Hey, hey, hey, we're back. We're brown, we're black. We see I switch to order up a little bit. I'm Tiffany and this is brown Ambition, Round Ambition. Yes. Oh, honestly, the people love us, Mandy, Do you realize that?
Uh no, but tell me.
I spoke at two places this past weekend. I spoke at Black Women Talk Tech, which was really done on fire with honestly engagements. I don't know what's happening. It's like my name is on the list somewhere and they're like, go get her, and I'm like, what really me? But so I spoke there, and then I also spoke at I flew to Vegas for a day to speak at a Black enterprise has this annual conference that's really so
call Women of Power, and it's so amazing. But when I tell you, people are like, oh my god, I love your podcast. I love your podcast. Oh my god, coll Madie, I said, hi, oh my god, and I'm like wow. Before it used to be like, you know, like you know one in one and four and then one and two. Now everybody will run down. They're like, oh my god, I love the ba Janie Stead, Oh my god, I love brand A Bishen and I'm a dream catcher. It's like they have to check off the list,
but Brand Ambish is always on my list. Now.
I love that, you know what I love. And this is when you know, like when you're you know, my little brother is like so cool, like so cool. He is five years younger than me and just cooler than me and every other single way. But his friends when they like he he just started a book club because he's trying to, you know, stay woke with it. And he had his first book club meeting and he was like, one person found out that you're my sister, and then we just talked about that the whole time.
I love that you favorite. Yeah.
I was like, ooh when when my friend when his friends know me, then he's that's when he pays attention. And he's like, oh, but that podcast that you're doing, yeah relegit.
Yeah that's awesome.
Oh that's so great though.
Yeah.
The love is the love is mutual. You guys, I still can't believe you've been at this for nearly four years.
I know, it's it's like a it's a it's past toddler stage. We are officially in preschool.
And the people still love it, So that's exciting all the traveling. I'm trying to plan a little spring, little spring break kind of vacation for myself. I need. I realized. I don't think I've taken a proper vacation in a while, so it is high time.
What are you thinking about going?
I was looking at Charleston because you know, I have a soft spot for a soft spot for Savannah, Georgia. I got married there. I'm from Georgia. I love Savannah, but people are always throwing shade and saying that Charleston is better than Savannah, and I just feel like I need to figure it out. I need to find out for real.
So yeah, well, first of all, you already know I love Savannah. I was so happy when you got married there. I was like, yes tooper like my favorite American cities, And I'm Charleston this weekend. No way? Yeah, well cause I so I'm speaking at south By Southwest and I link tomorrow in Austin, and then I'm speaking at this Black Expo, Black and Financial Empowerment Expo, and it's in Charleston. And I didn't even realize because sometimes I want to look at my schedule till a couple of days before.
And I've always wanted to go to Charleston because, like you, I freaking love Savannah. So now I'm excited. I'm like, yes, I love old houses. I cannot wait to see Charleston.
Oh okay, Well you find out where all the good food spots are and then let me know, because that's half Once. Once I'm planning a vacation. Now I'm just getting so I'll just get tired, just like sitting down to planet, like where are we going to stay? What are we going to eat? I just wish someone would do it for me. So you do their research and then you know.
I'm honestly and I'm like a very touristy tourist, you know, the first time I go to someplace, like I'm the types of like, no, I want to know the torsty places. I want to take a picture next to the big Fork, and I want to you know, like I want to do all of those things. So I definitely will.
There's a thing wrong with that. I'll whip the selfie stick out.
But yeah, that's crazy, I'm not doing that.
That's like, that's that's the one silver lining of the house spending is that We've built up enough points that we don't have to pay for airfare, and I love like the East Coast cities. It's just you know, in essence, we're in New York. It's it's really cheap to fly to some of these towns on the East Coast. So
that's why we tend to stick closer to home. But looking forward to it, got to figure out what we're gonna do with Molly, I know, Walker, Oh and shout out to the listener who sent me a sweet she called me Molly. She's like, I have a message for Molly's mom. Real talk. I am walking around this house saying things. I'm like, I am turning into my mother or not my mother, but like a like a stern pre k teacher, is how I sound. I am just like no, ma'am, No, ma'am. We do not bark, ma'am,
just like we don't. We don't ask for food like that, miss ma'am.
Who am icho tea? I means like very well done, because you know you like you don't want these the herts boys, but you want to.
Be firm, and we do not bark like that.
But oh bye, you don't have food.
One of our listeners shouted out because I was. I was whining about how expensive like pet Co was for all of Mollie's toys and everything, and she mentioned Chewy dot com, like Chew like a toy, and I'm obsessed. My mom and my sister both have dogs, and they were like, what you don't know about Chewy? So Chewy has affordable food and they do delivery and stuff. So I'm gonna check them out.
I know, maybe one day, one day, I could see myself one day with a dog, maybe.
As a person who has anxiety. It is. She's been so helpful for me to just like, calm down, just calm down and pet the dog. Yeah.
I know, they just seem so lovable, but they also seem like so much work.
You have to get a good one. I mean, we've got really lucky with Mollie. You know, behavioral why she doesn't have any issues. She's not snapping at us, she's not peeing all over the floor, she's not a puppy. I made a point to get a dog that was house trained. That was a big thing for me. She's not unsafe for people to be around, so I don't feel like I have to change my lifestyle, Like we had all kinds of babies and people over last weekend
and Molly was great. So you have to find the right fit for you, and it is a lot of work it can be. And I'm not saying that dogs who have those issues aren't worthy of adoption, but for our lifestyle, Mollie she was and it was the right time too, right time.
And like Leila has been seeing like a friend of mine, she's like meeting like her her Beyonce of her industry. I think this woman like she's like like high finance, so like she like has like three trillion dollars on the asset. I forget what companies she works for. So my friend used to work for Golden Sax and she someone heard her gushing over I wish I knew the
name of this woman. So I heard her gushing over this woman's so she's actually having a h at lunch with her and she was like she posted on NIGI and was like, you know what, if any questions do you have for let me see if I can find her name, because I gus she was just like gushing like this woman is everything that was like trillion under assets of one of the things I know she said that she wanted to ask her, is you know do people still question you despite you being so okay? I found her name.
Her name is Susan Shank when she wrote she's the Beyonce finance and that's what I call her, nothing but respect. She's managed two trillion of two trillion dollars of transactions. She's also the first black woman to head a publicly traded financial institution, and so she's always wanted to be like her. She's an engineer, an NBA grad turned financier, and she is loved by her city of Detroit. So so my friend is super brilliant. She's managed nearly eight
billion dollars on her assets. She's worked for Golden Sacks. My friend Natasha, and I just thought to myself, and this woman is married. I don't know if she has children, but I remember this thinking to myself, like because the question I wanted to ask is like, what did she have to say no to in order to say yes to family? You know that's a good question because you know, as we get like a little bit older, you know, before I'm like, I don't say no to any like
I'm going to say yes to everything. And to your point, I've been doing a lot of like travel and speaking and this and that, but like, for the first time, there is more requests than I have than I have space for it. So usually I don't I only say no. I only had to say no to a request because it wasn't a fit. I'm like, no, it's not a fit, or no I don't believe in that mission, or no,
you know, whatever reason. But it was never because like, okay, I honestly I don't have the capacity even though it's something i'd like to do. This is the first time ever that there are things coming in and I'm like, oh my god, I want to do it. Oh my gosh, I don't have the capacity. So it's just and it is mostly because of family planning, you know, not necessarily because I don't have any time. And so it's like, ah, so there's this weird poll where I'm like, oh my gosh, I want to go for.
It, but I think it's time for us to have for a new Shaw on the show. Yeah, I do, and I better to talk about balancing work with family and having a career similar to what you do. We need to have new Shawn.
It's high time, yes, because it's I you know, it's it's definitely a struggle, you know, and so I'm just like, okay, what how you know, because there's definitely this fear that like, Okay, so if I get pregnant, then you know, then I you know, like I'm gonna have to stop traveling at some point then the baby's gonna be here. So I'm
not gonna really want to travel for a while. What if that's a whole year, you know, like, you know, can you take a year off and be like Beyonce be back or would you take a year off and come back? Like Voice to Men, like the genre has moved on, you know what.
I mean, A Bruno much brought it back a little bit.
You know, but I'm just exactly, but you know, they moved on from boys to men. Voice to Men was the biggest thing out Mandy. I don't want to be boys to men.
I have a feeling. I mean, I don't have all the answers. I have no children, nor do I have a speak career. And you know the same way you do. But let me offer my free advice. But I feel like you're not going to be able to be out of the picture for a year. I think that I just I don't think that you'll be able to do it. It's just that, not that I'm saying you would like sacrifice what's good for your family to do it, but I think you're going to find a way to make
both happen. And like I've seen people like for a news to it, and I feel like it's really possible. And like what she says about and what she has said before when I've heard her talk about it, is like when becoming a mother made her more successful, made her even attract more wealth because she became more particular about what she said yes too, and she asked for more because she needed to ask for more from the specific opportunities so that she could do less of them,
you know. And I mean, I'm just making up things. I'm not making up, but putting words in her mouth a little bit. And then she actually wrote a column that I just read. I think it was for Refinery twenty nine, like about some of the myths or not some of the myths, but some of the advice she
has for working mom. And one of them that I was like doing snaps on the train too, was how she says when women have children, you have to go back to work, like you have to because the world, the wealth that you're missing out on accumulating, you know, over the years, can really hurt you and hinder you, and especially if you're well it's obviously single mothers don't have a choice. You have to work for your child.
But if you're in a dual income household, it's still important for the mother to get back out there and to not be out of the workforce for too long. So you know, Okay, now she needs to come.
On nus knows. I'm like, no, honestly, I would really love to have her, just because it's like a like before it was like, oh, I can totally see you know, but now I'm like, oh my gosh, because there's even things now where I'm like, oh, well, I don't know. That's like, you know, eight months from now. So I'm like, oh, yes, I would love to do that thing. Wait wait, what
if I can't. And so there's all of these like clauses now that I have to like keep in mind, And so yeah, it's just I mean, I know, I
remember Patrice uh of Washington, one of our faves. She said something to the fact was she she had just taken time off to take time off, and she was like, you know, and I don't know that it was a whole year, but she took time off, and she was like, girl, you know, if you built up enough of a of a business of like you know, just like a good solid business that she was like, it didn't, it didn't hurt her business because it just made her more conscious
about choosing just the right thing. Actually, was gonna reach out to my friend Lovely because she has a podcast called Jesus and Jealoff with the other girl, eyvon Ogi, and she she actually she has a checklist. She said that she hasn't. Actually, I was gonna, I was gonna hit Lovey up, love if you listen, hey, girl, because I love He's been the guests on our show. Because there's a checklist that she's created. Because Lovey speaks like
for a living. I mean, she she's got a New York Times bestseller and other things, but I would say the core of most of her income, as far as I can see from the outside anyway, it's speaking and love speaks like like you know, one hundred to two hundred days out of the year, so like significant amount of days, and so she said, because she gets so many amazing opportunities and she can't say yes to them all because some of them land on the same day
that she created a checklist to say, Okay, it's got to do at least six out of the ten. So that was something I told myself, like, you know what, you know, I can't remember what was on her checklist, So I was going to reach out just to ask and then like, you know, look at it and then add it to my own so it can help me to make, you know, better decisions. Like just today, I just got so many offers today and I was just like, oh, I would love to say I mean two thousand and ten.
Tiffany is like, oh my god, who's that? Is this? You want? Twenty nineteen? Tifany, It's like, oh, I need to take an ask. Hey.
One thing I'm trying to figure out is tax season. Oh yeah, I still haven't Paul, where are you at?
Man?
Where are my taxes? That he's still he's had them for? Like what's the good turnaround he's had over two weeks? And I'm just like, can I fill up now? Like I want to know my fate our listeners. So as promised, we are finally getting around to our tech show today tex Tuesday.
Yes, and we've got a special guest who I'm super excited about. So let me introduce you to Terry Chantel. So I'm at Terry because like maybe I want to say, maybe a year ago or maybe a year before that, I was getting so you guys know, I have a
Facebook group called Dreamcatchers. It's like a few hundred thousand women, and this woman's video kept getting posted over and over and over, and she had a couple of videos go viral, and I think she reached out to me, or maybe I reached out to her, and she was like, yeah, I'm sorry because we have kind of a rule about like videos in the group because most of the videos in the group, you know, they're like me meme esque videos, So we have a rule like you can't post videos
in the group. But I, you know, I let hers rock because they weren't like, you know, these weren't like videos of like you know, I don't know, kids getting cheese thrown in their face. You know, that's a real challenge right now, kids getting cheat thrown on your face.
I have so little faith in.
Humanity, right now I know and so like, and so I reached out to her and I was like, wow, you's so amazing. And so Terry is a financial educator. She is a tax educator, especially to entrepreneurs. She's a credit educator. She's just really bright and brilliant. And so after watching her videos I shared done with my accountain Carlo.
He was like, wow, she's really on point. Then I invited her to teach inside the Academy and she's taught a number of classes and actually wrote one of our intensives, which is like a three week long course in inside the Academy, which everyone is like, it's amazing. Terry is just dynamic, she's smart, she's sharp, and so when we were going to have our text episode, I was like, oo oh, let's invite Terry, and Baby said, okay.
So Terry, good recap, good recap. Yeah, I'm super excited to have her on. We have I've shaken out the reader mail bag and if you if you sent in a text question, thank you so very much for your questions. I've got a handful that we will cover with Terry
on Today show. And then, as always, if you know, new questions pop up for you feel free to send us an email at briannabis podcast at gmail dot com, or you can hit us up at Briannabisson podcast dot com and click ask us anything to shoot us your message. So we'll take a little short break and we'll come back with Terry Chantel.
We are back from our break, and I'm super excited because Terry is here. The crowd goes wild. You got the amazing question that you guys at over to jump to right right and you ready.
I am ready, glad, lad be here.
Awesome. So let's kick off things with a question from an anonymous listener. This is someone who's working in the gig economy, so they're a freelancer and wanting to have some tax advice. So Terry, here's a question from our anonymous listener. I'm trying to get out of debt and I decided to pick up some side hustles through the
gig economy. I've looked into some of these websites like task Rabbit, upwork, and flex and realized that I'd be considered a quote unquote contractor and I should expect to receive a ten ninety nine tax form from them. Can you go through the pros and cons of pursuing this type of side hustle. Is it really worth it? Or will I regret it later when tax season comes around. Your thoughts and advice are greatly appreciated. Good questions. There
are so many people. You know, I just walked, I had my dog walk today by like the uber of dog walking, and the guy was like, I just wanted to make some extra money. So there's so many folks out there who are like ubering and task rabbiting to make extra cash. So what should they consider before they start making that extra money?
Terry, Well, first thing is we are in a pay as you go system. So whether you're making money with a job or as a side hustle, you're required to pay taxes. And so what a ten ninety nine does is require you to report that income to the IRS. So mindset shift number one. I have to pay taxes. The goal is to pay the least amount of taxes. So the great thing about having a side hustle that's a gig. The major con is that although you're making money,
you get to write off business expenses. So it's actually a great thing to be considered a contractor in many situations, versus as employee. As an employee, for example, Mandy likes say that dog walker, if he worked for dog Walkers of America, he would get paid I don't know, you know, two hundred dollars a week, and they would automatically take those taxes out of and he would have no choice as to the amount of taxes that will be taken out. But let's say it's Brad's dog walking business and it's
his side hustle. Well, he made two hundred dollars, but he gets to write off any expense that went into that business, so the flyers that he put out, the website that he built, the leashes that he bought. So he made two hundred dollars, but he could probably write off half of that and not pay taxes on half of the money that he made. So really, in many situations, when it comes to a side hustle, the pro is
that it's a business expense. So go ahead and let them give you that ten ninety nine because you're going to give the irs those business expenses and you're good to go.
Oh yeah, quick question. So with tax reform, I know that some thing's changed. For yeah, the great minds think alike uh, some things have changed for people who are considered like sole proprietors or people who are basically a business of one has has any of that changed the advice around people in the gig economy.
No, most of the changes in terms of eliminations and things that aren't so you know, there are the negative changes happened on the personal side. Actually, some improvements have happened on the business side with the incorporation of some credits for higher earners on the self employment side, but really that side hasn't changed as much, and those bigger changes are more they are on the side of corporations and c corps, those big headliners that you see.
But for what we're talking about.
Self employed, solopreneurs, hot side hustlers, you don't see a big change.
Good to know, Yes, okay, well, we have another question coming in from New York. This is from Chris. I don't see you say, I can't use your name. Chris telling us how much she loves the show, and then she says, I am a notary signing agent a contract with banks and different different companies to meet with clients to notarize mortgage documents, refinance documents, etc. Lately, I've been getting more assignments than I did in my first year and would like to know when it's best to create
a business to continue this work. Is there a cap on how much a person can make as a contractor before they will have to pay back taxes to steak in federal For example, I'm already over six hundred dollars earnings for twenty nineteen versus twenty eighteen, I only made eight hundred for the total year. If there's no cap, is it safe to continue to work as a contractor? Also, today, I have not received any tax documents for twenty eighteen
from the companies I've contracted on work for. But I but I do keep tracking, so I get.
This question a lot working with newer business owners a lot. The biggest myth is that you have to do something special to become a business. But according to the IRS, the moment you engage in an activity where the intent is to profit, you are a business. You are a soul, and by law, you should report that income.
That's it.
You don't have to be in LLC, you don't have to go downtown to get a DBA, you don't need a website. If you said I'm opening up shop and it's for profit, then you are a business. So as you are running and growing that business, becoming an LLC doesn't have as much to do with income as it has to do with protection from liability of running that business. In LLC is a formal business entity that gives you limited liability protection. Basically, in Layman's term, that means that
you and your business are separate entities. So if you are a sole proprietor you're just out there doing your thing, then if someone wanted to sue you, Let's say you're that dog walker and that dog got hurt, well they would sue you and you as a person. So your personal assets, anything that you have up for grabs that they can use, they can go after it legally. But if that dog walker was in LLC, then only that as sets that that separate entity that that business owns
can be up for grabs in the lawsuit. So the question really is is what is the risk that I'm taking out here operating not as an LLC. Whether you're making one dollar or ten thousand dollars, it's about the risk and that's something that you should seek a professional if you want to form and kind of form that entity and kind of do some deeper research. But I wouldn't attach that decision to money as much as I would attach it to the risk in that type of business that you're running running.
What about what about Chris's or not? Chris? Yes, Chris, Sorry Chris? What about Chris's second question? Which is you know? For example? I see this question a lot because in my in my day job, we work with a lot of freelance writers and a couple of them have come up this year already and saying, Hey, I haven't gotten my ten ninety nine tax form from you guys for
twenty eighteen. Where it at? Though? So Chris, Chris wants to know, because what it's you say, she made eight hundred dollars last year, she hasn't gotten any tax forms from those companies? What should she do?
You still report the income. So I'll give a little behind the scenes, quick kind of peak when you're a tax preparer, and let's say if you gave me fifteen ten ninety nine from all of the websites that you wrote an article for. Really, what happens in the tax
software is we just add them all up. It's really just a ten ninety nine is proof that the company you worked for actually reported that income to the IRS because as a company, as a business owner, I am required to report the money that I paid to independent contractors because IRS wants to know every dollar that everybody makes and it's their way of having a documentation of that. So if Mandy you wrote an article for me and I paid you six hundred dollars, I'm going to create
a ten ninety nine. I'm going to send one to the IRS and say, hey, IRS, I paid Mandy six hundred dollars, and then I'm going to give you one. So the IRS knows about this money. So you can't ignore that ten ninety nine because they already know you made it. They're going to come looking for you and say, hey, we know you made some money, but you didn't put it on.
Your tax return.
But the other half of that question is whether I give you a ten ninety nine or not. Legally, you still are supposed to report that money. Remember what I said earlier is that the IRS says if you are operating in any activity for a profit, then you're supposed to report that money and a lot and you may fly below the radar if it's you know, one hundred
dollars here or two hundred dollars there. But when it becomes big money, that's when you see those big tax evasion stories that you see celebrities you know are getting into big trouble because they didn't get a ten ninety nine for all that money they've made, but they should have reported it some kind of way. The IRS got wind of it. So some companies like Uber, for example,
I have clients that drive for Uber. They will not send their drivers ten ninety n if they made less than ten thousand dollars because it's a cost to them. So what they'll do they'll just kind of give you, like, you know how much you made, just go report it.
No, that's great to know. I can just tell these people, why are you hounding me? Like I could send an email to accounts payable and give and it will take three weeks to get back to you. Or you could just you know, I can tell you how much you spent, how much we paid you last year, and you can just go file.
Yeah, they just want to be sure because it's a really bad thing if they under report. They just the biggest thing is we need to both tell the I rs the same number, because if they say one thousand and you said twelve hundred, come July first, they will send the letter you didn't pay us. You know, you said you only made a thousand, but Mandy said you made twelve hundred. So it's important that the numbers match, but the actual ten ninety nine, the actual paper, is not as important.
Excellent. All right, let's move on to our next question. I have lost my place. Here we go. This question comes from listener Sure Shar says, I just love you guys, and I legit think I know y'all in real life. Oh thanks, Shar, So here's her tax question. She also knows that I like to get straight to the point with my questions. Thank you, Shar, I love it. I love a listener who's like, please spare me the five
paragraphs about you know, your life story. No, I love you guys, but thank you for getting to the point. All right, Shar says, I withdrew. This is a great question. I withdrew ten thousand dollars from my traditional IRA back in March of twenty eighteen because I was unemployed. My intention was to pay it back when I started to work, but I was on this aggressive payoff my debt plan, and it slipped my mind. So now I owe the
irs like five thousand dollars. Oh shar. My question is can I pay the five thousand, five hundred dollars of the ten thousand dollars back before April fifteenth and it offset the withdrawal and I only have to pay taxes on the remaining forty five hundred that I owe. Oh and I forgot to mention that I also went tax exempt for four months. I only paid about six thousand dollars in federal taxes of the seventy thousand dollars I earned from April to December. How can I decrease the
money that I owe? That was a complex question, so let me know if you want me to back up and read anything.
There are pretty much no exceptions to that penalty. Once you would draw that money, you have to pay the penalty because you have to remember, the whole point of a traditional IRA is to say for a retirement and to get you know, a tax deduction. So there's really nothing you can do. Typically, some plans will You may find an IRA plan that says if you pay it back within sixty days or something, like that, but trying to pay it back a year and a half later won't work.
What if she'd planned to hide, what could she have done?
Maybe rolled it over to another plan that had a little bit more flexibility, like rolling that over to a rock IRA, But even that has certain rules like okay, you can withdraw all it but for certain reasons. You can withdraw the contributions, or you could tax free, or you could withdraw it if you're buying it for a house down payment. So she could have had some options depending on what she needed that money for, maybe for
medical expenses. But if you want to get money out of your traditional iry, if you're not even sure, like what's the rules for the traditional or the rough iry, call your plan.
Provider maybe they can help you out.
You probably can first roll it over to a plan that will accommodate the reason that you're trying to withdraw the money money.
Yeah, and withdrawing funds. Withdrawing funds early from your retirement plan is almost always going to end up with that tax penalty because they're going to look at it because as they should. You know, if you're putting in money pre tax that you haven't paid taxes on it yet and so they're going to come for it then, and I and a or not four one K loans like with four one k a retirement plan through your employer
and correct if I'm wrong, Terry. But some of them do offer a one K loan where you do take out money and then you pay it off. I've done this before, and you pay it off, you know, every pay period until it's paid back. But a loan is totally different than a withdrawal. It's almost like a personal loan where they tell you, Okay, you're gonna have this much of a monthly payment and you'll pay it back at this point and then it's automatically. It was automatically
just taken out of my paycheck. I didn't have to do anything and I and that way I didn't slip my mind, you know, I was always paying it back. The risk, of course, with a four to one K loan is like if I were to lose my job at the time that loan would have become due, it could have been it could have been due immediately or within thirty to sixty days, and some people may not be prepared to pay it back. And if you can't pay it back, well, then it becomes a distribution and
then you have to pay taxes on it. So there's any time you're dipping into your nest egg, like your retirement fund, whether it be an IRA or four one K, there's there's always it's never just easy money. It's never going to be easy money with no strings attached.
Yeah, so right, that is absolutely correct about payment plans. Yes, definitely, definitely, the IRS has payment plans. So once she files her taxes, she will call them and set up a comfortable plane payment plan process for them. And of course they're pretty
flexible as long as you're paying them. But you do want to pay that off because they charge interest on it and so on and so, but handle it, don't ignore it, and get on some type of plan, so they so it doesn't escalate into some sort of, you know, garnishing type of situation.
So she did ask the second question about that she did go tax exempt for four months and she only paid about six K of the federal taxes of the seventy K she earned. Is there anything she can do to grease to decrease that money that she owns because she she did go without paying taxes for a.
While, unless she has a business or real estate or something to offset that. So that last part of her question, how she can how can she decrease the money that she That's everything altogether.
So she's saying, in one, I owe.
This penalty for my withdrawals, but two, I know that I wanted my paychecks to be bigger, so I stop them from taking money out of my check. And I normally know that I pay about ten K by the end of the year, but now I'm only at six. Not only am I going to owe that penalty, I know I didn't pay into the system like I should have.
There's not much that.
She can do at this point, but just, you know, go forward and try to come up with something that reduces her situation going forward. I'm not sure what her details are. She makes seventy K and she pays six K? Does she have kids?
And she going? You know she has?
It's some strategizing at this point.
Okay, let's take our last question friend listeners. Summer TIF you want to take this one.
So Summer says, my question is for the future business owners out there, like Tiffany, I run a business that got to a point where we needed to switch to an es corp. Congrats, Summa. Well, I wish I knew the implications from this jump. I would have saved so much money in time. Job me too, she said, Okay, I'm about to launch a new LLC and entity, and I want to make sure that she does it right. Should she start with an escorp from the very beginning or should I wait until a certain point in terms
of revenue? When does a C corp status make sense? I believe that with my current business, before it was an es corp, it was classified as a domestic filer. It's also confusing. Okay, so let's break it down so one, she was at one point, can we just talk about the difference between an LLC and an escorp in the eye of the of the of taxes.
Yes, yes, so definitely.
The biggest reason why es corps are so popular is because you can save money.
That's the high level answer.
And the way you save that money is you have to you can pay less self employment taxes, So Tiffany, so the budgeties. As an LLC, everything that you earn is considered, you know, self employment income. The moment you turn over to an es corp, you can give yourself a reasonable salary, and that reasonable salary is not subject to those to those taxes. So that's how you save money. So, if let's say the business brought in one hundred thousand dollars as an LLC, you pay those special taxes on
that whole hundred k. Switch to an s corp. You brought in that same one hundred k, but we said we're going to pay you a reasonable salary, let's say forty grand. Well forty grand of that money doesn't have to pay those special taxes. So that's the understanding of why people want to move to an escorp. Now, you'll find different opinions on when is the best time to move to an es corp.
Typically, the number one thing is you are at a good profitable place.
Some people will say, you know, once you're netting you know, thirty forty fifty. I personally think once you're netting around seventy seventy five K. And here's the reason why. When you move over to an escort. There are more administrative responsibilities involved in that, and those responsibilities cost you money.
You have to start.
Paying those quarterly taxes, which means that you need an accountant to help you with that, which means that your books have to be cleaned. So now you're paying bookkeeping services. And if you have employees, you're in you know, so it and your taxes costs more the file too, you know, and I do esports. Two, you have an escorp, You're we're happy to see you escorps.
Come our way.
We're like, come on with your problems, come on. So, so you have to make sure that the expenses that you pay to become an escort far outweigh the benefits. And that's why we say you are.
In a profitable place.
If it's only going to save you one thousand dollars, is it really worth going through all of those changes once you add up the expenses that it costs to
operate as an es corp. And so usually my advice is not to start a brand new business as an es corp unless you've been in business for a while, it has some predictable income and you know that, yes, it's going to cost me an extra two grand a year, but the taxes that I'm saving far outweighs the administrative responsibilities that I have to go through to operate this way.
Yeah, So for me, it happened for me because of my accountant, Carlos. It happened when I was just like you said, Terry, he's more conservative as well. I was around seventy five to one hundred thousand dollars a year as the budgetiese s death, and he was like, okay, one girl, it's time to start paying quarterly. Because I would always feel like I was back to zero by the end. You know, by the end of the year, it's like yeah, yeah, yeah, I saved and all this
money goes to taxes. Yes, And he was like, you know, so one you're going to start paying quarterly. And to your right, I had a by then this was maybe like I don't know, I want to say, four years ago, maybe five years ago. I was like, okay, the BUDGETISA is steadily at this about seventy five to one hundred thousand dollars a year. You know, it's a it's a good, solid business. So we switched to an es Corp. And
it saved me thirty thousand dollars in taxi. So it was that, you know, that was a significant amount of money to not have to pay as a result of switching. Because but like you said, I met with Carlos quarterly all of a sudden. I also brought on a CFO because and we had a bookkeeper because you're right, You're You're like, it's there. You're really wanting to make sure that your books are super clean, clear and concise. And then she also asked about when does a sea corp
make sense? So, Terry, I recently, so I've got well many and I shared brown ambition, But that's an LLC. The budget Nista is a sea corp. Now, I just switched over last year. I have a marketing company that's a sea corp. And I have an online school that I think started off as an escort because it I mean right away, I knew it was going to make a good amount of money because it was built on the back of the budget ESTE. So it was like we knew when we launched, this is going to start off,
like you know, making over six figures a year. So can you explain what a sea corp looks like in the eyes of taxes and when it was one? Would it be a good idea to switch to a sea corp? If ever?
Well, I don't really, that's not my expertise working with sea corps. But it's when you're making money and you have some future long term goals. Yes, only a C corp accommodates. Okay, that's the high level answers to that. You can, you know, issue stocks, you can do more things, if you want to bring in investors things like that. Then that's when you have certain situations business moves that you're trying.
To make that really a C corp best accommodates. And right now, I know what the new tax office they've dropped. It was like thirty five percent. That's how much businesses we're paying. It Like, as far as taxes were concerned with the Sea Corp, it it reduced like to the lows it's ever been to twenty one.
Somewhere around there.
Yeah yeah, that's a twenty one percent, which is what some people were Yeah.
Yeah, yeah no, because truthfully, I'm like I needed it, doesn't That's why I switched to a sea court because yes, is it beneficial for me? But I know that that's not there. Why should someone or a company making multiple seven figures or eight figures or nine figures, why are you paying less taxes? That's it's so crazy that like my multi seven figure business has a lower tax rate than tifany ely, how like, how does a person I'm
paying more taxes than my successful business. That's honestly, that's ridiculous. And I am and so and I'll just share, like what why Carlos said it made sense for me to switch to a sea court. But I'm like, I said, I'm sure it's more intricate. It's just because for two of my businesses we did have long term goals that normally we were always pulling a large amount for my escort business as an owner draw and like my reasonable income. But for the other two businesses, we were keeping a
lot of the money in the company. But because of an ES corp, I was paying taxes on money that was being kept in the company. And I was like Carlos, like, I can't pay taxes on five hundred thousand dollars that I'm not receiving. That's a lot of money, you know. And so he was like, Okay, well then it's time
to switch to a C corp. So that way, the burden of those taxes falls on the company, not you, because you're not really pulling money out because you're saving for a larger you know, for it to make a long term move. So so I'm sure it's more intricate, obviously, But for me, I made the C corp switch because I was not pulling money out of two of my companies. Instead, I was keeping it there to make make you know, long term moves with that money. So that's what you did for me.
Yeah, and you explained it perfectly. And so it really depends on the perspective of the conversation on whether that's a good or bad thing. When the tax plan was put out there, it was the what the idea that.
This helps the middle class?
Well, middle class is not bringing in five hundred a million dollars, you know, and yay, the tax forre is lowered for the C corp to twenty one percent. That really doesn't speak to the middle class, but to the class of people where yes, that is great because my S corp, I'm paying forty percent over here, and if I switch to a C corp, I'm going to be paying twenty one percent.
When when I am winning, I am winning.
So it just depends on, you know, the conversation, the context of it.
But moving to a SEA corp, I say, my motto.
Is you want to keep more of what you make, and so the everything that I do around the education when it comes to taxes is listen, we are not about to cheat the system. We're going to learn the system so that we can beat the system. So if that is, then that's just what it is. And I'm not mad at you. In my TUPAC voice, move s, Corpy, move child. Yes, Okay, thank you, Carlos.
I always feel like the text code always brings out the republic in people like forget Trump for a minute. We all want more money, right, so say you're a liberal rich Person's what you're saying. No shade tiff, so real quick for people who for people because I know this is luckily, you know, a tax reform, everyone was really concerned. What does this mean for my taxes? I'm going Am I going to owe more? Am I going
to owe less? What advice do you have for people who get an unexpected tax bill this year or maybe get way too much of a refund and they realize that, hey, maybe I should be giving the government less of a free loan during the year in terms of like changing or withholdings in twenty nineteen, Yeah, what advice do you have for just regular W two workers heading into this tax year?
Number one.
The Irs has a calculator called the Irs Withholding Calculator and it's free to use. You want to make sure that the right amount is being taken out of your paycheck, so you can go on there, have your last paycheck in your hands, plug in the numbers. It'll ask you some questions and it will give you an eye idea of whether or not you're on part to have the right amount taken out of your check, so that you're pretty close to breaking even. You're not overpaying, but you
definitely don't want to be under paying as well. That paycheck is really determined by how you fill out your tax firms when you get on that job, so make sure that you're completing those firms so that they have the correct amount being taken out of your check. And that is something that a lot of people feel is very confusing. They're not sure, so that's why I always say, hey, just go to the calculator.
Excellent. Well, Terry, you've been so helpful and insightful. Thank you so much for joining the show. Now let our listeners know where they can find out more about you.
You can find me at cherishtel dot com. That is my internet home t E R R I E C h A and T E L. And that's where I have my courses and ebooks and things like that for.
Everyday people to beat the system, save or make money.
Yes, Terry and Terry. For those of you who don't know, she is an amazing expert inside the Literature Academy. The dream Catchers love you, the dream Builders love you. Brian Ambition, I love you, girl.
I love that this was fun.
I love it.
I love it.