Ep20- Tax Basics for Coaches & Consultants - with Ostriches and Salad
1/31/23 - Tax Basics for Coaches & Consultants - with Ostriches and Salad
Today I’m going to give you a really high-level, 30,000 ft view of your taxes that anyone can understand - and I’ll explain how the ostriches and salad fit in, too ;-)
I’m not saying you have to actually do your own taxes after this (I trust that it’s probably not your favorite thing), but you can at least feel confident in talking about it and thinking through it for your business.
Your bookkeeping is crucial, because, using that, you will generate a Profit & Loss statement (P&L), which will be the basis of your taxes.
There are 2 different ways your business P&L makes it into your 1040 form:
If your business has between $0 - $150K in revenue - you’re likely an LLC, but not an S-corp
Your P&L goes into a Schedule C
Schedule C is part of your 1040.
If your business has between $150K - $2M in revenue - you might be an S-corp
Your P&L goes into a totally different form, called a 1120-S. You have to file that with the IRS by March 15th (1 month before your taxes are due), but you usually don’t have to pay taxes will that form.
That first form (1120-S) produces a K-1 form.
Your K-1 goes into your 1040 Form
So your basic tax flow looks like this:
You operate business
Do your bookkeeping (and listen to Ep 7 in the Business Money 101 series if you need info on what clean bookkeeping looks like)
Your bookkeeping produces a Profit & Loss statement (P&L)
Your P&L goes into you Tax Return (Form 1040)
Your takeaway:
Remember, at a fundamental level of business….good bookkeeping is KEY. Because your P&L is what your business taxes will be based on.
Just like the ostrich that everyone thinks is scared and hiding from something, it’s not. What it’s really doing is caring and nurturing for something that’s really important to it. Its egg. In essence, its future…its legacy.
Learn how to protect yours in the tax process.
Listen in for all the details.
And until next time, may your week be filled with love and profit!
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