It's time for the va qa, the v a qa, which say the va qa with manday with b a qa and nobody else. It's just me this week, y'all ride in solo. My girl Tiffany is on VAK and we love that for her. I am holding it down this week on the baq and A and I actually sang that song without burning with embarrassment, which I usually do because Tiffany does it better. But I am very excited.
We've got a live member of the ba fan in the hot seat in the studio today with me to ask a question that honestly, I myself have struggled with as a new entrepreneur. And so for any of y'all who are nine to five, you have your nine to five, but you have some side hustle income on the side, which is fantastic and we support that, and I think having additional streams of income is all always great. But it's kind of like what they say is true, right,
more money, more problems. And it is tax season. So our listener today, Maya is here to ask a question about how she can take advantage of maybe some deductions or just how to approach her taxes for twenty twenty two. All right, so let's take a listen to Maya's question and then we'll get coming.
So I have a nine to five, but I also have work outside of my nine to five.
I guess you could call it a side hustle or side hustles.
But I always struggle when it comes to tax time, and I feel like I'm not necessarily either writing off everything that I could be writing off or reducing my tax burden significantly so that it makes sense for me to be earning extra income. So one of my questions is how do you reduce your tax burden when you do ten ninety nine work. I still owe the Feds from last year, and I'm pretty sure that I'm not going to get anything back this year when I do my taxes.
All right, Maya, Welcome to Brown Ambition. Hi, thank you, Hey Maya. I was giving her a little bit of I was just teasing a little because you have the most fabulous last name, lady, Lady Maya Pendleton of the d C Washington Pendletons. It's giving, Bridgerton, It's giving. Did you watch Bridgerton?
Am I high?
But I know what it is?
Dang, Maya, I can't get into the like, I don't know. So if I said I burned for you, you would have no idea what that meant.
Okay, that's fine, Sorry, that's fine.
Hopefully you're not here to talk about my Netflix dramas and rom comms anyway. You were here to talk about your side hustle. So tell me a little bit about what you do on the side and how long you've been doing that for.
So, I right on the side, I do research on the side. I've been doing that for about maybe like three years in additions to my full time job. I really like the work, but it makes my tax is really difficult every.
Year every year. So you're a freelance writer. Basically, yes, nice, I love that. What kind of writing do you do?
I write about like racial justice, about abolition, about prison.
Infusing Okay, so really uplifting stuff. Yeah, very brings a lot, no but important stuff. No, that's fantastic. And as a journalist myself and as someone who has written for definitely I write freelance now. I it was like this money is cute during the year, but then around January February you get those damn ten ninety nine's into the middle and it's like, wait, I was excited to earn this money back in October in June, but now I'm like,
when's this paper? And I just have this stack of like, you know, because every time you earn I think it's what is it, like more than six hundred dollars from Yeah, then you get you your your the contract or the company that's paid you will deliver you a ten ninety nine. And it's not like it's the ten ninety nine themselves is not stressful. It's just like, okay, so how do I, you know, put these include these on my income for the tax year? And then I know your question is
like how do I make deductions? Like how can I lessen my tax burdens because I do have this extra income, So let's start there. Do you actually have a tax preparer or an accountant who you work with?
No? And that's the crazy part. So I just do it all myself. And I know that's right. I know. I know. That's why I asked, because I was.
Like, this is you know, why, So tell me why, because I I think no judgment.
No. Before I was used to just you know, nine to five texts are very straightforward, like put in the number of the beautiful, right, you get the numbers back, it's fine. So I have been used to doing it that way, so I think like the first few years or two years is to be like my third year of doing it. This is the first year I've been like, no, I gotta get a handle on this. I was just like, well, it can't be but so hard. But then you owe a bunch of taxes, so it is hard.
Yeah. I know. My husband's like, remember the days we used to get tax refunds, and I'm like, babe, wish if you look at it. But that's almost like looking at it in a positive light. I think takes away the fact that tax refunds aren't that awesome. I mean, they're great because it's like a little windfall, but it also means that you've been giving more money than you should have to the government all year long. Sure I will, okay, so you don't have a tax professionally working with Now
we're going to get to that. I'm wondering, have you been setting aside money throughout the year from your earnings now that we try to do okay.
God, we don't calculate that very well. Because listen, I got the tax forms back, and I was like, there's no way I made that much and I didn't, right, But I try to, you know, at least do like twenty or thirty every time I get paid put that in a savings account.
Okay, yeah, I And sometimes it's like when you get these what I miss the most about being a W two worker is I used to just go to my payroll website and be like, withhold this, automate that, and
then I wouldn't have to think about it. But when you're getting paid, you get checks and deposits, you know, randomly throughout the year, you have to remember, okay, go in and transfer twenty five or thirty percent into savings and then sometimes that happens, you know, too late or after you spent it, so I get that one hundred percent and you hear often like one of the benefits of having a side business is that you do have the potential for deductions, and you know, people make it
seem so easy, like you know, there's this idea that you can like buy a whole car and have that deducted, and like you can deduct can you deduct your mortgage and like all this stuff, and it's like a little too too much. So to bring us back down to earth, the first thing I'll say is it's important to understand like what actually can be used to like reduce your
taxable income as a business owner. So you're a writer, for example, I would I wonder like, do you use any subscriptions for your business, like writing software, transcription software, any business services that you rely on throughout the year for your business?
I don't. I just use the basics of like Wi Fi my laptop.
Wait, but a Wi Fi? So like Wi Fi there's Wi Fi and you work from home when you do the writing?
Is that right from home?
Okay? Oh, this is one question I should have asked you. And by the way, I am not a tax professional. I'm just you know your financial bff in your head. So my first piece of advice should have been like, babes, you need to level up, find you a We're going to find you a CPA. You got to do, yes. But now I'm asking because you know these home expenses they can be a part of a deduction. Like for example,
I'm here in my zenden. This is my basement essentially, and so there's like a calculation that my accountant helps me with where it's like, how much square footage is your house? How much of that square footage do you use for your business? And then like, let's say it's twenty percent. Then like and this is a rudimentary calculation.
This is why we need these tax nerds to help us. Yes, but like twenty percent of my mortgage or twenty percent of my my WiFi or my you know, my cell phone expenses maybe can be deducted from my income because I work from home. In that way, you know, if you were traveling, which it doesn't think I don't think you are, but travel expenses, Oh, sometimes, okay.
I will go to a conference or like an in person meaning yes.
Yeah, conferences. So I went to a big conference in twenty twenty two, and I can you can deduct you can definitely write off like your expenses for the conference, the travel, the food, the actual cost of like the admission. Also, one of the tips my accountant gave me for twenty twenty two was go ahead and purchase any conferences you want to go to in the next year. Purchase them in twenty twenty two so that it can work. It can go towards your your write offs for twenty twenty two. Now.
I know it's a little late for that tip right now, but I'm just saying for future reference, if you know you're going to do something business wise, like go ahead and stack those expenses so that they're hitting you in the current tax year so that they can you know, go toward your like reducing your income. Now, office supplies. Do you have like printer, printer, paper stuff like that?
It this sounds crazy, I really don't. I got pins in the laptop.
That stuff. Like if there's listen, if you have like even your computer, I know that maybe it's not you didn't buy it last year. But if you're someone who's starting a side hustle, you want to buy a piece of equipment startup cost, you know, that can be a part of something that you can reduce. I have some subscriptions to like media outlets, trade publications that I that I you know, can stack up and include as well, so you don't use a car. But like, there's there's
stuff out there. The thing is, it's not it feels cumbersome and like complex because it does take I think an expert to come in and really identify like, Okay, according to this arcane tax regulation, how much of that can you deduct? And I think what gets sticky is
when we try to do it ourselves. The thing about having a side business or additional income is I do feel like we are more susceptible to IRS audits, right, So I think it becomes even more important to like get that stamp of approval from a tax professional and have that, you know, even put that that expense can
be put into your business expenses for the year. You know, however much I think my tax account, I think it's a few hundred dollars for her to maybe more five hundreds something like that for her to do my business taxes. But the peace of mind is just extraordinary. Are there any like specific concerns you have heading into twenty twenty two that you're like, oh, you know this might come up for me. Yeah.
I think my biggest thing is that my income increase and then the amount I earn outside of work also increased. So I just feel like I'm going to say, with the wild tax bill, do.
You think you're going to be in a higher tax bracket possibly because of your freelance income. Yeah, yeah, that could be an issue, like if you were because you know what tax bracket you're in based on your salary. But then you do you know, like how much you earned in twenty twenty two, or do you keep? Do you keep? Do you have a bookkeeper or any kind of bookkeeping system?
I don't maya okay, I don't do.
We don't get you together. Girls, It's time to do them. You a big girl, you gotta do okay. So there are there are some relatively simple bookkeeping systems. For example, I started with quick books. It's, you know, not that expense. It's I feel like thirty to forty bucks a month, depending on what you get. And as long as you run your you know you deposits and things, you connect your bank accounts, it'll keep track of what you have
coming in. Now, a bookkeeper for me became really essential because it was hard to find a good accountant who wanted to work with me unless I had a bookkeeper. They don't mess around, they're like and a bookkeeper will essentially she mine is a she shout out to Tianu. They will once a month go through everything that you've had coming in your expenses and reconcile everything. And reconciliation is basically like you know, we understand where these expenses
came from. We're going to categorize them and everything, and they put it in a pretty package for your accountant so they know that they have accurate records when they
come to calculate your taxes. So even though we talk about like getting a tax account and a CPA, I think from my own experience, it's just start with a good bookkeeper, you know, So a bookkeeper, I would say, especially if you're going to continue this freelance income, makes a lot of sense for you to just have someone on your docket and like where, like where would you feel like you could start if you were looking for a bookkeeper.
I'm pretty sure that my brother uses one. So I have family that keeps their finances together better than me that I can lean on, which is helpful.
I love that you said, brother, so trust a trusted person who could recommend your bookkeeper. I started. I found my bookkeeper. She's actually the spouse of one of Tiffany's former accountants. So I was like, you know, anybody, and I checked out her website, I interviewed her and had a great experience, and you know, I ended up going with her. I spend about one hundred and fifty how much do I spend I think I pay her quarterly. It might be like four hundred or five hundred dollars
per quarter for her to reconcile my books. We also use her for brown ambition. There is a like a national organization of bookkeepers as well. A lot of bookkeepers understand side hustlers because they themselves are doing it as a side hustle, you know, like they may be an accountant by day and then a bookkeeper on the side for extra income or a finance like a payroll specialist for a company, and then on the side they do bookkeeping. So I would definitely find you a bookkeeper first, and
then the accountant. Even if you were wanting to work with an accountant for twenty twenty three, sorry for twenty twenty two taxes, which are due right now, they're probably going to want heading in. They're going to be like, do you have a bookkeeper? Do you have a profit and law statement for twenty twenty two that I can you know, quickly go through? So I would do what you can to get something like that.
Ready, Wow, this is great, really herpful.
I feel like it's the kind of stuff you already know what it's just like I look at it. You know, all right, be a fan. You are listening to the ba qa. We are going to take a quick break and be right back with more of your questions and our answers. Okayva fan, we are back answering more of your questions for the BAQA. Let's go. And the next thing to think about too, is like you as a business owner. Oh, I forgot to ask have you established yourself as an LLC?
So that was another like part of my question was like is it better to establish an LLC? Is it better like easier to get tax write offs or deductions if you do that? Is that something that I should be doing because I've been thinking about that for a while now.
So you haven't established an LLC yet? Oh dang, okay that is essential? Yeah, yes, because for you to qualify for these business seductions, you have to have a business right right, So okay, that changes a lot of things. I almost wish we can, like shu, go back to the beginning. And in this case, I'm not exactly sure. I don't My instinct says maybe the ship has sailed for like business write offs for you because you're not
an LLC. But I would say, like if the freelance income has been coming in, like do you ballpark know how much you made in twenty twenty.
Two and into you're probably maybe like twenty or thirty thousand.
Like babes, Yeah, have a business.
Yeah, well it didn't start as that like that was I know it? Did it start it as like small? I don't know, five K, four K and.
Then the girl Yeah, no, it's okay, better late than ever. But I feel like a thousand percent start you in LLC so that you can take advantage of this in twenty twenty three. I mean, honestly, that kind of reduces some of the pressure because I don't know that there's much that can be done for you to like go back and get tax right offs at this point. I'm not a tax professional. So that's a good question for like a CPA. Let me see for sure you should, uh,
you know, when you're in LLC. Then you can decide if you want to be a single member LLC, which it sounds like you're probably in that kind of place. It doesn't sound like you're earning enough to be an escort at this point. Just yeah, just just start there, you know, start somewhere, treat yourself like the business that you are, because for sure you're doing well.
Great, this is I mean, I've been thinking about all of this, so it's good to hear and get confirmation.
Yeah, how old are you?
Do?
Might be asking, I'm thirty, Just thirty, that's awesome. I just love like having you know, an extra twenty to thirty k coming in. That's fantastic, you know. And I feel like the tax part of it, it just sours everything. When it does. You have to deal with the additional stress of it, and you're like, dang, do I even want this life?
No?
I do, think you too?
I do? Yeah, I do want it. I would love to eventially move to having my own business. But every this time of year, it gets like, wow, did I really earn that much? Let me go back and look.
Yeah. And when you get a CPA too, they can help you decide. Like, for example, one of the things that my CPA does is advise how much I should contribute for retirement, you know, based on my based on my income and retirement contributions as well. It's a huge part of like one of the benefits of having a business is you know, there are types of accounts you can open like a self employed or that step I RA or a solo for one K like I have now, and you can actually use your extra income to like
invest for your future. Yeah all right, so how are we going to get you a CPA? What do you feel like your next steps are there?
Okay, next steps start to get a CPA STAP. They're going to use whoever bookkeeper bookkeeper? Yeah, CPA, Well you comes first, because I feel like taxes are due in a little more.
Than a month, so yes, this is true. You can file an extension, like if you want. Yeah, you can file an extension. I actually filed. I didn't file. My accountant did because I was like kind of a mess and I've missed a deadline and she's like, it's fine, everyone files extensions. Let me follow you an extension. So that's been done. So you could file an extension on your individual taxes if you wanted to. Let me see while you're trying to find because taxes are due one
like mid April. Okay, yeah, it doesn't. Now. The thing with a tax extension that can be a little wonky is it doesn't actually stop when you would owe your taxes it's just basically like it's annoying, I know, But so.
You can't do it.
Because we're all supposed to be mathematicians. Maya, but I would I would do both at the same time, like try to find you a bookkeeper because you're going to need them anyway, and then find a CPA an accountant who and this is a thing, like it's fine to go to family, but I would definitely go to accountants who actually work with like nine to five entrepreneurs and understand that whole you know, really intimately, and they're not just like a tax preparer or an enrolled agent, like
they can probably process W two's and things like that, but do they have the level of sophistication to be able to work with someone, you know, with business income.
That's another question. And you may even be fine because I know, I know it's a lot like twenty K, thirty K whatnot, But you may even be fine using like whatever software you've been using so far, because they're going to they have the fields for you to fill in, like upload your ten eighty nine and what did you make and all that, and it will probably trigger like some you never know, but it maybe trigger like a a tax that you owe. I know you said you're
paying taxes from a previous year already. Yes, you may need to like get on a payment plan for that or something, but like, let this be the last year that that happens.
Yes, you know that's the goal.
No better, no better, do better kind of thing.
I love it. I haves.
Okay, good, And let me see what else can I say? I found my accountant through a referral of a friend who is exactly like you. She works in New York. So that's the thing, like I could I couldn't refer
her to you because you're based in Virginia, right or DC? Yeah, so you want to find people who are licensed and able to work with you in your state, So I would start with also, like even being a part of your community there, like if you have a I know we have chambers of commerce, but if there's networking groups for women entrepreneurs in the DC area or just entrepreneurs in general, like they can be a great source of information.
I'm I'm sure there's a Facebook group out there where be you got to be where you can check and see. I'm sure someone's already asked this question. Anybody know any good accountants, like I'm in a crunch and you know, start reaching out and dedicate that time to it. It's and I'm not going to make it seem like immediately
you'll feel like, oh, I have everything figured out. I'm on year two and I'm like finally feeling like okay for this year, I think I'm going to have it all together, you know, of working with the CPA, it's just it's just normal and it's like getting through the growth period just to be a.
Little tricky with any Anything I've learned through with working with finances or getting a finances together is that you got to be patient time it does.
And like one of the things one of the reasons I love my accountant, her name is Safie, is because she is a lot easier on me than I am on myself. Like she'll kind of tell me, like Mandy, everyone's following an extension, You're not a you're not a failure. You didn't mess up like it be. You know, it's fine.
I've seen worse and that can help. Like that helps me with my anxiety around it too, Just like hearing from an expert that I'm not the craziest like that they've ever seen, And yeah, I wish you all the best. I hope this was helpful or at least the kick in the butt you needed.
It was.
You got me together.
Get it together, girl, you still have some time? Okay, yeah, thank you, thanks so much for letting letting me chat with you and for submitting your question to be a anything else you want to say before we let you go, that's it.
I will say that my friends are really big fans of this podcast, so they were super excited I was going to talk to you. Oh really yeah?
Are they the ones who were like my submitted question b A.
I asked them. I was like, oh, what should I ask? And they help me brainstorm. But one of my friends, she like, has the gig up with money books. She listens to the podcast. She's a big fan.
Oh she's a DreamCatcher. Awesome. Well, I hope you will continue to be a fan. But regardless, best of luck, you're so not alone. Just one step at a time. Okay, thank you so much. All right, lady, thank you? All right, ba fam, We will see you next time. If you want to have a question and potentially a question answered by us, or even potentially be on the show with us live in the studio. You know what to do.
Go to Brand Ambition Podcast on ig and you could submit a voice note there with like a sixty second version of question and you may hear from our producer and be invited to the show. I am Mandy Woodrif Santos. We'll see y'all next week for more baqa 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.