There is more to personal finance than budgeting, saving, paying off debt.
There is a little big deal called TAXES. We have to deal with them year, after year, after year.
They never go away and even though the IRS does provide a lot of information to educate us– to many it is still way overwhelming to look at.
I want you to start thinking about taxes and taking action NOW versus waiting until April, so I invited an expert in this area to the show.
Her name is Amy Northard, but first I have to tell you something very important…
She is a Hoosier–she went to Indiana University.
Why do I bring this up? Because I am a Boilermaker and went to Purdue University. Those two schools are huge rivals so I had to swallow my pride and have her on anyways because I couldn’t negate the fact that she is great at what she does.
I figured you had to know that essential piece of information before you listened to the show (yes sarcasm included). Now you can move on with your life and listen :-).
What You’ll Learn In Today’s Episode:
- Her best piece of advice to make taxes less stressful and overwhelming
- Her hot tip for the 2015 tax year that involves the health care premium
- The best way to save for taxes for business owners
- The biggest mistake business owners are making
Resources From This Episode:
Get to know Amy:
FREE accounting resource for business owners:
Links to books:
I Will Teach You To Be Rich by Ramit Sethi (personal finance)
Profit First by Mike Michalowicz (business finance)
Are there any tax related questions that you want to ask so we can answer on a future show? Please be sure to comment in the comments section below!
Click on the arrow below to access the transcript:
[00:00:09] ANNOUNCER: Welcome to the Her Money Matters Podcast, the podcast to help you take control of your finances. Join your host, motivational money coach, Jen Hemphill as she shares with you practical, simple money insights into real life stories by women like you.
Let’s get to it!
[00:00:27] JH: Hey, hey, this is Jen! Thank you so much for joining me today, I’m excited to have you here. I wanted to share with you that I’ve decided to do something new on this show. So what I’m doing is quarterly, I’m going to be bringing experts in different areas of finance that I’m not well versed in. Trust me, there’s plenty of material and there is just absolutely no way that I’m going to just cover it by myself. That’s why I’m bringing experts to talk about this with me.
And to kick off the expert highlight, today I wanted to bring out a CPA, a certified public accountant, so we can talk all things taxes. Let’s face it, it’s nearing the end of the year and before you know it, tax season will be upon us and which is why I wanted to bring this to you way before the end of the year, not just to have the info before you need it but also encouragement to make sure that you don’t leave taxes for the last minute. Cause I know from personal experience I’ve had in the past, I’m getting better, I’m slowly but surely I’m getting better on not leaving things so last minute but I’m still working on this. It’s definitely a work in progress.
So I asked Amy Northard to join me today and you are definitely in for a treat. Let me tell you about Amy real quick. So Amy is a certified public accountant from Indiana. She works with creative entrepreneurs to make taxes and bookkeeping less scary so they can focus on the part of their business they love, the creative part right? She previously worked at a stuffy at a CPA firm and couldn’t see herself working there forever. Therefore, she created a job that she loves.
So let’s go ahead and meet Amy now.
[00:02:40] JH: Welcome Amy to the Her Money Matters podcast, I’m really excited to have you here.
[00:02:45] AN: Thank you, I’m excited to be here.
[00:02:48] JH: Well, I have to tell you, we recently connected — Amy and I — on an online Facebook group and I just really got a great vibe from her. So I've been looking for an accountant to have on here because what I want to do is start to feature some experts, money experts in areas that I don’t cover.
Despite her going to a rival school. I asked her to be on because I am a Boiler Maker if you didn’t know, I went to Purdue University and she went to — uh, this is hard for me to say — she went to IU, Indiana University and we are big rival schools. But beside that, I still wanted to have her on.
So I’m excited to have you here and I really appreciate you sharing your knowledge. I wanted to make sure we have this conversation before tax season because sometimes what happens, especially October, November, December, it get so crazy busy with the holidays and then January rolls around and all of a sudden we’re nearing tax season and it just hits us.
So I wanted to make sure that we have this conversation before it. Because I know whether you’re a business owner or a non-business owner, it can be scary. It’s good to be in the know enough to be dangerous while at the same time just leaving the expertise to people such as Amy and those in the field.
S0 Amy, I know we know the professional side of you but I’m curious about your niche. Why did you choose to work with creative entrepreneurs?
[00:04:25] AN: I chose to work with creative entrepreneurs because I came from working at a CPA firm where the clients were nice but they weren’t very — they didn’t work in fields that I was interested in. So it’s hard to stay engaged with your job every day when you’re not super interested in those types of fields.
I would read blogs in my free time and even set up a little Etsy shop just to kind of jog my creative side and I just love that world. That’s why I chose to work with creatives.
[00:05:07] JH: Okay, and what area — because you mentioned an Etsy shop, so what kind of crafty things do you do or you like to do?
[00:05:14] AN: Well that one, I opened that shop a long time ago but I only sold one thing out of it. But I knitted these salted little pencil purses. So I’ve always loved knitting, ever since I was in high school and still do it as a way to relax now.
[00:05:38] JH: Right, I hear you. How did accounting, tell me where did your love for accounting come in? Where did that start?
[00:05:47] AN: Well, my dad recommended that I take it in high school and I was like “Okay, whatever, I’ll take it.” I would rather have been in art class but I did that as an elective and I think the teacher is what really made it for me. I had two really awesome teachers in high school that taught accounting and made it click for me. So when I was deciding what I wanted to do in college, it just seemed like the natural choice.
[00:06:18] JH: Right, okay, that’s perfect. Now, of course we know about you, the accountant, we know you have a creative side but I want to know more about you. I understand you’re married and you’re recently married right?
[00:06:34] AN: Yeah, we just, last week celebrated our one year anniversary.
[00:06:38] JH: Wow, congratulations! So tell me a little bit more about the outside, you’re a wife of one year now and tell more about your personal side, whatever you want to share obviously.
[00:06:50] AN: Oh sure. Well, we can kind of talk a little bit about how I grew up around money.
[00:06:57] JH: Sure, yeah, that’s my next question.
[00:07:00] AN: Oh perfect. I’ll combine that then. My dad has always been a coupon clipper. Every Sunday he takes the coupons down to the basement and cuts them up and has done it for as long as I can remember. So I’ve grown up with him doing that and investing and being really aware of planning for the future and all of that.
When I got married last year, that was a fun experience because I kind of wanted to keep all of my money separated and we decided to, since we were working towards the same goal, we merged our bank accounts and that’s been going really well. Besides being a wife and a daughter, I like to do crafty things around the house and check out other small businesses that are local and meet with small business owners who — I love going to the farmers market, I guess could boil that down.
[00:08:18] JH: Awesome. Would you say that you’re a saver or a spender?
[00:08:26] AN: I would say that I am transitioning into being a saver. All through high school when I could drive, all I wanted to do was go out and spend my money that was my activity of choice. Since getting married, my husband pointed out that I was spending a lot of money on things that I didn’t necessarily need.
So I’ve been, since we actually even started dating a few years ago, I’ve been transitioning into being smarter with my purchases and not using shopping as my recreation.
[00:09:12] JH: Gotcha. So is he the saver? Because it usually tends to be in relationships, ones to saver, usually, one is the spender. You would say…
[00:09:20] AN: He is a hardcore saver. I have to drag him to the store if his shoes are falling apart so he’ll get new ones.
[00:09:30] JH: [Laughs] That’s funny. What would you say is your proudest money moment?
[00:09:36] AN: I would say probably when I paid off my student loans this year. It was earlier in the year.
[00:09:43] JH: Congrats.
[00:09:45] AN: Thank you. I paid for a lot of college with savings and paid as I go, as I worked through college but still had a big chunk of student loans that were hard to get away from. So instead of going on the vacations that we wanted to, we did smaller vacations and car trips and stuff like that and really focused on putting all of our extra money into paying off those loans.
[00:10:16] JH: Okay, perfect. Because I was going to ask, well how did you do it? Basically you still took vacations, you were able to still enjoy live and enjoy some time away from home but you just did it on road trips and you just spent less. You decided to just spend less on the vacations and using that amount or money, or the extra money for your debt and that’s awesome. That is awesome.
[00:10:42] AN: Thank you.
[00:10:44] JH: Who would you say influenced you the most in the area of money?
[00:10:50] AN: I would say starting out, probably my dad just because, like I mentioned, he’s always been the coupon clipper and always talked about the importance of investing. And even if it’s just putting money away into a 401(k), he’s always been really adamant that to make that an important thing.
[00:11:17] JH: Right, perfect. So you ready Amy? Let’s go ahead and talk taxes.
[00:11:23] AN: Oh yay!
[00:11:25] JH: Awesome! So I know, you and I know, taxes are essentially the biggest bill that you can have. We have a mix of listeners, some are business owners and some are non-business owners, so I want to make sure we cover taxes. Let’s talk about personal taxes first, we’ll just go a little bit to the basics. Tell me why you think we should pay more attention and be more in the know what our taxes, why is that so important?
[00:11:55] AN: I think it’s really important because if you’re not aware of what’s going on in your return and you just hand over your documents to your accountant or plug the numbers in to an online program and just pay what it says to pay, you could be missing out on tax deductions or credits and be way over paying.
So it’s really important to, even though those forms look really overwhelming, spend a little bit of time looking into what the lines mean, where you have numbers showing up and make sure that you’re getting all of the deductions and credits that are available to you.
[00:12:41] JH: Awesome, and yes, the key word “saving more money” because as I said, it can be your biggest bill.
[00:12:49] AN: Yeah.
[00:12:52] JH: To just piggy back on that, are there any — of course for more complex tax returns by maybe someone that has a simple tax return — are there any sites that you recommend to do them? I know there’s the H&R Block and all that but are there any specific sites that you like?
[00:13:12] AN: I haven’t used any myself but the majority of clients that come to work with me have used turbo tax. And I think that’s totally fine, as long as when you look at the end result, you can analyze it and be knowledgeable about it. Not just taking word for word that yeah, that they’re working correctly.
[00:13:36] JH: That makes sense. What would you say is the best piece of advice that you can give to anyone just to make it less stressful and overwhelming?
[00:13:47] AN: I would say to first start out by just creating a folder and maybe keep it in your kitchen or keep it in your office and every time you get a tax document, stick it in there. And when it’s time to do your taxes or meet with your accountant, all you have to do is pull that folder out and it has all of your documents right there.
[00:14:10] JH: Perfect, I like that. Cause that is something I did, for a long time I didn’t do it and then I’d be searching and searching all over and I couldn’t find it. And now what I do is, just to save on paper, I just scan it and I have a folder on my computer where I have all those documents and sub documents. I’m a little anal on that! I just kind of separate it for what it is especially with business and stuff.
[00:14:40] AN: Oh yeah, I think a lot of people think they have to keep the paper copies of everything but the IRS is totally fine with having copies of receipts or the tax documents as digital images. As long as you’re able to track them down when you need them.
[00:14:59] JH: Right, right. And that brings up a point because I — and obviously you’d be able to answer this — but for a while there is a misconception or confusion from just hearing people talk, not everybody, but just from the people that I’ve heard talk that as long as you knew what you spent. For example, for business; you went on a business meeting to lunch. As long as you kept track of the amount — but you actually need, they want the actual receipt, whether the image or the actual receipt correct?
[00:15:35] AN: Oh yeah, they want that. Just the bank statement won’t be good enough, they want to have that detail.
[00:15:42] JH: Yeah, I meant to say that. I wanted to make sure that that was out there just in case. What would you say is the biggest mistake people make with their taxes?
[00:15:54] AN: I would say the biggest mistake is that I see a lot of people put taxes off until the very last second. Because I think they’re afraid of what they might possibly owe or they think that they have a refund and it’s not urgent to get it done. But I think as long as you have the documents all collected and ready, don’t wait until the last minute because that just adds a whole another level of stress to the already possible stressful situation.
[00:16:26] JH: Absolutely, I like that. For 2015, what would you say are some hot tips to save money? Because of course every year there is something new, “Oh they’ve changed the law,” or whatever the case may be, which is also why you need to be in the know I think. Tell us about what would you say are some of the hot tips for 2015?
[00:16:49] AN: I would say, the biggest one is going to be with the healthcare. If you take the healthcare premium which is basically the government giving you some money to help pay for health insurance. The way they do that is they ask how much money you expect to make throughout the year and they calculate that money that they’re going to give you based on how much money you make.
But the problem is, if you end up making more money than that then they have essentially overpaid you that money and you could possibly have a big chunk to pay back on your taxes. So my tip here is, if it looks like your income’s going to be a lot higher than what you reported when you were signing up for these credits, make sure that you contact the insurance company and have that updated so that those premium credits are adjusted.
[00:17:52] JH: That is definitely a good tip, so thank you for that. Now let’s talk more on the business side of things. For you business owners, obviously what she talked about now applies, but let’s talk more about business taxes. With owning your own business, what’s the best way to save for taxes?
[00:18:15] AN: I think the best way is to create a completely separate account for your taxes, for the money that you’re going to pay in and just whether you put in 30% or less, transfer that money out of your operating checking account and move that chunk out of sight, out of mind so that you don’t think that that’s available for spending.
[00:18:41] JH: Yay, I’m doing something right! I’ve been doing that. [Both laugh] And I would add to that is, of course you said 30% or 20%, but on a monthly basis so that way you are not chunking it in huge chunks but just try to see what you can do on a monthly basis. So just a little bit, it doesn’t impact, hugely, your cash flow as well. I don’t know what you think but I like to take things…
[00:19:15] AN: That’s just awesome and less painful.
[00:19:18] JH: Yes, I like to make it little steps like that. What would you say is the absolute biggest mistake that you see business owners making?
[00:19:29] AN: I think the biggest mistake kind of goes back to those receipts. A lot of people think that using just the bank statement is going to be enough information, and so they lose receipts on accident, it gets lost in your purse or you accidentally throw it away. But it’s really important to have those because if you are to ever get audited, the IRS is going to ask for documentation of all of the expenses and if you don’t have that, they’ll basically add those amounts back in and you could have to pay taxes and penalties.
[00:20:05] JH: Right. Now okay, so let’s say you have the receipt and it’s X amount of money. So you need the receipt, you would have to put of course on your own documents, how much it was, what it was for and if you were meeting a person, would you recommend including who you’re meeting with? Is that something that they like to know?
[00:20:29] AN: Yeah, if your receipts are for business meals or business entertainment or even if you’re recording your business miles, you want to make a quick note of who you’re meeting with and why. You can prove to the IRS that these weren’t just fun little meetings with your girlfriend and you actually had a reason.
[00:20:54] JH: Right, perfect. Yay! Another thing I’m doing right. Okay, perfect. As I’m going, I’m checking off, “Okay, yes, I’m doing this, yes I’m doing this.” So if a business owner has put off looking at numbers, what’s the best way to get back on track?
[00:21:14] AN: I would say that the best way is to make yourself a checklist. Break it down into pieces; the first piece is going to be, start with each month and go through and print off all the statements for that month and go through and categorize or do your book keeping based on each statement and then when you pull out the receipts, you don’t really need to go through them, only just if you have questions then you can pull them out but I think sometimes that paper overwhelms people.
So don’t worry about digging into that stuff unless you have a question or need clarification on what an expense was. Just move through the months, if you have questions, highlight those, you could save them all and talk to an accountant, otherwise just take it month by month.
[00:22:11] JH: Okay, perfect. What would you say is your number one tip for business owners or for new business owners who want to start managing their business finances?
[00:22:22] AN: I would say my number one tip is to go ahead and go to the bank and get a separate bank account for your business. It’s really, really easy just to think of it kind of like a hobby as you’re starting out or not want to mess with getting a separate bank account but if you’re a sole proprietor, you can even just go to the bank and get a new personal chequing account and only use it for business purposes, it’s super easy.
[00:22:52] JH: Perfect, so let’s talk about personal, because of course you just mentioned separate your business account. Let’s talk about personal checking account for use for that purpose versus a business checking account. So at what point do you transition for those wanting to know?
[00:23:15] AN: You’ll definitely need to transition if you move in to a business entity that it’s not a sole proprietor. An LLC, an S corporation, even a partnership, you’ll need to make sure that you’re treating your business money separate from your personal money.
[00:23:36] JH: Okay, so a business that has the entity of LLC or non-sole proprietor — I never get that word — proprietorship, would need a business account, correct?
[00:23:50] AN: Yeah. A lot of them will waive the fee for it and if you keep a certain amount in there and then another thing to think about when opening that is if you plan to use an online book keeping program like QuickBooks online or Wave, just make sure that your bank is large enough that it will connect the fees.
[00:24:15] JH: Yeah, that is a great tip. That is a great tip. Well that’s some awesome knowledge and great tips Amy, I appreciate it. Is there anything else that you feel that you want to add to the conversation?
[00:24:30] AN: Thee only other thing, which I just mentioned, was those cloud accounting programs. They’re really awesome because they take away a lot of the manual work of you having to input everything into a spreadsheet and the way they work is they connect with your bank account or your PayPal account and then they pull those transactions into their program and then you just assign them a category so it’s pretty easy.
[00:24:59] JH: Is there one that you really love or recommend?
[00:25:05] AN: I really love Wave, there’s a couple that I really like but Wave is free and I think it’s really good for people starting out because you don’t have an investment, you can check it out, make sure that your bank connects with it and as long as you do their little intro, they have some webinars and online videos you can watch, then it’s pretty easy to get up and running with it.
[00:25:37] JH: Okay, I’ll put a link to that in the show notes. So Wave — W-a-v-e? I’m not familiar with that one.
[00:25:42] AN: Yep!
[00:25:43] JH: Okay, perfect, I’ll be sure to include a link to that in the show notes. So I appreciate that Amy. Let’s wrap it up with just some fun questions. You game?
[00:25:52] AN: Yeah.
[00:25:53] JH: Okay perfect! So what is your favorite money quote?
[00:26:00] AN: It probably comes from my dad and he always told me to make your money work for you, don’t work for your money, that’s his like end game.
[00:26:08] JH: Perfect.
[00:26:10] AN: Is having money work for you.
[00:26:11] JH: I agree, I couldn’t agree more. What would you say is your best money memory?
[00:26:17] AN: Probably buying my own car after college. My dad had always helped me out with that during school and that was the first time that I could go out and do it myself and buy it all with my money.
[00:26:34] JH: Awesome, awesome. Yeah I did that in college. Or yeah, right after I graduated from college, it’s one that sticks to me as well, you can feel proud of it like, “I did that!”
[00:26:44] AN: Yup.
[00:26:44] JH: What is your favorite money book?
[00:26:48] AN: So I have two, one for the personal finances is I Will Teach You To Be Rich by Ramit Sethi and then the business book that I just almost finished reading is called Profit First by Mike Michalowicz and they’re both really awesome.
[00:27:06] JH: Okay, I have heard of that, I haven’t read it but I read the other one. Awesome, and I’ll also be, in case you are interested, I’ll make sure to include that in the show notes as well.
So to finish up Amy, how would you finish this sentence? As you know, this podcast is all about making money simple and taking control of it. How would you finish, “Her Money Matters because ____?”
[00:27:34] AN: That’s a good question. Her Money Matters because she worked hard for it.
[00:27:46] JH: Okay, perfect. All answers are good answers. So thank you so much for being here Amy. Tell us, where’s the best place for people to find you and learn more about you?
[00:27:58] AN: You can find me at AmyNorthardcpa.com.
[00:28:02] JH: Okay, perfect!
Well thanks again Amy for being here, I hope to have you on the show again. If you enjoy this and if you have some pressing questions in the show notes in the comments section, be sure just to ask some questions that maybe in the future you would like to be answered by Amy and we’ll be sure to get that set up.
So Amy, thanks again for being here, I enjoyed this and we will talk soon.
[00:28:30] AN: Thanks! Thanks for having me.
[END OF INTERVIEW]
[00:28:38] JH: Regardless of where Amy went to school, she was still awesome. Maybe it would have been better if she was a Boilermaker but that’s okay, I won’t hold it against her. In all seriousness, I really hope you enjoyed it as much as I enjoyed chatting with her. Just real quick, I want to thank the ladies that have signed up for the Fresh Look Session. I am so excited to serve you.
If you’ve missed it, I’ll be doing something like this again. I don’t know when, so just keep your eyes pilled and your ears listening. And just make sure you’re on my email list. If you don’t know how to get on there, just go to my website and you find various ways to do so. If you want to know what in the world I’m talking about, if you missed that episode, that was episode 18 where I talked about the fresh look session.
So moving on, I don’t want the money conversation around taxes to stop here. If there are any questions for Amy, feel free to post them in the comments section of the show notes. Also, if there is another expert that you want me to have on, let me know. The next expert highlight will be a certified financial planner and so definitely look for that in the next quarter.
Now, one takeaway from my chat with Amy was how she saw that people left taxes to the last minute, I’ve been guilty of that. Maybe it’s because they fear of what they could owe or not being urgent because they feel that they would get a refund, those were some of the reasons that she mentioned that she thought were the case. But whatever the case it is, it’s definitely to have a good habit of just starting to get things together early and her suggestion of the folder was great.
Having said that, if you combine that with keeping up with your personal finances, that is a winning combo. If you just are in a place that you just don’t know where to start with your personal finance journey because you’re just feeling overwhelmed, my Jumpstart your mini-guide — actually it’s Jumpstart Your Money mini-guide, maybe I should have made that a little shorter so I don’t stumble on the words.
Anyways, that mini guide is just really a good place to start for this. I don’t charge for this. This is something, my gift to you and is easy to get, all you have to do is just text the word “miniguide” to 33444. That’s texting the word “miniguide” to 33444. Of course, definitely don’t do this when you’re driving, please for sure don’t text and drive and what will happen is it will ask you for an email via text. So once you text “miniguide”, it will say, “Please give me your email so I can send you the mini guide,” and once you enter the mini guide — no, I am having problems speaking today! Once you enter the email, the mini-guide will be hitting your email inbox. And it’s easy as that.
[00:32:07] JH: That is a wrap for today, I want to thank Amy for joining me and for being an awesome guest for sharing her tips, her expertise, in the area of taxes and plus she shared a little tidbit about her which was awesome. Just, if you want to check the show notes, be sure to go to JenHemphil.com/20. That is JenHemphill.com/20.
Thanks again for joining me and we’ll talk again next Thursday.
P.S. THANK YOU for listening!
Enjoy The Show?
Be sure to never miss an episode:
- Subscribe, Rate and Review the show in iTunes. (It’s easy here’s how)
- Subscribe via Stitcher
- Subscribe via RSS
Share with a friend by using the social media icons below.
Send us feedback via email to firstname.lastname@example.org or click here to leave a voicemail.
**Please note I love to give shout outs to my listeners, so if you’d rather me not mention your email message or play your voicemail on the show be sure to clearly state that, thank you!**