BA Q&A: Pay Your Taxes

busy body. Oh but we're gonna get Mandy the rest child. But I got y'all. We have great questions today. We got a money question, we have a business question. I wonder which I should do first? Hum, you know what last time I did the money question first and the business question second. We're gonna flip the script. Okay, So the first question comes from my mentor group. So y'all know that I mentor young women, especially black women and business,

well not young young in business. So you can be you know, ten, or you can be one hundred and ten. But like new wish to business and I do that through Patreon via my mentor Tiffany dot com. And so one of the things that comes up again from my mentees is about about lots of my check maybe like ony eleven hundred mentees. One of the things that comes up over and over and over. A question that comes up is, Tiffany, if I like, when I'm ready to hire, how do I go about doing so? Like, how do

I know who to hire? First? Second? Third? How do I go about hiring? So come into the room, the mente room. So let's talk about hiring and the mistakes that I made so you don't make them, and what I would suggest. So everyone's initial needs your reaction when it comes to hiring someone. They think that they ought to hire an admin first, which kind of makes sense, right.

You're like, oh, I need help with these emails, I need help navigating, you know, like some sort of honestly somebody to kind of like put by your side to help you pick up the pieces. Typically that's like an admin. And that's what I did. And I would say and that although having an ADMIN can be an important component to like growing your business and making them more stable, I push back and say, the first person you need to hire is a financial person because money is the

life blood of your business. Literally, the blood that flows through your business body is money. And if the money ain't right, sis, neither are you walk with me. Okay. So here's the thing. I know this firsthand because I hired an admin first, and for the first two years of business, I did not do my taxes because who had an accountant? Not me? I had ADMIN, and so

I was afraid. And that's not true. I had gotten an accountant, but I had gotten one later on down the line, and as a result, I was behind on filing for taxes. And then I got afraid to mention that I was behind, and it just became a mess until my accountant, God bless his his soul, he's still here. But Carlos hit me up because he saw me at Shopwright literally took his car and blocked the entrant, blocked the aisle. He said, you in my office this week.

I was like, Carlos, I'm scared to come because i haven't done taxes since I started my business, and I'm overwhelmed, and I don't have any receipts and I'm still using my personal bank account to pay bills. I'm still using my personal debit card, credit card. I'm a mess, and I know you are too. I know you don't have you a separate bank account, I say, you, says, I know you're still using your personal credit card, your personal debit card more than you are to even if you

do have a bank account. I know you're still co mingling funds. This is what we all do, and it's not it's not right, but it's okay. And so Carlos said, how much do you think you? Oh, and I don't know why, but I had convinced myself I owed eight. I owed thirty thousand dollars in taxes. He was like, did you even make thirty thousand? I don't know why. I don't know why. That's the number ahead of my head. And he was like, you don't. He said, I've done your taxes over the last two years and you owed

about eight. And I was like, oh, that's not as bad. Even though I didn't have eight, but still that wasn't as bad. He said, it would have been about five, but because of the fees and all of like, because you haven't filed your taxes and you've been late and paying. It went from like four points something four and a half to five to eight, and that's when I realized, oh, that the delay in working on getting my finances together was costing me money, and that money cannot be reinvested

back into my business the budget Neisa. So if I was going to go back to young be back, then I would have said, Tiffany, you need to get your accountant or bookkeeper, someone in that realm first and foremost you don't need to get them like first second, but the moment that you say to yourself, you know what, I need to hire someone like ideally an accountant. Now

here's the thing. An accountant. The good thing is that you meet you can meet with them quarterly, and so prices can range anywhere from I don't know, like fifteen hundred dollars for the year to upwards of that, you know, and so you can save up and say, okay, before might start my business, I know, I'm going to find an accountant and I'm going to you know, and making my business to be able to afford that fifteen hundred dollars for the year, and or also potentially a bookkeeper.

That would be connestly, honestly, probably my second higher if I had multiple streams of income. So if let's just say I had a smaller business where maybe it's a speaking business, I might not need a bookkeeper because it's not like I'm speaking every single week where money is coming in so rapidly that I need to keep track. But let's just say I had a business where I was selling things online and I was making you know, ten twenty one hundred sales a month. A bookkeeper is

going to be a helpful person. And bookkeepers, you know, you can find a bookkeeper for around four or five hundred bucks a month, give or take, and so it's not a little bit of money. But the reason why bookkeepers can be so helpful is if I would have had a bookkeeper, I wouldn't have had the issue of not having I didn't know what to give Carlos, my accountant, because my finances were a mess. So a bookkeeper is

what keeps you in line day to day. The bookkeeper keeper is creating a ledger of money coming in and money going out. They're keeping you financially organized day to day. So that way, when it's time to file taxes, whether it's once a quarter, every other you know, twice a year, or once a year, the bookkeeper puts it in a in the way that an accountant receives it. So they're going to upload it to like quick books, or they're going to put it in an Excel spreadsheet in the

way that accountants navigate. Now, some accountant firms were also offer bookkeeping, so you can ask about that. But to me, if I was hiring, like you know, and to be very beginning, because here's the thing, you could be your own admin. Is it a lot of work, yes, but here's how I was my own admin. So in the beginning, like especially when I had no no no, no new money, what I used to do was I remember thinking to myself, everyone is writing me, hey, Tiffany, and they're asking me

for personal favors. I wish there was someone else that was like a middleman, so they didn't know that I saw it, and so I was like, well, why do they don't know who's answering this email? So I made up an admin name. Her name is Michelle, and to this day my admin her name is Rose for real, but she still answers my emails as Michelle. And I've had about five or six Michelle since I started the business fifteen years ago, and so I was the first. Michelle.

You would email me and say, hey, Tiffany girl, real quick favor. You could come speaking by school and Michelle would write you, hello, Tanya, thank you so much for reaching out to Tiffany. This is her admirin Michelle. Meanwhile, it's me the old time. Can you please give us the time and the date and I will check with Tiffany to see that if it it's with her schedule. Mean, well it's me, you know. And then people are like, oh,

excuse me, Michelle, is she available on Friday? I'll ask, and I'm like, I'm not because Gary, I didn't want to work for free. So Michelle over invite back. Unfortunately, on this moment, Tiffany is not available, but please check back in another two months. Well she has some more availability. It created the space between me and the people emailing it, emailing me to ask for request, and it made me

look a little more professional. Well, I even got Michelle her own email child, Michelle at the Budgetizza dot com. I ain't no Michelle and so, but it was so helpful. So I learned that I could do that for myself. But what I couldn't do was the business finances for myself, and I'm telling you if your finances are funny, child, I've made so many financial mistakes is my business because I didn't learn that lesson until too late. It's cost me hundreds of thousands of dollars, if not almost seven

figures in mistakes and tax mistakes. I finally paid my last tax bill, it was like two hundred fifty thousand dollars. Okay, So I'm telling you this from a place of girl, I'll be like me. Listen to me, but don't be like me. You know, if you're in business and you're you're considering starting a business, you know you want right away to separate your business funds from your personal funds, so instantly getting two separate checking accounts, two separate deborat accounts.

You know, ideally look to see if you can get even two separate credit cards. Sometimes that's not possible because they won't issue you a credit card just yet. Although there are some business secured cards where it's literally like a credit card that you put a deposit down, and that five hundred dollars that you put up for the business that's the limit on your on your business credit cards.

So that's available, but separating your business and personal funds, getting yourself an accountant first and foremost, and you may or may not need a bookkeeper. And then as you grow you might need other financial people. But that would be my first hire. And you know, hiring is not easy. And then you know, if you don't have any additional money, consider interns. Interns are a great way to learn how to lead, to learn how to defer, and to to

give instruction to you know, interns. There's a great website. I'm gonna find it. I'm gonna my sister Tracey, who's like also a publicist. This is great website where she finds interns who they do it for class credit. You know, I'm gonna find it and we'll put it in the show notes. But interns are a great place to start to But know that interns are typically only there for like a semester, so three or four months, so you

can't be living and dying off interns. But and interns are a great way to find some good people that I've hired interns after they've interned for me for a while.

So but hopefully that was helpful. I know it was, girl, because you don't know what I'm talking about fifteen years in the game, forty million dollars later, I have learned all the mistakes the hard way, so you don't have to if you are someone who was like, ough girl, I want to start a business, you know, or my business is you know, up and running, but I don't really know what I'm doing, or I need some mentorship.

Mentorship is so critically important. Then head on over to my men, to Tiffany dot com and join our Patreon. It's only ten bucks a month, but if I'm being honest, it's going up to twenty bucks a month, but the old people will be grandfathered in. I think actually is going up next month. I don't know when this is gonna air, but y'all, so if you want to lock yourself in ten bucks a month, it will always be ten bucks a month for those who signed up for ten bucks a month, and it'll go up for the

new people later. But yeah, you can join us at my mentor tiffany dot com link. In the show notes, We're gonna take a blizzy black break and come back with the money question, and it's actually a really good one, and I'll be back in black. Y'all. Don't tell many, I've been acting up too much time. I've been good. I've been real good. All right, see you in a

minute and we're back and black and black. So, first of all, shout out to this lip that I'm wearing, because so y'all know we have this super dope black um producer her name is Emaney. Annie Mandy was like, yes, lip, I just love black women because we compliment you like for what you have on Yes, bun okay, skin brown

see you. I just love being black yp So she was like, okay with these lips, and because we love black around here, my lip is by If you was watching us on YouTube, you would be able to see it. But you know, my lip is by this black owned I guess health and beauty brand called the lip Bar. And actually, no, Melissa personally, she's super dope black woman

in business. She actually was rejected on Shark Tank, but when Jesus said yes, nobody say no. So she has grown her business to be this multimillion dollar business that is available at Target's. She actually Melissa is from Detroit, from the d and I've been to the Lip Bar in Detroit. It's super cute. And so I'm wearing guess what the let me tell you how I am right on point right here. So the lip color I'm wearing is called rich Auntie, and that ain't the truth, okay,

because lord knows I'm a rich Aunty. So it's really pretty. It's like this, like it's a very pinky red, so you know. And my liner is Mac but whatever. You know, we're not gonna give back too much because it's hyperworld via Mac whatever. But we really here for the lip bar rich Aunty. Okay. That's one of my favorite colors, is one of her best sellers. So let's get into the money question of today. So this question comes from Naya Hi, and Naya you see what I did there?

So Nya says, hey, Tiff and Mandy, I am twenty nine years old, and until I found this podcast about six months ago, no one all caps, I repeat again, all caps, no one has been able to make me one care about to feel educated and empowered about my money. Nay, your girl, don't have me crying up here. Naya Okay, She says, I struggled with math since I was younger and often felt discouraged for my ability to manage my money. Oh mama, but you all use language and concepts that

really help me to get it. Yes, that's what we're here for, Naya, She says, I have a question for the baqa that's a little dance to the tune of Tiffany's song. Why the ba qa a to b a q a? What you say? I love that you love that song because I feel like Meddie hates it, but it's here to stay. Oh no, she dover hate it, so she said. I recently started a new job. I'm trying to be intentional about my retirement options. Good, Naya. I have a decent sized rollover for my last four

one K about fifty five hundred invested. Okay? Good. I was told I have two options. You actually have more, but that's okay. One opened a rollover IRA with my personal bank so that it's always there if and when I changed jobs, or two roll it over into my new jobs four one K plan I have have, I said, rollover enough. I'm trying not to get text y'all taught me that. Yes, girl. What are some of the advantages of a true additional IRA versus keeping the money in

a four one K or vice versa? Is it better to have two accounts? Or just keep all of my retirement funds in one account. Thanks for all that you do to educate our community. Ny, your girl. First of all, we're gonna give you a round of applause for thinking about this ahead of time, for understanding that you can trigger a tax, an unwanted tax trigger, you know, if you don't do this correctly. So I'm glad that you're asking this question and we're gonna get you straight. So

there are actually multiple things you can do. So let's go over. There are five things you can do. So one, you can leave your money in your current four one K plan. But you know the problem is is that like like the pro is I guess it's just convenient, but the cond is child you know, one, you can't

contribute to that plan anymore. So by two, they might actually charge you additional fees because you're no longer an employee and who wants to manage multiple like you know, I rate or four one K plans are two different companies. So we're that is an option. But because I want you to know that there's options, there are about four options. But we're not doing that. Okay, she can't sit with us.

We're not leaving your current four one K plan where it is buy okay two option two, you can roll it into a new four to oh one K plan. This is one of the options that you brought up, and so here's some of the pros. So assuming that you like the new plans, the costs and the features

and the investment choices, this can be a good option. Right, So your savings has the potential for growth, and that's it's tax deferred, meaning like you don't have to pay taxes on it now because you know with four one ks you don't pay taxes now. You pay taxes when you pull it out, and so you can continue and if you continue to work for the company, then you know you could just continue to add to that four one K plan. Those are some of the pros. Is

that everything is right there. You know, you know you probably will have the same protections that you had at your other FOREU one K plan. The cons is that you're going to need to liquidate your current for one K investment and reinvest it into your new four one K plan and the new money, this money that's going to be rolled over will be subject to your new plans with draw rules, so you know you likely whatever.

Once you locked that money in there, you're not gonna be able to typically take it with you unless you leave your employer. But I mean, I think that's a con that you kind of know, like I'm gonna put my money here and leave my money here. So you can leave your money with this, you could roll it over to this new place. The key that's really critical is that you are not to do the rollover yourself.

The bank has to talk to the bank, so they're going to tell you, like, I just rolled over some money, right, So it wasn't for me to like cash out the money and say, here's thirty thousand dollars. Got no, no, no, no, no, Like literally, they're going to do themselves and give you clear directions. For one. For me, for example, they actually sent me a check that was not for me. It did not even have my name on it, but it really was for my new plan. And I was literally

supposed to mail the check to the new people. That was it. I was like, just just to hold the check and mail it to the new people, if that makes sense. So you just want to make sure that in rolling over whatever you choose, that you don't accidentally trigger a tax and fee of You don't want to trigger any of that because one, you're not fifty nine and a half, so if you take any money now you're going to be, there's a fee attached to that.

And then two, like just like when you are fifty nine and a half and sixty and sixty five, if you take your money out, you have to pay taxes on the money either way, so you will be paying twice. So you don't want to make that mistake. So this is a viable option rolling over into your four to one K plan. Now there's nothing wrong. I don't think anything. There's nothing negative here. You just have to decide. So number three is you can roll it over into a

traditional individual retirement account. So that's an IRA. So you have a four oh one K and IRA is basically like a four on one K that you have at your it's not buy an employer, it's with your bank. So because iras are not sponsored by employers, you own them directly. You won't have to worry about making changes to your account should you change jobs again in the future. So this is a pro and the IRA provider might offer you a bigger arrange, like a wider arrange of

investment options and services than your new employer. So many times for one k's will just have mutual funds, and mutual funds typically have higher fees because a mutual fund typically the the investments inside of a mutual fund are picked by people, right, and so when someone gets involved, they want to get paid, and so as a result of that, mutual funds have higher fees that are called oh, of course, I forgot the name of the dam fees.

Either way, they're called fees, but it's like a special fee, a special name for those fees. But so there might be so you might want to compare. If it was me, I would compare. You know, here's the bank where I bank? Let me see your IRA? What are your fees? Four one K? At my new job, what are your fees? And then what are my investment options? Do you just have? You know, the investment options at your four K are probably pretty limited, they typically are, but iras are usually

pretty broad. But broad might not be good if you're going to be overwhelmed in choices. Okay, so the pros are maybe a lot lower fees, bigger investment options. Some of the cons are Once you roll over your funds into an IRA, they may no longer be eligible for a few future rollovers into a four one K plan, you know. So what that just means is, let's just say later you're like, Oh, I'm at this new job and I really like them and I love the choices

they have. I want to take my IRA money out of my personal bank and then put it into a four one K plan at this new new job. You probably won't be able to do that, but that's okay. You also need to specify how the funds are invested. This is where people get hung up and you don't do it. The money is literally going to be sitting as cash, literally losing its value via inflation, so you have to put money. You have to invest it actively,

you know. So, like I said before, so the pros here are likely lower fees potentially, but you're going to check on them and also bigger investment options. The cons for rolling it over into an IRA, your own personal IRA are that you won't be able to roll it over likely to a four to win K ever again, and that's not so bad. But also if you're someone who can't pick investments, you're not really sure you won't have to pick, so you know asking yourself, are you

are you? Do you feel comfortable doing that? So that's the third option, right, So number four, you can convert it into a wroth ira, now a wroth ira. The difference between wroth and regular ira and an ira is you get the tax benefit up front. You don't pay taxes now, you pay taxes later. The wroth ira you do pay taxes now on the money that you put into that wroth ira, and then later when you withdraw it,

you don't pay taxes later. Okay. So the pros are the withdrawals are entirely tax free in retirement as long as you're over fifty nine and a half and you've held the account for five years or more. Okay. Now the cons are, because wroth iray's funded with after tax dollars, you're going to have to pay taxes on the money in your four one K that's you're rolling over. You're gonna have to pay the taxes now. So it's like, let's just say you're you know, you're taking out this

fifty five hundred. I don't know what the tax rate is. Let's just say they say you're taking out one thousand dollars from that. You pay taxes now you put it into your wraw and wouldn't pay taxes later. A raw iray must be opened for five years in order to withdraw earnings tax free, and you're going to be subject to that ten percent penalty if you would draw your money,

any money before you're fifty nine and a half. So that's just in general, that's why I said, you don't want to cash out because there's a ten percent penalty plus whatever the taxes are you're going to pay so

raw iray. So this to me is not my fave because you know, like you're you're already in the IRA four one K space where you haven't paid taxes, so I probably wouldn't consider it, but I want you to know it's available, and the last thing that you can do, the fifth option is the cash out, right, So that just means that you are just going to take the money, you know, like the pros are like you could take the money. I think like after you turn fifty five, you could take the money from your four one K

and just cash it out. But you sound like you're twenty nine, So that's that's a prob but not really for you. But the cons are your withdrawals are subject to a mandatary twenty percent federal withholding and in some cases state withholdings. So you might, you know, like it's gonna be taxed with like you're gonna be tax plus a penalty if you're under the age of fifty nine and a half, which is across the board. And so the cons for taking out your money now are and

I did this, so don't do this. I did this. I was thirty, was about your age. I was thirty. I was leaving my well, my preschool. I was a preschool teacher, and my school closed its doors because they lost their funding. And I had about thirty thousand dollars in my accocks. I taught for like ten years in my four one K. It was a four to three B which is basically like a four one K for nonprofits.

And I didn't have any money because it was a recession, and I took all the money out and I lost so much of it because I had to pay taxes on it, and I had to pay that ten percent penalty. And so I'm telling this from a place of where I've been. Don't go there. So the two options are to me, you know, I'm not giving you financial advice, because you got to get that financial advice from people

that you pay for financial advice. But if this was Moah looking back at thirty year old Tipping, when I was making the choices, I would be leaning into rolling it over potentially to my new four one K plan at my new job and or opening up a personal IRA. And the thing that would help me make the decision is who has more fees and do I feel comfortable making my own investment choices in my IRA. If I don't, then I might go with the four one K. If I do, then I would go with the IRA, especially

if the fees are low. These are the things that would be thinking. So I'm not here to tell you what to choose. I'm here to give you information so you could choose what's best for you. Sis Okay, Naya and Naya, I don't know this stuff. I do. So hopefully that was really helpful, not just for you, Naya,

but for the listeners at Lord. If you have a b a q A A b a q A what to say A b a Q eight with mandate b a Q eight with Tiffany, you can go to brand Ambition podcast dot com and you can click like the contact us button and ask your question there. You can hit us up on Instagram we are the BA podcast, or no, we are Brand and Bichon podcast. On i G you can message us we are the BA podcast

on the twitters. We are all sell brand and Vision podcasts at gmail dot com, so you can email us, message us, get to us across the board, you know, go ahead on and get you this lip rich Auntie by the lipbar. Okay, because it's serving for the gauds. Ask your questions if you want to be a mentee, like I said, the link will be in a bio show notes my mentor Tiffany dot com. And yeah, hopefully you like it here. Hopefully you love it here because

it's cutely here or whatever. And so I love your questions. Keep asking them and keep coming back and tell a friend have you told your bestdiet to listen to BAQA? Have you forwarded her the actual podcast? Don't be stingy sis, share the wealth all right until next week? Bye? Hey, BA fam. We could not do this show without your support or the support of our team behind the scenes. The Brown Ambition Podcast is produced by Imani Crosby and

Dennis Stanplinsky is our in house tech guru. I am your co host, Mandy Woodrif Santos, and we will see y'all next week. BA FAM