The MamasteFit Podcast Episode 128 – Optimizing Your Finances: Tax Strategies for Moms and Small Business Owners

Gina: Welcome to the MamasteFit Podcast. In this episode, we’re gonna be chatting with my CPA, Kimberly Tara, all about how you can keep more of the money that you earn in your pockets, so that you can spend more time with your children. We’re gonna be discussing how you can look to create your own business that doesn’t need to be your primary source of income, but there are different things that you can do to help increase your stream of revenue to your family. And, ways that we can deduct it so that you can keep more of that money for your family and for your kids.

Welcome to the MamasteFit Podcast. In this episode, we have Kimberly Tara here to chat all about taxes, how to integrate your children into your business- there’s gonna be tons of stuff that I know that we’re gonna talk about. Kimberly is my CPA, I highly recommend her if you’re looking for any tax strategy.

So thanks so much for being here, Kimberly.

Kimberly: Yeah, thanks so much for having me. Y’all are some of our favorite clients. But we, it’s just so funny because we’ve gotten to this point in our business where we can say no to clients who aren’t aligned with us. And that’s just really cool, and I’m sure we’ll talk about my journey and how I got here and how I got to that point because it wasn’t always that way. But, we love you guys and we really, truly, we love all of our clients.

Gina: I love you back. So can you introduce yourself to our listeners who may not be familiar with you?

Kimberly: Yeah, so my name is Kimberly Tara. I am a CPA and Certified Tax Coach- coming up on a decade now, over a decade of being a licensed CPA, and almost a decade of being in business.

I did not know that I was 10 weeks pregnant when I left my corporate accounting job, gave my resignation, moved from Atlanta to New Orleans and started my own business. But here we are, four kids later, 8, 6, 4, and 2. They are all 22 months apart and it was the best decision for me.

So again, I will share all about my business journey, I’m sure throughout the episode, but after many pivots, many lessons learned, we are so solidly in who we serve and how we serve them and the impact that we’re making in the world. And so we serve profitable women business owners, mostly moms, who are looking to keep more of the money that they’re earning and build the life that they dream of. And what I mean by that is, our clients, our moms, are not looking to just make a million dollars to say that they make a million dollars. For them, it is about keeping more profit in their pockets, spending that time with their kids, being there every day for school drop off and school pickup, taking Fridays off, and choosing memories and moments over money, while still also building wealth and growing their money. So it’s such a privilege and an honor to get to do what I do and I get to work with the best team out there and provide a culture and a team and a way that other women, other moms can escape the corporate grind and come serve our clients, in a true work-life balance.

Gina: I absolutely love your guys’ mission, and we were so aligned with each other. Like, we both got four kids, we’re both like CEO mom bosses, and so I think there is this like- we were talking about this before we started recording- this really wonderful balance of being able to be there, like physically and mentally present with our children at those like really important times, while also still having this outlet career-wise for ourselves, too. And to be able to have both and to build both and to be present I think is really such a wonderful opportunity for me, and I think, an opportunity for you.

Kimberly: Yeah.

Gina: And so let’s talk about how. What is the first way that somebody can go about trying to keep more of the money in their pocket? ‘Cause that was how I first came across tax strategy, my business was really starting to increase in revenue and I was like, “I’m gonna owe a lot in taxes, so I guess I should start saving to make sure I have money to pay my tax bill.” But let’s talk about how, what is the kind of, some of the first approaches that we can do to do that?

Kimberly: Yeah, so really the first thing, and it seems silly, but the first thing is to be a business owner, right? Because the tax code was written for business owners. So if you are just working a W2 job, and I don’t wanna say, “just working a W2 job,” if you only have income coming to you as a W2 earner, it’s going to be harder to strategize and proactively come up with creative solutions to keep more of that money, because the tax code was not written for just straight W2 employees.

So the first thing that you need to do is think of what is your business. So if you’re not a business owner, that’s the first thing that I’m going to encourage you to do is think about what’s a hobby that you love, that you can turn into a business. Because the IRS does not allow you to have a hobby and deduct the expenses from it, but if you can turn a hobby into a business, or if there’s something that you are always giving your friends advice or you’re always making things for them, right? You need a business, that is the first step to be able to even start the journey of tax strategy and paying less in taxes. So that’s my first recommendation right there.

If you have a business, so let’s say you either go and start this business or you already have a business, whether that business is making $10,000 a year or a million dollars a year. Where you need to begin is getting comfortable looking at your numbers and talking about your numbers and actually keeping them up to date. That is the number one challenge that I see- sometimes with our clients, now, we don’t do bookkeeping at our firm, but we do require our clients to have bookkeepers because of the importance that it plays in the overall picture of your business. But if you- I see it so often with female entrepreneurs from a mindset perspective, right? They’re uncomfortable looking at the numbers. They say, “I’m not good with money.” “No one ever taught me this.” “We didn’t talk about money in my family.” And so they’re not excuses, but they are a mindset, they are a story that women are telling themselves about their abilities to run their businesses, to manage the money and the finances of their business.

And so if you don’t get comfortable looking at your numbers, talking about your numbers, asking questions, getting educated, nothing can happen from there because the foundation is not in place.

Gina: Yeah, I would love to touch upon that. I was actually having a conversation with our PT that’s at the gym. So, she’s her own business, and we were talking about taxes and tax strategy and different ways that she could start looking at things. And like we were discussing like what our revenue was, and I was like, “I know that it feels really intimidating to talk about how much money you make, especially as a female business owner.” And I think part of it is there’s this feeling that I should just do this work because I love it and to help others, and that it shouldn’t be about compensation or how much I make. And so it almost feels like, “Oh, I shouldn’t talk about how much my business makes because it’s gonna make it seem like I’m only doing it for the money and it’s gonna make it seem like I’m not doing it to support others.”

And so I think a really important thing that we can think about if we are a business owner and you are feeling that pressure, is to remember what your mission is and how you go about that mission. Is your mission to make a ton of money off of everybody and do it in very exploitive ways? Or, is your mission to serve a population of people, and then as a benefit you make money, like because it is a business? And then, okay, my main goal, obviously everyone’s goal with business is to make money, but are you doing it by providing a service or are you doing it by trying to manipulate a population of people?

And so I really do think like your approach to business plays a big role in whether or not there should be like any shame involved with it.

Kimberly: Yeah.

Gina: Yeah, so that, that was just something, I just had that conversation yesterday and I was like, “Oh man, there is so much like weird shame when it comes to talking about money, especially as a female business owner.”

Kimberly: Yeah.

Gina: Because it feels like I should just do this as like charity work because it’s important.

Kimberly: Yes. And, again, that comes back to we weren’t a part of those money conversations and we are the givers as women. And something that really changed the mindset and dynamic for me- because, I don’t love to tell my clients, but it’s important to me that I’m open and honest with my clients and other women entrepreneurs that I surround myself with- I struggled. I struggle with a lot of money mindset. I’ve overcome a lot of it. I’ve had to undo a lot of things that I used to think growing up as the child of two entrepreneurs. And something that hit me hard when I started hiring team was that it’s not just me anymore, and I have other women and other families, because all of my team has children, and their family’s livelihood is on the line. So it’s not just me skipping a paycheck if a client doesn’t pay or if I do something for free, or I expect them to do something for free, I still need to pay them. And so that was one eyeopening moment.

The other eyeopening moment was a couple years ago I was in a mastermind and someone said, “I was trying to do so many things for free within the confines of my business, where if I would’ve just charged the price and the value and the worth that I was delivering in that business, I would’ve had so much more money to fund a full nonprofit over here and really give back.” And so I think it’s, there’s more than one way to do it. But yes, there is such a big mindset hump that we all need to get over as women, and I truly believe that it begins with talking about it like you and your PT were it. It starts with being open and honest.

Gina: Absolutely. So let’s continue with your tips on how can we keep more money in our pockets.

Kimberly: Yep! Love it!

So next thing that you’re gonna need to do is track your expenses. So one of the biggest things that I see when someone either starts a business or maybe, again, is a little scared to look at the numbers, they are either co-mingling their expenses- and what I mean by that is, they are maybe putting personal and business expenses on the same credit card or in the same bank account. So then, at the end of the month, or even at the end of the year, if you wait until the end of the year to start putting your numbers together, it’s, “Ooh, was that for business or was that personal?” And so the IRS’s approach is if you can’t prove that it was for business, it has to be a personal expense. So I see deductions, right? And a deduction is an expense that you get to use to lower your income, right? So we have your gross revenue at the top, then we get to take deductions or expenses, and that leaves us with your net income and the net income, the amount that’s left over after you deduct your expenses, that’s the amount that you have to pay taxes on. So I see deductions getting missed because they’re just simply not… they’re all over the place. They’re disorganized.

Another thing that I see is, and I used to be guilty of this too- I have a Target card, my red card, so I would get a 5% discount. So if I went to Target to buy supplies, whether that was for my office or if I needed something for a gift for a client, I would swipe my Target card ’cause I wanted the 5% discount. But now here’s the problem with that Target card is in my personal name and not my business name. So it didn’t flow through for my bookkeeping to go there and I had to remember, “Oh, I bought that at Target.” So trying to keep everything in one spot, trying to keep everything organized is gonna minimize you missing things that you’ve actually spent money on in your business and not getting to deduct them come tax time.

After that, I would say the next thing is waiting until the end of the year to look at your number. And this is bad for two reasons. One, you can’t make proactive tax decisions throughout the year if you’re waiting until the end of the year. And two, you’re actually not making data-driven financial decisions throughout the year if you don’t have your numbers and you don’t know what’s going on.

After that, so, missed deductions. The next thing that we like to do is teach our clients how to turn personal, what could be a personal expense, into a bonafide business expense. And so that could be meals, that could be travel. And a big one that we’re gonna talk about, Gina, is getting your kids working in your business, putting them on payroll, hiring them, and then letting them pay for summer camp. I don’t know about y’all, but I just plopped out a fortune on summer camp for four kids, right? So it’s hard- only one of my kids is hired in my business because a 4-year-old cannot do taxes.

So I’m, it’s depending on the nature of your business, right? It may not… all strategies don’t work for everyone. There’s so many customizations, but getting creative and figuring out how you can turn a non-business expense into a bonafide, legitimate tax deduction is always what we wanna start teaching our clients so that they start thinking about, “Oh, I could do this.” “Oh, I never thought about that!” Because we have to get them out of that employee mindset and get them into that CEO mindset.

Gina: Yeah. Some of my favorite ways to do a business deduction is travel. And so my kids are my employees, and so while we’re traveling…

Kimberly: And it fits for your business, right? Like it’s like it is within your business modeling what you are doing to have a two-year-old on payroll, ’cause you’re not doing taxes.

Gina: No. Yeah, I don’t think a 2-year-old could do taxes. They could probably do them but not well or to code. I’m sure she could hit the keyboard a few times.

Kimberly: She’s real good at hitting the keyboard and making a mess, yeah, and making a mess of my files!

Gina: So my kids are social media models, is what their business, or their job titles are within our business. And that’s been like a real, that’s been a really fun strategy to be able to do with them because essentially, my business pays them to be models for me, and then we could take that money and we could put it in their college savings. We have Roth IRAs for them, and so we’re helping to build this like wealth for them, like over the years, which is, I think, really cool. And so at a minimum, we’ll at least be able to pay for their college, which I think is really exciting. That was something that I felt held back on when I was getting ready to go to school, was I knew that I could not go to any school that I wanted because I did not have the finances, or my family did not have the finances to support that. So, I wasn’t gonna try to apply to an Ivy League school and I wasn’t gonna try to apply to that really expensive school in the city because my family did not, was not gonna be able to pay that bill. And so I looked at other options- which, there were, it was still great education, I’m still happy with where I went, but there was always a part of me that felt a little sad about not being able to do what I felt like I could. I felt like I had to hold myself back because I knew we didn’t have the money to do so. And so it’s really exciting for me to know, “Hey, we’re gonna have the savings account that we’ve established since you were babies that will hopefully have enough money to…” I don’t know how much school is gonna cost in 10 years.

Kimberly: I know, right?

Gina: 20 years?

Kimberly: 20 years!

Gina: I’m like, “Oh my God, is it gonna be like $4 million?” But I’m like, “We will ideally have enough money to send you to school, any school of your choice.” And that is a really exciting possibility to know that finances is not gonna be what holds them back.

Kimberly: Yeah.

Gina: From their true potential. I still feel like I did pretty good with my cheap state school that I went to.

Kimberly: I think you did! I think you did just fine. And and look, here’s the cool thing is, if you put in, I think if you start at age six and go to age 18, so it’s 12 years at $6,000- so that’s what? $72,000 I think that you contribute- if you put that into a Roth IRA and you just do that for 12 years, it’s over $2 billion with compounding interest by the time they retire, and you paid no taxes when that money went into the Roth IRA. And you won’t pay any taxes when you take that money out of the Roth IRA. That’s our goal for our kids, is to leave them with that, because if I leave them with that, I’m leaving them with nothing else. Like, you’re set.

Gina: Yeah.

Kimberly: You’re good.

Gina: That’s your inheritance. You’re good.

Kimberly: And, you can use, there’s a provision within Roth IRAs that you can use some of that money for education. So they can take it out for college.

And so yeah, all of these ways you can get creative with generating wealth for your kids, and you could generate wealth for yourself right now. And so it doesn’t have to be, a one size fits all.

Gina: Yeah. The other really cool thing about having my kids as employees of my business is I get to show them how I run my business as well. Obviously, my nine month old is not, I’m not doing bus business mentorship with her, yet. But my oldest, she’s starting to reach the age where we can start talking about, how do I go about my business? How did I develop it? what are some different things that I’m thinking about? Like she started to get more interested in wanting to create her own videos for YouTube. And so we’re exploring, okay, it’s not just point of camera and do this, there’s a little bit more to it. And so that’s been really exciting to share with them how to become an entrepreneur in some creative ways that they can make money. Which, yeah, right now they have a lemonade stand that they’re running out of the gym, and my oldest is having to practice like, okay, this is how I engage with a customer. Or, this is how I sell my product in a way that’s not like aggressive or overbearing. We can film a video where I talk about it. And so that’s been a really cool thing to introduce to them as well is, “Hey, I can show you how you can become an entrepreneur and you can build your own business, like, as you grow up,” which I think is a great life skill as well.

Kimberly: Because we’re giving them the foundation. We’re not saying you have to become a physical therapist, or CPA, or a photographer- like, you don’t have to do any of that. But the foundational skills of being an entrepreneur, that grit that we have, if you can learn that at an early age, it’s like riding a bike and it’s just these skills that are ingrained. And that’s why our firm is so passionate about working with moms, because I feel like if we could educate the moms and the moms could pass this knowledge down to the kids, like we are breaking these generational cycles of not talking about money, of not being open about it, of not understanding it. It starts with us teaching our kids those things at home.

Gina: Absolutely.

Kimberly: Oh, while it goes loop can I tell you a funny story? ‘Cause I feel like you’re really gonna laugh. You’re gonna laugh so hard at this- but our 8-year-old, our oldest, he is Mr…. so we have responsibilities and chores, right? Responsibilities, you don’t get paid for, like you live in this house, we take vacations like you have to help around it. Chores are extra, you get a quarter, a dollar, whatever it is. Well, he’s Mr. Entrepreneur. That first time I ever gave that kid a quarter at four years old for helping with the laundry, his light bulb went off and he was like, “Can I do this for money?” “Can I do this for money?” “Can I do this for money?” So he wanted a, he wanted to create a business. He was gonna sell barbecue chicken on the side of the road. And so same as you with your daughter, like I went through and I was like, “Okay, you have to buy the chicken. How much is that gonna cost? You have to cook the chicken. You need the barbecue sauce. You need like a container to package it in. Okay, let’s add all that up. It’s gonna cost $12. How much should you charge the customer for that?” And he is like, “$12,” and I was like, “Then you don’t make any money, so why did you do all of that?” And so I see his brain spinning.

So then we created a business plan- because these kids live in the Chad GPT ages, we did not, right, when we were eight years old. And I was like, “Okay, let’s like, let me help him get his juices flowing.” And so I told him, he’s all excited about this business plan, but, like you, I was like, “But you have to do marketing and you have to do this, and you have to do that.” And so we came back from our team retreat last week and he’s like, “So did you start my business?” And I was like, “Oh, no, Buddy. That’s on you. Like you have to… the business does just not come out of thin air because I did it. I have my business that I busted my butt for. And if you wanna make…” ’cause he wants to make $16,667 a month so that he can make a million dollars in five years, as an 8-year-old. I was like, “Dream big, my man!”

Gina: I love the ambition. I love it.

Kimberly: I loved it! But I was like, “I don’t think barbecue chicken on the side of the road for $15… Like, we’ve gotta think smarter because that’s not gonna get you there. So we need to reverse engineer into a plan, a business model, that doesn’t require you standing on the side of the road, with me, watching you stand on the side of the road!”

Gina: I’m not just gonna leave you out there by yourself! Oh my gosh.

So that is something that… So everyone that comes to me that says, “Hey, like, I really wanna start this business,” or, “I want to have something like you do,” I’ll always say, “Hey, absolutely, I will help you as much as I can. I will give you all of the tips, all of the mentorship, whatever you need.”

Kimberly: YOU have to do the work.

Gina: But YOU need to do it. I will not do it for you. And so my friends will come to me with like different specialties or different like hobbies or crafts that they’re really good at. And I’m like, “Do that.” Like, “You’re a chef. you know what people want from chefs? They want food, or they want meal plans.”

Kimberly: Yes.

Gina: Can you create those? Okay, we can do the food in person. Okay, what can we provide to an online audience that’s gonna give you probably increased revenue with less effort? Okay. We can do meal plans, or we can post recipes online, and you can become a blogger. Maybe you can become a YouTuber. And so I’ll tell them, “Hey, this is a specific skill that I see of yours that I think could, you can probably solve somebody’s problem for. And there’ll be a niche population of people that really want that problem solved. And just do it. And just do it.” And then some of them will do it, and a lot of them don’t. And I’m like, “I’m here for you. Like I will help you. You want advice? You want some tips? I’ll give it to you, but I will not do it for you. I’m too busy with my shit.” But if you wanna do it, I’m a hundred percent there and I am gonna be cheering you along the way, ’cause I wanna see everyone else be successful in this as well.

Kimberly: Absolutely.

Gina: So that would be like my biggest advice to somebody who’s like, “Okay, so I need to start a business. I wanna make more money so I can spend more time with my kids. What do I do?” Just think about some problem that the population of people that you support have.

So if you are a massage therapist and you’re like, “Okay, how can I make more money as a massage therapist?” One, have your own practice. And then two, okay, a lot of people think of massage therapy as like stretching. Could you create like a guide on stretching. Or, “Hey, if you have pain here’s a bunch of stretches that you can do,” or things like that. And so think about what…

Kimberly: Or like a partner guide, like how to give your partner the best massage ever.

Gina: Yeah. How to give your partner a massage, like a digital course on how to- obviously all my stuff is content creation, so that’s where my brain is gonna tend to go. What guide can you create? What course can you create that solves somebody’s problem to give you that revenue stream? That you still have to market, and there’s still work you put towards it, it’s not passive income. I really dislike that.

Kimberly: Oh, we could go on a whole tangent about passive income!

Gina: Oh my God, I hate it when people are like, “You can create a course and then it’s passive income.” I’m like, “No. It takes a lot of effort!”

Kimberly: And also, another fun fact, as someone who sees like the backend of everybody’s businesses, right? I see the million dollar claims, “Oh, I hit a million dollars!” Or my favorite, my absolute favorite in the online world is, “My business has generated $4 million.” They don’t tell you they’re summing all of their revenue over the seven years that they’ve been in business to add it up. I’m like, “You don’t have a $4 million business, like your business earned $4 million over seven years, but you don’t have a $4 million business. That’s not how this works.” And so most people, what they’re not telling- it’s like a whole thing- what most people aren’t telling you on social media or in the mass marketing that you’re seeing is that they may have a million dollar business, but they spent $900,000 on Instagram ads to make that million dollars to sell that course. And so by the time they host the course on platforms, they pay all the ads to have that course, and their time, they’re literally making $10,000 a year, and that’s not worth it. That’s not worth any time away from your kids.

Gina: No, absolutely not.

Kimberly: That’s not a million dollar business.

Gina: There are a lot of like gimmicks I’ve seen out there for… it’s really easy to sell to another business- and this is something that I will say over and over again. It’s really easy to sell to another business because you can tell them, “I will help you make more money.”

Kimberly: Mmhmm.

Gina: It’s much harder to sell to the consumer, or to the person. And so if you are selling to a consumer, like somebody who is not making more money off of taking your course or buying your product, they just, it’s solving a problem for them or, I’m, I get suckered into all of these coloring books and stickers and cozy activities.

Kimberly: Oh my gosh, stop!

Gina: Just show me an ad, and I’m like, “Purchase. I will buy that.” I can’t help myself with it. I just had some new sticker books come in and I was really excited.

Kimberly: I like the calligraphy ones. It’s, there’s something just, I can watch somebody do a calligraphy reel for hours on end!

Gina: Yeah! But if you can sell to the consumer, that’s huge. I think that is such an accomplishment. And so for me, where I’m heading now with my business is we are a business for consumers. Like I create programs for the mom who is pregnant, who is postpartum. Now, we’re starting to direct more effort towards the professional, and we already have the skill of marketing and supporting people who are in the perinatal timeframe. And so it’s much easier to transition to also offering something that supports the professional that’s within that space. And it’s gonna be a big revenue boost for us, which is really exciting. But we started with the consumer, which again, I find is more challenging. You have to convince somebody that you will solve a problem that they may or may not realize that they have. And for me, I wanna do it in an ethical way. Like it would be super… I would make so much more money if I was like, “If you take my fitness program, it’ll snatch your waist.” “You’ll get rid of that (insert derogatory term about your belly).” Like, “It’ll make you smaller.” “You’ll get abs just like mine.” Like I can do all of those like cheap marketing tactics, and I would probably make a ton of money, ’cause I would be digging into someone’s vulnerability and making them feel like shit, so that they would then buy my program. But it feels dirty to me. And that comes back to, “Is the goal of my business to help people in this phase of life, or is the goal of my business to make a ton of money?” My, my goal is, with every business, obviously, is both.

Kimberly: Both! But it doesn’t have to be one or the other.

Gina: But it doesn’t, yeah, it doesn’t have to be dirty about it though. And so I think, yeah, so that’s like my little tangent on it.

Kimberly: Yeah, and we’ve talked about this in my space as well, right? Because you and I are aligned in other tax strategists and CPAs who are doing unethical marketing, in my opinion. And they are making a ton more money than me, but I wouldn’t feel good. I wouldn’t sleep well at night. And, like it’s a personal choice, right? And so people ask me, “Why is it your business bigger?” And two reasons: I’ve put my kids first, and I put my clients first. And that’s why, and I’m okay with it.

Gina: It’s the same for me right now. There’s definitely a lot of projects that I have to pull back on a little bit because my kids are still very young. And there will be a time in my life, like, tear, where they will be all grown up and abandoning me behind, and I’ll have all the time in the world.

Kimberly: It’ll be sad and we’ll be sad and we’ll be like, “Alright, we can finally work on these projects that have been sitting here for 15 years!” And they’re now completely irrelevant!

Gina: Yeah. It’s like, gosh darn it! But I know that there will be a phase of life. I’m in this very small phase of life right now where things are a certain way, and in the future it’ll, I’ll have much more time. And so I also have to hold myself back in that aspect because my primary goal is to focus, be able to focus on my children in this phase of life. Which means I need to say no to things.

And I think that’s another really big thing for somebody that’s getting ready, that wants to start a business or is a business owner, is learning how to set your own boundaries.

Kimberly: Yes.

Gina: With yourself, with your clientele. And I think that’s something that like I have really struggled with, and remembering what your kind of priorities are has always been super helpful for me to help realign and establish my own boundaries with it. Do you do you struggle with the same? You seem really good with boundaries now. I don’t know if it was always that way.

Kimberly: Yeah. But that’s taken a really long, that’s taken a really long time to get there. So it’s, it’s boundaries with myself, it’s boundaries with the clients. That’s probably the one I was the worst with for the longest time. And then boundaries with my family and the outside too, because I’ve always, except for a six month period, I’ve always worked from home. I worked from home before working from home was a thing. So people assume that you’re available at their beck and call. They assume that you’re the default parent to run to school, or to be available, or to do this. And I do wanna be the parent who volunteers, I do wanna be at the kid’s school, but it is this assumption that my business is less important than my husband’s W2 job. And that’s not the case. So I’ve also had to set some family boundaries that, right now my door is closed and it’s locked because this is my focus, this is what I’m doing, and I don’t wanna be interrupted. Your dad is home and if it’s an emergency, go to him. You don’t have to come to me.

So I would also add in their family boundaries and it’s, very much like you were talking about before, involving the kids and explaining to them. And so sometimes, we have very open, honest conversations with our kids and I’ll be like, “This is the last two weeks of tax season,” because I don’t see him as much, I’m in my office more, I can’t. Dad’s cooking dinner and we’re tag teaming more. And so they’ll say, “How can we help you?” And I’ll be like, “Good listening ears, helping pick up, helping Dad around the house. Like those are ways that you can help Mom in her business because we talk about how Mom’s business supports more of the fun stuff that we do, right?” We’re a two income household for just basic bills, ’cause we do have student loans, but it’s involving them in those conversations.

And so I think that you’re spot on. And what I’ve noticed in working with female entrepreneurs for almost a decade is we’re all high achievers- most of us are high achievers- and most of us are recovering perfectionists and most of us are visionaries. And that is a very deadly combination for boundaries because we always just wanna go, do the next thing. We don’t want a parking lot that next project we, want it now. And so that’s been some of the hardest things, especially in being a mom and watching other women entrepreneurs who aren’t moms, who don’t have to parking lot their projects because their time is completely theirs, and my time is not mine.

Gina: Yeah. I really struggle with, I have this vision of all the things that I wanna do, that I know how to do it. I know the steps I need to take. I just need the time to do it. But if I take the time to do it, I have to say no to something with my kids. And I’m like, I don’t wanna have to say- sometimes I do say “no” to them, where I’m like, “Hey, I need to work on this right now. Here’s something that you can play with. You can go do that, and then as soon as I’m done, and if you don’t, if you don’t interrupt me, I’m gonna be able to get to you sooner. If you keep interrupting me, I’m not gonna be able to play with you in a little bit.” So setting boundaries with my family is also sometimes a struggle as well.

Kimberly: It is.

Gina: But it’s hard to be the person that holds yourself back, like 100%. But remembering what, yeah, your priorities are I think is incredibly important.

And then also, I think it’s great to have something that’s, I’m building it now as I go, but there’s gonna be something like really cool for me when I’m outside of this early motherhood phase as well, which I think is equally exciting.

What would your advice be for somebody who is not a business owner and is looking to figure out deductions or ways to keep more of their W2 in their pocket? Is there a possibility for that? Can you do deductions as a W2?

Kimberly: Nope. Unfortunately you can’t. So my biggest thing that I would say if you are just someone who is a W2 earner, is making sure that your withholdings are accurate. And so that is, if you think about your paycheck that you get every other week, once a month, every week, whatever that rhythm looks like for you, you have your federal withholding, you have social security withholding, Medicare withholding, and then a state withholding if you live in a state with income taxes. That federal income number, that federal withholding income number is often too low. And so if you find yourself every year, like, “Why do I owe when I go to file my taxes?” It’s because you’re not withholding enough from each paycheck. And so that’s, unfortunately, there’s, as a business owner, we figure out, “Okay, you owe 10,000, how do we get that down to 6,000?” Unfortunately, that option is not available to you as a W2 earner, but you can make sure that you’re withholding enough on each paycheck so that you don’t get in that situation where you’re like, “Oh my gosh, I still owe and I don’t have the cash available.”

So that’s advice piece number one. And then advice piece number two is, go start a business. I think everybody should have a business.

Gina: Yeah. ’cause again, it doesn’t have to be like your main focus either.

Kimberly: No! And I was gonna say that, so if you have a rental property, you’re a business owner. An investment property, if you rent it, whether it’s short term on Airbnb or long term, because you have 12 month renters in there, if you are selling something like Rodan and Fields or, what are some, other ones? Numi.

Gina: Yeah.

Kimberly: Numi. Numi?

Gina: Yeah?

Kimberly: New Skin! New Skin. So if you’re selling anything like that and you’re getting a, you’re receiving a 1099-NEC, you are a business owner. If you do any sort of freelancing work, I want you to not look at that as a hobby, or just a side hustle, or something you do because you wanna share it with your friends. No girl. You are a business owner and I want you to look at it as a business and I want you to start thinking about everything that you do as an expense or a deduction for that business. Because if you were on- let’s, take the New Skin and the Rodan and Field example, right? ’cause they’re in the same like face skincare realm- like I want you to think about how are you always marketing? How are your meals? Who are you going to have meals with that could be a meals deduction? What are you doing? You have to be careful with clothing and skin, skincare and like makeup write offs and all of that. But you should always be thinking about: how is this expense supporting my business and helping me grow the revenue of my business? Your cell phone, your internet, your home office, all of these things. I want you to see yourself as a business owner, not just a little side hustle.

Gina: So if somebody is a 1099, or they have a side hustle, should they make like an LLC? Do we need to be officially a business, or can you just say that you’re a business to the IRS?

Kimberly: Yes. Okay. So without getting too technical, if you are receiving any sort of 1099 compensation from someone and it’s just you and you’re just, maybe it’s your name and your social security number is how they’re issuing the 1099. Because if you haven’t created an LLC within EIN, that’s how they’re gonna issue the 1099 to you. You are still a business, you are still going to report that income and those expenses on Schedule C of your form 1040, which is your individual income tax return. So it’s an extra form or schedule that you’re gonna fill out, and absolutely, if you have that 1099 income and you can prove, and you kept track of your expenses that are supporting you generating that revenue, that 1099 income, you should absolutely be putting that on your Schedule C of Form 1040 so that you could report the income and then deduct any expenses that you have. Mileage on your vehicle, we didn’t even talk about that one. Office supplies. Anything that you need to generate that income, you need to deduct it from that income.

Gina: Yeah, and there’s so many things that you would be surprised by that you could reasonably say is a business deduction. So like for me- and hopefully you’re not like, “Gina, no. That’s not a deduction…”

Kimberly: I’m like, “LA, LA, LA, LA!”

Gina: Like, just go ahead and correct me if you’re like, “Gina, that was not a good example.”

Kimberly: Okay, remember Gina, we’ve got green areas, red areas, and yellow areas. So I might be like, “Oh, that’s green. Good.” I might be like, “Yellow. Okay.” Because everybody has a different level of risk tolerance and aggressiveness with the IRS. So, y’all are some of our more aggressive clients, so we’re not letting you do anything illegal or unethical, but like y’all are a little bit more okay with pushing the boundaries. And we’re okay with that too, again, as long as it’s legal, unethical.

Gina: Yeah. Like I’m not trying to do anything illegal here! So right now I…

Kimberly: We wouldn’t let you!

Gina: I know. Thank you! So right now I am creating a marathon training program, like, that is this project that I’m currently working on. And to do that, I am running a marathon, like I am training for it myself and then I’m gonna race in it, and I’m going to use that data to help me develop my program. So my registration for the race, I’m like, this is R&D, this is research and development, because it is a part of absolutely my process to then create this program. And so that was like a creative way that I thought about how could I have this thing that I am doing for myself personally.

Kimberly: And it’s a thing that you wanna do right? Like you still have a personal enjoyment.

Gina: But, I can tie it into as a part of my business to have it be a business expense, and therefore a deduction. And so that’s one creative way that I go about some of my deductions. Like normally it’s just, did I travel somewhere? How can I make that a business travel so that my flight and my hotel…

Kimberly: But if you want, but let’s flip the script, Gina. What if you want to go somewhere? So I want to go to Italy. I want to take my kids to Italy with me. So we have a goal of having our team retreat, the Tara CPA Firm’s team retreat in Italy in 2030. Goal 2030, right? All of my kids will be hired by the firm by then, as well as my husband, so they can all legitimately have their travel written off. We get to stay. We’re gonna do our four hours and one minute of business. Like, we’re not just saying, “Oh, I’m writing off my travel.” I’m saying, “Where do I want to go, and how can my business pay for it legitimately?”

Gina: Yes.

Kimberly: That is how you flip the script of writing things off in your business strategically, proactively and correctly.

Gina: Absolutely. So if somebody is doing their hobby- that is not technically a hobby if they’re making money.

Kimberly: We’re, right, we’re not gonna call it a hobby. You’re gonna turn that hobby into a bonafide business.

Gina: They’re doing, they have made their hobby a business. You are making money from this thing that you love to do, that may or may not be your primary stream of income. Maybe it’s like a side piece of income.

Kimberly: It does not have to. It does not have to be your primary stream of income.

Gina: And they want to deduct things. What happens if their deductions are way more than what they make? Is there a point where that becomes a problem?

Kimberly: Yes, there is. Because, you, it’s not a guarantee, but more than likely, after about three consecutive years, the IRS puts out data every year on the number of audits and the types of tax return types and forms that have audits. And so a Schedule C- which is the one that I just said, if you’re receiving 1099 income, you need to put your income and your deductions on- that is the most highly audited form out there. However, there’s also the fact that it’s the most filed schedule, outside of Form 1040. So for me, my tolerance is not going about more than three years in a row of a loss because that will get suspicious. And what they can do is classify it as a hobby instead of a business. Because one of the definitions of a business is for-profit, having a for-profit motive. And so if you never get to that point of profit ever, they can look at it and say, “This actually isn’t a business, this is a hobby.” And what is horrible about that, is that if they deem it a hobby, you have to report the income and you don’t get to deduct any expenses.

Gina: Okay. Oof.

Kimberly: Yeah.

Gina: Ugh. So you can make your hobby a business, but make sure it eventually becomes profitable.

Kimberly: Have a plan. And look, maybe you leave off some deductions in year three, right? It’s not super profitable, but it’s profitable. And the IRS isn’t gonna be mad at you if you forget to include some deductions on there so that your business is profitable and you pay a little bit of tax.

Gina: Absolutely.

What is your final advice for somebody who’s like, “Okay, I would like to keep more money in my pocket.” So we’ve got: become a business owner, in some capacity. It could either be officially with an LLC or all of the different entities, it could just be you just file the form… I’m assuming, maybe I had that wrong?

Kimberly: Schedule, you just file Schedule C on form 1040, if you just get 1099 income as a MLM or as a freelancer contractor.

Gina: And so what advice would you have for somebody who’s like, how do I keep more of my money so that I can spend more time with my kids?

Kimberly: Yep. Making your money work for you. Understanding how to make your money that you are already bringing in work for you. I want you to focus on profit, not revenue. And remember, profit is what’s left over. So I don’t, the top number, the gross revenue, if you hit a hundred thousand, if you hit a million, I am cheering you on. But what I want you to be focusing on is that profit number, because that is the part that you get to take home. That is the part that you get to make work harder for you, which enables you to spend more time with your kids. So I want you to be focused on profit, not revenue. That’s one thing.

The other thing that I want you to think about is- what expenses in my life am I already paying for that, with minor tweaks, I could turn into a business expense? So now I’m paying for this expense with pre-tax money, essentially, instead of after tax dollars that I have to pay myself and pay taxes on. So those are the two, just, biggest things that I think can really make such a difference.

And then the third thing, and I’ll stop at three ’cause I could probably keep going forever, but I will stop at three. The third thing is to actually look at your numbers and track them. Don’t think, “Oh, I roughly know what I make.” Oh no. Every month you need to sit down, look at your income, look at your expenses, look at your bank accounts, look at your financial picture. Because the only way that it’s going to improve, or even just be maintained, is if you’re aware of it and you’re looking at it and you understand it, because then you know what you need to focus on. You’re being cognizant of it. And so I know it seems counterintuitive to be like, I have to look at my money 30 minutes a week. That’s 30 minutes I could be spending with my kids. If you commit to that 30 minutes every week, eventually you will see the changes and the tweaks that you need to make so that your money can work harder for you and you can get those moments and those memories and more time back with your kids in the long run.

Gina: Absolutely. Thank you so much, Kimberly, for coming.

Kimberly: Yeah, thanks for having me!

Gina: For this chat with our listeners all about money, which I think is a really scary thing to talk about, especially as women. There, I think there’s a lot of stigma involved with it.

Kimberly: Yes.

Gina: I would like to keep more of it within my pocket.

So how can our listeners find you if they do wanna work with you or if they want to follow you?

Kimberly: Yeah, yeah. So I’m on Instagram @KimberlyTaraCPA. I also am the host of the CEO Moms Building Wealth Podcast. So if you like listening to podcasts, we share relatable advice, money moves, tax strategies, all the things, and then you can also go to our firm website, which is taracpafirm.com.

Gina: Thank you again for coming on to our podcast and for being my CPA.

Kimberly: Yeah, we love you! Thanks for letting us just be a part of the journey. It really is like, we have a channel in Slack called “Proud Mom Moment,” and when a client does something that’s like exciting, whether it’s like, what y’all have going on right now with your business, we cheered you on. We had another client, her business was able to pay for the health insurance for their family. We had a client buy a new rental property. Like, we are cheering our clients on, and it is just such a gift to be a part of y’all’s journey and see, just like y’all crush it as moms and business owners.

Gina: Thank you so much. I’m so glad that we were able to find you and work with you.

Kimberly: Yeah, Same.

Gina: Thanks so much for listening to this episode with my CPA Kimberly Tara. If you want more support throughout your pregnancy and into your postpartum, check out our online fitness programs. We have a prenatal fitness program and a postpartum fitness program so that you can stay strong throughout your pregnancy, you can stay pain free as you prepare for birth. Then our postpartum fitness program is designed to help you recover in the postpartum so you can feel strong and like yourself. Again, we don’t use any cheap marketing tactics such as, “shrink your waist” or before and after photos. We legitimately want you to function better throughout your pregnancy and your postpartum, regardless of your size or the aesthetics. So I hope that you can trust that our programs are designed intentionally with your function in mind, not by how much money I can make off of you with cheap marketing tactics. You can check out our courses on our website, at mamastefit.com, and use code STORY10 to get 10% off any of our online offerings. And several of our prenatal fitness programs can be bundled with childbirth education and pelvic floor prep. And the postpartum fitness program can be bundled with postpartum yoga in addition to infant CPR and massage. So we have a lot of different options on our site, and thanks so much for joining us this week.