If you’re anything like me, taxes are kind of a nightmare. With FemCity, Beautycounter, and Zach’s Big Map Travel business, we have to really double down on keeping everything organized so we don’t get any surprises.
After an amazing experience working with Stephanie Majeran of WellRun Results, I asked her to share five things people should consider when it comes to taxes. Take it away, Steph. 😉
Hello to all of you wonderful people who follow the amazing and brilliant Emily! I am Stephanie Majeran: native Des Moineser (is that a thing?), dentist’s wife, mom to a bubbly toddler and an affectionate/tiny fuzz butt, back-in-the-saddle again runner, and exhausted CPA.
I started my own business not quite a year ago with the idea of doing less taxes and more data analysis and strategic planning for small business owners. But somehow, there I was on tax deadline day wondering where the heck my life went the last three months! A list that started out as around 20 returns exploded to 100, the majority of which were officially filed by deadline (with a handful of necessary extensions).
I’ve met some awesome people along the way and have helped many out of some tricky spots! With deadline over, I am looking forward to helping clients think more about the future instead of trying to deal with the sins of the past.
1. What opportunities have small business owners missed in their taxes in 2017?
I think the number one deduction people miss out on is mileage. People hate tracking it, but the only legitimate way to take it as a deduction is to keep some sort of log. If you do get audited, that is for sure something the IRS will insist on seeing. Keep in mind, trips from your house to your main office are considering commuting and not deductible, even if you are self-employed. But anything else that is business related could be counted as mileage. There are several apps out there that can make keeping track much easier- my favorite is MileIQ. You can head over to my website to get a 20% off code for the app.
2. Taxes and accounting stress a lot people out, so how can people stay more on top of managing money?
I wouldn’t say there’s a “one size fits all” trick, but here are some suggestions I have:
1) Set a monthly reminder in your phone to update your business transactions. It’s much easier to remember a month out what that random check for $142.32 was for than trying to remember a year from now.
2) Set up a second bank account to keep your estimated tax amounts. A good rule of thumb if you are self-employed is to set aside 30% of your net income for taxes. Keep in mind NET: this means the amount AFTER expenses. So if you receive a check for $1000 from a client and estimated you had $100 worth of expenses, then you only need to set aside $900 * 30% = $270 for taxes. I’m happy to help people better think through and calculate what makes sense for them since this could be less if you also have W-2 income in the family.
3) Making decent money and just can’t deal with the above two items? Consider hiring a bookkeeper. But keep in mind: bookkeepers (nor CPAs) are mind-readers! They don’t know what that $142.32 check was for either unless you provide them with check stubs or receipts.
End of the day? Don’t wait till year end to look at your transactions. Not only will keeping them cleaned up monthly be less stressful, it will also allow you to think more strategically by seeing what income and expenses you have had so far.
3. Any apps or tools you use and love?
I already mentioned MileIQ- huge help! I have also really loved my online portal system, ShareFile. It has made securely sharing documents with my clients a breeze- and it has a phone app too, which has been helpful on more than one occasion!
Streak CRM for Gmail has been a game changer for me as well. With just a few clicks, I can quickly store emails from clients in separate “boxes” which makes referring back quick and easy. I can also designate what type of contact they are, so for me I have Tax Clients category, but then I also have a Potential Clients category so I know who to follow up with in the future.
Kind of funny bonus feature with it: you can see how many email messages you’ve had with each client. I told one of my clients he was “winning” at 333 messages! 🙂 But at the end of the day, my favorite tool will always be Excel!
4. Any changes happening in 2018 small business owners should be aware of if they aren’t already?
It is still a little hard to know in practice what the impact will be of the tax reform changes. Essentially, a bunch of politicians who aren’t necessarily experts in tax created some laws that they don’t actually know how to implement in real life. Fun times. But for certain I think we can safely say that small business owners who are self-employed, in a partnership, or in an S Corp will get a 20% deduction off of their net business income. There are exceptions in certain fields, but only if income/salaries are above a certain threshold and so far, I haven’t had any of my clients who won’t be able to take the deduction. However, we shall see if the IRS comes up with some other adjustments to the way this is being interpreted.
I would say for any taxpayer, the biggest impact is going to be the increased standard deductions. Hardly anyone is going to have enough to itemize, which means that your property taxes, mortgage interest, and charitable contributions won’t actually give you any tax benefits.
5. How are you celebrating being done with tax season?
Haha! Well I honestly have barely been able to look past today. Today, I’m hoping to wrap up early and go for a run! And later in the next week I have scheduled to get new glasses, a massage, and a hair cut. 🙂 Oh and a much belated date night with my husband! But I can’t take too much time to celebrate because I am presenting at EntreFest in Cedar Rapids on May 17-18 and need to get my presentation organized.
Thank you Stephanie for your wisdom + expertise in this sometimes difficult subject matter. If you’re looking for even more, be sure to reach out on her website.