Val: Guys, I am so excited for this conversation today. Kimberly is a CPA and just tax guru who is going to give us so much good information that we are dying to get. We need it. We have the questions and I’m going to ask all of those questions that we all are too afraid to ask our CPA. So, Kimberly. Thank you for being here.

Please give us just really quick summary of what you do, and then I would love for you to tell us about the upcoming dates that we need to be aware of.

Kimberly: Yeah. Well, thank you for having me and letting me spread my message as a tax guru. I know y’all, you’re probably like, I don’t want to hear about taxes, but stick with us. I promise I’m going to keep it exciting. This is not your typical dad CPA boring like, like we’re going to have a good conversation today and if you are running a business, you have to know this, whether you want to or not.

And you’re like, I’m not good at it. I want you to reframe and say, I need to learn this and Kimberly is going to help me be good at this because you need to know everything that Val and I are going to talk about today. So I’m Kimberly Tara. I’m a CPA and tax strategist. We work with CEO mom service providers to help them keep more money in their pockets to build wealth.

And I’m just passionate about that. We’re passionate about educating. We are passionate about really changing the game for Female entrepreneurs, because there is such a financial literacy gap out there and we’re all doing incredible things. And so we just need the support and the resources. And that’s what I’m here for.

Val: Yeah. Amazing.

. So let’s start out with what are the main dates we need to be aware of that are coming up? This is the beginning of March, so what do we need to know?

Kimberly: Yeah. So it is tax time. It’s here, y’all, whether, whether you’re trying to avoid it or not, it’s here. So if you are a partnership that files a form 1065, if you’re a partnership, you file form 1065, if you are an S corp, which some of you, some of the listeners might be, if you are an S corp, that is form 1120 S those tax returns are due.

on March 15th. If you are not ready to file your tax return, you can request an automatic six month extension by filing form 7004. And y’all, this form, it’s so easy to fill out. I promise you, you can do it by yourself. And we’re going to talk about why in today’s episode, but I want to empower you to say that you can go Google form 7004.

The IRS PDF will come up. You can type into it, you can print it out and write on it, and then mail it. That, you can do it. Okay, so that’s our first deadline. Your individual income tax return, Form 1040, which probably everyone is more familiar with, and if you are a sole proprietor and file on Schedule C, right?

That’s attached, that’s inside of your Form 1040. That is due on April 15th, okay? And if, again, same thing. If you’re not ready to file, if you want to request an extension, that is form 4868, 4868. Again, go Google it, you can fill it out, right, and you can send it in. And the big thing that I want to make sure that you know is, remember, Typically there’s no payment due right with your S corporate partnership on March 15th because those are what we call pass through entities and you actually report that income and pay the tax on that income through your individual form 1040.

So there’s no payment typically due on March 15th, but there could be a payment due on April 15th. And so I want to caution you if you are getting an extension. To file your form 1040, remember that’s an extension to file and not an extension to pay. So if you have a balance due, you sort of need to know and look, even if you’re just guessing and you know what Val, I even have a quarterly tax, calculator that we will give you and I’ll give you a code so that your listeners can get a discount because like, if you have no idea how much you might still owe, or you haven’t sent in estimated tax payments in 2023.

Like you need to send in something, right? Because their extension request is only to file the tax return and report the numbers and what you owe. It is not an extension to pay and they will hit you with penalties and we don’t want that for you, right? Because that’s just money out of your pocket if you’re paying penalties.

It’s actually a really fantastic calculator that if you put the right information in, it’s going to spit you out a really pretty close, accurate number.

And so you can at least send something in by April 15th towards your balance.

Val: Great. So is there an option to delay your payment? Like do they offer payment plans if you’re like, there’s no way I can do this?

Kimberly: Yeah, so it’s called an installment agreement and you can have that. Obviously, um, you know, there’s going to be penalties and interest and all of those things. So we want to avoid it if if we can. So, you know, we’ve, we’ve worked with a lot of clients. And we’ve walked them through that and we’ve helped them navigate it and get on those installment agreements. And for the most part, if it’s not in a absurdly huge number, right, the IRS, it’s pretty easy to ask for that installment agreement and pay that monthly amount.

When I tell you we work with multiple clients every year that are going through this, especially if their business has all of a sudden taken off and become successful. And you know, you don’t know what you don’t know. So you didn’t know that you were supposed to be paying estimated taxes. You didn’t know what your net income was going to be, right?

So you’re not alone. And number two, the IRS. Is not going to put you in jail. For not paying your taxes on time. Like as long as you’re actively working towards correcting it, like you’re totally fine.

Val: So then what would be the main reason someone would file for an extension?

Kimberly: Yeah. So we have a couple of reasons.

Some, some clients just, they’re like, it’s not that, it’s not that big of a deal. I don’t have all my stuff together. I’m not ready. Like they just want to wait and they don’t want to feel the rush. And some clients, they just, you know, they, they just like to wait until summertime and. You know, that’s, that’s okay. We say, you know, as long as they get us something like so that we have a preliminary number, you know, right.

So most of our clients, we’re working with them all year long because we’re working on proactive tax strategy. So they don’t really have a large balance due. So it’s not really a big deal for them to extend and simply report the numbers. The biggest thing is making sure you know, if you have that balance due

Val: Mm hmm. Yeah, totally. So, is there a, like a flat rate for, penalties or interest? Like do you know, like if, if I don’t pay my taxes on time, how much more am I going to owe? Oh.

Kimberly: So they actually, the IRS actually just raised it from 3 percent to 8%. And yes, so pretty significant. And my podcast is the CEO mom’s building wealth podcast, which we’ll have to get you on Val. But I have an entire episode, episode 74.

Talking all about this penalty increase. It was effective for Q4 of 2023. So. It’s in effect now y’all and I even run through a scenario and kind of like outline the numbers to say that like before at 3%. I don’t want to say that it was inconsequential, but like 3 percent because remember it’s not 3 percent for the whole year, right?

Because we were not going to get into how interest rates work and everything, but it was fairly insignificant. 8%. It’s pretty significant, especially depending on how much you owe. So, if, if that’s something, if, if you’re interested in knowing more about interest rates, how that works, what penalties could look like with the IRS episode 74 of the CEO, mom’s building wealth podcast, I break it all down and talk about the changes because that was a really big, that was a really big increase from the IRS’s.

Val: Yeah, that is, that is significant.

Kimberly: It is. Yeah.

Val: So now that we’ve got, you know, kind of the general idea of. of where we’re at in the year and what we need to be thinking about. The thing that everyone wants to know has to do with write offs. How can we owe less? What can we write off? How can we write it off?

There’s so many questions. And we’re gonna start out with working at Starbucks because everyone wants to know, can I write off my coffee and my food if I go sit in Starbucks or a coffee shop and work? And if not, Is there ever a scenario where you can?

Kimberly: So what I want you to start thinking about as a business owner when it comes to write offs is what is the bona fide business purpose of this expense? That’s, that is what the IRS is always going back to is what is the bona fide business purpose? So, what is your bona fide business purpose for going to Starbucks?

Can you creatively come up with a reason to go to Starbucks, right? Most business owners can’t, right? You know, maybe if your internet’s down, so you’re going to use their internet, right? Okay, now I can probably, and really to sit in their cafe for an hour, I need to purchase something. Okay, so you could probably get around that, right?

So I would encourage you to say, can you meet someone there? Can you meet a team member there? Can you meet a client there? Can you meet a prospective client there? Can you meet a referral partner there? Right?

Usually if you’re eating alone. That’s not deductible unless you’re traveling, like that’s not going to be qualified as a business deduction, even at 50%. So I always try and say like, who can I meet at Starbucks? We meet for the first 20 to 30 minutes, and then I’m going to still stay there and work for a little while longer by myself.

But I’m not going back and buying another drink. I’ve just bought the one drink. And so for me. That’s how I legitimize it first because it’s, it’s usually pretty hard to just say, I wanted to go to Starbucks and I’m working. So now I get to deduct my, coffee, unfortunately, unless you’re traveling, right?

And you need internet. Then I think that that’s, I think that’s an easier one to justify.

Val: Yeah. So what if you are co working? So you meet someone at Starbucks and you’re both working on your own stuff. Let’s just say it’s a friend. It’s not a client. What about that?

Kimberly: Again, it’s going to go back to what is the bona fide business purpose of you having to meet with that friend to be there, to need to go to Starbucks, to need to buy that coffee, right? And again, I think it’s all of how you creatively spin it. I don’t ever have a conversation with one of my friends who I’m co working with.

working with where we’re not bouncing ideas off of each other, right? And I will make sure that we bounce ideas off of each other for 20 minutes. I mean, think about it. If I was like, Hey Val, I’m coming to your area and you know, I want to meet up at Starbucks. It could be a marketing expense. We could be referral partners.

We could be talking about marketing opportunities, collaborations. Tell me what’s working really well in your business. Let me tell you what’s working. Like if you can always spark those conversations for me, I am. Always learning from and listening to people, which is improving my business.

And to me, that is a plenty good enough bonafide business reason to be meeting with that person.

Val: Yeah. So can you define bonafide for us?

Kimberly: Yeah. Bonafide just basically means like real to the IRS. It’s like the IRS has like real and legitimate. The IRS loves to come up with these words and like, we’re not even attorneys here, but basically like, like what is the true real like business purpose for it? Don’t let the big words scare you.

Val: So how do we practically do this in a good way? Like if it is coworking and I did have a really good brainstorming conversation, is it enough for that to be on my calendar or like, what are they going to be looking for?

Kimberly: Yeah, so it all depends. So let’s start with, audits are not as scary as like, the movies make them out to be, or they, you know, they sound. So typically, It’s a piece of paper for one account for one year. And if you’re able to send them the supporting documentation that they ask for, that’s probably like, that’s it.

So what I do personally, this is one of the things that I do is, I will. take a picture of the receipt, and email it to myself. And I have a, I have a folder, and in there I am writing and I put in the text because then it’s searchable in your email or if you like save it to your Google Drive or whatever.

We use G Suite so we can save it directly to our Google Drive. I’ll put like, you know, name of the restaurant, date, who I was there with, what we talked about, right? And look, if you’re having lunch for an hour with somebody or a coworking session, like you don’t have to talk for all 60 minutes about it, but you know, 20, 25, like start getting close to half, right?

Like, again, because the way that I look at it as, as long as you can say, this is who I met with. This is what we did. This was the business purpose of this. They’re not going to know if you talked for 15 minutes or 35 minutes of that 60 meal, right, of that 60 minute meal. So, you know, again, it’s as long as it’s not like, you know, as long as you are not really trying to put something over on the IRS, for the most part, I would, I would say most of your listeners, their substantiation is going to be fine.

And their business purpose. is going to be fine, but that’s personally how I do it. I do think that a bookkeeper is one of the first contractors that you should invest in, because I just think that almost every other business decision is going to stem from those financial metrics.

And so, depending on what kind of bookkeeping software.

Kimberly: You’re using, whether you’re doing it yourself in like a QuickBooks online or you have a bookkeeper, there’s usually a memo section, right? And I love to use the memo sections when I’m making an entry to kind of prompt it. And it kind of lives on forever in there, you know? And I mean, we have some clients that, you know, they’ve been with us for almost a decade now, and we have access to all.

Decades worth of their quick book files. I could go back to 2016 if I had to pull up a transaction, look at the memo and say, Oh, this was this was for this, right? And so I think that the more that you can write on the top of a receipt, if you still keep hard copies of receipts, take a picture of the receipt, email it to yourself to save it in a folder and put the information in the email.

I think that mixed with your calendar, right? Like that’s probably you know, the receipt with, with some supporting documentation is probably all the IRS is going to need.

Val: Yeah. Okay. Awesome. Okay. So another really popular write off question is, can I write off props or beauty related expenses for things like a brand shoot or even going to a conference? You know, things that we’re, when we’re doing something specifically for business, where I’m only getting my nails done because I’m doing that thing, or I’m getting my makeup done for this photo shoot, or I’m buying this thing for this photo shoot.

How do we think about those?

Kimberly: Yeah. So this is a very gray area and I don’t think that the IRS has really stepped into, what are we in the 21st century? You know, like I just, the IRS has not caught up to us. So there’s, there’s some things that are very, you know, black and white, but then there are gray areas. And so we try and use the gray areas as much as we can to our clients advantage. So. If you are a performer or something like that, we have one client, she’s a performer on Broadway and she travels for it.

So she has her like theatrical makeup and she writes that off obviously, right? It’s different from her everyday makeup. If you’re just buying something, a new concealer cause you’re going to do your own makeup for your photo shoot. Unfortunately, the IRS says, no, that’s not deductible. If you’re going to get your makeup done.

However, specifically for a photo shoot, You can write that off. Right? And so again, this is for me where the creativity and the proactiveness and the planning comes into play. Right? Same thing. If you go get your hair done, like, like a blowout or an updo or whatever that is for your photo shoot.

Right? And so I scheduled a photo shoot for the morning that we had an evening event, because I was really getting my hair and makeup done for the photo shoot, but it just so happened that conveniently that photo shoot, somebody scheduled it on the same day as an event that I also wanted to get my hair and makeup done for, right?

So we had like a six o’clock event. I had a Two o’clock photo shoot, which was perfect because it’s nap time, right? And this photographer only worked on weekends. And do you know that that just like conveniently worked out really well for me to be able to deduct all of that? So again, that’s where the creativity, where the planning, where the thinking ahead, working strategically with someone and thinking about those things.

That’s how you turn an otherwise non deductible business expense, into a deductible business expense. Unfortunately, clothes are not. Going to be deductible for a brand shoot because the, IRS is definition of like uniform or clothing. That’s deductible is, it’s ordinary and necessary for your job, but you couldn’t wear it outside of work. And so. Like that scrubs basically, right? And it’s like, well, we see people wearing scrubs all the time. So that’s not really fair. But, you know, again, fair and the IRS do not go hand in hand. So what I have encouraged, we have a lot of photographers, right?

And so they would all come to me and I’d be like, What are all these? And like, I’m gonna show my age here, but I’m like, what are all these forever 21 charges on here and this and that, like almost a decade ago. Remember like forever 21, I don’t know how old you are, but forever 21 was

Val: Oh, I do.

Kimberly: Yeah.

So I was like, they’re like, oh, well that’s what I wear to shoot weddings. It’s my uniform. And it really was to them, like their uniform, right? Because,, a lot of them are wedding photographers. So they’ve got like a certain pair of shoes, leggings, a top. And it like goes with all of their gear and stuff.

And technically I had to tell them that the IRS does not allow that because it’s not technically uniform because they could just wear it outside of work. And so our workaround for that, that I had them do was get a little logo on the shirt and on the top of the pants that like. Was visible, but not really visible, but it helped meet the requirements of, of a uniform and having the logo on there and saying, yeah, it’s got a logo.

I’m not wearing it if I’m not working. And so that helped, um, a lot of my photographers because legitimately they were not wearing their shooting clothes out, like if they weren’t shooting a wedding,

Val: Yeah. Totally. So then what about, like, going to a conference? So I’m not, like, getting pictures of me necessarily, but it’s like a networking event. Like, getting my nails done. Can that be a write off? Yeah.

Kimberly: technically, no. But if you’re willing to take the chance, right? Like all of our clients have different risk tolerances and there’s a difference between illegal and unethical. And then there’s a difference between what’s your comfort level. And if they come back three years from now and you wrote off that $20 to get your nails done or whatever, because.

It was important to you, your confidence, the impression that you made, right? If, if you stand behind it and your CPA is on board and you’re also not getting it done every single week, right? I think that that’s okay, but I’m again, I am also a business owner who knows, when I first started my business, I was physically at. client’s offices, and I was pointing to numbers and lines, right? And so I felt like it was absolutely, an impression on me and my polishedness . Like I do feel better and more put together and more polished and more confident when my nails are.

You know, manicured

and so I, I see a lot more things from the viewpoint of a business owner and what is the cause and effect of that expense or that thing that I, that I’ve done, right?

Val: Yeah. Man, we could spend so many hours on all of, all of the write off stuff. I, I would love to maybe hear a little bit more about what you think we often forget to write off or like don’t realize it’s something we could write off.

Kimberly: Yeah, so two things that I really want to touch on here. So the first one is charitable contributions. I see this a lot and I see business owners like, Oh, I’m gonna make a donation, right? if you file on Schedule C as an S Corp or a partnership, Your business cannot take a donation deduction.

There’s no charitable contribution. It’s non deductible to the business. It has to go on your individual Form 1040 tax return, to get the deduction. But you have to itemize your deductions in order to see the benefit of the charitable contribution deduction. So if your itemized deductions are not more than $13,000 as a, as a single filer, then. you’re not using, you’re not benefiting from charitable contributions. So I always like to lay the groundwork with that because I think that you should always.

You know, tithe the donate, whatever you call it from the goodness of your heart. And if there’s a way to make it beneficial for tax purposes for you, you should absolutely do it. But I always say like, you know, start from the goodness of your heart while you’re doing it. But then get strategic and figure out how you can make it work for you on your taxes.

So that’s a really important one to know that if you don’t itemize, if you don’t have schedule a attached to your form 1040, and you’re just taking the standard deduction, charitable contributions are doing you no good from a tax perspective. So as a business owner, what I want you to think about, how I want you to get creative and proactive is I want you to think about how could those charitable contributions be turned into marketing opportunities. So if it’s a nonprofit and it qualifies as a charitable contribution, it’s, it’s a 501c3, right? So for example, I like to use the example of, my kids preschool. They have a fair every year. They ask for sponsorships, right? Businesses to sponsor. So. They send out a 501c3 letter, hey it’s a charitable contribution.

No it’s not. If I was an individual, yes it is. But no, my business pays for that sponsorship. And so, what I would encourage you, anytime something like this happens, I want to know, how are you promoting me? Where is my logo and my signage going to be? How many times are you promoting me? What’s the visibility here, right?

So that cost, I think it went up to like $200. And so for $200 that my business sponsors, it is a sign in front of a ride. And I always pick the one that’s my kids favorite. And it is a very well attended ride. It’s the Petting Zoo. It is inside, hanging on a big banner, in the inside where the auction’s going on.

It is promoted on their Facebook, their Instagram, and their website. It goes out in the newsletter, it’s in the, brochure that the parishioners are seeing at the school. So I feel more than confident of the visibility and the marketing efforts that I am getting. And so that’s a marketing expense. That’s not a charitable contribution.

And so I want you to think of all of these things, like how is this a marketing opportunity and not a donation? Same thing with like, we have a client, she wanted to, buy the t shirts for, for little league for, for the, like little league football team, like the flag football team. And she’s like, can I write him a check out of this?

I’m like, okay, well, where’s your name going to be? And she’s like, Oh, nowhere. I’m like, we need your name on the sleeve. We need your name on the back. Like it doesn’t have to even be huge, but I need your name somewhere on the shirt so that we can say it’s marketing and not a charitable contribution to the playground.

Right. And so it’s little teeny tiny tweaks, like. That they can really add up over the year if you’re smart and strategic. And sometimes it’s just the ask. Hey, where can we put my logo? How can we promote me? How can we promote my business? I’m happy to do it. And most of them, if you’re giving them money, they’re happy to promote you in some way or another.

Val: hmm. Yeah, totally.

Kimberly: I think it’s such a missed opportunity for business owners.

Val: Mm hmm. So there’s definitely a theme with all of your answers. Right? Like, it’s, it’s all coming back to being strategic in our decision making with our money and, and what is the purpose of this expense? And so, Do you feel like you have, like, a question or two questions that you just suggest asking with every expense?

Like, what should we be asking ourselves in order to think about, is this a write off?

Kimberly: Yeah, so the first one I would say is, is it ordinary and necessary? Because the IRS like that, that is terminology from the IRS, right? Like, is it, is it ordinary meaning like not above the top and luxurious, right? Like you don’t need to go to a conference and you don’t have to spend a thousand dollars a night on a hotel room.

You could probably find one for two or 300 a night. Right. So that’s, that’s where the ordinary, and then is it necessary? Do you need a hotel room while you’re at that conference? Yes. Okay. So. 300 for a hotel room. 400 if I’m in a city. Okay, that’s ordinary and necessary. So that’s, I would say that’s where, like, you always should be asking yourself that question.

Then you need to ask yourself the question, like, is this against the IRS’s rules, right? Like, is it a non deductible expense? So that should be the second question. And then the third question is, Okay, so if it’s non deductible, is there anything that I could do or change in my, my operations to try and turn this into a bona fide business deduction, right?

And so that goes back to your Starbucks question about, okay, if I just go sit at Starbucks because I want to work there and I want to get my Starbucks, I probably, there, That doesn’t qualify under the IRS’s meals deduction rule. Who can I call? What can I do? What can I plan? So that I can check the box and say, Yep, I was meeting someone there.

We were talking business. And this is a legitimate business write off. So that’s kind of like the mental process that I want all of your listeners and business owners to kind of go through as they’re thinking about, I need to, I want to spend, I need to spend money. I want to spend money on this. How can I make it a legitimate write off?

Val: Yeah, that’s awesome. So I’m in Enneagram 1. I don’t know how familiar you are with that, but I’m, okay. Okay, so I’m very, like, black and white, right and wrong, or like, that’s how I tend to think. And so, when I hear you say, is it transcript. Yeah. Necessary, I’m like, what is like really necessary?

You know, like I can come up with a reason that things are not necessary, but I can also come up with, like, I think a conference is a good example. It’s not like complete. It’s not necessary for me to run my business. Like, it’s not like a website. Where I need a website in order to be able to market my business, but it, and it almost feels like, because it’s not a like core need in order to be in business, then does it seem over the top?

So can you kind of help me think through that? How can I

Kimberly: I love this. No one’s ever asked me that before. I love this. Yeah. And my brain is so not like that. I so have like a visionary, strategic brain that is like, Oh no, we are gonna find a way. Like absolutely that conference is necessary and we will absolutely find a way to make it necessary, right? So, I think how I would How I, if you were my client, how I would encourage you to think about it is, will it have an impact on your business?

No, it’s not necessary for your business to survive and to continue making money. But. Will it make you more money? Will it bring you new clients? Will it help you streamline your operations and therefore increase your profit? Will it give you new referral partners? Will it bring you podcast guesting opportunities?

So I would actually argue that it’s very necessary because if you didn’t do anything like that ever, Where would you, you know, I don’t want to say, where would you find new clients? Cause we could all go to social media. I’m not a big social media person. I much prefer, um, uh, connections and, and things like that.

So for me, it’s absolutely necessary. The way that we work, the clients that we attract, uh, the people that we are aligned with. It’s absolutely necessary for the success of my business. So I would just encourage you to like reframe your mind as a CEO and say. It’s absolutely necessary for the success of my business, for me to meet these people, for me to get out there and learn what’s new and what’s, what’s coming and what are other people doing that’s working well for them, right?

I’m so into learning and knowledge sharing. It is absolute. If you never went, I mean, my business. Not even, not even revenue wise, just the, the, the nature of my business, since I’ve really started reading more business books and talking with other business owners and attending summits and masterminds, my business is so, it looks so different because of that knowledge sharing.

And so I absolutely would argue that it is a very necessary part of your business.

Val: Yeah. Yeah. That’s awesome. And it is totally, yeah. Think about the impact. That’s a great, like just one line. What is the impact this is going to have? And I think that even directly relates to how we just make decisions with our business money in general. Are we asking that question? What is the impact this is going to have?

And I think it’s good. For us to think about let’s filter a lot of our spending decisions through, is it a write off? Because then it forces us to ask that question is like, what is the impact? And then, then that’s, you know, all working together. But I do feel like it’s easy, especially when it’s just you, you’re the only person in your business and you’re not a numbers person to kind of just make these decisions flippantly or on the spot or emotionally.

And

Kimberly: why I say everybody should have a bookkeeper, right? And, and, and you know, somebody who’s a third party objective source, who knows what they’re doing and can give you your numbers because I would actually argue and say. Don’t just go buy something because it’s a write off because I hate that.

That’s, you can’t see, you know, my air quotes, tax planning. It’s not tax planning in December to go run out and buy a bunch of stuff. Like if anybody’s seen Schitt’s Creek, but it’s a write off. Like when David does that, you know, it’s like a meme out there. And the thing is what, you know, as I know, we’re kind of getting to the end here.

We’ve talked about so much today. You know, if you go and buy something that’s. 2, 000. That’s only gonna save you 600 in taxes. So if you needed that item, if you needed that new camera, if you needed that new computer and you’ve been saving and you, and you had a good year, please go get it right off the 600.

Right. And, and that’s cause that’s, you’re going to write off all 2000, but it’s only going to save you 600 in taxes, right? Six to 800, depending on your tax bracket. and so I just want you to think about that, that like you’re still out. 400 to buy this item, you’re not saving 2, 000 in taxes. And so again, if you need it, if you’ve been planning for it, if again, is it going to have an impact?

Is that camera or that computer going to have an impact, a positive ROI in your business by all means go and get it, but please don’t just run out and go buy a G wagon at the end of the year so that you can fully depreciate it in your online business that doesn’t even need a vehicle, right? Like, please don’t go do that.

Please do not go do that.

Val: Okay. So I would love to just wrap things up with the last question for the person who doesn’t feel like they can afford a CPA or a bookkeeper right now, or maybe they have a bookkeeper but not a CPA. It’s tax season. They’re overwhelmed. They’re a creative. And honestly, there’s a lot of fear surrounding all of this.

What is your recommendation for them? Obviously, CPA is a great investment, something they should prioritize, but what if they can’t do that yet? What would you recommend?

Kimberly: Oh my goodness. So much to unpack here. So yes, I think that you should always start with the bookkeeper, honestly, like I don’t do it. So there, there’s nothing coming to me for this, but I think that that’s the first step because so much of all the other decisions and the tax strategy and everything else is going to stem from having those numbers.

So I always think that that should be the first investment. And then it’s going to make your taxes a little bit easier, at least just from a, from a preparation side, right? Cause you have everything. And I like what you said, cause that’s our freezing, right? It’s an investment. I don’t want you to think of it as an expense because, you know, we, legally the IRS will not allow us to say that we’re going to save you more than what you invest with us.

But 100 percent of our clients have saved more in taxes than what they’ve invested with us, right? And that’s our goal. It’s our goal. We can’t guarantee it, but it’s our goal. And so that’s the first step that I think is to rephrase it and say, this is an investment because, you know, if you’re creative and we work with a lot of creatives, I see the brains.

I like, and again, it’s just different, right? And it’s not good or bad. It’s just different. We all have different strengths and weaknesses. So if this is not something that you’re strong with, I would almost say that you, Can’t afford to not have someone on your team that’s helping you with the bookkeeping and the taxes.

So, but if like, if you absolutely cannot afford it, first off, please do not go to H& R Block. I can’t tell you, they are not cheap y’all. When I saw somebody’s bill from them the year before, I was like, I almost fell over. I was like, they’re charging you this and your tax return is wrong. Like I gotta redo it.

So please don’t go to H& R Block. Please be cautious. I also, I’ll get you out. I don’t know off the top of my head, but I also have a, an episode on the CEO moms. building wealth podcasts about like finding the right qualified person for you, like kind of explaining the difference between like a bookkeeper and a CPA and a tax strategist, and also have like some good questions.

And they were like, if you’re either interviewing for someone or you’re thinking maybe your person isn’t the right fit for you. Right. So I also have an episode on that. Cause I’m just, I’m really passionate about this. I would say, that. Honestly, before going to, to H& R Block, like, you do better, like, just doing it yourself.

I honestly think that the people at H& R Block, I, they’re not trained. They are not, like, they do, like, a, like, a two day training to be eligible to prepare taxes. And so, yeah, it’s, I, like, I went through the same training, I do VITA, which is for, I did it in college, and it’s just, For, like low income families that need assistance preparing tax returns.

And so the H and R block people do the same training as we do, but we were all accounting majors and you had to be in your last year of accounting to be eligible to go do the training. And so I know the training is. Poo poo. Because I’ve done it. Um, so I would say you have a better shot of saving your money and just doing it yourself than going like, I really have like zero love for each of our book.

So, you know, I would really say like at the, you know, we’re early in 2024, I would really, really encourage you right now, please start budgeting in your monthly expenses. For someone to help you with your taxes. Like, that is the best thing that you can do for yourself. And then you can still prepare them.

And again, like, if you have a bookkeeper, you can probably prepare them. There’s some, IRS free file, right? If it’s got the gov at the end. I’m not, to be honest, I’m not sure if you can do like a Schedule C on there. Not, just the clients we work with. None of them, uh, use that. They use us, obviously.

So I’m not as well versed on that. , be cautious with like the TurboTaxes and things like that because they’re like, oh, it’s free, but if you have an S Corp, you gotta pay. And if you wanna file a state, you have to pay. So just be cautious of all of that. You know, I just find that it adds up. They think, oh, I’m saving money by not going to refresh a professional, but I actually don’t find that it works out that way, whether, they, you know, we’ve had so many people that like TurboTax has got to be wrong.

Can I just hire you? And you know, TurboTax was wrong. So, you know, again, I really view it as an investment. And I would almost say that like, you can’t afford not to work with. someone who, who knows this and who gets this. And then I would really encourage you to take that next step and say, how can I budget for somebody who’s actually a tax strategist and a tax planner, and not just a preparer that I’m going to talk to one time a year, because no, you’re really not going to see any savings or any benefits from just paying someone to prepare your tax return.

Right. But you will, if you’re paying someone to proactively and creatively plan and strategize with you all year long.

Val: hmm. Yeah. And I would even say, I think it’s just helpful for people to even have a visual, I would say bookkeeper and tax accountant are like the very first things you should be outsourcing in your business. And it’s more important than any equipment upgrade. It’s more important than, you know, things that are more shiny object syndrome.

I would say more important than education. I’m an educator, but I’m saying that.

Kimberly: yeah, I, I outsourced my bookkeeping this year here in 2024, like, that’s how much we don’t do bookkeeping, but I value, like, I was doing it, and I had some mindset issues about, like, outsourcing it, because, like, well, Kimberly, like, you can do it, like, this is, like, this is what you went to school for kind of thing, right?

But it’s not my wheelhouse, and, and honestly, it kept, like, falling to the back of my to do list, to write for me because I had all I’m worried about all my clients. I’m not worried about myself. And so, um, yeah, I could definitely use a new computer, but that was a more, that was a more important investment in the beginning of 2024 as, as we’re really growing, and you know, I have team now and it’s not just me, how you were talking about, like, it’s different when it’s just you and it is.

And now it’s not just me. And so, you know, it’s one of those things where. Yeah, I’m sitting here trying to like come on computer, hold out through tax season for me. Just like, come on, you can do it. You can do it. I love you because yeah, you, you have to pick and choose your investments and I wholeheartedly agree.

Val: Amazing. Well, this has been so helpful. Thank you so much. Will you tell us really quick, where can we find you to just learn more from you? And

Kimberly: our website is www. terracepafirm. com. And you can go to backslash download and grab our. guide on 12 most missed deductions that are costing you money. You can also DM me on Instagram. I’m not like a huge social media poster, but I love connecting in the voice messages in the DM, which is where Val and I actually connected.

Um, and I love having conversations. So if you have a follow up question at Tara CPA firm, you can come message me and I’d love to get to know you.

Val: We’ll be sure

Kimberly: And the, oh, and the podcast, CEO, yeah, I forget about the podcast, CEO Mom’s Building Wealth Podcast. And we just kind of talk about all things wealth, but more than, um, more than just money.

Money’s important, tax strategy’s important, but we just talk about it holistically. Other CEO moms sharing our journeys and, we’re not sharing the highlights, we’re sharing the real. Cause, you know, it’s what we’re all about here.

Val: Amen. All right. Well, thank you so, so much. It has been just mind blowing. So much good information.

Kimberly: Thank you for having me.