Episode 90: Questions To Ask Your CPA & Tracking Expenses for Tax Time

It’s that time of year again. Something we all have to do, but none of us like it. That's right, it's TAX TIME. And that’s why today we are welcoming Jake Randall, the CEO of Taxbot. Taxbot is a mobile app that focuses on automating your expense and mileage tracking and staying IRS compliant. This is something we all need to know since we all deal with taxes. There is an easier way to keep track of your business and new laws you need to know about. Listen in for all the details! Biggest Takeaways You Don’t Want To Miss: How has the structure of the tax system changed for small business and solo-preneurs? A lot of the news on corporate tax doesn’t apply to us, we’re mostly just small businesses. The biggest change for us is a new bonus deduction. You get to take your income and multiply by 20% and you get that back. For example, if you make $50,000 in a year you can multiply that by 20% which gives you $10,000 as a deduction. Plus, all rates have mostly gone down, which is great for all small businesses. Have there been any changes that aren’t so good for small business owners? Overall the new tax laws are great, but the entertainment deduction isn’t the best for us. You can’t deduct certain entertainment events. You can still deduct meals, but if you’re taking your clients out for just entertainment activities they may not qualify. What are the chances of being audited? They are actually pretty low in any given year. But what you don’t realize that it can compound. You have a chance every year. Mathematically, if you’re in business for about 20 years then you have a 1 in 3 chance of being audited. This increases as you grow, if you make about mid-six figures then you’re more likely going to be a target for auditing. How can Taxbot help you with keeping track of mileage and receipts? The app can automatically track your trip. It knows when you start driving and you can then easily track your work miles. Plus, it will match up your bank transactions with business expenses. It will prompt you about certain transactions, ask you details about them (for example, with whom were you meeting and what was the topic?) then you can confirm them in your Taxbot. It makes all the headache of keeping track of these minor details so much easier. Show Highlights: Don’t miss out on the new 20% bonus deduction for small businesses [2:30] The difference between expenses and deductions [8:00] What you need to know about the possibility of being audited [9:20] How did Taxbot get started? [14:30] What you can do to learn more about taxes and how to drive your own tax conversation with knowledge [22:00] Links: Learn more about the benefits of Taxbot and connect with Jake Randall at Taxbot.com Also, don't miss some great educational information and video's on the Taxbot Mileage and Expense Tracker on Facebook! Downloadable Offer: Jake is offering a 14 day trial for Taxbot. You can watch the magic happen for yourself and get the most out of your taxes.  Simply go to taxbot.com/bella to get start your trial today. Also, get a risk free 50% off of Taxbot's educational tax course when you sign up. Plus you can bundle them for even more Share The Show: Did you enjoy the show? We would love it if you subscribed today and left us a 5-star review! Click this link –Bella In Your Business Click on the ‘Subscribe’ button below the artwork Go to the ‘Ratings and Reviews’ section Click on ‘Write a Review’ Transcript: This is episode 90 of Bella in Your Business. Welcome to Bella in Your Business, where Bella will discuss anything and everything about your pet sitting business to help you land on target. So get ready—Bella’s got your chute. Let’s jump. Welcome to Bella in Your Business. My name is Bella Vasta, your host, and today, if you’re in my Facebook groups, you might have seen a certain video go around a lot around January. It was about all these tax changes and there was this really high-energy guy with a lot of awesome information. And you know what, guys? I reached out to the company and got them here with us today. I want to blow the lid off of all this tax stuff that we have to keep track of as business owners. I mean, it is the most unsexy, boring, overwhelming, confusing stuff. We’ve never talked about this on the podcast yet, so today I’m excited to bring you a topic. The person I have on with me today is Jake Brandle. He’s actually the CEO of Taxbot, a mobile app that focuses on automating your expenses and mileage tracking and staying IRS compliant. Jake, welcome to the show. Hey, thanks for having me. It’s been great to get to know you and I love what you’re doing. Thank you so much. So I just want to talk everything taxes, and feel free to go off-topic because we often do that on this show. I’m all about the conversations and seeing where they lead us. So let’s start off with all the changes that have happened. How has the structure of this tax system changed for small businesses and solopreneurs? That’s a great question. So that’s actually the biggest change to the whole system—the way that the system works in general. The news has been talking a lot about corporate tax rates and stuff, but really that doesn’t apply to most of us small business owners. Not many of us are set up as C corporations; that’s really for public companies or companies raising a lot of money or unique situations. Most of us are running it like we’re just out there hustling, trying to make our business work. Some of you may be set up as an LLC or an S corp, but most people are just running it as their business. They file it on their tax return and let their accountant take care of it at the end of the year. Now, the biggest change for our type of people, unless you’re a corporation, is that they created this new special bonus deduction, which is really kind of cool. You get to take, essentially at the end of the year, when you figure out how much money your business made, that number and multiply it by 20%. You get to take that deduction—an extra bonus deduction that just kind of appeared out of thin air. Let’s say you make $50,000 in your business at the end of the year. That means you can take $50,000 times 20%, which is $10,000, and you get a $10,000 deduction on your personal tax return. There are some rules if you make a lot of money and are in a specific type of industry, but for most of us, it’s just this magical new 20% deduction. How did this come about? You said it was out of thin air. Well, there was a lot of debate back and forth—Donald Trump on tax reform—but really it’s not even Donald Trump’s deal. At the end of the day, the House and the Senate get to kind of do this. Since the Republicans had a majority and a tight window where they could do some stuff, they were able to get something through. There was a lot of debate, and things were changing all the time. I never knew what was going to come out in the end, and frankly, I was kind of worried most of the time. But it ended up being really good for most people. They lowered the corporate tax, and that was their big thing. At the last minute, they said, “What about all these small businesses, the backbone of our country?” Since we don’t have a corporate tax rate, they said, “We’ve got to do something there.” Almost everybody’s taxes—the rates got lowered, and the brackets got bigger. It’s very unlikely that you’re going to pay more in taxes. You’re almost always going to get a lower tax rate, plus you get to lower your taxable income because of that new deduction if you’re making money. That deduction’s amazing. Now I feel like I should put a disclaimer in here and say, anyone listening right now, we are not giving tax advice. Go talk to your CPA. That’s absolutely right. Everybody’s situation is different. Here’s an interesting fact: we did a survey of 3,000 business owners and asked them how they filed their taxes. Forty percent said they filed their own taxes, another 40% said they use a tax preparer but are unhappy with their service, and only 20% said they really like their accountant and feel like they’re getting the best deal. The important thing here—we recommend that nobody do their own taxes. There are a lot of reasons why: people make more mistakes, which means more chance of an audit. And those audits are real. I actually did a whole series on pet businesses that were audited by different agencies, even one with an auditor from the state of Connecticut on episode 20. She talked about what it’s like to audit businesses—it was incredibly insightful. So are there any bad changes to this new law? Overall, I think the new tax law is great. There’s a couple of surprising changes that happened that I wish didn’t. One of them is the entertainment deduction. Not every business uses entertainment, but I used to always justify it. I’d go play golf and talk business, so I could write it off. Entertainment looks like meals—going to lunch with a client still counts. But the big change is that if you’re taking your clients out to entertainment-type activities, those are gone. That’s pretty much it. There’s so much stuff that I remember when I first became a small business owner—I used to say, no joke, right at the beginning of January, I printed out all my bank statements, had a bottle of wine (maybe two), and my credit card statements. I’d go through and start highlighting. That’s how I did my expenses at the end of the year. Every year, I said, next year I’ll be better. And I never was. That’s why I got a bookkeeper. So talking about expenses and deductions—what’s the difference between the two? Expenses and deductions are a little different. Basically, an expense is whatever you put on your credit card for your business. Anytime you pay for something. Now, in certain cases, like entertainment, under the old tax law, you’d take someone golfing. You paid for golf,