#149: 3 Things You MUST Do to Avoid a Tax Time Headache

How was tax season? Michelle has had nightmarish experiences in the past! If filing 2020 taxes was the pits, make sure to start NOW and make next year easy. Michelle talks about her experiences during today’s episode.

Subscribe to these episodes on YouTube, or:
iTunes – https://apple.co/2sOjwVA
Stitcher – http://bit.ly/2K3UaN6
Google Play – http://bit.ly/2Jx9x0Y
Spotify – https://spoti.fi/2Y0Eu1r

Hello, health coaches. You know what? Most people think that they can eat whatever they want, not pay attention to their health until there's a really big issue. And then they finally get that diagnosis or they finally get that medication and they still feel like crap. And they're like, oh, what went wrong? So, I'm here today to tell you that, of course, you're not going to make that mistake and I'm not going to make that mistake. However, taking care of your health and taking care of your financial health are very, very similar. And if you want to do it right. You got to take the same approach, right? They both require those regular small habits that over time, really add up to either feeling great, or if they were not so great habits, they're going to add up to having a big problem. And those problems, if you ignore them to just get worse and worse.

So tell me either, if you're here live, you can type it into the comments. If you're just listening, you can shout it out and let all your neighbors hear you on a scale of one to 10. How much do you dread tax season, especially as a health coach or entrepreneur, right? It's definitely a more complicated situation than if you are a W2 employees somewhere. And since tax season just ended yesterday, I thought now would be the perfect time to talk about how that went for you. For me, this year was like no sweat. My bookkeeper handed over the books to my accountant who filed it. And I really didn't have to do a thing. It was like piece of cake. And the reason it was a piece of cake is not just because, you know, I have a bookkeeper and I have an accountant, but because my books were maintained and kept up to date all year long, it wasn't something that all had to be done just in the last couple of weeks.

This was not always the case. First of all, I did not always have a bookkeeper. I did not always have an accountant. I was doing everything myself for like the first five, six years of my business. And my books were definitely not kept up to date all year long. In fact books, I didn't even know what that meant. I had never run a business before. Right. So if you're in that place right now, it is okay. We can all learn new things, right? And this is something I had to learn. So your books are your record of your business transactions throughout the year, your everything that you've earned and all of your expenses. And if they are up to date, then filing taxes is going to be a breeze. It's going to be really easy to whether you're doing it yourself, or you're handing it over to somebody to prepare your taxes for you.

It's just going to be like, here's everything you need. Thank you. Bye. That's lovely. Now, if your books are not up to date, it's going to be a slightly different story. And that was the case for my friend, Amy, who I was talking to yesterday. Amy's not a health coach, but she is an entrepreneur, like all of us working for herself. And Amy said that last weekend, she sat down at her kitchen table. She was there until about three o'clock in the morning, just going through all of her transactions for the year, trying to figure out what all of her expenses were and it takes hours and it is painful and it is boring. And I remember doing the exact same thing when taxes were due. I was like, first of all, I was like, wait, what? I got to pay taxes. Oh yeah, I'm a health coach.

I'm a business. You know, you forget, especially when you're new and maybe you're not making that much money and you kind of can see maybe it's a little bit more of a hobby than it is a business. And you forget about the whole situation with taxes. That was definitely me in the beginning. So, what I would do is I would, okay, sit down, shoot. I got to figure out these taxes. And I would literally go line by line through my bank statements. I would go line by line through all my credit card statements because everything was all jumbled up together. Try to figure out where I had been paid and try to figure out where I had spent money on my business. Then add up all my income and my expenses. And I missed so many things, right? If you're doing it at the last minute, it's just never going to work out well.

So, tax season was confusing at all for you this year, or if you ended up overpaying, I have a free training coming up on this exact topic that I want you to sign up for. I'm going to be joined by Sara Fins, who is a health coach and a certified public accountant, because you don't want to be taking accounting advice from me. Okay? Like I am not the tax expert by any means. You want to talk to Sara. She's going to show us how to track our finances without spending oodles on bookkeeping, software, bookkeeping services, accounting services. And she's going to answer your questions live. So, sign up for that for free it's at healthcoachpower.com/easytaxes.

Now today's topic came from Jamie because Jamie posted in our group the other day, and this is what she said, she said, for those who filed your business as sole proprietor, do you see someone to file your quarterly taxes or have you found a clear way to do it yourself?

So Jamie's bringing up a couple issues here. First let's set aside the idea of being a sole proprietor versus an LLC versus an S Corp. Let's just set that aside. If you're earning money as a health coach, unless you're working as a W2 employee somewhere, you're supposed to be filing your taxes quarterly. This is something that I did not know anything about for many years. I don't think anyone ever even said those words to me, which is why I'm saying them to you. Now you need to pay quarterly taxes, at least in the United States. I have no idea how this applies to other countries, but I'm sure it's something similar. So, Jamie, to answer your question, the way that I pay quarterly taxes every year is that my accountant with my tax return will give me vouchers for my quarterly payments for the next year.

They base it on how much you made this year, right? And then they add a little bit and they come up with some estimate of what you're probably going to owe. And then you're supposed to pay that amount over the course of the following year. I have been able to pay them successfully online through the IRS site for my federal taxes, state taxes. I live in New York. I have not been able to figure that website out. So I just write a check and put it in the mail and send it that way. And you might need to do the same. I don't know. Every state is going to be different, but I can assure you that at least on the IRS site, it's pretty easy to go in and make a payment and choose estimated payments. So that's how I've been doing it. But like I said, the number comes from my accountant.

Otherwise I would have no idea how much I should pay. Right. And this is something that technically you're supposed to do, whether you are a sole proprietor or not. So I hope that's helpful. And again, I just want to say those words, quarterly tax payments, because I wish someone had told me about them sooner. However, I promised you three ways to avoid a tax headache today. And that's one of them, right? Because if you don't pay quarterly taxes, you're going to owe all that money at the end of the year. And that is not fun. Nobody wants that better to pay a couple thousand here, a couple thousand there, you know, throughout the year. And then it's not quite as painful. Maybe you even get some back, Hey, who knows. Okay. But how else can we avoid a tax time headache? The first thing again, I was not doing this early on in my business is to track your income and your expenses. You know, you're supposed to do that. Right? Everybody knows this, but we don't do it.

I had someone tell me once, try to do it once a week, like on Fridays, make it like financial Friday and you book out your calendar for an hour or two. And that's when you're going to sit down and track everything that happened that week. And I think that's a really smart thing to do. It would be similar to like how you go to the gym three days a week, or how you go to yoga on Tuesdays and Thursdays, right? Financial Fridays would just be a thing that you do so that it gets done on a regular basis. Not just once in a while, make sense. Right? Um, when you sit down to do your income and your expenses, that's going to be like, you know what you spent this week because you had to buy some sort of office supply, things like that. But don't forget about your home office expenses.

And that's something that we're going to talk more about during the free training coming up on June 2nd, you can sign up for that at healthcoachpower.com/easytaxes. But I just want to put that out to you because I think as a health coach, I missed a ton of potential deductions I could have been taking in the beginning because I didn't know. I was allowed to write off expenses for my home office, which is really just a percentage of your house or your apartment or wherever you live. Okay? So we need to be tracking our income and our expenses and doing it on a consistent basis. That's my other tip for you, because if you wait for the end of the year, it's going to be such a hot mess. You don't even want to get into it and you are going to run and cry, or maybe that's just what I used to do.

It's the pits though. We don't want to be in that situation. So doing it a little bit at a time throughout the year is really key. So my books get done every month. My bookkeepers go in, they go through my statements, all my bank accounts, and they reconcile my books once a month. If that's what works for you. Great. When I was doing it myself, I really did find that once a week was more palatable because it didn't take quite as much time. And I could just do a little teensy bit at a time. Um, I hope that this makes it easier for you. The idea is that tax season doesn't have to be horrible. You don't have to owe a lot of money at the end of the year, and you don't necessarily have to hire someone to help you with all of this.

It's exactly the same as with your health. If you take care of it, if you were responsible for your health or your financial health every day of the year, then you not going to reach a crisis point register for the training that's coming up on June 2nd. Again, it's healthcoachpower.com/easytaxes. And we will talk more about all of this there, with Sara who is an actual tax professional.

Okay. Um, we have some other questions that I wanted to get to today, and I apologize that this particular recording is not very interactive. I did have to go through several tries before we got the internet working and Facebook working and all the rest. So I'm not interacting with you guys as much as I normally would, but this is what you sometimes have to do with technology. You just roll with it.

Okay. So anyway, I have some questions that came in earlier and this one is from Jill. She said, I'm curious if any of you do speaking engagements to drive business? If so, do you ever charge a fee for an honorarium? I'm considering a speaker series for account... Funny for accounting firms as this is the profession I'm coming out of to drive individual and corporate coaching clients. Any thoughts?

So Joel, yes, 100% go do that. Speaking engagements, uh, holding workshops in corporate spaces, this is exactly what you should be doing. And it's not like I wonder, or might it be a good idea? It's like definitely a good idea. So go do it. Um, you also asked if you should charge for doing something like this. And what I want to say is it doesn't matter. Like if you are going to be able to get in the door more easily and present and collect email addresses for your email list, like you don't really need to be paid on top of that.

It would be nice. But sometimes I've noticed with different corporations, they have a lot of red tape. They have budgets. If you are going to ask for a fee and you totally can, and people could, you could charge hundreds and hundreds of dollars to do a one-time workshop or speaking about it or something like that. But if you find that's holding you back, it's holding you up, like you ask and they have to check with a million people and nothing's getting on the calendar. I would just go ahead and do it for free because that's going to bypass all that red tape. You know what I'm saying? However you go about it. It's going to be worthwhile, but I would think about it. And I think you are in terms of how can I do this event to fuel my business like longer term. And by that really means you want to be collecting those email addresses, as opposed to, I'm going to go in, I'm going to make $600 and then I'm going to leave.

And that's going to be the end of that because that's only $600. But when, if you went in and you presented to like a hundred people and you added a hundred people to your mailing list, and then over time, all of those people, not all of them, but a percentage of them would become clients. You would in the end, make a lot more than that $600 or whatever the initial fee was. So just another way of thinking about it. Okay. I have another question here from Abby. Abby says any good tips on re-engaging subscribers before deciding to wipe them from your email list. Okay. That's a good question. I'm sure some people are going to say, why would I wipe anyone from my email list, especially when I worked so hard to build an email list? Well, the truth is right. You're going to have an email list of, let's say, let's say you have a thousand people on your email list.

Every time you send out an email, you've probably noticed that the open rate is only like 30%, 20%, something like that. So you can have like 70% of these people who are not opening your emails. Meanwhile, you might have a free account with MailChimp or Convert Kit or whatever, and you're going to have to start paying once you hit a certain number, even for me, right? I'm definitely paying for my email service every month. But as my list grows and hits the next level, I have to pay more. So it makes a lot of sense to keep your list clean. That means getting rid of inactive subscribers and they could be an active for so many reasons, right? They could have simply lost interest. They could have changed their email address. They could have changed jobs, right? So, their old email address is no longer active, whatever.

So it is a really good idea to clean your list every now and then when you notice that it's gotten larger and yet, you know, only a percentage you're opening every time you send an email. So Abby, one thing that we do is we go through and find all the people who have not opened anything in six months, you could do it differently. You could say three months, or maybe you want to say, I want to find all the subscribers who have not clicked on anything, even if they have opened, but I'm usually fairly conservative around this. And so we usually go six months, they haven't opened because that means that they're likely like not even checking that inbox anymore. And then you just delete them. And that's typically what I do. Or like you said, you can try to re-engage them before you wipe them completely from your email list.

And sometimes you'll get emails like this from people it'll say something like, you know, should I take you off the list? Or are you still interested? Or, you know, something like that. And let them know that they are going to be removed from your list unless they click this link and that way they could stay on. So it's kind of giving them like a last chance before you're going to wipe them clean. Um, and that is another option for you. I hope that helps.

Okay. Here is a question from Renee. Renee says I'm looking to market companies market... I think she's saying I'm looking to market myself to companies or offices for clients. Does anyone have info or facts on how health can affect insurance rates? I would like to have some concrete info to present. Heather, I'm sure that exists. I'm positive of it. And I bet even if you just Google it, you can find some information about that. However, what I want to say to you is if you have to convince a company that it's worth it to them to have you come in and do some sort of workshop like we were talking about earlier with Jill, right? I wouldn't even bother with that company. That's like swimming upstream. So my suggestion is why don't you find some companies that already do this companies that already have some sort of work-life, uh, whatever initiative within their corporation, HR people who already are looking for health and wellness professionals like yourself to come in, don't try to convert the people who think this is not worth it. Go to the people who you don't have to do that work. You're just going to show up and you're going to have value for the employees. And they're going to already recognize that value. That way you're more likely So, to come across companies that already have a budget for this.

So like we talked about, you could be paid or companies who've done this before, which means they know the ropes. I know how this is going to go. Their employees know what it's all about and are going to be more receptive. Why fight an uphill battle. That is my best advice for you. And I hope that that is helpful.

Oh my goodness. Today we had so many technical issues, but I hope that this episode comes out clear as a bell regardless, and has some tips that are helpful for you, especially as it relates to preparing your books and your taxes and getting things filed because next year, wouldn't it be so nice if that was just a non-issue for you. So once again, if you haven't already signed up for the free training happening on June 2nd, we're going to show you how to make that a reality at healthcoachpower.com/easytaxes. I'll see you there and I'll see you back here next week. Take care.