Top 10 Tax Tips for New Entrepreneurs

Sidebar: I am not a CPA, tax preparer, or tax professional of any kind. The advice I’m going to share below is from my experience as a business owner filing taxes for different types of businesses over the past 12 years. My suggestion is to consult a professional if you have any specific questions pertaining to your business.

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One of the most stressful times of the year for me is tax time. I used to prepare my taxes on my own using tax software. I’d count all my income and all my expenses and try to make sense of it all and to be honest I was so lost. My friend, Heather, asked me for some tax advice last week since it’s her first time filing as a business owner. She mentioned that I should write a post about it (which is brilliant) so here I am! 😀

I know it can be really overwhelming and stressful to file your taxes for the first time when you’re a business owner. Here are some of my personal tips to try to alleviate some of the burden.

  1. Get to know basic tax jargon. If you’re an entrepreneur and plan on being one for a while you need to know basic tax terms. What is a 1099? A tax document that another business uses to report to the IRS that they paid you. You typically receive this from them if they paid more $600 or more in a year. What is a Schedule C? A document that is part of your tax return that allows you to show your profit and loss in your business. This is where you show your expenses and income. There’s more but start to familiarize yourself with these words and look up these forms.
  2. Save all your expense receipts related to your business. I’ll use The Good The Bad The Foodie as an example. We bought a tripod to use when we film – expense. We use a laptop of edit content – expense. Lighting equipment – expense. Camera – expense. The groceries we buy for filming – expense. The bowls and plates we use in our videos – expense. Website hosting service – expense. You get the idea right? Anything that is related to our business that we purchase I save the invoice or receipt.
  3. Save receipts and tax documents for at least 7 years. The last thing you want is more clutter. I feel you on this one. But when it comes to your taxes you never want to get in trouble with the IRS and not have documentation to back you up. Save your ITR’s (income tax returns) and receipts for 7 years. After the 7 years make sure you shred those documents and not just throw them away, it has personal info on it!
  4. Create a spreadsheet of expenses and income. If you don’t use Quickbooks or another accounting software then I suggest creating a spreadsheet to track your income and expenses. I’ll use my Real Estate business as an example. I created a document where I track every time I get paid so I know how much I made in 1 year. Then I created a second document that tracks all my expenses related to real estate. For example: Yearly licensing fees, associate dues, mileage from showing houses, lunch meetings with clients, cell phone bills, etc. If you make an effort to log in all that information at least once a month it’ll save you the time and head ache of trying to spend hours doing it right before taxes are due.
  5. Research what you can and can’t expense. A lot of questions I get are whether or not people can use a particular expenditure as an expense. The best thing I can say in this situation is write me a comment below and I can try to answer your question. If not do some research on the internet or ask a tax professional. I know resources for small business and solo entrepreneurs is a bit hard to find out there but the answer is out there! You just need to find it. I’m more than happy to help you if I know the answer. 🙂
  6. Put money aside in case you have to pay income tax. Let’s be real, y’all. Most people won’t have to pay income taxes the first year in business, but not everyone! Maybe you’ll be an overnight success! Maybe it’ll take a little longer, who knows. No matter what, I’d put money aside for paying taxes. But depending on what kind of product or service you sell, you should either put money away every time you get paid or maybe once a month. I personally put 10% away. For example, if I get sell a house I put 10% of my commission away. But if you sell products with a smaller price tag then you can transfer money into your savings every couple weeks or once a month.
  7. Don’t wait until the last minute. I’m not saying to wait until the very last day, but I’m also not saying to file on January 1st. Make sure you look through all your documents, receipts, 1099’s, or other tax forms together before you file. Have all your ducks in a row before you start doing the paperwork. I like to file the week before the due date just to make sure I covered everything but not at the last minute so I don’t have to fall in line at the post office. I also don’t want to file late to avoid penalties.
  8. Don’t forget your state taxes! I know everyone worries about their federal income taxes, but make sure you know the requirements for your state. When I used to use tax software it asked me at the end whether or not I wanted to file with the state of California for an extra change. I picked yes do I didn’t have to stress about it.
  9. At the end of every year, start to do the work. This goes along the lines of number 7. I never really do this, but I always want to. Check when taxes are due because it’s not always the same every year. Don’t waste your time putting all your documents together on April 12th if taxes are due on April 18th. Start to reconcile your accounts, finish off your spreadsheets, and file your tax documents away in a safe place.
  10. Hire a tax pro that you trust. I know many of you feel that doing your taxes is something you have to do because you don’t have the money to pay someone. But to be honest, it’s worth it. The peace of mind that a professional is taking care of it for you is worth th investment, at least for me personally. I knew how to file my taxes, I could probably do it, but it was so stressful for me. My good friend and CPA, Jenn, does all my business taxes as well as my personal. She is my absolute life saver! I trust her, she gives me advice and options, and is always there when I have questions. 

Hope these tips were helpful and if there’s any way I can help please comment below! 🙂

Xoxo,

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What’s Your Story? Walking Down Memory Lane

How did you get to this very moment in your life?

What specific events happened that changed your direction?

As an entrepreneur, our business reflects our personal story.

When I talk to other entrepreneurs the reason they usually come up with the idea is because something happened in their personal life and needed a particular product or service. Or they wanted to create a movement and change the way people thought about certain things.

As a person that has built many brands I see an evident trend. The most successful brands are the ones that people can relate to, connect with, and have a clear story/mission. As a business owner I used to hide behind the logos of my business. I didn’t want to embrace the idea of sharing my personal story. But as my businesses grew I realized the reason was because I became more and more open to sharing my journey as the person behind the business. More importantly, I realized that my story mattered.

When I look back on my journey now I still can’t believe how things played out just at the right time. A lot of different things could have transpired, but I believe that God had a hand in my path to where I am today. Along the road to full time entrepreneurship I had many choices and opportunities. I had the free will to choose where I wanted to work, what I wanted to do. With a lot of prayer and tough decision making, my choices brought me here to the present day.

*cue time travel sound effects*

During the end of my final quarter at FIDM I decided I wanted to start my own business. I was drowning in an ocean of final projects, tests, graduation, working at a bridal shop 35 hours a week, and dancing in my free time. I have no idea how I pulled it off, but I did. Having all those things on my plate showed me how to multitask and handle multiple projects at once. At the same time I started my first business, Daydreamer Events, a wedding and event planning company. The wedding industry showed me how to be a people person, how to be more outgoing, and was my first taste in customer service.

Daydreamer Event Planning
Daydreamer Event Planning by Carissa Solomon 2004-2011

Post-graduation I was running my wedding planning business and was working full time for a print company. Charlie’s experience and my experience in the print industry inspired us to start our first business together, Inked Print and Graphics which later turned into CO Creative Cartel after we got married. The print industry showed me how important it is to have strong business to business relationships. 

Inked Print and Graphics, 2006-2011
Inked Print and Graphics turned into CO Creative Cartel, 2006-2011

 

CO Creative Cartel, 2011-present
CO Creative Cartel, 2011-present

2007 was the start of the great recession and that was the start of a lot of ups and downs for my family. I was very lost during this time. Everything I had known started to turn upside down. I had different jobs on and off during the next few years to help supplement income, when my mom convinced me to get my real estate license. I was still running both my wedding planning and print businesses, but things were slowing down. This time in my life taught me about perseverance and how necessary it is to adapt to change.

Original Ninong's Logo, 2008-2013
Original Ninong’s Logo, 2008-2013

In 2008, my family opened Ninong’s. Oh boy, if you knew the story of what happened before we opened in Granada Hills. It was really really hard for us, let’s just say that. It was new, it was exciting, but it also took a toll on all of us physically, mentally, and financially. We are finally starting to see the fruits of our labor and are extremely grateful that we didn’t give up. Charlie and I got engaged shortly after and 2 years later got married. Those years were an extreme transition time for us. We had so much to look forward too but there was an immense weight on our shoulders. After our wedding I worked a few contract jobs and found myself as a manager at a stationery company before I went to work at Ninong’s full time. Working as a manager showed me how to lead a team of people and set milestone goals which was extremely useful when I transitioned to Ninong’s.

New Ninong's Logo, 2013-present
New Ninong’s Logo, 2013-present

2013 was when I really went full time into entrepreneurship and it was the scariest time of my life, both professionally and personally. When I first started I was the first one at work and the last one to leave. I would work 14+ hour days and come in on my 1 day off a week. Guys, I think I cried every day for almost a year. I realized as an entrepreneur you just have to do what you have to do to stay afloat. You do it because you love it and believe in it that much.

A month after I started my mom found out that she had cancer. That moment was the turning point for me and my life completely changed. Things became clearer, more real, more complicated, but also more meaningful. I knew that this was going to change ever aspect of my life and my outlook. During that time I realized that all the odd jobs that I worked helped give me the experience I needed to run my businesses successfully. I stopped crying ever day lol! I became stronger and more in tune with myself as an entrepreneur. I realized I had all the tools I needed because of my journey. My long and winding journey shaped me to the person I am today.

Today I run our cafe Ninong’s, a stationery company CO Creative Cartel, a Real Estate business, and a Youtube Channel The Good the Bad the Foodie. This is me, this is my life, and this is who I am – an entrepreneur passionate about business in every way, shape, and form.

If you’re out there this is my message for you. You are going to experience a lot of ups and downs during your time, but it’s all about how you persevere through the tough times and the grace you show during the good times. Trust me, it’s always worth it in the end.

I believe we all have a choice which path we want to take it life, I truly believe there is always a choice. It may not always be easy, everyone has something that holds them back or they struggle with. But take it from me, the journey is the most important part. Cherish the journey, learn from it. Embrace it and be proud of your story.

xoxo,

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I Have a Business Idea, Now What?

When I started doing regular meetings with my long time friend and fellow entrepreneur, Heather, I realized how often people come to me when they realize they want to start a business. I usually get questions like, “I have this idea but can you tell me what paper work I need to get this going?” or “What kind of business should I open up?” or “Can I pick your brain about this business idea I have?” or “Do you think this is a good idea?”

Well, let me tell you that if you have a business idea then I think it’s wonderful! Entrepreneurship and small business is my life. I love being a business owner. Through good days and really crappy days in the end I know being an entrepreneur is what really makes me happy – it makes me tick. So, you’re thinking of starting a business of you own? Great! Here’s my advice of what you need to do first before taking the plunge.

  1. Get prepared
    1. Do. Your. Research. I can’t stress this enough. A lot of businesses fail before they even begin because of lack of research. A couple questions for you:
      1. What do you need to start up?
      2. What kind of permits are needed from the county and/or state?
      3. What kind of monetary investment is needed for start up costs?
    2. Scope out your competition. And not in a creepy stalker way! Reach out to them as a colleague in a professional manner. Worst case scenario is they don’t respond back to you. But best case scenario you have a new friend that you can talk shop with!
    3. How can you differentiate the market? Basically, unless you’re an inventor you’re business idea is just reinventing something that has already been done. So how is your product or service going to be different from what is already out there?
    4. What can you bring to the table? This is the culminating question based on questions 2 and 3. Most of the time you and your personal brand is what is going to set you apart from the competition. Is there anything else? Maybe you have an innovative way to present your product. Or maybe you are going to utilize technology in a way that hasn’t been done in your industry. Or maybe, the exact opposite, you plan on going back to basics and minimizing the use of technology. Who knows? You should know 😉
  2. Figure out your costs. I know a lot of people don’t like to discuss money, it’s a touchy subject for some. But let’s be realistic here. You want to start a business for 2 main reasons: to do what you love and to make money, right? Now I’m not talking about start up costs anymore. I’m talking about operation costs.
    1. How much will it take to keep your business running after you’ve started? Create a budget of your monthly expenses for your business. That way, you know exactly how much you need every month to break even. Do you need to rent office or warehouse? Do you need internet? Do you need a website? Do you need a company phone line? How much will you pay yourself? Those are your monthly expenses.
  3. Create pricing for your product or service. Now that you know how much your business is going to cost you it’s time to think about making some money. A lot of people think you can just take the cost of your product or service and multiply it by 3. But that’s not true for everyone. In fact, it’s not true for most. Pricing your goods or services correctly is extremely important. Some things to think about when :
    1. What is your competition’s pricing? It’s very important that you don’t undercut your competition. Not only will you be sabotaging your colleagues but you’ll be cheating yourself on potential profits. Just because you’re just starting out doesn’t mean you have to charge 50% less than the competition. You have value, your insight is valuable. You are knowledgable and have something to contribute in your field.
    2. What can the market bear? There are numerous factors that can play into this. Yes, your competition..but also your geographical area. Where are you located? Who will you be servicing? What kind of added value are you including into your product?
  4.  Go for it! Lastly, don’t be afraid! Take the leap and invest in yourself. Whenever people tell me they’re thinking about starting a business I get extremely excited for them. Why? Because it takes courage, and most people won’t have the courage to go for what they want. I’ve noticed that a lot of people that people don’t know what they’re passionate about. But if you’re thinking about starting a business that means you must be passionate about something and that’s exciting! I ain’t gonna lie people – owning a business is extremely hard. You’ll learn things that you never learned before, put in more work hours than ever before, and you’ll wear so many hats you never thought you’d have to! But for a lot of people they wouldn’t have it any other way. Why? Because despite all the hardships, entrepreneurship will always have the biggest potential for more. And more I mean not just more earnings, but more life experience, time, and more getting to know what you’re really made of. So go out there and do it! I’m rooting for you!

In your corner,

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