171 - The Ohh Shit Cycle - Continued

Episode #171

On this episode of the podcast I share my own personal experience on the Oh Shit cycle of back taxes.


This episode is brought to you by my new FREE Masterclass, "The Most Common Legal and Tax Mistake at Each Stage of Business and How to Avoid Them." In this Masterclass you will learn if it's time to go from a sole proprietorship to an LLC, an LLC to a S-Corp, and how to properly run an S-Corp. You'll learn how to get more profitable in a snap and put your taxes on auto-pilot as well as how to manage the growth of your business without fear or IRS hate mail or lawsuits. Click here to sign up for the Masterclass.



I want to start off by telling you that back taxes are more normal than you think. About a third of my students owe back taxes and another third usually aren't up-to-date on their quarterly taxes. If you get a letter from the IRS, don't freak out.


When I started my business I knew I should be saving for taxes but I kept procrastinating. I kept putting it towards expenses saying I'll make up for it later when i start making more. But what happened is instead of making up for it later, I started increasing my business expenses.


My first year of my business I didn't end up owing because my profit was low and my husband's refund covered what I owed.. The same happened my second year and in the third year I grossed $70,000, profited about $35,000 and I paid about half of the taxes and was left with the rest in back tax on top of my quarterly taxes for the new year. So I got off my money hamster wheel and decreased my expenses to increase my profit.


Then I got a letter that I owed 2018 back taxes and my 2020 quarterly tax savings went to paying those off. I then increased the my auto-save amount on my quarterly taxes to 40% to get caught up. I have privileges that not everyone has such as my spouse and his stable income as well as my business profit. Your ability to catch-up on taxes is based on how much discretionary income you have and are able to put toward it, it's different for everyone but if you're not in a position to make fast changes or save more, getting out of the Ohh Shit Cycle is possible and we work on it together in the Unf*ck Your Biz course.


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