Erin Armstrong is a money coach, entrepreneur, business tax specialist and professional speaker. She loves working with small business owners, creatives, and freelancers with regard to their business financials, their accounting and understanding the tax deductions.

Podcast Highlights

Discover what Armstrong recommends that could help make paying your taxes easier (6:44).
Find out how Armstrong got interested in tax deductions (11:22)
Find out about the tax deduction challenge on Armstrong’s website for small businesses and freelancers (15:45).
What Armstrong has found working with people to maximize their tax deductions (17:34).

What You’ll Learn

Why it is important to learn about tax deductions as your business grows (3:28).

Although it is easiest to just collect receipts and hand them to your accountant, it will not give you the best write-offs or tax filing. Therefore, it results in you paying a lot more in taxes. Also, Armstrong mentions so much of the accounting industry likes to come up with general “cookie cutter box” answers. These answers address what expenses you take and how you take them, for example. However, Armstrong points out that these answers are not the same for creatives.

How often you are supposed to pay taxes and how much you’re supposed to pay (7:20).

Eric addresses this topic because he thinks it may be really important for listeners to hear because he learned the hard way. Particularly, Eric once thought that you could pay at the end of the year when you do taxes. Armstrong mentions that that is a popular misconception and everyone is supposed to be paying quarterly. However, she mentions that there is leeway the first year of business because the IRS doesn’t know you are making money. In fact, they will not know you are making money until your first tax return. Armstrong mentions that if you do not pay quarterly your first year, this could result in confusion. For example, you may remember you didn’t pay until the end of the year the first year and plan to do the same again. She also shares that there is no specific amount of money you need to be making that excuses you from paying quarterly.

While talking to people, Armstrong has found that some are confused how much they are supposed to pay. Therefore, she gives a formula to listeners to help them figure out just how much they owe quarterly. The formula is you always owe 90 percent of what you paid the year before.

What you can write-off on your taxes (16:36).

Armstrong discusses that one of the trainings through her tax deduction challenge talks about how to take a home office deduction. She talks about how it can make a difference such as thinking about things that you can possibly rent versus buy.

A write-off that Armstrong explains as very misunderstood is meals and entertainment. For example, she mentions typically meals and entertainment are a 50 percent write-off. However, Armstrong expands on this by addressing some exceptions to the 50 percent write-off. For example, if you purchase a V.I.P. day or go to a workshop, you are purchasing someone’s expertise. In many cases, there is a catered meal component included in the event. Therefore, because the meal is provided to their client, it is a 100 percent write-off. Another exclusion would be if someone goes to a conference and has no option to eat at home. In this case, the write-off is 100 percent as well. Armstrong also answers Eric’s question about if there is a certain distance considered “away from home” which makes the 100 percent write-off applicable.

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