Lesson 4 of 4
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Other Considerations

Collin Gabriel February 2, 2022

Marissa Danley (00:00):

Okay, moving on, odds and ends. We’re gonna make it on time. Um, I told you we were gonna talk about estimated payments, so I’ll throw that out here. So our tax system is designed to be paid as you go. So that’s why when you were working as an employee, they take the money out as you’re going because, well, you might not have it all at the end of the year when you need to pay it. So what they really want us to do as self-employed people, um, they want us to pay as we go as well. So when you’re earning the money, they want you to pay your taxes. So again, the employees have the paychecks, but we should be making quarterly payments. And in reality, the reason to make the quarterly payments is really just so you don’t have a huge tax bill. Come April.

Marissa Danley (00:44):

In my experience, it’s a lot easier to manage if you’re making those small payments through. I just saw one hand go up, um, <laugh>, it’s easier to make ’em throughout the year than cry at my desk when I tell you you owe $40,000. Um, the other thing with it though is the IRS and Oregon and any other state will charge a potential penalty and interest if you don’t make those payments. It’s pretty small, you know, but they do want you to make ’em as you go. And so again, you can incur the penalties and that is something that I do work with my clients. Just getting in that routine of, Hey, that’s not really my money. I know it looks great in my bank account, but I gotta send it in. Um, and your business may vary. Like for me, I make 80% of my revenue in 10 weeks.

Marissa Danley (01:31):

It’s insane. I work like crazy. And then the rest of the year I go to Costa Rica, <laugh>. But, um, yeah, you, you gotta just kind of track what you’re doing because maybe you need to make more payments in one month than, you know, one quarter than another. So again, yes, it’s good to track bookkeeping for tax purposes, but it’s also good to track everything, you know, do all your bookkeeping because that tells you your business story. It tells you how you’re doing with it. And so maybe you do need to pay a little bit more, a little bit less than each quarter. Um, and again, that brings me to record keeping. It is essential. It’s, uh, important for both your tax purposes and your business health. And it helps you make better decisions, knows if you’re doing okay. Um, and what I tell people is, you know, whatever method works for you, do it.

Marissa Danley (02:18):

Like the important thing is just getting that information documented. You can use a bookkeeper, you can use a spreadsheet, you can use software such as QuickBooks, FreshBooks, wave. Um, you know, I, I work with a lot of artists and musicians and a lot of times people just don’t wanna deal with the numbers. And I’ll tell you one of the best things I ever had brought into me, it was a, a client who was a musician and she just couldn’t deal with the numbers. So she took an old Willie Nelson album and she made it into a book. And so she had everything handwritten in this Willie Nelson album cover, just so she felt like Willie Nelson could like inspire her to keep track of it. So whatever works for you, you know, just make sure you’re documenting. Um, again, I feel like we’ve covered this, so I’m not gonna go too much into it. This one is the one I do wanna talk about real quick. So

Speaker 2 (03:14):

Marissa, quick question before you start. Yep. Uh, Janice wants to know how do you pay the IRS through their website?

Marissa Danley (03:22):

Oh, that is a great question. Yes, through their website. And, um, I actually have a PDF of that and if anybody would like that PDF of how to make those payments, um, email me and yeah, you make it through their website, but I can, I can happily send you the pdf f if you want. Um, cuz it definitely gets a little confusing. So, real quick on this, what is gonna happen is things like Venmo, if you have a business Venmo account, they’re now going to send you what’s called a 10 99 K. If you make over 600 bucks from them, it used to be 20,000, but now it’s 600. This has caused a lot of confusion for people because a lot of times people mix their Venmo, their personal and their business together. Um, you need to keep them separate because technically the business transaction should be on a business Venmo account.

Marissa Danley (04:20):

That’s where you’re gonna get this form. You’re not gonna get a a tax form if you’re using a personal account for people paying you back for their portion of dinner. So in the interest of time, I’m gonna throw that there. It’s not as scary as it that may have been in the, in the media. Um, COVID provisions, we don’t have a lot of those left. P P P came out a couple years ago. Um, it’s not considered income. Just a recap, if anybody’s still concerned about that. The E I D L, if you got an economic injury disaster loan, those were provided from the sba, um, you’re probably making those payments just so you know the interest. If you’re paying interest on those, it is tax deductible. That is a thing to note there. Grants, people still ask me about this because the grants are still coming out.

Marissa Danley (05:11):

If you do get a grant, uh, and it is a business grant, it’s for your business, it’s generally considered taxable income. So you get the grant, you buy the stuff, um, it nets out. So that means that it actually doesn’t have a tax effect because you’ve spent all the money, you have an expense, but it does have to be documented on the tax return generally as an income and expense. So just fyi there, um, the employee retention credit, there’s a lot of, I, I had a guy call me the other day trying to sell me services about this. I kind of lost my mind on him, but, um, just so you know, their employee retention credit is getting a lot of press right now. If you have employees, you may have qualified for this, but it had to have been done on your 20 2020 or 2021 tax return, your payroll returns. So it’s something you wanna check with your payroll processor about and see if you did qualify for it. And if you did indeed get it, if you did not, for whatever reason, you can amend those reports until 2024. Um, that being said, oh, I have a little video, but I’m gonna skip it. Resources, there you go. There’s a few resources for you. And I think it is exactly five o’clock. I think I did. All right. <laugh>,

Marissa Danley (06:40):

Any questions? Uh, anything else you wanna chat about for just a second here?

Speaker 3 (06:46):

You were saying the grants may or may not be taxed, um, and then said that the expenses are normally for expense and then that evens out by exemptions, is what I was trying to remember.

Marissa Danley (07:00):

No, it’s not exemptions. It’s, so let’s say I get a grant for 500 bucks that grant goes on as income, self-employment income, but then I buy a computer with it mm-hmm. <affirmative>, so then I have an expense of the same amount. So then I end up with a zero tax effect. So I’m not paying tax on any of it, but I still have a computer. That’s pretty cool. You know, so it does generally even out, but it is something that you need to let your tax person know about if you get one.

Speaker 3 (07:26):

Oh good. Because yeah, we’re not spending it all at one time, so it was like, oh gosh, if it’s rolling out and I didn’t wanna have to hurry up and spend this freak me out.

Marissa Danley (07:35):

Well, you, you could maybe need to, so, because it is in one year. Yep.

Speaker 3 (07:40):

<laugh>. All right. All right.

Marissa Danley (07:42):

Let’s talk Roberta

Speaker 3 (07:43):

<laugh>. Yes. Yes, I’ll be, yes.

Marissa Danley (07:46):

Sounds good. I think I just saw a question in the chat, which I’ll jump, I’ll just jump to if that’s okay. Erin, I think I’m, I took over your job. Sorry. Um, are IDAs taxable generally they are one of the grants that are not considered taxable. They’re considered what’s called a gift, so, uh, generally not,

Speaker 4 (08:07):

No other questions.

Speaker 3 (08:09):

I did have one about, uh, I took your in-person class too, but, um, it was with the, the marriage, uh, I married. And you’ll always file together or do you have the opportunity as a sing a sole member, L l c and your partner? My partner, my husband to file separately. But I remember something from the first class you said you always file together.

Marissa Danley (08:34):

Um, no though you don’t have to, you always get the option no matter what. So you can file jointly or you can file separately. So filing jointly, all the income gets put into a pot. You file one tax return, so your self-employment and then your spouse’s income is all gonna go together. If you do separate, you file two separate tax returns with your own stuff and it’s not put together at all. Um, however, the way that the tax code is written, it’s not generally beneficial to file separately. The tax rates higher, your deductions are limited. It’s really incentivized for people to file jointly. So we would wanna start there if possible and see, uh, kind of what works out better. Yeah.

Speaker 5 (09:18):

Marissa, can I ask a quick question? Mm-hmm. <affirmative>, I hope it’s quick. Um, so with uh, our structure, my wife is the owner and I, I would be like the employee. Usually I run the accounting to like clear out tax payments to like an employee. So as not the, uh, the owner, the only problem is that she’s, um, when, where do her social security taxes come out? Is it in the wash of the taxes at the end of the year or does she have to figure out a way to do that separately? Because that’s been a concern for a couple years now.

Marissa Danley (09:51):

So that’s what the self-employment taxes, it’s the social security and Medicare payments. Yeah. So whenever she’s paying that self-employment. Yeah. And it’s not a, it’s not a tax deductible expense that self-employment income or self-employment tax. So it, it shouldn’t be in the, in the accounting usually if you’re a self-employed, uh, sole proprietor or a single member lsc, if you’re, if you’re an S corporation or something like that, potentially it could, but generally the only tax payments that are deductible as a sole proprietor or single member L L C are your tax payments to say the city of Portland or the Trim District. But those self-employment tax payments that you’re making or not deductions

Speaker 5 (10:35):

Objections. Okay.

Marissa Danley (10:36):

Yeah, good question.

Speaker 6 (10:40):

Um, I have a question. When you were talking about the grants and saying that if I was kind of confused by that, if I use all my grant money to cover payrolls, I didn’t lay off anyone during those years. Does that, um, is that still considered like income and taxable?

Marissa Danley (11:03):

What, what grant was it? Was it a P P P?

Speaker 6 (11:06):

No, uh, well those I did get, but, um, the, like the Prosper Portland.

Marissa Danley (11:12):

So generally, yeah, it would’ve been considered the Prosper Portland would’ve been considered income, but then cause you paid the employees, you had that expense and so it actually nets out to be a zero tax effect for you.

Speaker 6 (11:27):

Oh, cuz it just went out as payroll.

Marissa Danley (11:29):

Exactly. It just went out the door. Yep. Right. The P p P grants were a little bit different because we got the grants, we did not have to include them as income, and then we got to expense that, so we actually got a bit of an extra bonus. Um, but the regular grants just, just kind of washed themselves out.

Speaker 6 (11:50):

Okay. I don’t know, does that help that? Right. Then? I don’t know.

Marissa Danley (11:54):


Speaker 6 (11:55):

Okay. So those probably, those wouldn’t have been counted as sales then?

Marissa Danley (12:01):

It would’ve been counted, it could have been counted as sales. It just depends on what income or what category your, your accountant put it in. Um, but it would go into gross income one way or the other. Generally. I mean, there were some grants that were not considered taxable right. At the, the covid time. So without knowing the specifics of the grant, but general rule of thumb, yes they are except for IDAs.

Speaker 6 (12:22):

Okay. So the P PPP were was not tax was taxed or

Marissa Danley (12:26):

Wasn’t, was not, was

Speaker 6 (12:28):

Not Okay. All right. Was not. Thank you. Yeah,

Marissa Danley (12:30):

I know. I, I feel like sometimes I al people ask me questions and my answer are always like, well, it depends yes and no, maybe <laugh>. So yeah, there’s a lot of moving parts for sure.

Speaker 7 (12:44):

Marissa Jr here, hey, as owner of a part, owner of a llc, before our accountant used to give us coupons for the estimated payments throughout the year. Um, is that, at what point does it make sense for businesses to do that? I mean, my wife used to hate it, but it was like, it saves the end of the year.

Marissa Danley (13:03):

Yeah. Anytime you’re going to owe greater than a thousand dollars for the year is when you wanna start doing that. Okay. So yeah. Yeah. As, as much as you possibly can. And the thing is, you know, if you overpay then you either get it back as a refund or you roll it forward to your next year’s estimates. So it’s not like a, you know, use it or lose it kind of thing. They don’t keep the money. So if you do overpay, you know, there’s a way to get it back. But yeah, you, if you’re gonna owe more than a thousand dollars, they can’t hit you with a penalty and interest. Yep.

Speaker 4 (13:37):

Cool. Any other last questions? We should probably, uh, consider the time now it’s 5 0 8. Anything else? No. Well, thank you all for joining us to this afternoon, evening. And remember, if, uh, you need assistance in bookkeeping, uh, tax preparation assistance, reach out to your resource navigator. Aaron, Danielle, myself, we’re here to help you, assist you. Um, uh, thank you all for, for joining us and uh, we will have these meetings. Uh, we’re gonna try to have them every other month, uh, I hope <laugh>. So, uh, there’ll be different subjects, but we’re gonna try to have, uh, meetings, um, in person in the Portland metro area and virtual for Regionwide. Um, because as you all know, we are covering Washington, Idaho, and Oregon now. So it’s extremely exciting. So we’re gonna try to make, uh, everything relevant to the region that we’re serving. So thank you all and, um, Marisa, thank you so much for your time. Thank you. And again, if you have additional questions, shoot ’em to Aaron, Danielle, myself, and then, uh, we’ll get a answer to you and then make sure that you’re checking in with your resource navigators when you need to. Um, so Colin, thank you for joining us. It was good to see you all. So have a great night. Uh, I’m gonna stop the recording. Thank you everyone.