Accounting Tips for Creatives with CPA Amy Northard - Creative Counsel Episode 62

This is Creative Council Episode 62, Accounting Tips for Creatives with CPA Amy Northard. Welcome to Creative Council with Brittany Rettell. I'm your host Brittany, an attorney for creatives who believes in solid contracts and cute office supplies, and who wants to empower you to be a more confident business owner. Whether you're a creative influencer, maker, artist, shop owner, or content creator, you are not just a blank. You are a real bona fide business owner. So let's help you own your business and get you legally legit with Brit. Hello everybody and welcome back. So excited to have you here and really excited to share this episode today. So Amy Northard, our guest today, is a CPA with nearly a decade of experience in public accounting. She's basically my pink calculator-wielding equivalent, okay? So if you, you know, know me as the attorney for creatives, influencers, people who are creative lifestyle brands, Amy is my counterpoint in the money field, okay? She earned her undergrad degree from Indiana University and is the, uh, the official accountant of creatives. Yes, she did that registered, good girl, and offers tax planning, bookkeeping, S-Corp, you know, reasonable salary reporting, and virtual CFO services to creative clients, along with a Be Your Own CFO course. When she's not helping clients with taxes and bookkeeping, you can find her taste testing craft beers, on a run with her golden doodle Lily, or planning her dream log cabin with her husband and son Jimmy. So I'm so excited to introduce this episode here to you. Now, If you are tempted to tune out or to be like, Brit, I'm not good at money, like someone else handles that for me, I guarantee you there will be something worthwhile here, no matter how lean or robust your money team looks like right now, whether you are doing everything yourself because that's the stage you're in your business, or that's your comfort level, or whether you have already hired all of this out in terms of bookkeeping, accounting, CFO services, as you uplevel, whatever, whatever, where you ever are on that spectrum. Amy is my go-to when I have questions about PPP forgiveness, for example, this year, or when I want to do better about like, what's the workflow look like about handling my receipts? Or what about like expensing things that are kind of unique to the creative field that maybe some traditional— hint, hint, white hair accountants— don't understand or will push back on? Amy's a great resource for knowing like, is this normal? And having something kind of behind your belt. So Please tune in and know that all the resources that we talk about are gonna be links in the show notes. So thanks so much.

So as you kind of heard in my introduction, she's an amazing CPA and an incredible resource, and we're just excited to have her here to share her wisdom and strategy with us today.

Thanks for having me.

Awesome. Well, Amy, to kind of get us started, why don't you tell us a little bit about how you got to do what you do now, what kind of drew you into your kind of niche and working with creatives. We all know how fabulous creatives are, obviously, hair flip, hair flip, what, what brought you into this interesting niche in the accounting field?

Yeah, so, you know, almost like 10 years ago, I was working at the traditional CPA firm. I finished college, started working there. I got a lot of great experience, but after I spent a few years there, I just found like the clients weren't inspiring. I wasn't excited to go to work on Mondays. I had that like pit in the stomach pit in the stomach feeling every Sunday. And I was just dreading it. So I started to try to figure out what can I do to enjoy my business, enjoy a way of like making money and using my CPA license that I worked really hard to get. But also, you know, just be happy and not have to feel that feeling every Sunday. So I started trying to think like, what can I do? And I saw that thing, taxes just for bloggers, and I never thought about like niching down that far and that someone could create a business just on that. So yeah, it seems really scary, like, yeah, like are there enough bloggers in the world? Like when you first start thinking about it, you're like, I don't know if there's that many people that need this. So, so that's kind of like what got me in that direction. Then I took a part-time job while I started this business, did that for about a year, and then it just got too crazy. To do both. And I've always kind of had like a creative background, so like in my office there's a lot of art supplies, knitting, like there's just a lot of like that kind of thing. I've always had that interest. I always—

hell yeah, I'm a knitter too, so yeah, I—

it's awesome.

It's not— it's great to be able to have it all as part of your work, you know, for it to be all melted together.

Yeah, yeah. So I just love being inspired by the creativity of my clients and I work with a lot of different types of creatives, kind of like you do, but just following them on Instagram and Facebook and getting to see what all they're doing inspires me even though I'm doing the boring, like what people consider the boring part of their business.

Quote unquote, yes.

Right. It's still just so much fun for me to be able to cheer these people on. I'm so jealous of their creative skills. I wish that my stuff measured up. At all, but it's just fun and inspiring to work with them.

That's awesome. No, I think we're cheerleaders there in the same respect that we found a way that we can overlap the skill and expertise we have, but that we get to work with our favorite type of people who, they're inspiring, they're bold, they're brave, they just go for it. And sometimes we have to rein them back a little bit, but they go for it so much. But, you know, it is such a vivacious, interesting you know, just so alive kind of person to work with that I think, you know, we have the best job in the world that we get, you know, we have the pleasure of being able to serve and help support and grow creatives as they build their businesses and their empires.

Yeah, I totally agree.

Awesome. So, so you started out kind of doing more traditional kind of CPA work, right? Just kind of client work, you know, helping people with taxes. And then you've kind of now grown that to a sizable business. You have to tell us how many clients you have because I know it's a crazy number and then even kind of evolved past there. Tell us a little bit about that process, what that looked like.

Yeah, so when it was just me, I mean, it was me by myself for a long time. A lot of the beginning years was just me and I knew that I didn't want to take on a ton of bookkeeping myself. I kind of only took on a few people there, but then I really focused on taxes. And as things grew, word of mouth spread. We just, you know, expanded quite a bit to needing to start hiring contractors to help me with the taxes. We've now hired 3 employees in the past year and a half to come on and do the bookkeeping side of things because we really found that people were needing bookkeeping even worse than just the taxes.

You know, what we—

what you put into the tax return is garbage if what, you know, if the bookkeeping hasn't been done correctly.

Yeah, it is. There's no stronger than the month-to-month profit and loss and expensing and all of that.

Yeah, yeah, exactly. So we kind of switched gears the past year to focus on, um, our virtual CFO and bookkeeping and just getting people set up with that so that their numbers are in good shape when it comes to tax time. Um, and that way, you know, we're— we are confident in their numbers that we're using for the taxes, and we can be involved with this stuff throughout the year rather than like your typical accountant where you're just talking with them once a year and they're just giving you bad news. Um, we're able to like, you know, plan for that stuff so that there's not that $20,000 tax bill due. Yeah.

Yeah. You guys are transitioning from being ER docs, um, to, you know, like more wellness providers who are like, you're coming in for your checkup and how are things going and how are you feeling? Which, let's be honest, everyone likes those visits more than going to the ER.

Yes, exactly. Great analogy.

Yeah, awesome. Um, and tell us how many clients you have now.

Um, so we have about 50 bookkeeping clients and then we have about 500 tax clients.

That's crazy. That's a crazy client load. I cannot imagine.

Yeah, it's crazy. It's why I can't do it myself, even remotely. So my husband started working with me about 3 years ago and he does a lot of like the admin and tech stuff. And then we have all the CPAs that I lean on a lot.

Awesome, awesome. So, um, when you first started getting— you know, you said you kind of, you know, you put yourself out there, that you were in this niche, that you boldly kind of said that you were going down to creatives. Did you, did you have hesitation about that? Did you think that there was going to be enough people? And how did you start, you know, attracting your ideal client?

Um, I don't— I mean, you would think like a rational person would be kind of nervous about niching down that far. I was just really excited and never never really thought like there's not going to be enough. Because once I looked, once I realized that that was a thing, like there are all of these business owners out there that need help with this stuff, um, I was kind of overwhelmed by how many people out there that needed this. So, um, so I never really felt that nervousness. Um, yeah, I don't know where I was going with that.

You just went for it. That's awesome. Yeah, yeah. And then in terms of, did you just start creating content or what was your strategy in order to kind of reach out and find your people and make sure— because I think, you know, you, you're a little bit like me, um, in that we, we know people need our stuff but they don't always know they need us and they don't always like to think about us or spend their money on us. And so it's a little bit of a tough marketing place to be in sometimes.

Yeah, yeah, I think I've really focused on like creating free content with the blog and doing guest posts and doing free webinars. Like, I was trying to get out there and get in front of as many groups as I could. Even though, like, podcasts and public speaking, you know, kind of stresses me out sometimes, that stuff, like going outside of my comfort zone, has been the best investment in my business every time I've done it.

Amen.

I love that.

And so, yeah, that's really where my focus has been throughout. We, we work with a ghostwriter for the blog now. So we found a couple of people who are amazing at writing. I review every single post and then we post it. So we're trying to really beef that up as far as like free content for people and just teaching them because I can't sit down with every one of my 500 clients and say, like, here's what you need to know. As much as I would love to do that, I can't. So that's been my recent goal, is just getting this important information out there any way I can.

Yeah, and to make sure that you have just a really robust resource to offer them. Yeah, which I mean, I found that it's so much easier once I've created a piece of content for me to say, hey, you just got ripped off, please go listen to episode number 11, instead of having to give the same spiel again and again, because you do find that you're repeating yourself a lot.

Yeah, I love, I love having like a resource list and I can just link out to like blog posts and stuff. It's so nice.

Yeah, that's super smart. Awesome. So, and that's great of you to take advantage of, you know, what do they say, like, um, you know, do what you do best and hire out the rest. And so as much as, you know, the content's important to you, it doesn't mean that you have to be involved with all the stages of the drafting. You know, it can still have your touch and your voice, but you don't have to be doing all the grunt work. Yeah.

Exactly. And I'm not a great writer, and so to have somebody that can make it actually like sound interesting, um, I read it and I'm like, oh, you made this really like boring topic actually kind of palatable, which is great.

You came to life. Good. Double, double thumbs up for you. Yeah, that's, that's awesome. So, um, and then how did you go about finding your people who are going to help you? What is your— what does your team look like now, and, and how did you find them?

So now we have, we have a CPA starting on Monday, which I'm really excited about. And then we hired 2 last year. And so we, we spent time drafting the job descriptions. We really looked to see like what we wanted in terms of help for the team, like what I needed to pass off. We put that into job descriptions and then we posted it into some accountant-specific job postings. And that really gave us like the best leads as far as people sending in their cover letters and resumes. And then we did some testing, which is really helpful recently because we wanted to make sure that the people that we were hiring, you know, they can be good on paper, but we wanna make sure that when they start working with us, they can actually do the job. And— Yeah, that was the best thing this last, this last round was we did a pre, pre-test. So we sent them something we wanted them to give us feedback on. And then during the actual interview, we did video interview. We had them like walk through a little QuickBooks test. And that was just so nice to be able to like see and hear their mental process of how they would go about completing what they, what we asked them to do. And I know like stress plays a huge part in that, but we only had a very small amount of applicants where people we interviewed completed correctly. So that really helped us. Yeah, it was so interesting.

Is this something that you guys created yourself, or did you find it somewhere else, or use like a third-party software or something?

Or, um, well, it was just like a simple journal entry.

Okay.

So we kind of gave them like a scenario, and then we had them do a journal entry. And, um, so I just wanted to make sure they had the accounting background and knowledge, and then knew the software that we were going to use. Um, so that it really helped narrow things down quite a bit. And so we could definitely, instead of having a large pool of people that looked great and have a hard time, you know, it narrowed it down to like a couple people and made our decision a lot easier.

Yeah, that's awesome. And I think that's a really scalable tip for those of you who are listening who are like, that's great, I'm not a CPA and I don't care about QuickBooks, but If there is another, especially a piece of software or something or a process or a methodology that you use in your business pretty regularly and that's what's going to be helpful and useful for someone to learn, then why not have some sort of skill test based on that to make sure that, yeah, people can be confident and be able to fit into your organization and use that correctly.

Yeah, and I haven't— we haven't done this yet, but I've heard of a lot of people doing like personality tests too. I know those are huge right now with like the Enneagram and stuff, but Um, that's something I think I would want to do next is, um, you know, have everybody on my team take one of those tests and then just so we kind of know what the team level is and then make sure that whoever we're bringing on fits really well with the rest of the team but also the type of position. Because somebody who really needs to be around people is not going to love a virtual accounting job. Yeah, you know, they're going to get into it and be in it like 6 months and be like, see you later. So we want to avoid that. And I think that would be the one thing I would have done differently looking back.

Right.

Or if someone, you know, thrives and loves to be around people, then like they're a much better fit for client-facing or customer service positions versus someone who's not, who's like, no, I don't do people. It's like, okay, well, here are the jobs which you are better suited for, you know.

Exactly.

Because we all know that you lose, you know, there's a lot of time and energy that has to go into onboarding and getting someone ready to be part of your organization.

That.

Certainly, yeah, having that not go well is— can be super frustrating.

Yeah, for sure.

In that respect, I did want to make sure that we had some classic accounting CPA tips here because I know people are always excited for those, even, even if not all of their hearts thinks that they're as excited for those as they need to be. So when people are going through this process themselves, especially when they're looking at hiring and growing their team and I use those terms loosely because I know most of us usually start out with independent contractors and then maybe get to W-2 employees. You know, what do people need to be taking and be aware of? You know, I've talked a little bit about on the podcast and a couple different places about kind of independent contractor tests and some of the factors. And we all— I all know, for my clients who live in California, there's a big caveat here that you really need to talk to someone who practices, who's really familiar with those rules, because California is crazy and Dynamex is changing everything. But what are some of the things that you like to talk to, to your clients about when they're kind of considering and making sure they're doing things right?

Yeah, I mean, like, but like what you said, doing that independent contractor test, looking at your state's rules and laws around that stuff is really important. I know a lot of us just want to jump in, go hire, get them on board, and that's the focus. But I think you really want to make sure that you have a good foundation because you don't want them to come in and then you look unprofessional if you're like, oh, I told you you were going I thought you were gonna be a contractor, but then I found out you need to be an employee, and you're switching things up. So having that figured out ahead of time will save you a lot of embarrassment going forward. And then also figuring out like the tax side of things. So, you know, if you decide they need to be a contractor, you need to have them get that W-9 form filled out. And I would do that upon like initial working with them, not waiting until January 30th and the 1099s are due the next day. Yeah, you're not going to get that filled out, I promise. Um, and then same thing with the employee and getting a payroll system set up. Um, it's not as daunting as a lot of people think it is because there's so many great programs out there. Um, we use Gusto to manage all of our clients' payroll and ours, and they just make it so simple just to like fill in, go through the steps. If you're not sure how to do something, they have additional information, and we help people with that too. But they have done a lot of the legwork when it comes to each of the states as to like what's required, workers' comp, all of that stuff.

Exactly. Super, super smart. So, um, with the, you know, general framework of if you are doing too much control of somebody, even if you call them an independent contractor, even if you bought one of my independent contractor contract templates that says that, you know, if it looks like a duck and it smells like a duck, if they're, you know, using your laptop and they're at your warehouse and you tell them when they can show up, when they can leave, and how they can do their job, that looks a lot like a duck. It looks a lot like an employee.

Yeah, exactly.

Yeah, so awesome. Any other things that you find that people tend to be getting wrong in that area or miss that you keep on seeing being kind of perpetuated about how to distinguish between independent contractors and employees?

Um, I get a lot of photographers who ask me about their second shooters. So, um, you know, the second shooters typically bring their own camera, but they're required to be there like during a certain time and, um, that sort of thing. So I found that that's kind of a gray area. So I'm curious what your thought is, like from a legal side. We typically classify them as contractors because the photographer kind of gives that opportunity to the second shooter, lets them say yes or no, and they use their own stuff. But I'm curious what you would think.

Yeah, I think I would go the same as you. I would say that it's a little gray, especially if you're in California. I would say that. So I would say maybe talk to my friend Raiden Adam Drake, or who else practices in California who does this? Annette Stepanian. Someone else is in this space who is a little bit more familiar with the, you know, irregularities of California and how much they like to make their own law. But I think that if you— especially if you can emphasize how a second shooter is going to be a little bit different from the services that you're providing, you know, if it's not just— you're not just a photographer, you're also maybe doing and making sure that you're on top of all the client shots and you're doing the client interaction, and that's what you're emphasizing in terms of your client service agreement. And then with the photographer, it's a very narrow niche thing that they're doing. I think that helps separate a little bit, that like you're not seen as in the same business, but it's tricky for sure. I think, I honestly, I think California's got it wrong with this, and I hope that they, you know, wise up and make it easier for people to be, you know, creative and service freelance professionals there.

So yeah, one thing while you're talking that reminded me, so one thing that I see a lot of people do wrong would be they just like, they'll have a face-to-face conversation or text their second shooter and say like, here's how much I'll pay you to show up to this wedding and shoot it, and then they, they just send the money afterwards. And what really needs to happen is there needs to be an invoice involved. So the second shooter needs to be invoicing you as the business owner so that you have kind of like a paper trail of that payment. And then along with that, I know you've posted about it, I've posted about it— don't use Venmo to pay these people. Don't use PayPal friends and family to pay them.

They're not your friends and family, people. They're not. That's, that's for splitting dinner with somebody. Like, you know, people always like, well, what about for business stuff? I'm like, yes, you are a business. Are you using the business merchant services feature?

No?

Then it's not okay. Yeah, yeah, it's, um, I know it's easy and convenient, and that's why, because we're like, oh, I gotta go talk to someone or find out, you know, where to, where to invoice them. I know it's an extra step, I know it's a pain, but you know what's a bigger pain? Getting audited, getting, having to pay fees, you know, getting in trouble because of misclassification. So Yeah, I do. And the other thing I see a lot that I've told my people about is please don't use, you know, your personal Venmo, or even worse, like be using your husband's or something in your business. Like I've seen that where people are— it doesn't even match their credentials of the payment, don't even match up to what their business is. And so not only, you know, does that not look really professional, but if someone disputes it, if there's a chargeback or doesn't recognize that charge on a statement, it's gonna be really difficult for them to to figure out what it is or for things to get resolved because they are going to be like, I have no idea what this money is. And it's no wonder because it doesn't look like a legit business.

Yeah.

So don't do it, people. We can do better. Know better, do better. Yeah, and all the good things. So you talked about with your people that you— I love that you talked about your tests that you bring them on, and I'm sure you are cognizant of whether people are employees or independent contractors that work for you. How else do you kind of help in the onboarding of new people who are working for you that they are doing it in your way? I mean, you know, there's kind of a reason, like you said, that you maybe weren't feeling the vibe in maybe a traditional accounting firm and in the kind of traditional bookkeeping style. So how do you make sure that what you love about the job and what people love about working with you is carried out in the people who are joining you?

So one thing that we really focused on, the last person we hired before this new hire was back in November, so basically a year ago. And so what we really focused on from this summer up until this week was making sure that we went through all of our clients who we do like a monthly, monthly work for and we created a workflow. So, 'cause we wanna, we want to be able to kind of move some clients from people that are gonna be working on taxes to this new hire. So instead of having them take their notes and us maybe forgetting things, we want the, we want the, what they receive from us, the client receives from us, to stay consistent even though we're moving it from one CPA to another. So the way we're doing that, we have super detailed workflows for every client. We're going to do a training when she starts, so we're going to go through, you know, broad company processes. Here's, you know, where we track our clients, you know, how you do those sorts of things. But then we're also going to go through each client work through the workflow with them so they feel confident and teach them like how to communicate with the clients and that sort of thing so that it's just really consistent across the board and people don't feel like they've gotten passed off to someone that's a newbie or like lower quality or anything like that.

Gotcha. Yeah, which is the last thing that you want. That, that sounds awesome. So it really sounds like you're trying to systematize the client management and the client relationship and make sure that people are getting a really consistent experience with you all through, all through different touch points, even though it might be different people in your organization who are the ones who are actually keeping in touch with your client.

Mm-hmm, yeah, and that was the thing that was— I was really nervous about when I started to think about hiring because my name is the business name right now. It might change eventually, but right now it's my name. And so I wanted, first of all, to preserve that. I don't want people to think poorly about it or anything like that. So I want everybody to have the tools to carry things out as I would. But also, you know, eventually I will remove my name from the business and we might be just the accountants for our creatives. And I want them to know that they're not just going to be working with me. It's not a one-woman shop anymore. In that we have a team that we're all working together with.

Gotcha, that makes sense in terms of, yeah, forward planning. So what do you guys use to manage communication and kind of that kind of task flow? Are there systems or things that have worked for you guys?

Yeah, we're using Slack just for general communication. So obviously we still have email for things, but internal communications we're doing Slack quite a bit. And that lets us, like, we do a question of the week. We try to to have some fun things in there just so that we can get to know each other better, um, because we don't— we have never all met in person, which we're gonna do next year, and I'm really excited.

Oh, fun!

I do like a little retreat or meeting.

Yeah, we're gonna go out to Lake Tahoe, which I'm really excited for.

Oh, that's awesome! Um, I heard it's beautiful. I've never actually been, but I've actually heard where I live in Coeur d'Alene, Idaho, is— reminds people a little bit of Lake Oh cool, just a lot quieter.

Yeah, yeah, yeah, I'm really excited. So that's just another way that we're gonna kind of get to know each other better and do a little team bonding. But as far as the client management goes, um, we use several things, but the main thing we use is Trello, and that lets us kind of visually see how much work each person has, where it is in the workflow, um, you know, we can jump in and help people. And then especially for tax season, you know, we kind of have that group mentality where we don't just say like, here's your assigned clients. We put them all into one bucket. And as you're able to, you go in and you do tax preparation or you do review of their returns. So it's just kind of like a team mentality for that. And Trello lets us see like what everybody's working on. So, you know, if someone has— is bogged down by stuff, you, you can kind of jump in and help.

Awesome.

So you guys are all, you know, we're all pulling on the same side of the tug of war there.

Yeah.

Mm-hmm. To get stuff done. So that sounds great, especially since with your business you guys do have such a, you know, crunch time that's limited because of the time frame. You know, it's not like you can— as much as you can, there are things you can do throughout the year, but there's always going to be that craziness in April, you know, March, April. Yeah, unavoidable. So April 16th is always the sweetest day, I'm sure, to a CPA. Yeah. All the things. So, um, and then in terms of the tools that you recommend to clients, if people who are trying to, you know, uplevel and kind of get their numbers legit, make friends with their numbers, you know, I'm sure you get the same thing that I probably get all the time, is people are like, don't be mad at me, don't hate me, don't yell at me, but I haven't been doing this, or I don't think I've been doing this right. Where do you tell them to start, you know, or what are some things that you recommend that they kind of invest in or make friends with to make this easier?

I think if you haven't done anything, you know, and it's towards the end of the year and maybe you have a whole year of bookkeeping to get caught up, don't be afraid of a simple spreadsheet. I think some people think like, oh, that's too simple, I need something like QuickBooks. But honestly, if I, if I had no bookkeeping experience and I tried to use QuickBooks to do a whole year of bookkeeping, it would be a mess and you get so frustrated. So unless you have a good chunk of change to hire that out and get it caught up, just dump all your transactions into a spreadsheet, organize them by, you know, give them a category. You can use a spreadsheet to sort by category and, you know, there it is.

That's—

you've got your numbers for your tax return.

So I think maybe pull up the Schedule C and see which map, you know, match up, which it's sometimes a little hard now because honestly not all of those categories are really modernized for the way that we do business. You know, there's a lot of stuff like, how many of us really need laundry services? Um, yeah, not, not a ton, but a lot of us, our education is really high because a lot of us take online courses or, you know, putting stuff into. So yeah, some of that's a little—

yeah, so don't be afraid to create your own categories. Those will all go— anything that doesn't match what you see on a Schedule C will just kind of dump into that other expense category, and that's fine. What you want to avoid is having like $10,000 in miscellaneous expense. That won't be fine.

Yeah, that's, that's the red flag. So, and that's what I've heard from our accountant before, is like, yeah, those are never good, or like really easy peasy round numbers never look super good. It's always, you know, we need to make sure that we have something that looks like there's actually a rational basis where you got this number in reality.

Yeah, yeah, yeah. So I would start there. One thing, if you do want to get into something like QuickBooks, the beginning of the year is the perfect time time for that because you can start back with January 1st. You'll, you know, if you start mid-January, you only have a couple weeks to get caught up and import into QuickBooks. And it just kind of lets you kind of dip your toe into using something like QuickBooks. If you're just a freelancer and you don't have a very complicated business with like sales tax and a lot of merchant fees and those sorts of things, the QuickBooks Self-Employed option is really good. But if you are anything above, like if you're selling on Etsy or you have sales tax involved, you really need the next level up of QuickBooks. So look into that. If you want to do it yourself, spend some time learning it. Don't just feel like you assume you know everything is, you know, how everything's working. Take some time, do some tutorials. Lynda.com is great. They have tons of tutorials for a pretty good price, and you could do like like 1 month free if you don't already have an account there, and just dig into that when you have a slow season. There's Wave Apps, is a free accounting program. They all have their little quirks, you know, it's free for a reason, but if you really don't wanna spend the money there, you, it works. We have several clients who've used it and love it. You just have to make sure you take that time to learn it.

That makes sense. And honestly, anything that you do to keep track of this is better than nothing, you know, in terms of making, you know, being consistent. And, and I would say, you know, the number one tip I always give to people, and I tell them, you know, please think about what you want to do in terms of a CPA or bookkeeping software or strategy, and/or, but is make sure that you've set up your separate bank accounts because it's so much easier to go and go throughout this work. If you set up a separate business bank account, a separate business credit card, and you keep everything clean and separate, and you make sure things stay in their lane and you don't try to mix and mingle. You know, you save that for your dance floor and your reunions and your company retreats at Lake Tahoe, not in your books.

Yeah, and I think I've talked with a lot of people, and I think some of them use their business accounts, especially PayPal. Like, it's super easy just to type your PayPal credentials in when you're buying something for yourself. Or maybe you don't want your spouse to see that you bought $200 shoes because you were influenced on Instagram to buy them. So I see a lot of like that, and it's not something we a lot of times openly talk about, kind of hiding those things, but it's easy to do. I have honestly found myself in that trap, like the mindset of like, oh, I have money in my PayPal account, I could just use it, then I don't have to explain that I overpaid for some really cute shoes, you know. So I think getting a handle on that and really like making that your resolution, if that's something that you find yourself doing, is also important. Just make that— make your business accounts only for business.

Yeah, I know.

I think that's— that— thank you for bringing that up. It gets really important. I think the advice that I have heard is to really treat PayPal as a pass-through. And so really, as soon as all your money's there, you should move that on to whatever bank account you're using in terms of an operating fund, or if you're holding money for taxes. Or I use Profit First now, and so there's, you know, there are things that that money has to do once it gets into my accounts. There are rules that I need to follow on certain dates to move it around. So yeah, yeah, yeah, she's nodding vigorously. She's a fan of all of that. Yeah, so other than kind of those tools, you have some kind of, kind of tips for us to kind of reduce stress at tax time. So why don't you tell us a little bit about that?

Yeah, and so these tips are things that will help you like not have a heart attack when you file your taxes, just keep things a little bit more accurate and more manageable. So the first one is if you're taxed as a sole proprietor, make sure that the payments to yourself are not included as a business expense. The reason for that is because like let's say you have a profit of $10,000 and you pay yourself $5,000. You might think if you include that as a business expense, oh, I only have $5,000 of taxable income. I'm only going to save 25% of that. I'm good on taxes. But what you want to focus on is that $10,000 of profit before you paid yourself. That's what you're going to pay tax on. So By making sure that you do that correctly, then that's one less thing that can stress you out.

Yeah, and something I do want, because I think people— I get this question a lot and people get confused about that— if you set up an LLC, you are still taxed as a sole proprietorship. And so it's important for people to realize that you, unless you've done something else like send in your form to change yourself over to a corporation and then now you're an S Corp, this is the default status that you probably are.

If you're—

especially if you're a single-member LLC, that's what you are. You're a sole proprietor. You're an LLC, and that's awesome. You get double thumbs up from Brittany for protecting yourself legally and from getting all the liability. But you do need to make sure that you're still, yeah, not mixing in terms of your, you know, your draws that you're taking yourself and counting that your salary as an expense, because it's not a true salary. In the IRS's ICF.

Exactly. And along those lines are income tax payments. So whether it's to your state or the IRS, if you're paying an income tax payment, you need to include— count that as like an owner's distribution. Don't put it into that like default taxes and licenses category. That's one of the biggest things when we take on, um, bookkeeping for people that we have to update for them. So So that is another thing, and those payments are large, so they typically— so they can make quite a big difference in your net profit. The other thing is if you use PayPal or Stripe or Square, even treat those like bank accounts. So when we do bookkeeping for our clients, we treat those like bank accounts because, because of the merchant processing fees and all of that. I think a lot of people, if they're DIYing, you know, if you're using PayPal and you transfer whatever's left over that comes from a sale into your account, and let's say it was a $100 sale, you get $95 deposited into your checking. A lot of people just mark that $95 as income and move on. And I get it, that kind of makes sense. It feels like that's all you should have to pay tax on, and that's all you will have to pay tax on. But what you want to do is you want to show a $100 sale and then $5 of expense for those processing fees. So you're still only taxed on the $95, but by treating those as like their own bank account, you can do transfers, you can reflect the expenses that happen that you pay through PayPal. So it's just a lot easier to kind of compartmentalize, put them into their own little bucket. And treat them that way for bookkeeping purposes.

Yeah, which can get sizable. I mean, I'm always amazed now that I— because I make more sales every year in my services that I did the year before, which is great, but my payment services fees are going up and up, and it's crazy. I mean, it's a few grand now each year that I'm paying to PayPal just for the honor of people paying me through them.

Yeah, yeah. And the thing is, like, the thing you can get— the thing that can really cause you stress is if you were to collect like $10,000 through PayPal, but you only reported $8,000 because maybe that's all you had left after they took their fees out. If you only report $8,000 of sales, the IRS is gonna say, hang on a second, we got a 1099 from PayPal that says you got $10,000 and things aren't matching up. We want you to pay tax on the extra $2,000. And you're like, wait a second, you know, people freak out and we have to kind of write a letter to the IRS, explain it, redo some things. So that's the real reason, um, and it will save you a lot of stress down the road for sure. Um, and then the last thing is just reconciling all of your bank accounts. I think a lot of people get everything categorized and then they don't— they think like reconciliation isn't something I have to do. Um, but if you're using something like QuickBooks or Wave or Xero and you're not sure how to do a reconciliation, just Google like QuickBooks reconciliation. There's really simple tutorials even on YouTube. But all you're doing is basically matching up what's on your bank statement with what got imported. And you want to make sure there's nothing missing, nothing duplicated, and that's going to be kind of your, your way to second guess or second check yourself and make sure that that's all correct.

Perfect. Yeah, so Oh, I love these. These are all such great tips. So, um, and then, you know, as people are wading into this stuff and trying to get better, you know, when, when people find things that they're maybe not sure of what they mean, you know, I mean, I think I was listening to one of your other podcasts in preparation for this, and someone had a great question, which is like, what exactly is a write-off, and what do people mean when they say that? And I think that's great because I think a lot of people hear that and they've maybe come to the point where they're like, I don't think I'm allowed to ask what that is yet. Like, I'm supposed to know at my stage of a business, and I'm gonna look like foolish if I don't know what this actually is. But I've heard clients or other people joke about, oh, I'm gonna write that off and write that off, and I'm like, those are, you know, getting your nails done. I don't, I don't know about that. You know, what, what are some things they should be thinking about if they're actually planning on something to be a valid business expense? You want to some good questions for them to coach themselves through that if they haven't had the joy of working with somebody like you and your team yet, and hopefully they will be.

I think you just need to think about like whether or not it's more personal versus business. So I think a lot of people get in the trap of like, oh, well, I have to look good if I'm gonna be on my blog and I'm gonna use my blog to sell products or whatever. Like, there's a very easy— I understand how you could kind go down that wormhole of thinking like, oh, I have to get my hair cut, I have to get a tan, I have to get my nails done, and all of that feeds into my blog income. But the IRS sees like all that stuff is more personal in nature. It's not necessary to run your business. It's something that benefits you outside of just the business. So same thing with like a gym membership, you know, if you're a bodybuilder, you know, that might be a different situation, but honestly it's really not. Um, it still benefits you. Um, personally, I have a lot of, a lot of blogging clients who will come to me and say like, oh, I want to, um, deduct, like you said, the nails. And clothing is a huge thing.

So, I mean, or my— I get lashes every month, or I get hair extensions, or—

yeah, yeah, yeah. So the, the clothing, I mean, unless it's something that you can only wear like if you are a doctor or a nurse and you're a contractor and you can only wear it to work and you can't really wear it out, even if you choose— like, it's not your choice. If you go to a conference and you choose to buy a dress to wear one time, just because you chose to only wear it one time for a business thing, that's different than only being able to wear it for a business thing.

So you have the capacity to use it for something else, and that's what counts.

Yeah, right. Yeah, so there's really just that personal in nature thing to think about.

It's—

there's a lot of things that are kind of gray in nature, and so that's why we offer consulting calls. We do try to put a lot of that stuff on the blog to educate, but then there's also a lot of people out there saying, yeah, go ahead, you know, like there's accounts out there that say, yeah, deduct your clothes, you know. So you have to be careful who you're taking advice from and and get some background, like have them say, oh, you know, can you show me the IRS, you know, code for where you're getting this information? I think having that as a little bit of a backup is good rather than just taking blind faith from anyone you talk to or any Facebook group you post in, because I see a lot of people asking for legal and tax advice in Facebook groups and then just going off of what random people tell them. So getting some background and actual data behind what they're telling you.

Yeah, I think that's really, that's really wise. And you know, you need to know kind of what your own level, what your comfort level of what risk is and what you tolerate, and then kind of make sure it's matching with whoever is advising you, you know, what your CPA, your bookkeeping folks are, and make sure that makes sense for what you have on the line. Because is it really worth it to you for this dress to be deducted for a conference for the risk of what can happen if, you know, if it's flagged or if it triggers an audit or, you know, whatnot. So yeah, yeah, wise, wise stuff to talk about. So, um, well, the last thing I kind of wanted to talk about is you have, um, you know, been in the space and serving clients one-on-one, and now you've grown to like this agency model, which I think is super interesting. And really, there's some great lessons that we talked about today that will apply to people even if if they're, like I said, not doing your exact service but looking to expand using that model. And then now you also offer a digital product. You have kind of your virtual CSO service kind of in— and combined with that. Kind of tell me a little bit about how that got started and what that looks like. And yeah, because that's, that's a different world. I mean, for a lot of people don't realize it's kind of running like an entirely new business.

Mm-hmm. Yeah, it was born out of just doing like tons and tons of free calls with, with new clients, consulting calls, and I was just getting a ton of the same questions over and over again. So I wanted there to be something that was accessible. I mean, it's $30 a month, you know, you can go through the content, it's bite-sized pieces, there's 6 lessons, 20 minutes each, they all come with cute little workbooks with them, and And I wanted that just to be something that, you know, if you learn better through visual or through reading, you know, we had a bunch of different platforms. But I worked with my husband on creating that. Um, we're going to refresh it soon, so we're going to create new videos and kind of go more in depth in the bookkeeping side of things. Um, but it was something I wanted to be able to send people that maybe did not, you know, weren't ready to invest in hiring out bookkeeping, or they didn't want to pay $200 for consulting call. They just wanted to kind of take it on their own time, figure things out, but have someone kind of guide them through the process. So that's why I created that. One of my favorite things about it though, um, I added in, um, we do like a Facebook group. So we have a private Facebook group for everybody. They can ask questions there. They're not going to be real personal questions, you know, like how much tax am I going to owe and that sort of thing, but it's a little bit more general things you don't mind other people seeing, right? And you get basically access to a CPA for $30 a month to ask as many questions as you want.

So that's a steal, right?

I know, that's kind of my favorite part about it, is just that accessibility and being able to offer that information.

Yeah, which I mean, I think is really smart because like you said, so many of these questions— well, everyone likes to think that they're a special, you know, rainbow unicorn and so unique, And you guys are all wonderful people and you're all talented. There are a lot of things that are very similar in a lot of different businesses, and so you do get the same questions over and over again, which means that if you can provide a resource like this to answer those questions, you can help a lot of people and give that to them at a really reasonable price that still supports your business and your family, but also gets help into people who need to have it.

Exactly. Yeah, I was doing— I, I mean, I was way underpricing a lot of my consulting in the beginning just because I did I kind of felt bad, like I want to give them this information, I don't want to charge them a ton, they need it. So that—

yeah, girl, I hear you. You're preaching to the choir here.

Yeah, yeah. I reversed things, like I made a cheaper option that I could provide to more people and then raised that like one-on-one thing, which was tough for me to get over, but I got over it.

Yeah, you listen to some Rachel Hollis, you put on some, you know, '90s rap, you do whatever you need to and, um, yeah, and make it happen.

Yeah.

So in your business now, you know, now that you've kind of managed, you said, you know, you have your husband working with you. What has that dynamic been like? I'm always curious, and I think it's really helpful to see other people who have brought their spouses on in their businesses and how they make that work. What's working for you guys, or maybe what's still a challenge or something that you've discovered along the way?

So I think we work best because we stay in our own lanes. So I do, you know, the CPA thing.

Things.

He has a tech website web development background. Um, he's really great at like business development, figuring out how to streamline things. So he's kind of taken that on. Um, so we really stay in our own lanes. We know what our jobs are. Um, I'm not worrying that he's going to be doing something I'm doing or that I should be doing something, you know. So that's been really helpful. The other thing, like the more practical thing is we just have separate spaces. If we were in a room together, I think it would not work out. Um, he likes to watch YouTube while he works. I like to listen to music. So he's in the room next door, but we just have our own little spaces that we can shut the door. It's almost like he's off at his job that he used to be at. We can still message each other and that sort of thing, but I think that helps as well. We see each other at lunch. He can pop in um, during the day and say hi, but, um, we still have that separation.

Yeah, you guys still have some boundaries. And as much as you like hanging out with them and being with them, you also want to get your work done so that you can enjoy being with him and not having work be what you're doing together.

Yeah, yeah. The only— I would say the only hard thing about it is I feel like there's— it's hard to— like, if we're going out on a date night, it's hard to separate that. Like, sometimes that's that we need to figure out like when we can do date night and focus on that, and then do separate, maybe separate like coffee dates, and we focus on the business stuff. So we're actually going to do one of those tomorrow morning and, you know, prepare for the new hire. But separating that stuff out is still a challenge because sometimes it's fun to kind of dream and talk about business, but there's also like during tax season, I get to the point where I'm like, no, I can't talk about it anymore.

Yeah, you have to make a rule. So, and we find that— I mean, my husband and I, we're not in the same businesses together, but we like talking about our businesses since we're both in small businesses. And but then, you know, we find ourselves, that's all we talk about, or either our businesses or just talking about our kids. And so sometimes you have to be like, okay, we love these things, these things are important to us, but also, what, what have you been reading about? Or tell me about that book, you know, or that new you know, you're watching today, you're, you know, really trying to reach for some fresh conversation and connection. Yeah, yeah, for sure. So, um, well, awesome. Well, I, I think everyone's gonna love, um, kind of the research that you've talked about, and I'm sure there'll be people who are interested in, you know, looking you up and seeing what you— everything you have to offer to creatives in the space. Um, what's the best way to connect with you?

Um, probably the best way is through my website and Instagram. So Instagram is where like I, I love to post cute calculator pictures, a little bit about my family. That's kind of my creative outlet right now. And then the website, you know, if you are interested in working together or want to learn more about the course or anything like that, that's like my hub for everything.

That's awesome. So yeah, and that's a little bit similar to me. And you guys have kids yet, or?

Yeah, we have a 2-year-old. He just turned 2.

Oh, that's exciting. So how has that balance been in terms of, you know, now momapreneuring it?

Um, it was tough the first year because he was home with us the first year. Um, and I love that we had the ability to do that, but it was still really tough. So he started school, um, basically about a year ago, and that's been nice because we can both really, really focus on getting the work done. And then when he comes home, we can just like shut it off and really focus on enjoying him rather than— I think we got to a point last year where it was just kind of like annoying feeling sometimes, which is terrible to say as a mom. But, um, yeah, that just made me feel sad.

But yeah, well, no, but it's hard because then you feel like you're having both of it. You're kind of half mothering and half working, and then, um, you're not really giving great attention to either thing. So yeah, exactly. Yeah, no, I know, totally understand there. So well, that's awesome. Well, this has just been wonderful to chat with you, Amy, and I'm grateful to have you as a resource to offer people. And I know that, yeah, your stuff is, is really important. So I know that, you know, legal and bookkeeping and taxes are not always the sexiest stuff. Amy and I, we know this about ourselves. We're, we're, you know, we're cool enough and with it to know, you know, what, what we offer and what we don't. But, um, I know that, you know, it can be a really helpful thing for people to dig in, and, and we promise that we make it as fun as possible.

Yes, that's the goal. Well, thanks for having me.

Of course, thanks so much. Isn't Amy fabulous? Uh, so lucky to have her on and to have— hear about her wisdom and just practical tips. I just love that she gets it. She gets that we, we don't love this stuff, most of us, except for maybe nerds like Amy and I, about the, the tax and the legal and making friends with numbers. But this stuff is important, guys. And I can't tell you how many stories that I hear when people feel comfortable to kind of be open and be vulnerable about some of the shadows and, you know, real struggles in their businesses, about how many people lose money or get swindled, or, you know, they are at risk of embezzlement from family members, from people that that they thought they could trust from things going poorly because they weren't on top of their numbers. And that's not to say that, you know, those people deserved it by any stretch of the imagination. No, that's a terrible thing, and people make their own choices, and that's really unfortunate that someone feels like they're in a position where they could take advantage of someone's trust like that. But it's a new— it's kind of a new level, new devil. As you grow in your business and mature, you get the opportunity and the responsibility of being able to manage your money and have good cash flow and making you can take care of your people and pay your team, and that you're in a position where you can make really strategic and intentional decisions about what you're going to do. How are you going to keep money in your business? How are you going to pay yourself? Are you making sure that you have a profit? Are you making sure that you have money set aside for taxes? You know, taxes are not an emergency, guys.

They happen.

You know when they're going to happen. You know when your tax payments are due. None of this should come as a surprise to you. And Yes, as you make more money, this stuff will become more important and they will be bigger checks and you will be dealing with, you know, bigger levels of responsibility here. So you need to make sure that you're leveling up. And that means either hiring someone or training yourself or training someone else on your team, you know, internally or externally to help you with these tasks and these services and responsibilities so that you're in a position to grow like the real, you know, big girl, business that you want to be. So I hope this kind of inspired you and gave you some tips to think about, especially as we're, we're closing down this year and then we're looking forward to have, you know, a new, new foot forward in, in terms of 2021. So if you are interested in any of the resources mentioning, especially in following Amy and getting some of her tips and looking at what she has to offer, she is great about— I subscribe to her email newsletter and she's always putting little tips in there and guides and, you know, quarterly tax planning sheets and resources, um, chock full of stuff that you— that's going to help you in your business. So make sure you're following her on Instagram, um, and take a look at her resources and what she has to offer to make this easier for you. Okay, that's her whole stick, and I, I love that. So thanks so much for being here. If you have not had a chance to rate or review the podcast, um, I'd love to see that. I read every single one of those, and they really make my day. They keep creating content and getting motivated when it seems overwhelming, which is a lot, you know, frankly. Yeah, especially this year. And I'd love if you'd share with a friend if there's something on here that struck a chord with you, or any of our other episodes. Sharing online, sharing with somebody that you know that's in your entrepreneurial circle, and really helps spread the podcast and lets me help more people, which is my whole goal here, is to make sure that this side of building your business, especially when you're a creative or creator, isn't scary, isn't overwhelming, isn't cost prohibitive, that it's accessible and a way that you can move forward with the confidence of being a business owner that, that you want to have. So thanks so much for spending time with me. I really appreciate it, and we'll catch you next week.