Latest / The SmallBizChat with Melinda Emerson / Small Business Taxes Made Easy with Eva Rosenberg

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Small Business Taxes Made Easy with Eva Rosenberg · The SmallBizChat with Melinda Emerson

• 0:00
  3, 10, 1, 0, ignition, liftoff,
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  Ending small business failure.
• 0:11
  Welcome to the Small Biz Chat podcast with a number 1 small business expert Melinda Emerson.
• 0:17
  Bolinda's goal is to end small business failure, and she'll give you the information
• 0:21
  you need to succeed and live the life you've dream of.
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  Now here's the small Biz lady herself.
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  Melinda Emerson.
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  Hi, everybody.
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  I'm Melinda Emerson, the small Biz lady.
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  America number one small business expert, and it is my pleasure to welcome you to tonight's
• 0:39
  small biz chat.
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  Now we do small biz chat because we offer peer to peer advice to help you take your small
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  business to the next level.
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  The mission of small fish chat is to and small business failure.
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  So that's what we're about.
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  So I'm really excited.
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  Our goal is to give you an opportunity to hear sage advice from experts that are gonna help
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  you take your business and your life to the next level.
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  Now tonight's guest, I have tax expert Ewa Rosenberg.
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  You guys know her is tax mama.
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  She's here tonight.
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  She has answers to tax questions.
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  She provides information on her tax quips podcast, and she's written a wealth of books
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  and released many webinars to help you deal with your personal and business taxes.
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  Her latest book, the 4th edition of small business taxes made easy, including the latest
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  tax laws for being bookstores in March.
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  So I'm so excited even to have you back with us on small fish chat live.
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  Welcome.
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  Thank you.
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  And congratulations on, you know, being The top woman at LinkedIn this year.
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  That is so exciting.
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  Thank you.
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  Well, it was kind of a surprise.
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  You know, they named me one of the top voices of 2019 for small business and
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  entrepreneurship.
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  I didn't know any of the other people on the list, but I was happy they put me on the list.
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  So I'm really excited about that.
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  But now let's get to you because I know taxes stress people out.
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  So I want you to kinda give us some insight into what we need to be thinking about going
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  into filing this year's taxes because you said we actually got some good stuff out of this
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  some of the legislation and things that have come around.
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  But first, before we get started, will you please tell me when are business taxes due?
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  This is the number one thing that I think people screw up all the time.
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  When are business taxes due?
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  Oh, god.
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  Yes.
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  I'm so glad you asked that.
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  First of all, they changed all of the deadlines a couple of years ago.
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  So partnerships and s corporations and any kind of pass through entities are due on March 15.
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  And if they are are going to consider taking an LLC or corporation and make an election to be
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  an s corporation, They have to do that by March 15th.
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  The penalties for not either filing or putting it on extension are $205 per month per partner
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  or per shareholder.
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  So they're huge So that's why I am so glad that you asked that because somebody just wrote to
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  me and said she finalized her partnership last February And now she's considering filing the
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  tax return, and she's facing $4000 worth of penalties.
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  So the corporate return is due in April as well as the individual on April 15th.
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  Okay.
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  I'm glad you broke that down because I think a lot of people think business sectors are due in
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  April.
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  They are not They are due for most people in March.
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  March 15th is our deadline.
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  Alright.
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  So now talk to me about If you have to file your business taxes, which is a small business
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  owner, you better be filing business taxes.
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  What kind of tax expert do they need?
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  I mean, it can turbo tax do it for you, or do you really need a human to do your business
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  taxes?
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  Okay.
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  First of all, I want everybody in business to put your tax returns on extension.
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  K.
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  Absolutely put the bond extension this year.
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  It's a form 7 0 4 or come and ask me.
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  Who do you need to help you?
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  Either an enrolled agent or a CPA should be able to help you deal with your taxes.
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  These are people who actually are required to have tax education every single year They're
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  required to know what the changes are and what's going on.
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  Anybody else?
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  I know I know you won't believe this, but except for California, Oregon, and Maryland,
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  there are absolutely no education requirements for any tax professionals anywhere else in the
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  country.
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  So anywhere else in the country, if they're not an EACPA or attorney, stay away from them.
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  And I know they're gonna hate me for telling you that.
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  Well, look, I want people to know the information, so I don't care.
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  Alright.
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  Congress gave us a little gift this past holiday.
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  Can you tell me a little bit about the high points of the new tax law that was just passed
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  in December that kinda updates the the Trump tax reform law.
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  Sure.
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  There were only about 715 pages.
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  No big deal.
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  And they did it at the last minute.
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  So everybody has to retool so none of the forms, you know, are quite ready yet.
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  But there are two big things that affect us right now as as taxpayers.
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  Some of them affect everybody and not just businesses, and there are extenders, various
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  tax provisions, that expired at the end of 2017, and they may be interesting for people to
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  amend their personal tax returns for last year.
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  Most of those things don't really affect businesses, so I'm not really going to go
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  there.
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  But then the things that do affect business are the Secure Act, and that is changing how
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  retirement plans work And they're making more and more people eligible, including part time
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  people, people who are still working can stay can continue to contribute to IRAs even after
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  age seventy and a half.
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  And people who are seventy and a half don't have to take their minimum required
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  distributions from their IRA accounts.
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  They can wait until age seventy two.
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  And so there are new provisions for retirement plans themselves that will allow a lot more
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  people to be able to get the benefits, businesses to get tax credits for automating
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  enrollment.
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  So if somebody comes on board, if they automatically make them part of the retirement
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  plan, the business can get a substantial credit.
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  But, you know, there are a lot of nuances and a lot of things that need to be Blaine.
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  And you mentioned that small business taxes made easy is coming out in a few weeks.
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  I incorporated the details and what to do on all of these changes because we caught it just
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  before it went to the printers.
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  Oh my gosh.
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  That's so awesome that you were able to give people that extra insight.
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  So talk to me about I know that I've heard a lot of people talking about the new 20% qual
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  qualified business income deduction, This is a great deal for business owners.
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  Right?
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  Or or will it just generate audits and and a whole bunch of mess for people?
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  It's really good for tax professionals.
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  We are able to increase our fees dramatically.
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  We are thrilled at this new provision because it's complicated.
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  IRS has written 100100 of pages explaining it.
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  It's okay.
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  For some people, it's really good.
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  There is a provision for most of the people that you're dealing with, people who are
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  consultants who are in small businesses and providing a lot of different services, they
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  have severe limitations on how much of this deduction they can use.
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  And if they are married filing jointly, it's somewhere around 315,000 if their income goes
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  above that, they start losing the right to use these deductions.
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  Half of that for singles and that number has increased by inflation.
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  For people who don't meet what's called a specified service trader business description,
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  which are service businesses.
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  They don't have these limitations.
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  And, you know, like everything else with the IRS, it's a trade off.
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  It's 20% of your business profits reduced by certain things.
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  So it's not gonna be simple.
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  Right?
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  So it's 20% of that.
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  But if you really wanna focus on maximizing that deduction, that means you're you're
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  increasing your business profits, which means you're increasing your self employment taxes
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  and various other adjusted gross income numbers For some people, they're better off not using
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  this at all.
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  So I'm actually working on putting together a course on how to how to balance this so it
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  makes the most sense.
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  But for some people, it's really great.
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  Now you already said that you think every business owner should put their business on
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  extension.
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  Yeah.
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  Now what what's involved in doing that?
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  Cause if you owe, you can put on extension on you want to, but you still have to write a
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  check, right, if you owe?
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  Yes and no.
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  So there's always that.
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  Right?
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  This is the IRS.
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  So first of all, yes, if you owe the extension as an extension of time to file, not to pay, if
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  you don't pay, send something with it.
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  But if you can't afford to pay the whole thing, the penalty for late payment is a half a
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  percent per month.
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  If you pull that money out of your credit cards, you're gonna pay a lot more than that.
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  Right?
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  So half a percent a month is not very much.
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  There is also a form 1127 that you can file that will actually buy you 6 months of delay
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  without any penalties if it's a hardship.
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  So there actually is a secret form nobody knows about that you can use to get additional time
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  to pay too.
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  Alright.
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  Thank you for telling us about that because I'm sure that there's a couple of usually, the
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  people that I see most getting jammed up with this is people who are side hustlers and gig
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  workers.
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  Like, they kind of forget to put that 30% aside, and then they get hit with a tax bill,
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  and they're like, McCauley Cockkin from home alone, you know, when they get this bill, like,
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  oh my gosh.
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  What am I gonna do?
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  So I think it's really important that you talked about that.
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  But are there any special tax benefits for people who are gig workers and and and
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  freelance folks out here?
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  Well, honestly, the IRS has this whole gig worker area of the website that they've
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  expanded on But the fact is all they are is people who are self employed.
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  And the the shock comes exactly the way you said.
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  Somebody on the out on tax mama, I had this as tax mama forum where people can ask questions
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  for free.
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  We answered them for free, and we'll be very patient up to a point when we keep giving them
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  the same answer five times and, you know, they're not getting it.
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  Like the guy who said, how come I my profit was my taxable income was 29,000.
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  Why am I paying $10,000 to the IRS?
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  On $29,000, that's a lot.
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  Well, we explained to him his business profit.
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  His Schedule C was about 40,000.
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  And he's paying 15.3 percent self employment taxes on that.
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  The income tax is only on the 29,000, but the extra 5 or 6000 is on his self employment, and
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  he can't get the concept, and he's not unique.
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  A lot of business people don't understand that even if they're itemized deductions or their
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  standard deductions wipe out their business profit, They still have self employment taxes,
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  and that becomes a huge shock when they do their taxes at April 15th.
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  And now don't have the money to pay.
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  So that's why if you're in business, it is your responsibility to sit down with a good tax
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  professional.
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  Invest a couple of $100.
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  And I'm, you know, I'm not trying to sell that.
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  I'm just telling you that it will save you 1000 of dollars if you sit down with somebody for
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  about 2 hours and get an understanding of what you need to do because they can help you find
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  tax credits and save a whole bunch of money with the right deductions, and you will owe so
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  much less and no penalties.
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  I never see any reason why people should have to pay penalties.
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  It's bad enough you've gotta pay taxes.
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  Why pay penalties?
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  I I love it.
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  I love it.
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  Well, listen, we're gonna go to right now, but when we come back, we're gonna talk to the tax
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  mama about some of the most common things that people miss that they could be deducting on
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  their business taxes.
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  I'm Melinda Emerson, the small biz lady.
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  You're watching small fish chat live, and we will be right back.
• 13:01
  Hi.
• 13:01
  I'm Melinda Emerson's small business lady.
• 13:03
  I know you might be thinking about quitting your business and going back into corporate
• 13:07
  America, but wait, before you give up, my new book fix your business could give you a whole
• 13:12
  new lease on life.
• 13:13
  My twelve piece of running a successful business will walk you through step by step.
• 13:17
  How to grow your business revenue, how to hire great people, and streamline your processes,
• 13:23
  and so much more.
• 13:24
  Grab a copy today, affix your business, and get your life back.
• 13:31
  Welcome back to Small Bishop Live.
• 13:33
  I'm Melinda Emerson, your host, And I am so excited to be here today with the tax mama, and
• 13:38
  we're asking her the questions that can help you with your last minute tax filing stuff.
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  Alright.
• 13:44
  Tell me what are the most common missed business tax expenses that you see constantly?
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  People who spend money using cash, They don't keep track of it.
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  And if they don't even dare to estimate correctly, when I force somebody to actually
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  track the cash they spent, It was closer to $10,000.
• 14:05
  So track your out of pocket cash expenses.
• 14:08
  The other stuff you have on credit cards and checks and we can go through that.
• 14:12
  Your accountant can go through that and see what's deductible.
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  So those are the main things.
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  And then there might be other things related to the mileage.
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  Your mileage is a lot more than you realize it is.
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  If you actually track it, you're gonna find some really good stuff.
• 14:28
  And then there's something called redeem costs, which may apply to you where you're not even
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  spending money or spending very little money, but the IRS gives you allowances for deductions
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  you can use instead of the actual cash you spent.
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  I took one person who spent 500 a month and because of the per diems, I turned it into
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  almost 5000 a month.
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  Okay.
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  Well, those are big ones, but here's some of the questions that I often get asked.
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  You know, can you write off meals if you take anyone to dinner, you talk about business.
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  Can you can you deduct it?
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  We go out to dinner with your best friend and say, We say the word business.
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  It's a business deduction.
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  No.
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  You can't.
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  It really has to be business.
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  It has to be associated.
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  We can't deduct entertainment at all anymore.
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  So if you're doing any kind of an entertainment thing, one of the things you wanna do is get a
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  separate bill for the meals and and drinks part of it you know, like you buy the, what do you
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  call it, the box seats at sporting events and they cost 1000 of dollars.
• 15:29
  That's not deductible, but the meals you provide Get a an absolute separate receipt.
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  Those are still gonna be deductible.
• 15:36
  Alright.
• 15:37
  Now what about this?
• 15:38
  Can I get my business to pay for my health insurance?
• 15:42
  Most of the time you can, if you're a partnership or a corporation, if you're self
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  employed, you can't get the business to do it.
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  But you can take an adjustment to income for the cost of the health insurance.
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  And if you are a family and you get your spouse or your children to work for you, you can give
• 16:00
  them family coverage as part of their wages.
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  They have to work for you legitimately.
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  And all of the family medical expenses, not just the insurance, could get covered if you
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  know how to do it.
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  That's one of the chapters in the book.
• 16:14
  Alright.
• 16:14
  What about gifts to clients?
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  Is there a limit, or is it just, you know, a bottle of wine, or can I just send them a pen
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  or a t shirt with my logo on it, or can I I send them a $300 wide basket?
• 16:26
  Yeah.
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  Right.
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  Maybe you can send them the wrapping for the basket.
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  What we have is a $25 limit per gift per person per year.
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  It hasn't changed in the last 50 years.
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  And so you can't give them more than that.
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  You can maybe add the cost of the gift wrapping and shipping, but that's it.
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  So we have to make an adjustment on our books.
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  I mean, Congress hasn't changed this forever, and there's barely anything you can get for 25
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  bucks.
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  So instead what we Yeah.
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  Our promote, we can do promotion things.
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  We can't give them tickets to something or or give them a gift certificate to go to dinner.
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  But we can take them to dinner.
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  Okay.
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  Well, that might be better anyway.
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  Work on the relationship.
• 17:14
  Eva, what is your favorite business app?
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  Well, you know, my favorite website rather than a business app.
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  I know you're gonna find this hard to believe is the IRS.
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  I live on the IRS website.
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  Of course, you.
• 17:29
  Yes.
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  I do.
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  I live on it and I correct it and I send the corrections in and they fix it for me.
• 17:36
  Alright.
• 17:36
  Well, they love you.
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  You're helping.
• 17:38
  They do.
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  They're job better.
• 17:40
  And and, of course, as as as an enrolled agent with the IRS would tell me the IRS would site
• 17:45
  is their favorite business app.
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  I'm gonna take that because I I think it's valid.
• 17:50
  One of my favorite apps, I'm a big fan of Dropbox.
• 17:54
  And I've become a big fan of this new app called Designrr.
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  And it's, like, enables you to make ebooks and import video, and they'll turn it into content
• 18:05
  in seconds.
• 18:06
  I mean, it's amazing.
• 18:08
  And it's a new app I've been playing with, and I I really like So it's called design r r.
• 18:12
  And you're gonna give us a link to that because that sounds good.
• 18:16
  Yeah.
• 18:16
  Well, I'm actually gonna put out a post soon with it with all of my favorite new tech tools
• 18:20
  in it.
• 18:20
  So just watch out for that soon.
• 18:22
  Another couple of weeks, it'll come out.
• 18:23
  But, yeah, that's that's my new favorite one.
• 18:25
  Eva, what's your favorite old school marketing tip?
• 18:28
  Understanding the what's in it from econcept.
• 18:32
  What does the customer really want?
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  Don't sell them.
• 18:37
  Give them something that they really want that they can really use.
• 18:41
  Even if they don't know, they need it.
• 18:43
  Right.
• 18:44
  Right.
• 18:45
  It wasn't in it for me.
• 18:46
  Everybody listened to the same radio station, right?
• 18:49
  WII FM.
• 18:52
  What's in it for me?
• 18:53
  I love it.
• 18:54
  I love it.
• 18:54
  Good stuff.
• 18:55
  My favorite old school marketing tip, handwritten notes.
• 18:58
  Handwritten notes still make a big difference.
• 19:00
  Everybody sent an email.
• 19:01
  You sent somebody a handwritten note on stationary.
• 19:04
  They will keep it, and they will remember you.
• 19:07
  Last question.
• 19:07
  What is your favorite business book?
• 19:09
  It is psychosybridetics by Maxwell Mault from way back in about 1960 or 70, and it's all
• 19:18
  about visualization positivity.
• 19:22
  Believing in whatever it is you want, and it's the foundation for a lot of business
• 19:27
  philosophies, Amway, and everything else, basically tapped into that.
• 19:32
  So if you can visualize it and manifest it and believe it, it actually works.
• 19:38
  It actually works when I decided I didn't wanna do taxes anymore, and I wanted to write my
• 19:44
  phone rang and McGraw Hill called and offered me a book.
• 19:47
  There you go.
• 19:48
  Alright.
• 19:49
  Listen, guys.
• 19:50
  Thank you so very much for being my guest tonight on small fish chat live.
• 19:54
  If you want more information about tonight's guest, head on over to my blog.
• 19:58
  Succeed as your own boss.com.
• 20:00
  And if you want more information just about me.
• 20:03
  I'm the small business lady.
• 20:04
  You can find me everywhere on the internet as a small business lady.
• 20:07
  So I want to leave you with this.
• 20:09
  You never lose in business either you win or you learn.
• 20:13
  God bless everybody.
• 20:14
  See you next time.
• 20:16
  Thank you.
• 20:17
  Listening to the Small Biz chat podcast with Melinda Emerson.
• 20:21
  For more resources and small business success strategies, visit succeed as your own boss.com.
• 20:28
  Subscribe to this podcast wherever you listen to the podcast and join us next Wednesday.