A big thanks to everyone who watched and joined the Google Hangout on Taxes for Freelancers.
We had a rough start and a lot of technical issues (thanks Google), and I want to thank you for your patience. Once we finally got all the kinks worked out, it ended up going great.
A lot of questions were sent in and didn’t want to be on the Hangout all night, so I only answered on a few of them. So here are the all of your questions, along with my answers.
Q: What are some of the deductions I can take for operating as a sole business owner?
A: There are quite a few actually, but instead of listing them all out I made a Tax Checklist for freelancers, solopreneurs and small business owners, with a complete list of deductions you can take. Download the checklist here: carefulcents.com/checklist
Q: If you make under around $9k now, you don’t have to file taxes, (read that today) but someone said that self-employed income is different. Not sure if that’s true. I am filing taxes off two 1099 MISCs and wasn’t sure if I needed to file.
A: Self-employed freelancers are required to file if they make more than $400 throughout the year. Only people with W2 income under that amount aren’t required to file, since they had taxes taken out during the year.
As a self-employed taxpayer, we have to pay SE tax (self-employment tax) so the requirement to file threshold is much lower. It’s just the government’s way of “high-fiving” us for going out there and making it happen (sarcasm).
Q: Do I need to issue myself a 1099 if I took money out of the business?
A: No, if you’re a sole-proprietor that runs an LLC (and don’t have a partner) your business income and personal income are considered the same thing — at least when it comes to filing your taxes/paying taxes to the IRS. So you actually won’t be filing your taxes separately from your personal tax return.
When you take money from your business (or pay yourself, which is the same thing in this case) it’s considered an owner’s draw. You don’t have to issue yourself a 1099 because you/your business income is one in the same. If you issue a 1099, you’ll essentially be paying taxes on the same income twice. We don’t want that!
Q: Do you have any suggestions for those instances when solopreneurs/entrepreneurs pay for businesses expenses out of a personal account?
A: As mentioned in the answer above, your personal and business income are one in the same. If you want to keep better records for yourself however, and you take money out of your business account to pay personal expenses, you can do one of two things.
- Keep track of how much you “borrow” from your business with due to/from account
- Categorize the expenses as an owner’s draw (personal expense)
In either case, you won’t get deductions for those expenses since they were for personal transactions.
There were several other questions submitted and asked live on air. Watch the video below to hear our answers!
Disclaimer: We are not tax professionals or CPA’s, although we do have a background working as tax professionals in some capacity. We’re just regular people who run our own businesses and want to share what works for us and what we’ve learned. We also mentioned tools and resources we use, but were not paid to pitch any of them.
Full transcript below:
Taxes for Freelancers
CARRIE: Welcome to the crazy world of Carrie Smith where nothing works and everything breaks. I blame you guys. No, not really. I really do appreciate you being patient with me and patient with all of us while we are working this out. My computer just totally crashed when multiple people were trying to jump on, and I had no idea what was happening so hopefully this works out a little bit better.
I’m Carrie Smith, I blog at carefulcents.com. And during the day I am a small business accountant and I have been a tax professional for four years. Hopefully, this year I’ll be able to transition into a full time freelancer so that will be really fun. But I just wanted to have some time to have a conversation with you guys and the ladies who have joined us tonight. I appreciate you all taking the time. I know its not very exciting talking about taxes so I’ll make this quick and painless, and we’ll go over some really cool questions that were sent in, and get to know some of you guys a little bit better.
First off, I do want to say that even though I have worked and done taxes for ten years, I still think for each individual situation, it’s best to go find a professional, tell them your actual details and the ins and outs of your finances so we are not going to be giving out tax advice that you should be taking literally. We’re not the experts here even though we are experts in our own right. We are just business owners like you are, and we’re really excited to share our perspective and what we’ve learned from running our own online businesses and real-world businesses, as well.
So with that, let’s just go ahead and dive right in starting over here with Andrea. Would you like to introduce yourself and what you do with your business and how you got started a little bit?
ANDREA: Okay. My name is Andrea Whitmer, and I probably know a lot of you guys that might be watching but maybe not all of you. I’m the owner of Nuts and Bolts Media which is a company that I started in 2011. I took it full time in 2012. I do web design, graphic design, website hosting and WordPress consulting. So I’m just starting into my second year as a freelancer and have spent a lot of time researching and driving Carrie crazy asking about taxes.
CARRIE: Awesome, cool. So what did you do that made you want to switch into the full time freelancing? Was there something specific that drew you to being your own boss?
ANDREA: Well, not exactly. I was one of those people who enjoyed some freelance things on the side, always said this is good, I’m going to keep my full-time job, maybe at some point I’ll do something on the side, keep it on the side. And then I switched positions within my company in the fall of 2011. I was a therapist before I did this, and there were some changes to Medicaid to my state, changes in the way I could bill for therapy and suddenly I was making minimum wage. And it was my freelance side hustles that were paying my bills, and after a while I thought, you know, if I’m making money from this and paying my bills, why don’t I just stay home?
CARRIE: Gotcha. Awesome. I love that. That’s hopefully, I’ll be doing something here soon. I’m trying to leave the full-time job and go into something a little bit more exciting. But being your own boss definitely comes with all of the financial and tax implications so it’s something we’re definitely navigating every day for sure.
Alright. Emily, would you like to introduce yourself and share a little bit about what you do and the awesome stuff that you’re in?
EMILY: Sure, I would love to do that. I’m Emily Chase Smith. My background is I’m a 17-year attorney. My practice background is pretty varied. When we’re young lawyers, we practice what we call food law, which is anything that puts food on the table. But as I became more experienced, I kind of niched down and focused on what I enjoyed doing. And so I went into the bankruptcy field. I hired on with one of the biggest bankruptcy firms in my county. And at a certain point, I just realized I’m making money for these boys hand over fist, and I’m not going to do it for them anymore, I’m going to do it for me. And then as I opened my own firm and we really started working a lot, my favorite people to work for were entrepreneurs. So now I call myself the entrepreneur’s money expert, and we help entrepreneurs prevent financial trouble. and get out of financial trouble if we haven’t been able to prevent it.
CARRIE: That’s awesome. I love it. And don’t you also do a podcast or something where you interview different entrepreneurs, as well?
EMILY: I do. You were a guest on my podcast.
CARRIE: Yes, I was.
EMILY: It’s called the Entrepreneurs Money Podcast, and we interview professionals like you. And we do nuts and bolts, and then one of my favorite things is interview–we call them ‘comeback kids.’ So people who have gone through a big financial dip, what happened, how they got there, and then how they got back out.
CARRIE: Awesome. Okay so then you run your own firm then. Are you like an LLC, are you incorporated, are you just a solopreneur?
EMILY: I’m just solo right now. In the professional field, there’s not a big liability block by using some kind of entity like that so I haven’t done that yet.
CARRIE: Okay, cool. So you are still filing your business taxes with your personal taxes then?
CARRIE: Awesome, okay. That’s exactly what I do as well.
Andrea, is yours an LLC or do you file your personal and business together?
ANDREA: I just switched over to an LLC in August so I was pretty panicked about that, had been doing everything together up until that point so this–well, just a few weeks ago was the first time that I had filed. And it really didn’t change a whole lot; it still got filed with my personal. Having the LLC still had some changes that I had to get used to.
CARRIE: Yeah, okay, awesome. Well, that’s exciting. I’m glad we have a good variety here. I do have quite a few questions that were sent in and I would love to just go ahead and dive right into what was sent in here. And then you guys, I would love to hear your perspective. We do have a lot of different–sorry, I’m just reading my notes here so I won’t forget–but we do have some really good perspectives with you ladies and what you’ve experienced in business. I know whether you’ve been your own boss or worked in another company, there’s some really good advice, I’m sure. You guys can jump in here anytime.
The first question which is actually something that I was really happy to see is that along with talking about taxes obviously comes with the bookkeeping and the staying organized and using financial software to see all of your income and your expenses and everything. So the first question actually comes from Raven and she asks, “What’s the difference between a bookkeeper and an accountant, and what exactly does a bookkeeper do? Why would I need one?”
I’m actually a certified bookkeeper, I’m not a CPA. They are way too crazy, and I’m always having to chase them down and correct them so I figured why not just do what I’m doing instead of having to take that horrible test? So being a bookkeeper my whole life for small businesses here in Texas and I work with CPAs on a daily basis, I can definitely tell you that CPAs have a tendency to charge a really good amount of money for their expertise; and it may not be the right fit if you’re looking for someone who wants to do the day-to-day transactions and expenses. Bookkeepers are a lot better at recording the transactions putting together the financials, profit and loss and all that, and then they get the reports ready and send them over to the CPA for his review and he’ll make all the adjustments needed there. That’s my understanding of it through my ten years. What do you guys think?
EMILY: I was going to say, Carrie, that was the first hire that I did even though I work in the financial field. What you are talking about, the nuts and bolts of this receipt and this software, I didn’t want any of that. I wanted to focus on my core business so that was my first hire. Actually I hired the bookkeeper from my old firm. She went out on her own as a freelancer. And so I think of her as my companion/helper and then I think of the CPA as somebody who gives overall advice. So my bookkeeper is the one who executes and my CPA is the one who strategizes. And I advise my clients that they should really look on elance or odesk and get somebody who is proficient and just work hand in hand with them because then they can keep their finger on the financial pulse of their business. I get a P&L every month so I know exactly how much I’m spending in each category. I can make little adjustments whereas if you just take a big box of receipts to your bookkeeper at the end of the year, you don’t know what’s going on for all those 12 months, and you may be making some big mistakes or spending in one area that if you really knew you were spending that, you wouldn’t be doing it. So I think a bookkeeper is your first hire, but it doesn’t have to be expensive. It can be somebody who works hourly, you know, 20, 25, $30 an hour.
CARRIE: Absolutely. Yeah, you make some really good points. It can be a really good bridge between the accountant at the end of the year and the person who works with you day in and day out. And they can really get to know you and that’s a really good point.
What about you, Andrea? Do you use a bookkeeper? Have you had experience with
ANDREA: Right now I do everything myself. I’m one of those really stubborn people who can’t stand to let go of control. And luckily I am still at a point where my business is small enough that it’s not bogging me down and because so much of what I do is online, not a whole lot of face-to-face transaction kind of stuff, it’s been relatively easy to keep up. I am reaching a point now where I am kind of thinking: okay, I might need to get someone involved.
I have an accountant, and I have talked to you about this, of course, before personally but my accountant is a really nice guy who knows nothing about earning money online. He always says, “Oh, yeah, all that internet stuff.” And so basically what I do right now is I take care of everything, I keep up with everything, I fill out my own tax paperwork and then I just drop it by there before I file and say, “Hey, look over this really quick, make sure I’m not messing anything up that’s going to cost me a lot of money.” I do get to pay a reduced fee for that but I mean honestly, he’s not doing anything for me. A bookkeeper is something I’m interested in potentially later this year.
CARRIE: Gosh, yes. That’s a really good point too because I’ve done the online stuff for almost two years; this is actually my second tax season going through it. And I actually go to where I used to work, and I have them help me out with it and go make sure everything is correct too, so I always have someone too who is looking at it.
Looks like we lost Emily.
ANDREA: This chat just got a lot more boring.
CARRIE: Haha! But yes, the IRS isn’t even up on the internet stuff, as they say, and there’s not even specific categories for some of the things and you just have to sort of like fit them in. It’s really funny. I’m actually looking forward to the day when the IRS sort of catches up on that.
Well, let’s see if I can get her invited again really quickly again. She might have gotten kicked off because she’s actually out of town and she’s jumping in on her spare time. I sent her another invite; we’ll see if she can jump back in here.
The next question actually comes from Jeffrey, and he is asking if there is any advantage to incorporating into an LLC for the taxes and liability as a freelancer. Now, for me, I don’t see the need for going into an LLC because I am just by myself right now. I’m just doing my own freelancing business. I’m doing a little bit of writing and consulting and stuff like that. A lot of it is just services and I’m not offering any product or anything like that and a lot of it is intangible.
But I’d love to hear your perspective on like why you thought it was best for you to go the LLC route, Andrea.
ANDREA: Well, to be honest, doing my LLC was a complete accident. I actually just wanted to file a DBA with my local county clerk. And then when I got there, there was nowhere on the form to check off like ‘sole proprietor,’ I mean even the county clerk couldn’t figure it out. We called in to the state capitol and sat on hold for a while. And he said, “You know you could just save a lot of time, just go home, do the LLC,” so I just kind of fell into it.
I was in a panic because I thought how is this going to change things? And I mean really as far as how I run my business day to day the only difference is mental because I feel like this is a real business. I feel the separation more than I did before. So then it became important to go get a business checking account, and I’ve got a business credit card and just different things that I’ve done that I might not have done before.
CARRIE: Okay. And do you know does your state have–because I know that different states have rules, do you have to pay franchise taxes or a fee for being the general partner or something like that? I don’t know if your state has that or not.
ANDREA: I had to pay $40 to get everything set up. And then I actually just got a card in the mail this week where I have to file the annual report. And that always scared me when I read that, you know, it’s an annual report, oh my gosh. But all they basically want to know is who is your registered agent, which is me; who is the owner, that’s me. Everything is me so it’s really easy to fill out and then that’s a $15 fee every year. So in Kentucky it’s really cheap.
CARRIE: Okay, gotcha. Yeah, down here in Texas, I file a lot of those for my clients so I’m just curious what another state would have. Actually, down here it’s a little more expensive. We don’t have state tax obviously so I guess they try and get you other ways. Definitely something to keep in mind whether your state will charge you, you’ll have filing fees. I know that becoming incorporated or an LLC definitely has more record keeping, more bookkeeping that you have to keep up. Like you said; filling out a report, for making sure that they know–they kind of want to know what you’re doing. But for me it was easier to keep it all together so that’s why I went with that route for now. But we’ll see.
ANDREA: One thing my attorney advised me about, I called him when all of this came up and said, “Hey, I didn’t mean to do this, but now I’m an LLC. What do I need to know?” And I don’t know if this differs by state, I’m definitely not an expert on this but he did tell me that this offered me some separation since my business is in my home, it’s all me, and then of course my personal life is all me. But he told me that, for example, if someone were to sue me personally for, let’s say, I don’t know, if I stopped paying my bills and someone was going to sue me, the assets that are specifically allocated to my business can’t really be–there’s a separation there. So like for example, the money that’s in my business checking account can’t be frozen or taken or anything for a personal debt that is separate from the business. And we had some discussion about this on a forum that I’m on, and I think that–I don’t know, it’s really confusing–and some people were saying, “I don’t know if that’s the case.” And all I can say is, you know, I pay my attorney to give me good advice so I hope that it’s good advice and hopefully I’m not sued on the business or personal end. But I’d just like to know this is my business money, this is the money that I pay myself, and so I know exactly where that line is at all times and then it’s just easier to keep up for me personally.
CARRIE: Yeah, yeah. That’s a really good point; separating your business and personal stuff and having that liability shield there. Awesome, okay.
Let’s see what the next question is. This one is from Lindsay and she asks, “How do I know if I need to make estimated tax payments?” Well, the IRS actually says that if you think you are going to owe or do owe more than $1,000 of tax, then you are required to make estimated tax payments. So it’s not if you’ve made that in income. It’s just when you put all of your income on Schedule C, which is for sole proprietors and freelancers, and then you have your expenses that come off of that, and then your tax is calculated, your self-employment tax and your federal income tax. If it equals $1,000, then you need to make quarterly tax payments. And it’s easy to–you’ll kind of get a heads up with it because if you make a good amount of money like this year and then you go to file next year, you’ll have that whole year to see how it comes out. Like for instance, last year I actually had a loss in my business and then this year I had a good amount of gross income and revenue so then when I have to file the quarterly tax statements, I’ll know ahead of time because l would have sort of seen it coming.
What do you think, Andrea?
ANDREA: I just went completely blank. I love when that happens.
CARRIE: Yeah, I just wanted to see what you thought about the quarterly tax payments. Do you have to do that with your business?
ANDREA: Last year was my first year full-time self employed. I left my job in mid-December of 2011. And so basically January 1 was, “Okay, now I’m self-employed.: And I had talked to my accountant ahead of time, and he asked me, “Okay, how much do you think you are going to make with this business this year?” And I’m going, “I don’t know, I had a full-time job last year.” And he said, “Just guess.”
And we kind of looked at what I had made a month, how much more I thought I could make, and we came up with a very low ball number. We said that hopefully I would make $20,000, that was the minimum I needed to pay my bills and stay self-employed. So then we looked at all my other personal tax stuff and kind of figured out, okay I probably needed to make quarterlies. And his advice to me since I was just starting out and didn’t know what I might owe was to take 20% of everything I made, stick it in a savings account and then send it in quarterly. So I did that and then it turned out when I filed my taxes, I had overpaid and I actually didn’t owe anything so I got back everything that I had paid in.
So this year the IRS tells me, “Well, you didn’t have to pay anything in last year’s so you don’t have to make quarterlies this year.” But I’ve already almost made more in 2013 than I made in 2012. So I’m kind of to that point that even though the IRS won’t penalize me if I don’t make the quarterlies, I’m going to owe them. So I am putting the money back even though I don’t have to just so I’m covered.
CARRIE: Gotcha. Hey, Emily. Sorry you got bumped out there.
CARRIE: That seems to be how it’s going tonight.
EMILY: I know.
CARRIE: I’m glad you got back in. We’re just talking about estimated tax payments, when you need to make them, how much money in tax that you would owe.
I actually did the same thing that you did, Andrea, and it sort of flows into our next question here. We got a question from Jonathan wanting to know how much you should set aside for your taxes at the end of the year or if you pay throughout the year. I opened up a separate savings account and transferred, like every time a client paid me or I did a job or something and I got a check, I just automatically transferred 25%. And actually in my case because I’m a single taxpayer and I don’t have any dependents, I actually was only about $180 off.
So I actually owed a big chunk of money and it was good that I had that cushion and set that aside. But Andrea, in your case, that’s why I always say you should go and talk to someone who can get a good feel for your own situation because you and I probably made a different amount of money.
You are in a different tax bracket or you have different deductions and so for me, I owed money but you ended getting some back. So definitely important to–there’s actually even a PDF that you can download from the IRS website that lets you estimate your taxes ahead of time and you can sort of figure out how much you will owe in advance.
Since Emily is back, I’d love to hear you chime in on how you handle your taxes throughout the year. I know you have a bookkeeper, and I’m sure she probably helps out with that.
EMILY: I do. And I am in a different position because I have a husband and kids and a house and another business so I put money aside because I don’t like to deal with the IRS. I always tell my clients that’s the last person in the world you want to owe so I always tell people to keep their taxes super clean. Yeah, so they are my big boys, they are my first priority.
CARRIE: Yeah, absolutely. I totally agree with that. On that note, there are a lot of deductions that you can take, and sometimes I will even opt out of taking the deductions, for instance, the home office deduction just for the sake of keeping it really clean. And what I mean, if you have a Schedule C, something that we could say is that your Schedule C will already sort of flag the IRS because it is sometimes a little more complicated and sometimes people will put something on the Schedule C just to get the earned income credit.
So they are very on the lookout for that. And I don’t really want to add any more to that by saying, “Hey, I have this and this and this and this,” unless it’s legit and I have actual paperwork and I keep really clean records. That’s the cool thing about being an LLC sometimes is that–does it flow through to your Schedule C or do you file them separately, Andrea?
ANDREA: It’s on Schedule C.
CARRIE: Okay. Yeah, so you are still a sole proprietor even though you are an LLC so alright, cool. Well, I definitely don’t want the IRS knocking down my door. Alright, let’s see here. We talked about that. I just wanted to talk a little bit about some resources and some tools you guys use. Make a disclaimer here, no one is paying us here to hawk their products or anything like that. Just some really cool stuff that, you know, some methods or tips or some tricks. Some of my favorite things that I really like to use are I actually have a tax checklist that I made for myself.
You guys can actually go to carefulcents.com/checklist and you can download it for free. And it has just like this little quick checklist of your income and all the deductions that you can get as a freelancer. So that’s something really cool.
It’s something that I made up for myself several years ago because I kept forgetting, and like we were talking about all that online stuff, they aren’t really up on what’s going on online and all the virtual everything so it’s nice to sort of have a reminder so I made myself a little checklist. Do you guys have any reminder things like that that you do?
EMILY: No, that sounds like a great resource. I’m going to check it out.
ANDREA: Yeah, I’m not quite that organized.
CARRIE: Well, I’m one of those people that when I started working out of high school, I’m like these CPAs don’t know anything. You ask them and sometimes you get a round about answer or what. So I was like, “I’m going to go learn how to do it myself just to make sure they were doing it right.”
So I always have my own checklists and stuff like that that I am trying to do to make sure it’s correct. Something else that’s really cool that I use every day to keep — I don’t really like QuickBooks, that’s not my style. I know a lot of bookkeepers that do it. I actually have clients who do it so I use it alot but I don’t use it for myself personally. So what do you guys use, Emily, for your bookkeeping or your software? What do you like?
EMILY: I use QuickBooks.
CARRIE: Okay, yeah, it’s really efficient.
EMILY: Yeah, my bookkeeper is well versed in it and then she’s remote, she’s in a different state so we can both log in. Yeah, I use QuickBooks and then I use their online payment system too because I have clients that are all over and so it’s an easy way to have payments flow in.
CARRIE: Gotcha, okay. Yeah, and isn’t it really easy to send reports off to the accountant too? Or they can maybe even log in, I’m not sure.
EMILY: Yeah, she generates reports and then sends them to me.
CARRIE: Okay. What about you, Andrea?
ANDREA: As you know, I’m on the Outright bandwagon. I resisted for a long time but when I finally signed up for the account, I was blown away. All of my clients are scattered. I do have some locally but most of them are people that come across my site online or word of mouth. Almost all of my payments are either via PayPal or credit card payments on my site.
So I’ve got Outright set up with my business checking account, business credit card and PayPal, and it pulls everything automatically. If there is anything that it doesn’t know how to categorize, it tells me, “Hey, I don’t know where this goes, fix it.” Filing my taxes this year was just a completely different thing from doing it the year before because everything was just already there so I love it.
CARRIE: Yes, I agree with you on that. That’s actually what I use for myself personally. Well, I have multiple ones but for my business stuff, that’s what I use and I actually have gone through several different kinds of software but I feel like this one works the best for me since I’m doing a lot of online work and working with people virtually.
I do like how you can categorize everything. And it really does, if you have the premium version which is really inexpensive compared to other software programs, it will automatically export your deductions and your expenses straight to the correct category on Schedule C. So that’s really cool to be able to sort of print that out and–I mean, you have to have it categorized correctly to begin with. But if you do, it’s just a no-brainer.
And it’s really cool to also use to estimate your quarterly tax payments because it will say how much money you brought in that quarter, how much your expenses were, and then it will say, “You need to send in a check for this amount of money,” and it has a little box there and a profit and loss up at the top.
And that’s outright.com in case anybody was wondering. I’ll have all these listed on my resources page but you can go to outright.com and check it out because it’s really really cool. And you can start for free, you don’t have to buy the premium version. Like I said, no one’s paying us to do this. Alright. Let’s see. Are there any other tips and tricks that you guys really think that someone would really like to know to help them out with their tax situation?
ANDREA: I would just say people, I don’t know if it’s so much of what we’re doing is online but people seem so hesitant to seek out a flesh and blood person, an expert that they can go to. But when I realized that I was going to be leaving my job and starting this company, the first thing I did was go to my accountant and you know, “Oh, my gosh, what am I going to do, what do I need to do?”
And that conversation was probably–I guess that’s the only time since I’ve known this guy that he actually earned what I pay him because he knows my situation, he knows I’m a single parent, he knows what I own and what I owe and all that kind of stuff. And he was able to say to me, “Based on you, not based on some generic article on the internet but based on your life, this is what you should do.” And considering the fact that I had just got back everything that I had paid in quarterly this year instead of owing a lot of money, you know, to me that was so worth it.
I was concerned about, you know, I’ve paid in all this money and what if I still owe? What if they say it’s thousands of dollars? And I felt like his advice was indispensable because it helped me get started. He lectured me about being organized, and while I still have a long way to go, I do at least make an effort to kind of keep my things together and keep an eye on what’s going on financially.
CARRIE: I totally agree with that. I think that is really smart and I actually have a really cool resource if people want to actually find someone like you said flesh and blood and maybe even go and sit down and talk on the phone, whatever you want to do.
But there is a really cool resource from FreshBooks, which is an invoicing program that I use. It’s also really good to use to track your expenses for a project and all that kind of stuff–we can get into that more some other time–but all the tools that I use to stay organized you can go to carefulcents.com/map, and it will actually pull up a map of CPAs, certified bookkeepers, regular bookkeepers, accountants and all that across the nation and in Canada.
And you can click on their website, check them out, maybe some of them have free consultations, so if you are interested in just getting a quick, “Hey, am I on the right track? What’s going on?” And like you said, just touching base with that person, that’s a really cool resource to check out.
Emily, any final thoughts and suggestions?
EMILY: I do. You know, I agree with Andrea that that’s money well spent when you can get good guidance like that. For me, it’s about knowing your core competencies. So I knew that tracking little expenses is–I’m a big picture gal. We deal with hundreds of thousands of dollars in debt, and I really don’t want to know about that 9.99 that I spent on that book, but my bookkeeper does.
And so I knew my core competencies, that’s why she was my first hire because I knew that if I waited–it’s interested. I started my business in January of 2011 so I really hired her really at the beginning of the year. And I could have done that receipt box and I could have hired somebody at the end of the year.
But again, just beating that drum of knowing where you are, having your finger on the financial pulse of where you business is so that you can make those adjustments so you can really be successful because as entrepreneurs every dollar that we don’t spend on expenses is a dollar that we get to put in our pockets. So knowing what those are and making really good intelligent informed choices. Taxes are not just something for this time of year.
I mean, they are really something that as an entrepreneur, you have to keep your finger on because it will–your business will fly or sink based on how you handle your money. And you could have the world’s best business, you could have the world’s best idea, but if you flub the money part, you will kill your business before it gets a chance to live.
CARRIE: Absolutely. That’s a really, really great thing to remind everyone of, yeah. I totally agree with that. So I think we have some really good perspectives here. We have what it’s like to be a freelancer, how to handle your money and then we talked a little bit about organization and some tools and obviously that is the pulse of your business.
That is what is going to keep you going forward or keep you held back. I know it’s sort of boring sometimes and we don’t want to think about it and then sometimes we do want to go ahead and make that leap and hire that person that can really help us out with our business, and then other times, we are bootstrapping it. Both ways are fine, if you think like you are competent like you said Emily. Andrea is really good at that right now.
She’s just that small business like I am and so you just sort of grow with your business, you don’t always have to invest a ton of money to get on the right track and keep your taxes in line. And like we said, the biggest thing is not to have the IRS on your back so if you think it’s over your head, reach out to me or one of these ladies.
I’ll have a link on my website carefulcents.com and you can also go to carefulcents.com/resources, and it will have all the things we listed here plus the opportunity to contact me for more questions. So I know the other ladies would be totally fine with you guys reaching out to them as well.
Thank you guys so much. I really appreciate you taking the time as always. You can go to my website, email me or find us on Twitter or whatever. I really appreciate it and I hope you guys all have a really good night.
If you’re a freelancer, I highly recommend (and personally use) Outright as a my go-to tool for organizing business income and expenses — try it for 40% off during the month of March!
Download, print or share the Tax Checklist for freelancers and sole proprietors here: carefulcents.com/checklist
Talk to an accountant or bookkeeper in your area, or virtually, by clicking on the interactive Map here: carefulcents.com/map
If you’re curious to see all the resources and financial tools I use to run my business, click on the resources link here: carefulcents.com/resources
Now, over to you! Share a little about your business.
Are you an LLC, sole proprietor or Incorporated? Do you have a tax questions you want answered, leave a comment or email firstname.lastname@example.org.