A peaceful life is one where your work and personal lives are balanced yet separate…but how does that translate to finances? Anne & Pilar have done it all: from TurboTax and nerve-wrecking audits to having an accountant on retainer. There is no one-size fits all plan for business finances, but keeping things organized + separated is a good start. Be ready to evolve your strategy as your business does and tackle tax season like a #VOBOSS!
More at https://voboss.com/tax-season
Transcript
>> It's time to take your business to the next level, the BOSS level! These are the premiere Business Owner Strategies and Successes being utilized by the industry's top talent today. Rock your business like a BOSS, a VO BOSS! Now let's welcome your host, Anne Ganguzza.
Pilar: Hola, BOSS Voces. Bienvenidos al podcast con Anne Ganguzza y Pilar Uribe.
Anne: Hey everyone. Welcome to the VO BOSS podcast. I'm your host, Anne Ganguzza, and I'm excited to welcome back to the podcast very special guest cohost Pilar Uribe.
Pilar: Hi, Anne.
Anne: Pilar, Pilar, I, ugh, it's that time again.
Pilar: It's tax time.
Anne: Pilar, I think this might be the time of year where every voiceover artist entrepreneur says, oh, 'cause we got to start the process or at least forms are coming in. We're gathering receipts. We're doing all of that good stuff to prepare for the tax season.
Pilar: It's a communal flip-out.
Anne: Yes, it is.
Pilar: It's a hootenanny of flipping out.
Anne: It is. And it's always like, oh God, I don't want to, oh. Or I want to just get a nice refund. And it's been kind of crazy with the extension last year with the pandemic and things got all out of whack, but I'll tell you, I've got a few things that I've learned along the way that may help BOSSes out there. And I'm sure you do, Pilar, may help you guys when it comes time to getting ready for tax season.
Pilar: You know, I think the most important thing, Anne, is to start looking at what you've spent, how you've spent it, how you've earned it. And you know, there are people who are listening to this podcast who are going to say, oh yeah, I've got it all together. And then there are people who are just beginning their career. And so for those VO BOSSes, whatever stage you're in, it's really important to, to start it. And it doesn't matter if you don't have it all together because every single person started out not knowing what they were doing.
Anne: But, but I will tell you what helped me immensely right away for my business, whether I was part-time or full-time. 'Cause I started and I did a couple of years part-time before I went full time, was getting a separate bank account, a business bank account, so that I could separate the monies that I was using for my business in and out. So that was the single most important thing I think I started, I mean, outside of researching, do I create an LLC? Do I create -- I actually started as a DBA. Do I create an LLC? Do I have an S Corp? And I think for everyone that is just starting, that's something that you want to research. You may not need to start an LLC right away, whatever it takes. I guess it depends on -- it does depend on the state. I only required a DBA when I first started. So that's what I did. And I followed the rules and did what I needed to do. Got my DBA, and made sure I had a separate bank account so that I could account for all the money coming in and flowing out as well.
Pilar: Yeah. I completely agree with that statement. So here's something that I did. So all you VO BOSSes listening out there can do the opposite. I did actually, because my bank gave me that option. I had my regular checking account and my business checking account.
Anne: And you didn't have to have a DBA or a --
Pilar: No.
Anne: -- something that proved your business?
Pilar: No. This was when I first got to Miami after Colombia, and it was, um, Wachovia, which is now Wells Fargo, but they, they just offered that and I was like, sure, I'll take it. So it was two, two different savings accounts, two different checking accounts. But here's what I didn't do. So I really wanted to get my frequent flyer miles. So I thought I'm just going to use my regular credit card for everything. Big mistake, big mistake. So I, and I didn't do it until relatively recently that I got a separate credit card for my business. So nothing that I put on my business has anything to do with my private life and what I do when I'm buying groceries or whatever has nothing to do with what I put on the expense credit card. And that is so important because what ends up happening is if you say, oh yeah, I can just put everything on one credit card and then I'll divvy it up at the end of the year, like right now, then you're just basically pouring over and over through all your statements and it becomes a nightmare.
Anne: Well, that's just as bad as not having a business bank account.
Pilar: Yes. I agree.
Anne: And it could be worse because you tend to spend more on that credit card. Yeah. A business credit card is, I absolutely agree, one of the best things that I ever got, and you know what, I limited it to one. I actually went with American Express, and most, most places take American Express. So if I'm going to buy equipment or I'm going to make an investment, buy office supplies, whatever it is, office supplies, nice mics by the way. Those are the office supplies, Hey, a new studio, nice. Everything went on that business credit card. And it was so easy to categorize, because a lot of times they do that for you.
And the other single most important thing I did, and I say this constantly, so if you guys have listened to at least one VO BOSS episode, you probably know that the accountant was the best thing I ever did. I have her on retainer. So every month she balances my accounts. She's very familiar with my company's spending and ins and outs. And we meet every other, once every three weeks or so to go over things. And she keeps my books up to date and that makes tax season super simple.
Pilar: Right. Instead of a huge headache where your, like, heart is palpitating every day --
Anne: But I have had that happen.
Pilar: -- which is what used to happen to me.
Anne: I have had --
Pilar: Oh, I had that for years. Yeah.
Anne: And it was one of those things back -- remember when there was paper with paper receipts. I mean, I'm kind of happy now that things are electronic and at least digital, because it's easy to go recover those receipts because remember when you would put those receipts in the box, and they would be those thermal paper receipts. And so at the end of the day, they would all like wear off and you're like, what did I even buy? What is that number? What does that say? So.
Pilar: What a nightmare. What a nightmare. Yeah. Or you write something in pencil, remember the days of pencil, and then you can't read your writing for crying out loud.
Anne: Yeah. Yeah, so I would say first tax tip is figure out what your business is. And I always say if after you make a certain amount of money, yes, you need to like incorporate. You need to look at options for your business. But I was a DBA for quite a number of years, actually, Pilar. And it served me fine. I didn't have to pay a ton of money, and up to a certain amount, if you're not making over a certain amount of money, it worked really well for me. I did have to start prepaying taxes. But again, that helps when you have an accountant on your side, that's helping you do your books every month. And once I started making more money, I had to start making prepayments. And so I kind of evolved over the years. And then most recently I think you and I were discussing, and we can talk in a minute about that, I'm now an S-corp. So I pay myself and that becomes a little more complex.
Pilar: Yes. Agreed. Now, just for those of you who may not know what a DBA is --
Anne: Oh yes.
Pilar: -- what it means is "doing business as," so it is actually your registered, you register your name, your business name with whatever state you are living in, and you become like your own organization. So it, it actually, it really depends on the state that you're in because every state works differently. And so you create this entity, so you can have a way of collecting checks and payments. And then when people come to your business, you can give them that name, whatever it is. And that is your business name. You're not just Anne Ganguzza. You are Anne Ganguzza, a company.
Anne: Yep. Anne Ganguzza is a company name, like Voice Productions. And so a lot of times that does a lot for indicating to your clients that you are truly a professional, and you're not just a hobbyist here.
Pilar: Yeah. It's the official, it's official, it's an official registration of your business name. And that's really important when you're doing business and you're not just saying, oh yeah, well, yeah, it's like $.25 a word. And here -- you have to be able to present yourself as a business because we are a business first and foremost.
Anne: And at the end of the year, right, or when you have to provide w nine forms for people, you can use an EIN number instead of your Social Security number, which is a big advantage. So that EIN number is your federally assigned employer identification, if I remember correctly.
Pilar: Employer Identification Number, yes.
Anne: Employer Identification Number. So you don't have to share your Social Security with every Joe that you work for.
Pilar: Tom, Dick, and Harry.
Anne: Yeah, exactly. Exactly.
Pilar: Yeah. And that's also, that makes a big, huge difference further on down the line. Because I became an S Corp as well recently, just very recently, and this has taken me years and years to understand.
Anne: Did you get help from a lawyer or an accountant or?
Pilar: I got help from an accountant. My accountant is my go-to person. I have a relative, who's also a tax lawyer. So that helps. But really, and truly it's, it's so important. And what you say, what you were saying gives me a great idea too, is to really have a close relationship with your accountant. I don't have her on retainer, but that's a really good idea. I call her for anytime I have to sign a paper that my agents send me. I always call and I check with her first. So we know what it is that I'm getting into because there are lots of things I don't understand. I mean, before, when I said, yes, you are first and foremost a business, we are voice actors, but that is our business. So we have to be able to do both. We have to study the craft, which is what we were talking about, you know, over the past couple of weeks. But we also have to know how to conduct ourselves in a business-like manner.
Anne: Absolutely.
Pilar: And that means knowing what you spend, how you spend it, having a competent CPA who will be able to help you and go over things with you. So for example, one of the things that I didn't know was that there are a lot of expenses that we have that we can deduct.
Anne: Yes.
Pilar: But you have to know which are the ones that you can deduct. You can't just deduct everything willy-nilly. That's what you check with your accountant for. And so my accountant every year gives me an organizer, and it's really helpful because it just, there are categories of expenses that I can look at that I may not even have realized that I can deduct.
Anne: Does this change yearly? Do you get a new one every year? So --
Pilar: I do.
Anne: Because the tax laws change every year. So my accountant has to stay up to date. And of course that's why I pay her. So she knows the latest. How much can I donate every year? How much can I deduct for this? How much can I deduct for that? And is this a deduction really? And so the cool thing about having one on retainer, and it's not as expensive as you might think, because she just, she's very good at it. And she does it. She just does it for a set number of clients. I'm not that complicated in reality. My business is not that -- it's not like I have retail that I'm shipping out every day and I've got all sorts of vendors that I'm purchasing from. Literally it is essentially my expense is buying equipment and things for the office and things for my business and literally people paying me. And that is a simpler business than let's say a corporation that has employees and all that sort of thing and health benefits.
And so for her to manage my account, it's fairly, for what she does, inexpensive. And the nice thing about it is that because she manages it monthly, by the time tax season rolls around, usually most accountants are crazy busy. And I remember like panicking because before I had hired her on a monthly retainer, it was the end of the year, and I was scrambling, right? Oh, here, here are my forms. And I would make copies, scan my copies of everything, and send it to her because she was not local. I used to go to a local one, but you know, now she's, she lives in another state. And so I would make sure I, back in the day, faxed it, sent it securely to her so she could do the taxes, but then it was like, you know, nail-biting because she was working on other clients as well. And there was that deadline.
And so she would be so crazy busy that I would be like, oh my God, did you get, you know, and then -- do I owe, do I owe? And if I, oh, I have to prepare or am I getting anything back? And so that's whole that nail-biting period of time, where a good month or two, even if I started at the end of January, here are all my forms. She was insanely busy. So she got to me when she got to me. And so sometimes I'd be waiting a month and I'd be like, do I owe money? So ultimately it's so much nicer now that she already knows my accounts well, and we meet periodically so I can explain, you know, things, money that comes in. What was that for? Where should I categorize that?
And basically that's it. And she manages by the way, not just the income coming in in one payment, because I allow my clients to pay me either PayPal credit card, ACH. There's multiple ways that my clients can pay me. And she handles all of those accounts, including my personal account that comes in so that we can make sure that I get the best tax advantages that I can for the year.
Pilar: Yeah. That's really important. One of the things that I think is for me, so my brother-in-law used to do my taxes way, way back when, and then one day he basically said, okay, Pilar, you're all grown up. You need to start doing your own taxes. And I was like, what? I was incensed. I was so hurt. And then I was like, yeah, it's called being a grownup. So I went to TurboTax, and I think I might've done one year.
Anne: Yeah. We tried that too. It gets complicated when you're personal. And then business.
Pilar: The reason why I mentioned is because that's exactly what happened to me is that I thought that I could do it all because -- I know a lot of people who do their -- I know a lot of actors who do their own taxes. And I think that that's awesome. And if you are really good with numbers, and you understand bookkeeping, good for you. But if you don't, and this is something that a really good friend of mine taught me, if there is something that you can't do when you're just butting your head against the wall, there are people who know how to do it better than you.
Anne: Oh my gosh.
Pilar: So stop be trying to invent the wheel.
Anne: Be smart, outsource.
Pilar: Exactly. Go and get an accountant. There are plenty of accountants who are specialized, and that's important, to find an accountant who is specialized in the kind of business that you have.
Anne: Oh yeah, absolutely.
Pilar: And so they know what to deduct, and they know that they can -- you know, so if you have a business, and you're inside your house, they can figure out, you know, I can take this much for, in terms of using my business in the home, because there are ways to structure that, and they know how to do that.
Anne: Right.
Pilar: But trying to do it on your own when you don't know what you're doing, and you're using a platform, I can't tell you the amount of times I messed up on TurboTax.
Anne: Oh yeah, oh yeah. Well, and us too, it's a nightmare. It is a nightmare.
Pilar: And it can cost you a lot of money. And luckily my brother-in-law would, he would like, you know, drag me from the edge. And finally I said, okay, that's fine. I get it. I'm hiring an accountant.
Anne: Yeah. Well, it's like one of the, I can do it. Yeah. I'll save money if I do it. In reality, by the time you've finished doing it, you've spent so many hours trying to learn --
Pilar: That you can't get back --
Anne: -- and then do it --
Pilar: You can't get back those hours.
Anne: And plus you're not up on all the tax laws. That's the other thing. You could be making deductions that you did not, or you're, you may not know about deductions that you can take. And that is so, so important, which is why for me, I'd rather invest it. I consider it an investment. My accountant is an investment in my business ,and she helps to -- she explains things to me and has to tell her, like, what does this even mean? And I'll just say, hey, look, I'm not proud. We are entrepreneurs. We own our own business. If you do well at that business, I remember the first few years, of course I showed a loss, right? And the government expects that right for businesses. So you can have a loss and I actually did have a loss, but when you start making money, and then if you start making a certain amount of money and you are a self-employed, they look harder at you.
And so it is not inconceivable that you will get audited, even if, you know, I mean, look, I'm on the up and up. I mean, my accountant's on the up and up, and I got audited a couple of years ago, and it's not fun, but because we were organized, and she had done my taxes for so long, it was super easy for us to submit, like they thought we were missing paperwork or they wanted proof for some donations or whatever it was. I can't even remember what it was, but we had it. It wasn't a big deal at all, but anything that goes through the government, as you know, takes that amount of time. And she was able to like send the certified letters, send everything that they needed.
And then of course they didn't receive it. I got another letter that said, blah, blah, blah, or I owed, and I needed to pay. Whatever that was, she was able to take care of it for me. And it was just, uh, it was, oh, it was just a godsend because otherwise I would have had to do it myself. And it's scary when you get audited. You're like, oh my God, did I do something wrong? Of course I didn't do my, you know, she did it for me. I'm like, oh my God, did something happen? Did we take a deduction that shouldn't have happened? Of course not. So, but you've got to prove it. You've got to prove it to them. So.
Pilar: And they know, because they've been doing it for so many years, they know how to go up against the government and say, no, no, it's right here.
Anne: Line here. I deducted this. Yup.
Pilar: Yeah. They know the lingo. They know how to do it. And also something that I learned this past year is that they are behind a good six weeks.
Anne: Always. If, if not more.
Pilar: If you ever get a letter from the government, they're responding to something that happened six to eight weeks before this. And so if you're like panicking going, oh my gosh, I don't know what to do, that's why it's always great to have an account in your corner, knowing what's going on, because then everything is up, and it's out in the open. Trying to be underhanded is not great. And if you make a mistake, you're setting yourself back and you're giving yourself a headache when guess what? You could be spending time in the booth.
Anne: Sure.
Pilar: So like, for example, in this organizer that we were talking about before, it gives you ideas and things that you can deduct. So let's say you haven't really paid attention to your stuff. You can go ahead and look back. That's why a credit card is so important because that's where you see the spending, and you can see, oh, I spent this money on that. Or, oh, I can actually deduct this, but you have to have your receipts all in one place. That's why you want to have a separate credit card.
Anne: Oh. And I try to use that credit card for every single transaction. And that includes healthcare as well. Because as part of my business, right, taking care of my health, I have a deductible. I have a healthcare plan through my husband, but what I pay that's not covered by that is also deductible. And that can be towards my tax year. And so if I pay for everything on that credit card, it's super simple to organize for my accountant. Just almost everything goes on the credit card as a matter of fact. I think I only write, I only write checks and that and checks really, the one credit card and checks, and it's been probably the easiest thing ever.
I think the fact that I accept multiple credit cards coming in and checks coming in and PayPal and Venmo, I accept all these other incoming pathways of income, that's harder for her to organize than the fact that I only pay out on my credit card or I write a check once in a while. It's funny because I almost don't know how to write a check anymore.
Pilar: I know I never do. I almost never do. It's really funny.
Anne: And who mails a check? I mean, like oh my God.
Pilar: Well, what about when you're sending it to the IRS?
Anne: Yes, exactly.
Pilar: Then you have to certify it and make sure they get it and return receipt. That whole business.
Anne: Goodness. Yep.
Pilar: Something that I started doing too for myself, even though I hand everything over, but I like having my stuff organized. So this is, and I'm going to tell the VO BOSSes, this is how I used to do my taxes. Just so you realize --
Anne: The shoe box.
Pilar: Practically.
Anne: Yeah.
Pilar: So I would have different folders. I had different folders, but I mean, we're talking less than three years ago, I was still doing this. All right? We're not talking like 10, 20 years ago. And I would use either my laptop calculator or I would use my iPhone calculator to add up all my gas. Okay. That's how backward I was.
Anne: Oh. And mileage too, remember mileage like, when you would travel anywhere, to a studio.
Pilar: Back then. Yeah. But back in the old days.
Anne: Before the pandemic.
Pilar: Right, exactly. Before the pandemic, but I would literally add everything up, and then I would give her the totals, you know, how much I spent on clothing for auditions, on headshots, and resumes, blah, blah, blah. And there's so many now on the market, but the one I use, and I'm actually thinking of changing to QuickBooks, but I use Quicken. So Quicken is great for you to -- and it's basically, it doesn't really matter what the program is. It's basically for you to be able to see A, you can balance, you can balance your budget that way, which is really important, but you can also see, and it can give you summaries of what you spent over the year.
So then you go, oh, okay. This is how much I'm spending on groceries. So this is how much I'm spending on takeout, since you've got all these categories and then you can sit there and you can look. Okay, do I really need, you know, in terms of creating a budget for yourself, because you know, we're still kind of going through this situation and where people, jobs and whatever -- the whole market has changed. So it's really great to keep an inventory of what you're doing, and for tax time, then you've got it all in one place. You just have to say, oh yes, okay. This is how much I spent on classes. This is how much I spent on new equipment.
Anne: Yep, coaching or yep, new equipment, studio costs. I have an entire folder when I built my studio for just studio costs.
Pilar: Exactly. And all of that of course is deductible because it's your business. And so that way, when you've got a program like Quicken or QuickBooks and there's, you can keep track of it through waves. There's the waves app, the Mint, there's, there's so many, Next Wallet, you just keep track of what you're spending and also what you're earning. And I think it's really helpful because really, and truly, we are voice artists. We're also entrepreneurs. We're also our own business. If we treat ourselves like that, if we treat ourselves like serious business people, other people are going to, when they look at our business, they're going to go, oh, okay. She knows where this is. She knows how to, you know, the invoice, this, this is how I do my business. And that is something that, you know, you can go home at night and go, yeah, I'm a business. I'm an artist doing my business. And that's really important. And then when tax time rolls around -- tax time -- you're not freaking out. Right? Because you've got your stuff organized.
Anne: That's the biggest thing. BOSSes, if you take anything away from this, it's being organized sooner rather than later, all through the year, every single day. Be organized, track those expenses and have that account, try to keep it as simple as possible. And like I said, we're actually kind of lucky. We're not as complex as some corporations that provide healthcare and hire employees. I mean, I outsource, so that's a whole other thing because I pay people as well. But honestly, compared to like a normal corporation, it's fairly simple what we do and what we need to keep track of.
So I think that if you can give yourself a certain amount of time each week, each day to just make sure those expenses are categorized, they're organized, they're put into financial software, you talk about QuickBooks or Quicken -- I used to use Quicken, but now I use QuickBooks online with my accountant. We can both go into the same account and look and try to reconcile. If she has any questions, she can ask me. And it's a really great way to just keep on track with things. That's the best thing you can do is keep on track because by the end of the year, the last thing you want to do is to be scrambling.
Pilar: Yeah, exactly. It really is great to be able to see what it is that you do in your daily life. We couldn't really do this before the age of digital. And so it's really nice to be able to see, because we're freelancers at the end of the day. Unless you have a nine to five job doing this, you don't really know how you're spending your money. So it's, it's a really nice sort of bird's-eye view of seeing, okay, this is what I spent on gas. This is what I spent on takeout.
Maybe I can cook a little bit more at home if the money situation, if it's that time of year, when there're not a lot of auditions coming in and you're not booking work as much as you'd like to, then you can say, oh, okay, I can shave a little bit off of this. Because you see, and you have your totals and you see what you've spent for the month. You've, you've already figured out what your budget is, so. And it takes time. I didn't come to this, these realizations overnight. It took a lot of blood, sweat, and tears to figure it out.
Anne: And tears.
Pilar: You know, but there're great resources online. You know, I don't know if people are aware, there's this organization called actorsfund.com and you just have to basically, you know, you can do orientation sign up as an actor because we are actors, and they have all these great courses like budgeting nuts and bolts, how to create your own budget.
Anne: Oh, nice. How do people get there again? What is that, actorsfund.com?
Pilar: Actorsfund.com.
Anne: Awesome. Great.
Pilar: There're all sorts of programs. I mean, if you live in New York, there's ways you can, they talk about housing. They talk about mindfulness meditation.
Anne: Because after we do our taxes, we need that.
Pilar: We need to lay down.
Anne: We need mindful meditation to calm down. I also want to say though, that not just for full-time entrepreneurs, but for people who are doing this part-time, I remember when I did it part-time, I didn't at the time have enough opportunity to make a certain amount of money so that the taxes were simpler. If I made a thousand dollars in the year, did I actually report that as a business income? Not necessarily, but if you are part-time, and you intend on either you're getting enough work, and you're intending on going full time, getting that business bank account, figuring out if you're going to be an LLC or an S-corp or DBA, whatever that is, I think the sooner you start that, the better.
And it's always good to be mindful of keeping your accounts separate. So if you are doing this part-time, maybe get, if you're not incorporated yet, or you're not a DBA yet, just get a separate credit card and only use that. And then maybe see if you can get a different bank account. Hopefully your bank will allow you to get a business bank account so that anything that comes in or goes out, goes through that account. So start early with that.
Pilar: And check out, I think it's, Next Wallet. You can actually do comparison of credit cards to get really good deals. So you can get a credit card that can give you points, and you can even pay for some of your bill with the points.
Anne: Yeah, that's, that's what mine is. So whenever I use to buy, I get money back at the end of the year. I get like 2%, 3% back. And that's typically what I do because I don't want to pay my full bill. Right?
Pilar: There are a lot of resources out there. You just have to look for them to help you. And it does get easier with time.
Anne: It does get easier, guys. BOSSes, you can survive tax time. Pilar, and I are here to tell you that. Get yourself organized.
Pilar: It'll go from "it's Tax Time" to "it's tax time, yay."
Anne: There you go. There we go. Wow. Good topic. Not always one that I love talking about, but hey, it's a necessary topic. And to be BOSSes, we have to move forward and get prepared and pay those taxes and survive the season. So BOSSes, we have the faith that you can do this. I'd like to give a great, big shout-out to our sponsor ipDTL that allows you to network and connect like a BOSS. Find out more at ipdtl.com. You guys, have an amazing week and we'll see you next week.
Pilar: See you next time.
Anne: Bye.
>> Join us next week for another edition of VO BOSS with your host Anne Ganguzza. And take your business to the next level. Sign up for our mailing list at voboss.com and receive exclusive content, industry revolutionizing tips and strategies, and new ways to rock your business like a BOSS. Redistribution with permission. Coast to coast connectivity via ipDTL.