Sweeting Up Your Taxes with The Beauty CPA

Shannon O'Brien  00:01

INTRO: Welcome to The Sugar Show. I'm Shannon O'Brien, body Sugaring expert and licensed esthetician who's taken my own skincare business from zero to multiple six figures and has helped over 3000 students learn how to do the same. Now, let me tell you it wasn't all that long ago that I lacked the time budget and knowledge needed to grow my small business as a body Sugaring Pro. If we were to press rewind, you'd see the many failed attempts and lessons learned that have helped me build the profitable business that I have today. When that runs on its own, it gives me the lifestyle and freedom that I only used to dream of. I created The Sugar Show to hand you my secrets and give you the simple step by step strategies to help you do the same. So if you're a cosmetologist or esthetician or wax professional, who's looking to fill your books, make more money in your business and enjoy greater balance between your work and home life. You are in the right place. Let's dive in.

Shannon O'Brien  01:12

Welcome back to this episode of The Sugar Show, it is the end of the year. And I always like to dial in some kaneesha Coleman, the beauty CPA to come and really inspire you for whatever part of the year we're in to be strong, strong beauty corners as she calls them to be strong sugar boat owners to be strong business people. And even if you are an employee, you can learn so much from her. Because really she helps you how to manage your money. So kaneesha Coleman is on this episode, the beauty CPA, she's helping us to wrap up the end of the year, not be afraid of our numbers. If you have a loss, it's okay, if you have a gain, that's awesome. But how to work with that well, and really, if you break even, that's okay, too. If you understand your numbers, and you reconcile your books month to month, you can number one, catch errors. Number two, you can really work your business and understand where you need to focus a little bit more, right. So if you need to maybe beef up the products or you need to be reminded that you need to probably bring in some more clients and get some referrals, whatever it is that your kind of strengths and weaknesses are in your business. Being smart, especially at the end of the year and looking back at your business is an absolute game changer. A to make sure that you are making the most out of your taxes, and B that you can look forward to the next year with strength and renewed vitality. So welcome back to kaneesha Coleman as always, it is fabulous to have her show on the show. And I hope you enjoy her.

Shannon O'Brien  02:59

Tanisha it is time to wrap this year up. I cannot believe it. We weren't I feel like just yesterday. We're talking about q1.

03:09

Absolutely it is time flies, right? Oh, this year special? Yeah.

Shannon O'Brien  03:16

So oh my gosh. Okay, so you have been walking everyone through out the year q1, q2, q3. And there are some folks who have, you know, kind of put that on the back burner. So we're going to talk about those folks and what they need to hurry up and do. But let's talk about q4 the end of the year. And now there are some people that are listening to this podcast, believe it or not, that are like don't even have their own business account. So this is this is a little bit more advanced than that. I know, I know, I know. There's a little bit more advanced than that. This is really like you have your own business account. You You will hopefully have a bookkeeper, you hopefully already have your CPA if not, you're going to be contacting Tanisha and her information will be in the show notes. But really, this is what should people be knowing for the end of the year, no matter what year it is, and especially this year, taken away?

04:17

Absolutely. Okay, so I have three hot tea hot things, that's gonna make a ton of difference, right? These things are really needle moving and making a whole bunch of impact you heard like that 8020 rule right? 20% of what you do it take you 8% So these are three things I want everybody to really lean into for the rest of the year. The first one is catch up bookkeeping. Now I know a lot of people are probably like, Oh, I knew she was gonna say that. And they're cringing right now. But yes, especially if you don't have a dedicated bookkeeper. Now is the time for you to take a look at where your books are right now. where your accounting records are? In See, have you been tracking all money or money out? And if not, it's time for you to catch that up. It is time, because we only got a little bit of time left in the year and it literally may take you all of that time to do bookkeeping for, you know, the first 10 to 11 months of the year.

Shannon O'Brien  05:23

Okay, can I jump in there really quick because I want to share with everyone like kind of what I do when it's ketchup bookkeeping day now. I will be honest, I've been really good this year. And I was really good. Last year, my catch up bookkeeping was like, for last month, and maybe it was like two weeks into the next month. For the last month. It wasn't like six months ago, right? Like, I mean, it's like six months catch up. But I want to share with everyone

05:50

that I get in the zone. Like

Shannon O'Brien  05:55

I approach my office or my desk, in my laptop with like, a strong woman. Like I put I put my big girl panties on, I get a really beautiful glass of you know, sparkling water with some fruits in it or some citrus like I'm all kinds of swanky like Oprah you know, she puts it in a really pretty glass. And I put on some like really soft like piano music in the background. And I like I put on my like boss bade Cape in my mind. And I'm like, Uh huh, I am going to I'm gonna rock this bookkeeping. Otherwise, it makes me cringe. And I will I won't do it. Right. But I literally schedule the time in and I like address my desk as if I am going to rock this bookkeeping. It's a mindset thing. Because if you don't have it, it's overwhelming. Right? So yes, I suggest to the people like, listen, it is catch up bookkeeping time, make it an event. Make it like your pretty water, your your cozy slippers, you know, whatever it is, but like Get your head in the game, and just whack it out. And I'm always surprised at how when I think it's a giant mountain of a task. If I just pay attention and zone in and like shut the door and turn on the music and put on the like, and I'm like, like really rockin my, my bookkeeping. I feel empowered at the end. And it actually didn't take me as long as I thought. Yeah, if you keep up on it month to month, yeah. So I just want to say like, this does not have to be scary. Now for some people, it's going to take more than one session of sitting down if it's been six months. But it really is enlightening, because you catch so many things you didn't realize. So chat

07:48

about that. Absolutely. The and that's why I always start with bookkeeping. Because before I can say I can sit here and tell you a hundreds of ways to save on tax through tax planning. But how are we going to do that if you don't even have a good updated set of financial data? Because you've been tracking it all year? No way I can do that. No way you can implement anything I'm about to say on forward if we don't have a good set of financial data to assess, so we got to start with that. So then once we have caught all of the records up, and we know where you are in net profit wise, at this point in the year, then we can say okay, here are the tax strategies that will serve us well to save on taxes when we found that return nation. Yeah. Yeah. Then you're speaking

Shannon O'Brien  08:44

the proper language. You're not saying well, maybe or I think you're saying yeah, these are my numbers. What good bad or indifferent. Like it's okay, if they're not great, because you can at least work from the proper jumping spot, instead of you know, oh, sorry. Kinesia. I'm not, you know, reconciled yet. Yeah, I haven't caught up on that yet. Well, then you can't have a good conversation about your numbers if you don't know him.

09:10

Yeah. Okay. We can't talk about everything, right. Yeah, I don't think you raise a good point. Not gonna get off topic at all. Because you know, you and I can do this for hours. But you raise a good point. How do you know where you are? If you haven't been tracking on money and money out? If you look at these numbers now, you can be like, Okay, for the rest of the year, and then I'm gonna lean into this to turn this number around. I mean, because I don't like where it is. So I'm gonna make start doing XYZ things to make even more come to close a q4. So yes, starting off the next year, right? Yeah, absolutely. Absolutely.

Shannon O'Brien  09:49

Don't be scared of your numbers. Don't be scared. Don't don't not catch up bookkeeper? Because you're scared of your numbers because sometimes a loss can be worked with so much wisdom and a loss, or a breakeven that will make next year so much stronger.

10:09

Yes, I need I need people to realize number one, you're not to numbers. Okay? But then to even if you're at a loss in the tax world, a loss is a good thing. attack that loss is a tax benefit. But I don't know that when I'm tax planning for you, if you don't catch up that bookkeeping. So remember guys, number one, catch up that book? You bet. Yeah. You know, year to date, to where are you are? Catch it all up, get it all cut up. Okay. All right. Number two, after you have got the bookkeeping caught up, and we know what all our numbers are, I want you to look at your business entity structure. And what I mean by that, I mean, how is your business organized? Are you a sole proprietor? Are you a one owner LLC? Have you become an S corp? I want you to know what your current structure is. And then depending on your net profit, should you be switching to something else? Because that decision of how your business is organized? That is one of our single most very easy analysis that we can do to save you 1000s on tax? Literally 1000s Okay.

Shannon O'Brien  11:29

Like, Game Changing money, like, yes, like the difference between owing and not owing? Yes, like the difference between breaking even and actually getting some money back money back? Yeah, the difference between not being protected and being protected, you know, sole proprietors might not realize that, they're, you know, they're, they're really putting themselves out there for some

11:55

liability. Yeah, absolutely. And, and I feel like, once you do the analysis, and you make this decision to make a switch, it doesn't only save you taxes in the current year, it saves it for every year on going forward in the future. Like the gift that keeps

Shannon O'Brien  12:17

giving, yes, you

12:18

know, what you gotta do, you got to do the analysis and our firm, we can help you with that, right. That's something that that we do on our free tax strategy sessions that we offer, you can get to that call on our website, beauty cpa.com To book your call, but that's something that we can discuss in that process to see if you have the potential there. Yeah.

Shannon O'Brien  12:43

I, I love working with you. Kinesia, besides the fact that we're both, you know, super fun on us. But I love working with you, because you understand the beauty industry. And I didn't realize how different it was because I've only really known the beauty industry as it relates to having my own business, I was an employee, I was a teacher back in the day, so I didn't have to do all this, right. But when I got into the beauty industry, I didn't realize how many nuances there are, that's different than like, your husband's, you know, bank teller job, you know, like, it's just different. And it's, and there's little nuances that really matter. And that if you don't know them, you don't realize what you're missing out on. And it really could cost you a lot. So having someone like you that really understands our industry really makes a difference. And a lot of you know, the audience, I'm going to put all of this in the shownotes because a lot of the things that kaneesha guides you through really is simple stuff for her. Right. And but but well thought out for us, and really easy to follow, which you know, our expertise is you know, Sugaring and skincare and and that's our expertise, our expertise is not the finance piece and the taxes piece. So when you know kaneesha wouldn't go sugar in herself, she'd come to me, right? I'm not gonna go do my taxes myself, I'm gonna come to someone like her that understands, you know, that niche, and it's super critical to get the proper tools in your tool belt. Okay, number two, I'll get off that. I'll get off that but the shownotes they will everything will be listed in the show notes for them so they can they can find you. And we do have classes with kaneesha Inside the sugar tribe. So inside the free Sugaring app, so excited. Inside the free Sugaring app, there is links to finish as well. So jump on that app shameless plug. Okay, so number that was number two that we finished

14:42

up number two. Number two was done. Okay. Remember, once you get them book, your bookkeeping caught up, go ahead and evaluate their structure by far the single most easy thing you could do to save 1000s on tax. Okay, the third thing I want you to keep in your backpack, okay, we got to maximize deductions. All right now, I look at hundreds of beautiful new tax returns every single year, hundreds, okay? Every I want to say 99% of you are not taking all the deductions you're entitled to 99% of you are not taking all the deductions you are entitled to. And this can be for a variety of reasons, right? It could be because you ain't doing bookkeeping, so you don't know what you can to deduct, or to you're kind of like scared of the IRS for some reason, please don't be I used to work for them. They're made up of people just like me and you, okay? And three, you just don't know which I get that too. Okay. But I want to tell you that most things, most things you spend money on for that business is deductible. Okay, and it all comes back to again, not to beat a dead horse. But it comes back to bookkeeping. If you're tracking all the money you're spending, you will know just the right you know, the appropriate amount you should be deducting. But again, you came to duck but you're not tracking. Okay. And there are some other tidbits, I know some strategies you may have been told in the past by other CPAs or people tax pros that you can't like take home office or you can't do this. You'd be surprised how creative you can create an illegal you can get okay, I do have a have a freebie spot out submit tax deductions guy for beauty, beauty printers. It's like a 19 page, you know ebook that kind of walks you through how you know when something is tax deductible for your business. And it gives you all sorts of cheat sheets that specifies what's the dark blue and some loopholes. I love a good loophole, loophole loophole. So we got to do that we got to maximize deductions now, Warning, warning, warning warning, a lot of you are going to hear this, you're going to be hearing in the news from now to the end of the year. To go buy stuff to save on taxes, don't do that. If you don't need it for your business, don't do that. Don't go buy something you ain't gonna use. And that's not going to produce a return in the form of revenue for your business. Just don't buy stuff to be buying stuff. That's not a good strategy at all. I want you to instead be more strategic about what you have already spent. Okay, and what you actually use in your business to maximize deductions. Okay. That's the That's the third and final thing, but it is a biggie. It is a biggie some of the loopholes that I kind of specified in that in that guide I just referenced have saved my clients 10s of 1000s of dollars. That's awesome. 1000s of dollars. So please don't don't don't don't sleep or deductions, guys.

Shannon O'Brien  17:57

So how does this look for an esthetician she's walking her dog right now she's listening to this podcast. It's no beginning of November, this is going to air middle of November, right? So what should we have done? All the way through like, like right before Christmas? And then realistically, we're not thinking about it over the holidays, because we're going around trying to make all the magic happen. And then we get into January. So if we could have X amount of things done, it would be reconciling through November, if this if they're listening to this in December, January, right?

18:34

Yes. Yes, absolutely. Record, review and reconcile all of your business bank accounts. I am praying all of you have a business bank account and not mixing money with personal but we're gonna assume all of you are awesome and amazing. And you're doing what you're supposed to do. You have a business bank account, reconcile, and categorize all the transactions from your business accounts up until November, okay? I want you to look at that net profit. What is that net profit is that net profit is like 30,000 $40,000, I want you to immediately think I need to evaluate my business entity structure, can I save the tax on this $40,000 net profit by switching to another entity structure? I need to run an analysis or obviously book a call with us and we can talk through how to run that analysis to see if the switch will save you money on self employment tax. Yeah,

Shannon O'Brien  19:42

then do that. Now you don't need to run out and buy a HydraFacial machine because you want to you know spend that 30 grand so that you know you don't get taxed. No, no, no, just be just work with a professional grab that tool out of your tool belt, your beauty tool belt and grab that tool and say Alright, I'm gonna give kaneesha team a call and see what makes the most sense for this before the end of the year. And then we can take a look at, yes, January's numbers, I would like to come back on with you, too, in January, and really take a walk through like, alright, what did 2023 look like? For folks? And how can you work with your numbers then to work for 2024? Right, like, all right, yeah, we took some hits. You know, maybe we didn't do things totally the right way. How can we set ourselves up for the next year? And so that's going to be a teaser? We're gonna do that in January. Because I think if you can really, you know, and I think there's strength folks in saying, you know, what, I did not do as good as I should have been 2023. And it's only been about the amount of money. It's about, like how you ran your business, right? Like, I really missed the mark in maybe product sales. Maybe I need to charge a little bit more, I need to take a look at my cost per service. Maybe my overhead is super high. Now is not the time to necessarily do all of that like critiquing of yourself. Right? Right. Now is the time to get all your paperwork done. Get it dialed and then January will work on all right. What are we gonna change for 2024?

21:20

Absolutely, absolutely. Yeah.

Shannon O'Brien  21:22

So when you are listening to this, take a breath, scheduled time in your calendar to catch up on those books. Take another breath. Go ahead and catch up on the books don't just make the time like actually do it. And take a breath and say it's okay. If I didn't make as much money as I thought I did. It is okay if I broke even. And it is okay if I made all of this money and didn't have enough write offs. Because there are ways to fix that. Like she's saying, Yes. So q4, I cannot even believe we're here. I can't even believe that. Like, it's the holidays, you know, and we're having to do all this. But this is part of being a badass business owner. And this is absolutely. This is absolutely how you make the next year work and make this year work for you. So yes, any other things that you've seen, like maybe a little success story or something that you've watched, changed a little client story that you have for us of? Like the biggest? I don't know, give us a good client story. kaneesha

22:33

Yeah, absolutely. So Oh, my God, I love this client that I'm referring to to death. She is a a two person shop, she's an esthetician. She also she leans heavily into her retail products as well. She is with our firm, and we do the whole suite of services for her. So we do the comprehensive tax planning, we also do the financial analysis, and we keep up with her books, this two person shop, she has broke 600k this year 600k This year. And we so typically a person bringing in that much money and mind you, I'm gonna say she's netting over a quarter million dollars. So she's bringing in all that and she's taken a little bit under half home. So her net profit percentage is very, very good. The tax planning on top of that she falls into the highest tax bracket as you can imagine, but throughout tax planning, we've effectively got her at a 10% tax rate. So that's from 37 to 10, which is amazing. Giving a lot of that to the government. She's only paying her fair share, I want to say the keys to her success. Okay. That I can see that she is doing very differently than other beauty printers that I've just met in passing and also other clients as well. Number one, she does not over invest in extra labor. Okay, yeah, black people over hire. I don't know why but they over hire, they kind of tend to throw people with the problems rather than solve the problem. Okay. She does not invest overly in labor. Number two, she looks at her numbers on a regular basis, maybe a couple of times a month. She looks at those numbers. And when she sees that it's not hitting her goal. She course corrects during the month so that that month or the quarter can end they're close to or if not at where she wants it to end. Okay. Three, she is not one of them. Build and they will come people. She is very she's out there meeting people. She's on social media. She's now working. She does not invest 1000s of dollars in paid ads. She does not. But she has very good relationship with her clients that They keep coming back and they refer refer refer refer. Okay. And she, she stays on social media not saying social media should be your job. But you gotta meet people. They gotta they buy you not your product. Yep. Okay, story to story.

Shannon O'Brien  25:16

As always kaneesha Thank you so much for being a part of The Sugar Show you are. I'm so glad we met all those times. It's been at least a couple of years. Yeah, it's been years. Yeah. And I'm so glad to just have you in our tool belt. Because I know that sugar pros are gonna benefit from everything that you and your team do. And I really thank you for specialising in us. Because you know, a lot of CPAs they just they take anybody, any clients on and I just love that, you know, you really have focused on us, and you really can speak our language. And it is just an honor to have you by our side.

25:54

Oh, no, thank you for having me. Again, if you're new printers, you guys are the best to work with. You're the you're you're the most exciting, the most creative, and you look awesome as well doing it so

Shannon O'Brien  26:05

we keep you looking good girl. All right, my love's I will be linking everything in the show notes. And, like kaneesha, we will see you at the beginning of the year, hopefully with really great reports on how well we did in 2023.

26:20

Have a sweet sweet day. Thank you. Oh,

Shannon O'Brien  26:25

I love kaneesha She is she really is a tried and true tool in your tool belt. That's a lot of tease. She is has been a good acquaintance of mine for a really long time, and really has helped a lot of people to form their business, right? Because as you've heard, at the end of the day, it's all about making sure that you just are aware, be aware of those numbers. And it can really, really take you places. So if we're working so hard to make sure that our Sugaring strategy, and our Sugaring technique is is perfect. We want to make sure that our foundation and our business is strong as well because you can be an amazing practitioner. If you have a shaky foundation that your business is built on, you won't succeed and the story is to be a sweet success story. And I want to interview you for this podcast. So let's do this together. So I hope you enjoy this episode with Phoenicia, take a look at the shownotes she has all kinds of links in there and make sure that you download that free app because we will be going live inside of there throughout the next year with kaneesha to give you even more tips and tricks.

SUMMARY KEYWORDS

bookkeeping, business, numbers, tax, year, sugaring, net profit, catch, money, 1000s, people, clients, q4, sugar, absolutely, save, deductions, bookkeeper, beauty, books