your bookkeeping - If you do not already have a bookkeeping software set-up like Quickbooks or Wave. This will help you organize...

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Episode 139: What to look for in a tax preparer

income tax interview Feb 09, 2021

On this episode of the podcast I ask Theresa Speights, tax attorney and manager of resolutions at Community Tax LLC in Chicago, about what you should look for when hiring a tax preparer.

 

If you missed Theresa on previous episodes, check out Episode 137 "How to Handle a Letter from the IRS" and 138 "Back Taxes 101 and How to Get Caught Up"

 

This episode is sponsored by my FREE training: 3 legal & tax mistakes made by new & experienced business owners and how you can avoid them. Sign up for this free Masterclass here, and get ready to unf*ck your biz.

 

What to look for in a tax preparer:

1. Never hire anyone who says they're going to be able to get you a huge refund. Eventually you will get audited and you will owe a lot of money.

2. Just because they are on the IRS website as someone you can go to doesn't mean they are good at their job. Ask anyone who refers you about their experience.

3. If you have simple taxes, like a W2, you will be fine at...

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Episode 138: Back taxes 101 & how to get caught up

income tax interview Feb 04, 2021

On this episode I chat with Theresa Speights, tax attorney and manager of resolutions at Community Tax LLC in Chicago, about back taxes and how to get caught up if you have them.

 

This episode is sponsored by my FREE training: 3 legal & tax mistakes made by new & experienced business owners and how you can avoid them. Sign up for this free Masterclass here, and get ready to unf*ck your biz.

 

Tax controversy is when you owe the IRS money for various reasons - 401k you took out, rough years in business, etc. It ranges from individuals to big businesses. If you have tax liabilities or owe money to the state or federal government, someone who works in tax controversy can help you work through the debt.

 

When it comes to microbusinesses, the most common tax problem Theresa sees is usually poor bookkeeping and comingling of business and personal expenses. When you comingle, the IRS views all the money in your personal bank account as business income, even...

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Episode 137: How to handle a letter from the IRS

income tax interview Feb 02, 2021

On this episode I chat with Theresa Speights, manager of resolutions at Community Tax LLC in Chicago, about what to do it you get a letter from the IRS.

 

This episode is sponsored by my FREE training: 3 legal & tax mistakes made by new & experienced business owners and how you can avoid them. Sign up for this free Masterclass here, and get ready to unf*ck your biz.

 

Today's question is, "I got a CP2000 letter from the IRS. what does it mean? What do I do with it? Should I hire someone to help me or just call?"

 

Theresa does tax controversy work, making her the person to call if you owe money to the Internal Revenue Service to work through it and get your debts paid. 

 

If you get a CP2000 letter, the last thing you want to do is call the IRS, they will not be able to help you. Instead, look at page page 3 of the letter to see why they are saying you owe more tax. Once you see you want to verify that you did make that much income. If you did,...

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Episode 132: Owning the CFO role in your business

income tax inteview Jan 14, 2021

On this episode, I chat with Keila Hill-Trawick, owner of Little Fish Accounting, about how to own the CFO role in your business by planning for taxes year-round.

This episode is sponsored by my FREE training: 3 legal & tax mistakes made by creative entrepreneurs & how you can avoid them. Sign up for this free Masterclass here, and get ready to unf*ck your biz.

Accountants look at historical data. Are your financial statements accurate, organized, and set up for success for tax prep or applying for grants? A CFO (Chief Financial Officer) should take this information a step further into the future to make financial decisions for the business and reviewing payroll, bill payment, receivables, budgets, forecasting, and the overall financial picture for the business.

It's important to find someone who meets your needs - are you just looking for tax prep? Looking for someone to walk you through your finances and explain why it is they're asking you to save? What is it that...

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Episode 130: Your tax write-off and bookkeeping questions answered

income tax interview Jan 07, 2021

 

On this episode, my guest Parker Stevenson, Co-Owner and Chief Business Officer of Evolved Finance, takes a crack at answering 12 different tax and bookkeeping questions from fellow creatives in the Braden's Besties Facebook Group.

This episode is sponsored by my FREE training: 3 legal & tax mistakes made by creative entrepreneurs & how you can avoid them. Sign up for this free Masterclass here, and get ready to unf*ck your biz.

1. First year of business and have a profit loss. How much can I report as a loss? Will I get audited? Is there a limit? (asked by Jennefer Cooper)

 

Hire an accountant! An accountant will help you to write-off as many expenses as you can while still being profitable. Tell yourself, "It's okay for me to pay taxes because that means I have a profitable business."

2. As a small business owner, (two-person LLC), can I deduct the cost of my vehicle on my taxes? (asked by Robes Pierre LaMontagne)

Involve your accountant in this...

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