It is one of the worst options for bookkeeping, never mind for full small business accounting needs.

Harsh words, yes.

They are true, nonetheless.

How can I be so sure?

I’m an accountant and tax preparer.

I’m also a QuickBooks ProAdvisor and use the programs on a semi-daily basis.

Trust me, this isn’t about personal preferences as I recommend QuickBooks Online to anyone who should be using it.

It’s not about a single bad experience either.

I’ve experienced one or more of these issues with every person I’ve ever dealt with who uses QuickBooks Self-Employed.

Hell, it’s not even about money!

(If it was, I’d be gushing about it for affiliate sales!)

This is simply about using my expertise to guide you as a business owner.

To lead you away from a “small business accounting” program that will cause more hassles than it solves.

And, to give you a logical counter to all of those people who push the product simply because they get a kickback as an affiliate.

My Recommendation

Real Small Business Accounting

Take QuickBooks Online for a free 30-day trial & see for yourself how complete it is. There’s a reason it’s the only app I support & use myself!

Go Get It!

QuickBooks Self-Employed Promotes Commingling

One thing that I always preach to small business owners is to have separate bank accounts for business and personal money.

It’s a basic practice for running a business of any size.

QuickBooks Self-Employed, however, seems to encourage people to commingle their money.

The program actually tracks transactions as “business” or “personal” which is a huge mistake.

Just allowing the mixed tracking increases the chances for misclassification or worse–writing off personal expenses as business deductions.

Another example of this poor method of bookkeeping is the home office deduction.

In the app, there is literally a business expense category for “home office expenses” which is misguided, if not just plain stupid.

Why?

Well, the home office deduction is not a business deduction per see, meaning you don’t pay for your living expenses with your business checking account.

Instead, you track all of your expenses outside of your business, then calculate the potential for the home office deduction on Form 8829 along with your 1040 and Schedule C.

The reason I say “potential” is because you have to have profits first of all in order to claim the deduction, but also because the actual expenses might not benefit you to the point that the simplified method will grant you the bigger deduction.

But that’s all for another article.

Basically, you should not be tracking “home office expenses” with your ordinary business expenses.

You Can’t Customize QBSE Accounts

This is a huge gripe for me!

What is the point of having a bookkeeping system that you can’t customize?

Does every business have the same exact sources of income?

Do all businesses use the same expenses?

This is one of the dumbest aspects of a program with a lot of dumb aspects.

QuickBooks Self-Employed doesn’t have a chart of accounts and this is the explanation for why:

Sometimes you actually need to create additional accounts.

For example, if you are a lawyer that provides multiple services and has a blog plus sells downloadable, you will want to see how much each of those beings in.

You could want to see:

• Legal services
• Expert witness testimony
• Website income
• Downloadable sales

It only makes sense to want to see where your income is coming from and not want to have everything lumped into a single “sales” account.

The same goes for any small business that has more than one income stream.

This issue goes for business expense tracking as well.

Many people want to see how much it costs to maintain their website, but there is no “website expense” category.

You may want to track the costs of accepting credit cards in a “merchant fees” account, but there is no such account.

Or, a big one for a lot of people is bank fees which also doesn’t exist.

All business owners need to be able to see their income and expenses in the way in which they feel most comfortable and that requires the ability to create/rename the accounts.

Another issue related to this is the “other business expenses” category which buries several pretty important expenses as sub-accounts under this one catch-all account.

That, we’ll look at next…

Reports In QuickBooks Self-Employed Are Terrible

For a business owner, financial reports are important.

They can show you how much you are making, spending, and profiting.

They can also show you how much your assets are worth and how much you owe.

From a tax accountant’s perspective, financial reports are essential to filing income tax returns.

The reporting in QuickBooks Self-Employed fails on all points.

Let’s start with the fact that you have very limited reporting options.

Take a look:

The profit & loss report is limited to specific periods or month-by-month views.

You cannot see year-over-year to see how your growth/decline compares to similar periods in your yearly cycle.

That’s important because you want to compare summer months to summer months when kids are out of school or Christmas season to Christmas season when families are focused on the holiday season.

It’s more accurate than looking at January vs. February.

On top of that, as I mentioned in the previous section, a bunch of accounts get lumped under the heading of “Other Business Expenses”.

When looking at the P&L, you aren’t seeing an accurate representation of your business because of the “hidden” expenses.

It’s also 100% possible to have no expense accounts other than “Other Business Expenses” with 5-6 expenses rolled up into it.

You would have to do a “drill-down” in order to see what the heck makes up that account.

There are also no options for different views such as seeing percentage changes between periods or seeing individual expenses as a percentage of the whole, or individual income items as a percentage of total income.

Plus, there is no balance sheet since QuickBooks Self-Employed doesn’t track assets or liabilities.

That means you don’t how much you have or owe and you can’t track your equity in the business.

On top of all of that, you can’t run a report that shows amounts paid by each vendor which means you can’t easily track to whom you need to send 1099-NEC forms.

As an aside, QuickBooks Self-Employed doesn’t have a feature to send the 1099-NEC as QuickBooks Online does.

QuickBooks Self-Employed Has no Bank Reconciliations

Bank reconciliations, to some people, are a thing of the past.

They think that because you are using a “modern” bookkeeping app or program to track your business income and expenses that it’s always going to be accurate.

I can tell you with 100% certainty that that line of reasoning is wrong.

The APIs banks use to send information to QuickBooks Self-Employed–or any other bookkeeping program–are not flawless:

• Capital One Bank has a habit of randomly failing to push multiple transactions a month to one of my clients and many others based on QB support reports.
• American Express earlier this year had an API problem that resulted in a week’s worth of credit card activity not being sent to bookkeeping products.
• PayPay is the worst of them all–it treats bills as actual transactions and ignores refunds when transmitting banking data.
• I’ve even had to make changes to downloaded transactions because the $ amounts were wrong.

All of these examples outline the importance of doing bank reconciliations.

This is the only way to ensure that the information in QuickBooks is completely accurate.

Since QBSE doesn’t give you the ability to reconcile your bank or credit card accounts, you really don’t know if that’s the case.

If you don’t know if your net income is correct, then you cannot be that your self-employment tax deposits are correct or even if your income tax return is accurate.

Removing Accounts Removes Everything

This issue is something that almost no one would even think to look into.

I know it never crossed my mind.

I happened to stumble upon this problem dealing with one of the issues mentioned previously.

Someone who does their own QuickBooks Self-Employed management was referred to me because they stopped using their personal account for business and when they disconnected the account everything was gone.

I never heard of anything like that happening so I did a quick search and came across this little tidbit on a help article:

That literally says it all:

If you [delete] a bank or credit card account, you also delete all related transactions.

It makes zero sense.

What happens if you change banks or credit cards?

You have to leave all of those accounts connected and “hide” those transactions but that’s stupid.

And if you start out using your personal bank account when starting out and then decide you don’t want to continue using it?

You have to set up the new business account and leave the personal account connected.

The reason I’m adding this issue to my list is simple:

NO ONE EXPECTS THAT DISCONNECTING A BANK ACCOUNT WILL REMOVE ALL THE ASSOCIATED TRANSACTIONS

It doesn’t happen in any of the other QuickBooks Online versions nor any other platform as far as I know (which admittedly isn’t much).

QuickBooks Self-Employed May Not Scale

This used to be my #1 issue because in the past it was impossible.

For the longest time, QuickBooks Self-Employed simply could not be upgraded to a full version of QuickBooks Online.

For context, when you would outgrow a particular QuickBooks Online level, all you would do is switch to a higher level at any time and the new features would be unlocked instantly with no other action needed.

When you wanted to upgrade from QuickBooks Self-Employed, you would literally have to set up an entire new QuickBooks Online account, export the QBSE data manually, and upload it to the new QBO account.

Now, while it’s not available to everyone, at least some QuickBooks Self-Employed users are able to do a direct upgrade.

Unfortunately, it’s still hit-or-miss as to who is eligible with no explanation as to how the selection process works.

You have to take a chance that if you need to scale up to a more robust version that you will be allowed to.

Once again, Intuit itself says as much in the help articles:

What happens if you can’t automatically upgrade to QuickBooks Online?

Is it the end of the world?

Of course not, but you will have to manually move all of your data over which can be a pain in the ass to deal with but not impossible.

You can also wait until the beginning of the next year and start the year fresh in the new program.

The point is that it should never be this difficult to access more advanced features of a program or app as your business grows.

Wrapping Up

Sure, I’ve found some positives when it comes to QuickBooks Self-Employed:

• It’s pretty cheap
• It’s fairly easy to use
• …

Well, maybe a couple of positives.

Is it worth the negatives or hassles to save a little money?

Not in my opinion or professional experience.

It’s definitely not worth using if you know someone who can get you a QuickBooks Online subscription at a lifetime discount.

Like anything, though, there are going to be people who use and swear by QuickBooks Self-Employed so you should definitely do your own research.

My Recommendation

Real Small Business Accounting

Take QuickBooks Online for a free 30-day trial & see for yourself how complete it is. There’s a reason it’s the only app I support & use myself!

Go Get It!

Your Turn

Ok, go at it–let me know how I’m just a hater and how these facts are wrong If, however, you have an actual comment or opinion by all means let’s have a discussion. What’s your experience been with QuickBooks Self-Employed? Do you get what you need? What’s lacking in your view?

Everyone wanted one.

The typical response to the question of “what would you like for [enter occasion]?” would be “just get me a gift card to [enter retailer]!”

Gift givers were all too happy to give a gift card, too as it was a way to not have to put much effort into the gift…

Plus they sure as heck didn’t have to go from store to store trying to figure out what to get.

And the recipients were more than happy to accept the gift cards.

They didn’t have to worry about opening a wrapped box just to find a pair of socks, ugly sweater, or another item(s) they had to feign interest in.

To see how popular gift cards have become, just take a look at your local grocery or drug store.

I’d guarantee that you will find at least one display of gift cards for other stores.

Let’s not forget about “rewards” such as Rakuten cashback bonus offers, business referrals, survey rewards, etc.

But things aren’t all rainbows and unicorns, there are people who don’t like them very much, including me!

Gift Cards Make For Lazy Gifts

This isn’t my own opinion, but something I’ve heard/read about multiple times so it bears inclusion here.

The biggest complaint seems to be that it takes no effort.

I mean, I’m pretty sure the giver does have to spend a bit of time thinking about which store’s gift card to give.

But that isn’t what people mean.

It’s lazy in that it doesn’t show any thought being put into the gift in terms of it not being meaningful to the recipient.

Some people think it’s no different than simply giving cash.

I can see where people are coming from with that viewpoint.

Obviously, there is a time when a cash gift can be unquestionably appropriate such as a wedding or bar/bat mitzvah.

The reality is, however, that many people think that gift cards make for a lazy gift.

Store Gift cards Lock You In

Now we get into my own reasons for disliking gift cards.

One of the biggest reasons for me is the fact that you have no flexibility.

You have 3 options that may not be ideal:

• Force yourself to use the card at that store
• Try to sell it
• Regift it

This kind of ties into the idea that a gift card makes for a bad gift.

If you even put in a little bit of effort to think of a store where you think the recipient would appreciate a gift card, that’s not always the case.

Maybe they just don’t have a need for anything there at the moment.

Maybe you based the decision on limited information or an incorrect assumption.

I’ve experienced something like this firsthand:

I mentioned buying something at the grocery store (for the life of me I can’t remember what it was, but that’s not the important part) to my mother one time and for months moving forward she would clip the coupons for it to give to me.

She took that one purchase and turned it into something bigger.

People do the same when it comes to gift-giving:

They will recall one mention of a store or a single trip, and while the thought is in the right place, the person might not have a desire to shop there.

I’ve also had someone give me a gift card to Starbucks, but I don’t drink coffee–and yes, I know it sells other things but coffee is the main thing there.

So what do you do after you smile and say “thank you”?

You can regift it, which is what I did with the Starbucks card.

You can also try to sell unwanted gift cards, but you need to be forewarned that you will not be getting 100% of the value in return.

Or do you hold onto the card, hoping for a reason to use it until you literally forget about it and find it while cleaning out your drawers years later?

Some gift cards, however, have multiple stores available on them so those may make it a bit easier to use the card, but won’t necessarily solve the problem completely!

Gift Cards Can Force You To Spend Money

Another reason I don’t care for gift cards is that there is almost always a personal contribution involved.

Depending on the amount of the card, you may be forced to spend your own money in order to use it.

Let’s say you get a $10 gift card to Best Buy.

What can you purchase there for $10?

There likely isn’t much I’d imagine, so if you wanted to use the card you will have to put your own money in to make up the difference.

If you happen to find something that is less than the value of the gift card you get to carry a balance on to the next purchase.

Of course, the personal outlay will come with that next purchase or…

You Can’t Always Clear Gift Cards

The opposite problem is what happens when you don’t want to spend any of your own money.

In those cases, you end up leaving money on the store gift card which can, again, sit in a drawer forever.

There really isn’t much else to say about this.

You are either going to spend extra or lose some money unless you have the magic ability to spend exactly the amount on the card!

And speaking of leaving money on a gift card…

Debit Gift Cards Suck For Online Shopping

Some people might be inclined to prefer a debit gift card ie: Visa or MasterCard due to the universal acceptance and flexibility that store gift cards don’t provide.

It’s a logical assumption but leaves you in a more difficult position when online shopping.

With virtual debit gift cards, you can actually add them to your wallet such as ApplePay to use it in a store so it’s not a problem.

Neither are the physical gift cards.

The issue comes into play while shopping at home.

You see, stores are specifically set up to process their own gift cards as separate payments.

That means if you go online you can enter a store gift card separately from the payment method.

But, when you are using a debit gift card, you don’t have a “gift card”, you are using the actual payment method!

Online stores just aren’t capable of processing debit gift cards separately so they make terrible options for online shopping.

You really need to play mathematical gymnastics when shopping with those debit gift cards!

The one workaround I have found–and this works really well for those times when you have small amounts remaining on the debit gifts:

Use the card to replenish your Amazon gift card balance!

There’s no minimum amount so you can reclaim all the change remaining on your various debit gift cards and give them a new purpose.

Unfortunately, this doesn’t work with store gift cards for obvious reasons.

Wrapping Up

Don’t get me wrong, free money is free money.

I’m not stupid–I’m not going to turn that down.

But in all honesty, just give me cash.

If you’re giving me a gift, just give me cash.

If you’re giving me a reward for taking a survey, just give me cash.

If you’re giving me a “thank you” for a referral, just give me cash.

Your Turn

What are your feelings about gift cards? It can be about giving, receiving, spending, whatever. have you ever been faced with any of the situations described above?

What’s deductible?

What’s not?

If I buy this thing in my business will I get in trouble?

It’s even more confusing when you consider that social media influencers are paid to talk about business topics like they’re experts.

Just because you “have a business” doesn’t mean everything you spend money on will be legitimate business expenses.

That is what we’re going to go over here:

Legitimate business expenses for online businesses specifically such as:

• Bloggers
• Podcasters
• Freelancers of all kinds
• Coaches
• Graphic/Website Designers
• Course creators

Truth be told, even though I aim most of my content at the online folks, this info applies to all businesses.

So let’s get started at the very beginning.

Basics Of Business Expenses

According to the IRS:

To be deductible, a business expense must be ordinary and necessary.

Internal Revenue Service Publication 535, Business Expenses

What does that mean?

For starters, it means that you have to compare apples to apples, and oranges to oranges.

You must look within your own industry to see what is commonly needed and/or used in business.

A landscape engineer can’t look at a legal firm and say “Well I know someone and they are deducting so-and-so”.

And vice versa.

It simply doesn’t work that way.

If an expense is ordinary–in that is common within your industry–you’re halfway to being able to deduct it.

The second part is “necessary”, meaning it’s a requirement for you to run your business.

For example, the landscape engineer can buy a pickup truck through their business.

It’s “necessary” for them to be able to get around from site to site and be able to carry all of their equipment.

You, as a home-based blogger or a VA with no local clients?

There’s no necessity component to the business owning a vehicle, so that would be a no-no.

If you can say that it’s an “ordinary” expenditure and one that is “necessary” for you to do your job then you, my friend, have a deductible business expense.

Now that you’re (hopefully) clear on what makes an expenditure a business deduction, let’s take a look at what you can freely spend money on!

Money-Related Business Expenses

This is a screenshot from one of the Facebook groups I belong to.

It’s in regard to credit card processing fees.

It reflects a very common problem people face when starting out…and even when you’ve been around for a while too!

When it comes to money-related issues, you can deduct anything that is charged in conjunction with collecting, maintaining, or sending money.

That includes:

• Bank maintenance fees
• Bank overdraft/interest charges
• Credit card annual fees
• Credit card late payment fees
• Credit card interest
• Merchant services account fees
• Loan interest 

For those who don’t know, merchant fees are any cost/deduction that a payment processor charges or deducts for its service.

That includes both the percentage and flat transaction fee amounts charged by PayPal, Square, Stripe, QuickBooks Payments, your bank’s merchant processing system, or any other service.

Some people–myself included–would consider membership fees to be “dues and subscriptions” (covered a little later) but I figured I’d keep all credit card stuff together.

It really doesn’t matter much except for classification purposes.

This is also why it’s important to have a separate business account.

You are not allowed to deduct any of this on your personal tax return for individual purposes (meaning without a business).

So, even if you had “mixed-use” accounts, you would have to be very careful in claiming any of these as business deductions because of the shared aspect.

At the very least you should be allocating a percentage to your business use, and only deducting that amount…but it’s just a heck of a lot easier to have a separate account dedicated 100% to business purposes.

Website Expenses

This is a biggie because a small business website is a necessity these days!

After all, this is where we business owners sink a lot of our money lol.

Well, actually, in the beginning, many of us probably went the cheap route and choose free hosting like wordpress.com and blogger with themes that didn’t cost anything either.

Then once you realized how bad of a choice it was you hopped on the self-hosted bandwagon just like I did!

That’s when we started shelling out money for all these little things to get our sites up and running like domain names and hosting accounts.

Then came the growth where some of the free options just didn’t hold up and a better, more robust option was necessary.

So we started buying premium plugins and more advanced premium themes.

Then backup and security monitoring services.

The question I most often get about these types of purchases is:

What website expenses can I deduct through my business?

Almost every onlne business owner

The answer is pretty simple:

If you are monetizing your site–meaning you are actively trying to profit from it as a business or using it as a marketing tool–then anything you purchase in relation to it can be paid for by the business.

That being said, you’d be surprised at how many times people don’t include one or more of the following expenses when they give me their expenses listings at tax time:

• Domain registration
• Domain Hosting
• SSL certificates
• Maintenance services
• Themes
• Plugins
• Images
• Fonts

Online Tools/Cloud-based Services

Now that you know practically all of the costs to get your blog up and running are legit, deductible business expenses, it’s time to look at your marketing.

You know, the things that you need to do to let people know of your existence on the web.

After all, this isn’t Field Of Dreams, and no one will come just because you built it (I may be seriously dating myself with this analogy!).

You need to get out there and do marketing and promote your site or else no one is even going to know about its existence–aside from family and close friends perhaps.

There are a lot of free things you can use like Facebook, Pinterest, Twitter, email, and a host of others depending on what you want to do in terms of marketing.

However, sometimes you just can’t get away with using free versions of apps or platforms to do what you want.

Sometimes the free versions just aren’t powerful enough.

Other times, the apps or programs limit your free use before you are required to start paying.

For others, you may simply feel the need to pay so you can remove the existing branding and only have your own branding appear to the public.

So what can you pay for with your business funds and actually deduct?

Tools and services like:

• Content creation
• Social media marketing
• Email marketing services
• Graphic design programs
• Team communication apps
• Online storage

Digging a bit into these resources, we have…

Content Creation

The first thing to understand is that content creation involves more than just writing.

It involves managing teams, organizing ideas, project management tools, and a ton more.

Tools like Evernote for organizing ideas or Trello or Asana for managing teams and projects are free in the simplest versions. When that happens they all have “upgrades”–meaning paid versions that unlock more powerful features–obviously for a cost.

Social Media Marketing

Think beyond the actual platforms.

That means we’re not considering Facebook, Twitter, Pinterest, Instagram, or any other platform itself.

For this, we’re speaking of automation and dashboards.

Programs like Hootsuite for monitoring multiple platforms at once.

Apps such as Edgar and Tailwind for scheduling updates.

Some of them are free for basic usage needs while others cost right from the start.

Email Marketing Services

If you don’t already know, you’ll soon find out: your email list is the most asset you have, regardless of the type of business you run.

At least that’s what practically everybody says lol.

For the most part, if you want to do stuff more than just blasting broadcasts or sending out the latest post on your blog to your list via the RSS to Email function, you’ll need to pay for a service.

You may have a sales funnel for prospective clients.

Or a set of reminders based on dates and the industry you are in (ie: accountants and quarterly estimate reminder messages) you need more advanced functions.

All of your email service payments, like say for a service like ConvertKit or MailerLite, will fall under this category.

Graphic Design Programs

Pinterest.

Blog feature images.

Facebook ad campaigns.

Shareable quote images.

Whatever the purpose, you need to be using images in more creative ways now.

There are sites like PicMonkey and Canva that allow you to make basic images free of charge.

Unfortunately, like anything, you get what you pay for.

The fee versions allow for basic functions and features, so you’ll have to pay to access premium stuff.

But the good news is that it’s all deductible!

Independent Contractors & Professional Services

Ah, the famous question:

“If I pay so-and-so to do this-or-that, can I deduct it?”

Well, the answer is usually yes!

Plus, I am a huge proponent of outsourcing tasks that you aren’t an expert or proficient at.

That is if it has a direct correlation to your business.

Let’s look at some of the jobs you would commonly hire contractors to do that are definitely going to be deductible:

• Social media managers
• Virtual assistants
• Writers
• Designers
• SEO pros
• Bookkeepers
• Salespeople

It’s a pretty straightforward section and each of those professional types don’t need any explanation.

I will say this, however:

Remember I mentioned being able to deduct a pro’s fees if they are directly related to your business itself?

It’s going to be touched upon later on, but I figured it couldn’t hurt to talk about it here too, considering it’s quite similar.

There are some business-related professional types that you are going to be able to write off even though they don’t have anything to do with your itself.

Some examples include:

• Accountants
• Lawyers
• Factoring companies
• Business coaches
• Professional organizers
• Retirement specialists
• PR firms/agents

A few are straightforward like accountants and lawyers.

Some of the others may give you pause, but I assure you they are perfectly legit, so let’s take a look at some examples:

Factoring Companies

Not every business works on a COD (cash on delivery) basis.

Many small businesses invoice their clients and then hold their breath in the hopes of being paid timely.

Sometimes, you have a lot of clients that take forever to pay, if at all.

That’s when you bring in a factoring company to help collect on those outstanding receivables so you can at least get paid something for your time and energy.

Business coaches

No, this doesn’t mean a “life coach” or some retreat to the woods to rediscover yourself.

That’s…well…something else entirely.

A business coach helps you in actual facets of your business like marketing, sales, pricing, etc.

Pretty much if it impacts your business directly, it’s good.

They help you recognize strengths & deficiencies in how you actually run your business.

That helps you to both earn more as well as reduce your spending, both having a positive impact on your business.

Yeah, that’s absolutely deductible so keep paying those people who teach you to do Facebook Ads or how to position yourself as an expert in your industry!

Professional Organizers

Let’s face it, many of us may have problems keeping our work areas neat and orderly.

Personally, I don’t have that problem because I abhor paper so my office is really minimalist(ish).

But I know a bunch of people who have hired organizational professionals to optimize their working environments.

That gets a big yes for a qualified business deduction (assuming you only hire them for your home office and not any living areas).

CFP/Pension Administrator

Once you reach a certain profit level, you’re going to start looking at “other ways” to save on taxes.

One such way is to give yourself a retirement plan other than an IRA.

That way you’ll be able to save a much larger amount for retirement.

Oh yeah, and they also help reduce business profits, thereby reducing your taxes which equals a big-time deductible expense for their time!

So, even if you are getting personal financial advice, as long as your business planning is part of the equation you will be able to take at least part of it as a business expense.

PR Firms & Media Agents

You might not think about it, but there are plenty of small businesses that use media agents or marketing agencies.

Some use them to get placed on television.

Some use them to get booked on podcasts.

Others even use them to book paid speaking appearances.

Literary agents as well if you want to write a book.

Anytime you pay someone to put you in a position to talk in front of an audience, be recognized as an expert based on your experience, or get paid for anything you get to deduct it!

Business Development

What’s the most important thing about running a business?

Growing it!

I know a bunch of you said making money, but the thing is you have to grow in order to make more, right?

And by grow, I don’t necessarily mean in size as in hiring employees or needing to lease office space.

“Growth” can mean:

• Honing existing skills to be more efficient
• Learning new skills to deliver more value
• Creating & developing premium content
• Expanding your professional network

See, there’s a lot more to it than just making more money.

But what exactly does that mean in terms of spending and being able to actually deduct as business expenses?

The answer to that is relatively simple as you can deduct:

• Webinars & courses
• Conferences & events
• Networking meetings

Let’s take a closer look at these categories…

Webinars & Courses

This one is something I get asked all the time!

We aren’t talking about formal education here, but rather task-specific learning.

Education that leads to a degree is something completely different, especially if it doesn’t do anything for your business.

For instance, if you take Michelle Schroeder-Gardner’s course called Making Sense of Affiliate Marketing to monetize your blog, you’re golden.

If you take Holly Johnson’s Earn More Writing course to start getting paid to write for others, you’ve got no problems.

Heck, even if you take Lauren Bowling’s Beginner Blog Accelerator for starting/improving your blog you get a thumbs up!

On the other hand, a course teaching you how to code video games isn’t going to be a business expense for an SEO company.

Conferences & Events

Now we get to the fun stuff hahaha!

I mean, who doesn’t enjoy going to a conference where you get to see all of your online friends in one place?

And it’s even better if it’s a conference like FinCon (the Financial Bloggers Conference) that not only gets attendees educated but also knows how to show them a great time as well!

Just remember, if it’s a conference related to your specific business or in general, you’re good to go!

But, if it’s something for your day job or something that doesn’t play directly into your online business, then it’s probably a no-go.

In other words, you can’t go to a microbrewing conference if you are a website designer–sorry I know how that one can hurt some of you.

Networking Events

Personally, I’m not a big fan of networking groups, and especially of writing off meetings held at bars as business expenses.

I mean, let’s face it, most of the time you’re not really talking business anyway.

Personal feelings aside, it’s a standard practice in almost every field.

And that means it fits into the “ordinary and necessary” qualifier of the business expense definition.

So by all means pay for it with your business card!

Operating & Everyday Business Expenses

There are the obvious business expenses that you have to pay for during the ordinary course of work.

Those are business expenses that directly impact your ability to successfully run and grow your company like the items we’ve already mentioned:

• Website-related costs
• Online tools
• Contractors
• Business development

But there are a lot of behind-the-scenes costs that are equally as important–and coincidentally deductible.

Costs that are practically unavoidable in many cases such as:

• Legal & Accounting Services
• Computer programs & apps
• Membership Dues
• Travel
• Marketing & Promotion
• Advertising
• Corporation/LLC formation & DBA registration
• Business Insurance (not health)
• PO Box rental
• Office Rent
• Office Furniture & Equipment
• Office Supplies
• Postage
• Business Gifts
• Payroll

This can be a lot to take in so we’ll look a little closer at a few of these items…

Legal and Accounting

A lot of people are tempted to try to do everything themselves.

They’ll spend time trying to draw up contracts, disclosures, or terms and conditions for their sites.

Or they’ll spin their wheel trying to figure out tax stuff and still end up unsure of the answer.

You can hire one of these people for a single hour’s worth of work or keep them on a monthly retainer.

Regardless of the amount you pay, as long as they are dealing with a business-related issue, you get to deduct it.

And don’t forget to deduct the cost of hiring a tax accountant for your tax returns as well!

Computer Programs & Apps

No, we’re not talking Candy Crush, Angry Birds or whatever game app is popular these days!

We’re talking Google Workspace or Microsoft Office for document creation.

QuickBooks Online (never QuickBooks Self-Employed) for your bookkeeping needs.

Asana for project and team management.

Any of those, and many more that would take forever for me to research and list individually!

Just make sure it’s truly a business need and not something you want for yourself and “occasionally use it for business”.

Membership Dues

Let’s get this one out of the way right off the bat: clubs for pleasure, recreation, or social purposes are not deductible as business expenses regardless of what you do there.

It’s spelled out specifically and explicitly by the IRS.

That being said, BNI and Toastmasters work fine.

Paid newsletters and professional publication memberships are good.

Professional groups such as CFP and bar associations get a pass as well.

Anything for your business and to maintain a professional designation will be covered as long as it’s a major part of your business.

Travel

Here we’re talking about local travel as part of your normal operations.

The long-distance-type travel stuff is covered in the next section, appropriately enough called “Travel” hahaha.

This part covers your gas, parking, tolls, train, subway, cab/Uber/Lyft, however you get around town to meetings or meetups or to get to the post office from your “office”.

Just remember: commuting to your office or taking the kids to practice or to Chuck E. Cheese’s doesn’t count.

Marketing & Promotion

Do you use one of those “text to sign up” thingies?

How about paid versions of Buffer or Hootsuite?

A service to send out push notifications?

Ever make business cards or letterhead or anything else with the business’s name and/or logo?

Anything that you spend money on to make people aware of your business is marketing.

Those my friends are definitely a legit business expense!

Advertising

Actually a particular type of marketing, I prefer that people track advertising separately.

Why?

Because it has a distinct purpose and approach.

It’s the practice of targeting a specific audience with a specific message or call-to-action (you’ve heard the term CTA before).

So things like Facebook ads, sponsored tweets, or paid placement in an online newsletter are all advertising expenses

They are crafted and targeted, unlike marketing expenses which are more generic and widespread.

Corporation/LLC Formation & DBA Registration

There’s always a cost associated with forming a business.

Whether you are paying the state directly for DIY biz formation, or if you’re using a service like MyCorporation and paying for the full-service package it’s all the same.

It’s not just the costs of forming your business or claiming your fictitious name that can be expensed.

You also get to deduct the cost of renewals regardless of the term (depending on the state and the type of biz transaction it can be anywhere from 1-5 years at a time).

Also the fee for a Registered Agent as well as any additional service such EIN application.

Business Insurance (Excluding Health)

You should have insurance.

Media Liability.

Business interruption.

Home business insurance.

General liability.

And if you have a commercial vehicle, car insurance premiums as well.

Your regular homeowners or renters policy isn’t always going to cover your needs as a small business owner.

Any insurance coverage that is distinctly business-related–even a business rider on your personal coverage–is able to be deducted as a business expense.

Your health insurance, on the other hand, is a personal expense that doesn’t get run through the business because it doesn’t affect self-employment tax.

There is a little wrinkle that you can read about concerning the self-employed health insurance deduction for a complete explanation.

Rent

There are various kinds of rent expenses for business owners.

You can rent an office suite in a building or office park.

There are places that allow you to rent a room with a single shared receptionist/lobby/kitchen.

There are coworking spaces.

Even renting a P.O. Box (USPS or UPS Store) counts.

Office Furniture & Equipment

You kinda need someplace to work, even at home, right?

I mean, it’s not like you’re expected to work on the floor.

You need a desk.

And a chair.

Perhaps a chair mat so you don’t mess up your floors.

That all seems about right.

But it doesn’t stop there.

You can buy bookcases.

If you’re into the more modern off-the-floor look, you can buy floating shelves.

Lighting also counts.

As long as you aren’t using it in the living room or family area for all to use, you get to run it through the business.

Let’s not forget, you’re probably gonna need a computer of some kind.

Maybe a printer or scanner as well.

Many of the equipment items you need to effectively operate your business can be written off as business expenses.

Office Supplies

Oh, the list of crap that falls into this catch-all of an expense category lol.

Everything from paper goods to writing instruments to art supplies to cords and cables to organization products to white/chalk/dry-erase boards and accessories.

There are so many different items that you use in the ordinary operation of your business that it would be hard to list them all.

To keep it short & sweet, I think the easiest way to do it would be to say anything you use strictly for business purposes that you can get at an office supply store counts!

Postage

It may not be the first thing on your mind that would be deductible for business purposes but it is.

Any time you need to ship things in the running of your business, you can pay from your business.

That means mailing in your estimated tax payments

Or send out gift cards to winners of a giveaway you host to grow your social media and email list.

Even thank you cards you may send out to random folks for no reason other than to say, well, “thanks”!

if you still mail out invoices and statements, that counts too!

All kinds of physical business communications fall under this category.

Business Gifts

Speaking of thank you notes, you may decide to send something a bit more.

Perhaps you want to send your best customers a little gift you know they will like.

Maybe you want to send a mentor a thank you gift for being there for you.

Maybe you want to send a business partner a little something extra for their help.

If you perform a service you can also give clients a gift for joining your crew.

Just be aware, however, that there is a limit to how much you are allowed to spend on “business gifts”.

The IRS limits business gifts to a maximum of $25 per person per year. That doesn’t mean you can’t spend more, just that you can only deduct $25.

Payroll

Not many people have actual payroll, simply because it’s so much easier to hire people on a contractor basis and pay them via PayPal or credit so you don’t have to file any paperwork at the end of the year.

But for those of you who do reach the point where you have real employees, or become an employee of your own S Corporation, much of the associated costs are deductible.

The employee wages.

The employer’s match of the FICA taxes (Social Security and Medicare).

Unemployment insurance (both state and federal).

Retirement contributions and/or matches.

The fee payroll companies such as Gusto charge for those services.

Also, if you pay for employee health insurance you get to deduct that too (other than the health insurance of the >2% shareholder-employee which I referenced in the “Business Insurance” section above.

It’s important to remember that if you are self-employed–a sole proprietor or single-member LLC treated as a sole prop for tax purposes–when you “pay yourself” (ie: take a draw) that’s not a business expense.

Business Travel

Travel, yes, now we’re getting into more fun stuff!

The part where we get to take our family with us on those conference trips and write off the trip to Disney/Six Flags/Yellowstone or wherever, WOO HOO!!!!

Waaaaaiiiiiiit just one second there.

That’s not exactly how it works now.

Plus, if you have a full-time job while blogging on the side until you can make a full go of it, then driving to work and back home doesn’t count either.

Then how does it work you ask?

I’m so glad you asked!

First, let’s look at what you can possibly deduct in general:

• Plane/Train/Bus Tickets
• Hotel/Motel
• Cruise
• Car Rental
• Gas/Parking/Tolls
• Car Services
• Baggage Fees
• WiFi/Internet

These are pretty self-explanatory so each category isn’t going to require a breakdown or examples individually.

But there are a couple of things that do need explaining

Cruises

This doesn’t mean your family vacation to the Caribbean or that around-the-world cruise you’re planning for your retirement kick-off.

No, this is specifically for business-related purposes.

One example is Podcast Movement and the Podcast Cruise.

While it was held on a cruise ship, the intent was training, education, and growth so that is a totally awesome way to spend some legitimate business money!

Car Services

Any method you use to get around town during a conference, training, mastermind retreat, or sales trip is a real business expense.

It doesn’t have to be a regular yellow cab.

It can be a rideshare service.

It can be a rental scooter.

Heck, it can even be a bicycle-pulled cart or simply a rent-a-bike.

Remember I said something about combining family vacations with business trips all the way in the beginning?

This is a biggie folks, so pay close attention!

You can only pay for the business portion of your travels with business funds.

I’ll say it again to emphasize the importance of this rule:

You can only pay for the business portion of your travels with business funds.

How do you do that if your family is staying with you in the hotel at overlapping periods–like the last day or two of your business portion flowing into your family portion?

Well, thinking the hotel is going to be of any help is wishful thinking…they aren’t going to try and do pro-rations of the bill based on who stays and when lol.

What you have to do is calculate the proper ratios and then apply that to all of the costs.

When you know how much money was allocated to each segment you can then reimburse yourself personally from the business if you paid it all out of pocket.

Or if you paid it all on the business then I would put that money back into the business from your personal funds.

This will ensure that you are creating that distinction between your business and your personal spending, and it’ll also make sure your reports are more accurate when you look at your budgets on each side.

Business Utilities

How do you work on your business?

I’m guessing 70-80% of you will say on your own equipment in your own home.

What about the other 20%?

A small percentage of people actually have a dedicated office with its own utilities.

I’m going to say the remainder does a good amount of their own side-work at their full-time job.

No judgment, I promise!

In fact, that’s kind of how I started too.

I spent so much of my time at my job I didn’t want ideas to escape me until I got home to finally find the time to implement them.

So, I ended up working on my own stuff while at my desk during the day ????

But that’s wrong so I don’t want to encourage it hahaha.

So back to the original point…many people don’t know that you are allowed to deduct some personal expenses through your business:

• Internet
• Landline
• Cell Service
• Hotspot

One word of caution, however:

YOU CAN NOT PAY 100% FROM BUSINESS FUNDS.

Why not?

One very simple reason–you can only deduct something fully if you use it EXCLUSIVELY for business purposes.

Other than that, you have to take a prorated amount for business use, but it’s not unheard of to actually take 50% or more as a business deduction if you can honestly back it up.

And, yes, I know that a lot of people will ask “what’s a landline!?” but trust me, there are still a lot of people who use them.

How to deduct 100% of utilities

There is one perfectly legal way to pay for any of these utility expenses without any worry:

Pay for a separate line of service.

That way, you can point to one line of service and say “This one covers my family ” and then point to the other and say “That one covers my business specifically and no one else.”

It’s just like the separate bank accounts I spoke about earlier. If you can show a clear line of separation, it’s much easier to deal with!

Some people may be asking “Well, what about other kinds of utilities like electric bills and cable television and stuff like that?”

That I’m going to cover in an entirely separate article.

Audio & Video Equipment

Here’s an extra special bonus for all you vloggers, podcasters, live streamers, and other multimedia types out there!

I know many of you have been sitting there like “Well, podcasting and FB Live/YouTube/Twitch are really important, I wonder if those count as business expenses.”

How did I know that?

It’s one of the more common questions people ask me lately!

Podcasts, YouTube channels, Twitch & Instagram live streams have become just as integral to a business as blogs before them.

That means you can spend your money on these items and not have to worry about not being able to write them off as business expenses:

• Mics & accessories
• Cameras
• Mixers
• Audio editing apps
• Video editing apps
• Podcast hosting
• Video Equipment
• Voiceover work
• Video editors
• Podcast editors

It’s pretty much a given that you’d have to be allowed to deduct this stuff.

I mean, without any of it, you have no content or anyplace to share it.

Talk about meeting the “ordinary and necessary” qualifiers for business expenses hahaha.

Clothing & Makeup As Business Expenses

Are you using video to increase your online presence?

Maybe you hit the “big time”?

You know, that point where you’re sought after for on-screen interviews.

Or as a public speaker in your specific area of expertise.

Or as a paid brand representative or spokesperson.

If so, congratulations!

It’s great that you have reached such heights in your business.

Unfortunately, I do have some bad news for you.

Most of that money you spend to look good on camera isn’t a valid business expense.

IRS Rules For Clothing, Hair & Makeup

Generally speaking, a business expense is anything that is ordinary and necessary to the operation of that business.

I hate to be the one to break it to you, but the IRS is very clear on this issue.

It isn’t enough that you wear distinctive clothing. The clothing must be specifically required by your employer. Nor is it enough that you don’t, in fact, wear your work clothes away from work. The clothing must not be suitable for taking the place of your regular clothing.

What this all boils down to is one fact:

If it’s suitable for everyday use, it’s not deductible!

That applies to the maintenance too, like dry cleaning and tailoring.

But you’re self-employed, and writing those off as a business expense, right?

Nope!

Those rules apply to everyone across the board, not just employees complying with their employer’s directives.

But you need to present a certain image so it’s ok to write that stuff off, right?

Wrong again!

For several years, Anietra Hamper, a local television station anchor, claimed business deductions for clothing, contact lenses, haircuts, makeup, dry cleaning, and other items unrelated to this topic.

She was required by contract to maintain a well-groomed appearance and wear specific styles of clothing and claimed that her clothes were purchased specifically to comply with these conditions and she justified it by saying that she would never buy the items for her own personal use.

She also claimed that the makeup (purchased at a department store) was specific for appearing on-air and the contacts were a different prescription than her normal ones and were just for reading the teleprompter.

The IRS ruled against her.

The Court reasoned that the restriction on the taxpayer’s selection of business attire, however, was not significantly different from that applicable to other business professionals who must also limit their selection of clothing to conservative styles and fashions.

The Court further reasoned that the fact that the taxpayer chose not to wear the business clothing while away from the station did not signal that the clothing was not suitable for private and personal wear.

In fact, as the Court noted, most professionals typically do not wear their business clothes for private or personal wear.

Similarly, petitioner does not satisfy the requirement that her clothing not be suitable for everyday personal wear.

Although she is required to purchase conservative business attire, it is not of a fashion that is outrageous or otherwise unsuitable for everyday personal wear.

Given the nature of her expenditures, it is evident that petitioner’s clothing is in fact suitable for everyday wear, even if it is not so worn.

Petitioner typically purchased her makeup from Nordstrom’s and drugstores that sell ordinary cosmetics.

The receipts offered into evidence do not indicate purchases for special makeup designed for on-camera use but simply indicate purchases for ordinary makeup suitable for everyday wear.

Petitioner’s expenditures for manicures, grooming, teeth whitening and skin care are inherently personal expenditures. Although these expenses may be related to her job, expenses that are inherently personal are nondeductible personal expenses. As in Hynes v. Commissioner, 74 T.C. at 1292, the fact that petitioner’s employment contract with the station required her to maintain a neat appearance does not elevate these personal expenses to a deductible business expense.

Hamper v. Comm’r, TC Summary Opinion 2011-17

But you consider yourself as being in the “entertainment” industry, so the rules are different, right?

You’d be wrong yet again (trust me, I don’t take pleasure in that).

Don Teschner, a backup musician for Rod Stewart tried to deduct silk boxers, men’s underwear, leather pants, hats, and a vest relating to his stage appearances in 1991. Not surprisingly, he was denied many of those deductions.

The IRS excluded most but did allow for $200 of deductions.

Clearly the underwear does not qualify as a business expense. As to the remaining clothes items, we find that the majority of them are adaptable for general and personal wear and, therefore, are not a deductible employee business expense. Some of the more “flashy” and “loud” items, however, might not be acceptable ordinary wear.

Teschner v. Comm’r, TC Memo 1997-498.

Don’t get all crazy just yet, there is good news!

How Hair, Clothing & Makeup Costs Can be Business Expenses

This is the part you’ve been waiting for.

While you can’t deduct most things relating to personal appearance there are some things you can deduct as legitimate business expenses.

• Marketing – You can deduct the full cost of any clothing item that you have custom-made which contains your brand name or logo. Shirt? Deductible. Hats? Deductible. Bracelets? Deductible. Jewelry? Deductible. And, because they are marketing tools, not only are items themselves deductible but so are the care and maintenance!
• Consultants – We’ve established that clothing, accessories, and makeup aren’t deductible. But what if you hired someone to advise you on how to dress? Or to come in and apply your makeup perfectly? If you pay a style consultant for their talent, that is 100% deductible.
• Rentals – You want to try out a different look without committing to purchasing an outfit. Or you may want to wear a specific item for a specific shoot. You can go to a costume shop and rent any of those for a specific purpose and deduct the full cost of the rental.
• Professional Products – You can deduct the cost of industry-specific professional product lines. Going back to the anchorwoman’s issue above, if you purchase makeup specifically designed to make you appear better on camera, and get it from a specialty seller, then, by all means, deduct it.
• Props – Custom specialty items like backdrops, coffee mugs, accessories, or decals that you use in your videos to promote your brand or business.

The IRS Itself Is Sometimes Confused

There is also an argument for spending on these items as a “profit-seeker”.

The IRS sees individuals as having two personalities.

…one is a seeker after profit who can deduct the expenses incurred in that search; the other is a creature satisfying his needs as a human and those of his family but who cannot deduct such consumption and related expenditures

That can lead many people to try and blur the line in an attempt to (wrongly) deduct certain non-deductible expenses in an effort to minimize their taxes.

Some try to argue that they need to “look a certain way” in order to promote or sell themselves or their business.

The claim that “I am my business so all of my expenses are business expenses” is heard quite a bit, too.

The IRS quote above makes it seem like the Service agrees with all those people.

And, on the surface that makes some sense, except it doesn’t.

Even if you think you must “always be on” you really don’t.

The best example of that is the people many people point to–celebrities.

You see it all the time: pics of celebrities out in public, dressed in sweats, hair messed or under a cap, the women makeup-less (and the guys too considering how everyone wears makeup to cover imperfections for on-screen work).

That actually shows you, in a very striking way, that there are two sides to each person.

That’s exactly why most personal appearance expenses are personal in nature, and not deductible to the “business of you”.

The bottom line sucks for most people.

As much as you’d like to be able to pay for, and deduct, the items you use to look good on camera–whether for tv or your own videos–you simply cannot.

And, as much as you can argue that you “never wear/use that in my regular life”, that argument simply doesn’t hold water.

It’s something that we all have to deal with at one point or another.

Such is the life of an entrepreneur trying to navigate business expenses!

Wrapping Up

And that does it!

We’ve covered a ton of business expenses that you would possibly want to spend money on for your business!

I’m sure there might be others, especially in more highly niched or more “traditional” fields.

But now you know what the possibilities are, and you won’t have to worry about dealing with that age-old question of “Am I allowed to buy this through my business?”

You may notice that I didn’t mention the Home Office Deduction and there’s a reason for that–it’s complex enough to deserve its own articles and once I get that done, I’ll link it right here!

Other than that, if you have any other business expenses you think could fit on this list let me know and I’ll look into it!

Your Turn

Does this clear things up regarding business expenses? Are there any items here that you always thought weren’t deductible but ended up being so? Have you been given the opposite advice and been told that something was a business expense that you later found out not to be?

What bookkeeping system should I use for my business? QuickBooks Self-Employed? QuickBooks Online? FreshBooks? Spreadsheets? Just my check register?

My answer is always the same:

It depends on your needs.

Yes, it’s vague, and not very helpful on the surface.

But it does accomplish one important goal.

It forces them to think about where they are and what they actually need in terms of bookkeeping.

Not what they want, mind you, but their actual business needs.

Let’s face it, if we went by wants in business, we’d all outsource everything and sit back and watch others make us rich!

Sadly, that’s not the case for most small business owners.

When it comes to their books and finances, there are clear guides, though, which can signify the need to move onto a more advanced way of keeping your company’s books..

So, without further delay, these are the signs that it’s time to ditch the old ways and upgrade your bookkeeping tools.

My Recommendation

Entry-Level Bookkeeping

When you need a low-cost upgrade to your bookkeeping for income/expense tracking start with FreshBooks at an affordable price point.

Go Get It!

More Transactions Means Advanced Bookkeeping

When you’re first starting out, it’s quite easy to do your company bookkeeping on a graph pad or a simple spreadsheet.

It’s mostly just a few regularly occurring business expenses, if that, which need to be recorded.

Sometimes you might do a little work and have a deposit here or there as well.

But, it’s safe to say that when you first start your business, it’s relatively easy to manually track everything.

As you grow and start to pick up regular clients and start spending more in a non-regular fashion, it becomes more difficult to keep up with things by hand.

And if you start slipping, the time it takes to get your bookkeeping caught up after a couple of months of neglect can be significant!

When you upgrade to a more fully fleshed-out bookkeeping program all you have to do is link everything one time then it’s permanently linked.

From there, once the transactions are imported, you simply need to categorize them and BOOM! you’re done.

No more bouncing back-and-forth between spreadsheet cells.

No more erasing math errors on paper.

No more having to go line-by-line from your bank account or credit card statement to record the transactions.

Everything is done in a fraction of the time!

And you know that some people think that time is money so if you are in that camp, you definitely appreciate saving time.

1099-NEC Filing Is Easier With Advanced Bookkeeping Apps

This is a topic that really causes some confusion, especially with the re-introduction of the 1099-NEC form.

If you’d like you can go read my article on when you shouldn’t send out 1099-NEC forms.

It’s been very helpful for a few people so far who have used it to get clear on when a 1099-NEC is and isn’t required.

But in terms of this topic, a program such as QuickBooks is so much more powerful and easy to use than any other form of bookkeeping.

You see, at the end of the year, you need to go through all of your vendors and see not only to whom you paid more than $600, but also make sure that you only paid that amount in cash/check/personal transfer.

But if you do everything manually, odds are you aren’t really tracking who you are paying and how you are paying them…just that you spent $X on a particular expense category.

Well, by using a more advanced bookkeeping system, you can track all that info much more easily.

When you use a bookkeeping program like QuickBooks Online, each time you make a payment, you select the vendor you paid.

That gets recorded under the vendor’s info in the system.

Then, all you have to do is run a report for payments made to vendors, limit it to those that are in excess of $600 and there’s the hard part taken care of for you!

From there, all you have to do is see if you paid them directly with cash or if you sent them money through a merchant account of some kind to determine your responsibility for reporting the payments to the IRS or not.

It certainly takes up a lot less time than having to search through all of your records at the end of the year.

That’s assuming your bookkeeping records are detailed enough to put it all together at all.

Multiple Streams Need Better Bookkeeping

My Recommendation

Small Business Bookkeeping

When you’ve outgrown your current method, try a free trial of QuickBooks Online for a more complete small business bookkeeping system.

Go Get It!

This is something that isn’t done as well on some online bookkeeping programs as it is on others.

But it’s still a heck of a lot easier to do on those than it is to do on a spreadsheet or paper.

Let’s say you have 5 websites that you monetize.

Each site has different expenses and income streams.

So you either have a separate spreadsheet or sheet of paper for each one, or you do what so many would think is the “easy way” and make 5 sets of everything like this:

• Advertising Income – Site 1
• Advertising Income – Site 2
• Advertising Income – Site 3
• Advertising Income – Site 4
• Advertising Income – Site 5
• Affiliate Income – Site 1
• Affiliate Income – Site 2
• Affiliate Income – Site 3
• Affiliate Income – Site 4
• Affiliate Income – Site 5
• Website Maintenance – Site 1
• Website Maintenance – Site 2
• Website Maintenance – Site 3
• Website Maintenance – Site 4
• Website Maintenance – Site 5

That’s just 3 different accounts and it takes up almost the whole screen…imagine what the list will look like accounting for all of your income and expense categories.

When you use an online bookkeeping program, you have much more flexibility.

In some instances, you can set things up to track each site’s transactions separately as a separate class or segment.

That way, you don’t have a chart of accounts or a Profit & Loss statement that is hundreds of lines long, spanning multiple pages in length.

Instead, what happens is everything goes to a single tracking category (ie: advertising income, website maintenance, hosting expense, etc.) but is also sub-tracked for the individual business segments.

That enables you to run reports specifically for each property as well as for your company as a whole with a few clicks.

Sure, a spreadsheet can eventually be configured to do something similar, but first, you’d have to figure it all out.

Well, actually, first you’d have to spend the time breaking everything down to enter into the spreadsheet.

Of course, the first heading I mentioned was the ease with which transactions are imported into these types of programs.

S Corporation & Partnership Bookkeeping Needs

When you are a sole proprietor or even a Single-Member LLC, the bookkeeping requirements are fairly minimal, particularly if you are a cash-basis business.

Things get a lot more complicated when you are part of a partnership.

You have to track partner capital accounts–including contributions and distributions–which gets a bit difficult when you are using a spreadsheet.

Don’t get me wrong, it can be done but it’s just not going to be as smooth or even easy to track as when you use a program like QuickBooks Online.

Similarly, if you choose S-Corp status, you have to track the same information for the shareholders.

Taking it a step further, if your business is either a partnership filing Form 1065 or the S Corporation filing Form 1120-S you may also have to report balance sheet accounts.

That means you need to report the balances in your asset, liabilities, and equity accounts.

If you are confused by those terms, then you definitely should be speaking to a tax accountant.

But back to the point…

If your revenue or total assets exceed $250,000 you are required to fill out the equivalent of a balance sheet on those tax returns.

If you are using a basic bookkeeping system, odds are you are not tracking any of those account balances.

When you use a more advanced bookkeeping program, bank account and credit card reconciliations should be built-in features, and running a balance sheet to complete the tax return is as simple as running a report.

(I say should be because not all programs are true “bookkeeping” or “accounting” programs but rather glorified transaction aggregators which track income and expenses)

Yeah, so upgrading from a spreadsheet or other simplistic bookkeeping setup will benefit you greatly in these situations as well.

It’ll make things easier for you during the year by saving you time for one.

Plus, you will probably save money by giving your tax preparer less work and they’ll possibly charge you less for your income tax return (one can hope!).

Wrapping Up

There you go, folks!

4 specific and clear signs that will let you know when it’s time to ditch the old-school methods of bookkeeping and move into the modern age.

Of course, there will be other signs as well, such as your profit, making it too sensible not to outsource work to people who will do certain tasks for you.

For now, these are the more obvious, less money-driven reasons to do so.

My Recommendation

Advanced Business Bookkeeping

QuickBooks Online is the most powerful bookkeeping platform for small businesses that scales with your small business as it grows.

Go Get It!

Your Turn

Are you still using pencil & paper or simplistic spreadsheets? Or have you already moved on to a more advanced method of keeping your books in order? Let me know what your reasoning was in either case in the comments below!

It may be a badge of honor to some people.

Not turning to outsourcing can be a control issue.

Or it may be a cost-savings measure.

Or even a trust issue.

Truthfully, it’s a sign of potential trouble.

It’s definitely going to result in inefficiency.

After all, you can only do so many things solo.

My Recommendation

Hire Freelancers In Any Field

The one-stop shop for hiring freelancers across a wide range of fields. You shouldn’t have any problem outsourcing your business needs here.

Hire A Freelancer

When Is The Right Time To Start Outsourcing?

Taking on too much responsibility can lead to:

• losing focus
• getting sloppy
• foregoing sleep
• losing track of time
• being disorganized

Trying to do everything can lead to accomplishing nothing.

Think about it…

Doctors have nurses draw blood, and take blood pressure and measurements.

Attorneys have paralegals and legal assistants to do research and type up motions.

Online entrepreneurs have virtual assistants to schedule appointments, answer mail, & manage team members.

Each of these professionals, and tons more out there, delegates the “grunt work” so they can concentrate on what their area of expertise is.

No one knows everything, nor should they. 

Multitasking really isn’t such a good thing and shouldn’t be held as a badge of honor.

Think about it: if you are doing more than one thing at a time, none of those tasks are getting your full and undivided attention.

That means aside from the drop in quality of the work there is also a greater chance of a mistake being made.

Outsourcing will help you put your full attention into what you decide to take on.

Outsourcing Can Make You money

That being said, you shouldn’t be wasting time on tasks that take you away from your particular area of expertise if you can pay someone to do those tasks.

Especially if the cost is less than the lost income you face by tackling them yourself.

The key to running a business successfully is to put all of your efforts into what you do best and outsource everything else to maximize the earnings potential of your business.

While in the beginning, it may seem like this strategy gives you complete control over your entire business, it could very well be costing you in terms of customers and therefore income.

There are several areas of business operation that entrepreneurs erroneously tend to do themselves.

Not only would you be wasting your time, but the odds are good that an outside person who does those things for a living would be able to do them significantly better and more efficiently than you could.

Some of the tasks that are likely better suited to be outsourced are:

• Bookkeeping
• Tax Preparation
• Legal Services (ie: drawing up contracts)
• Social Media
• Website Design
• Public Relations
• Graphics
• Responding to emails
• Running payroll
• Appointment setting

For example, if you are a doctor running a solo practice (or a lawyer, or salesperson) and doing the books at the same time, you are costing yourself important billable time (or time that you can be selling).

So, if you spend 1-2 hours a day paying bills, balancing the checkbook, running reports, etc. and an hour of your time is worth $100 (for argument’s sake) you are losing approximately $100-$200 a day.

That may not seem like much, but pro-rate that over 240 business days (48 weeks x 5 business days conservatively assuming you close for holidays, personal days, and vacation time), and you could potentially be costing your business between $24,000 and $48,000 a year.

Now, if you were to hire a tax accountant that charges even $1,000 a month to handle all of the bookkeeping, bank reconciliations, and report analysis, it would only cost your business a total of $12,000 for the year.  This comes out to a savings of 50%-75% annually.

[Of course, the figures used are just examples, and if your time is worth more than the value used, you will be saving your business even more money, which ultimately leaves more money for you to either put back into the business for growth or to take personally as salary.]

Even if you already have a bookkeeper on your payroll, outsourcing still makes monetary sense from the standpoint that if this person is very knowledgeable and skilled you are still paying much more than $12,000 a year to employ them not to mention any secondary costs such as insurance, payroll taxes, supplies, etc. in addition to any idle time.

Also, think about using a 3rd party system.

My buddy Martin runs an Airbnb experience taking people on tours of Toronto-area coffee shops.

He could have set up his own booking and payment system but he took the smarter route and lets Airbnb do the back-office stuff and does what he wants–drinks coffee and meet new people.

The other side of the equation is that you are employing a less skilled and knowledgeable person, in which case you will benefit from outsourcing the accounting duties by not only saving money but also acquiring a built-in support system.

Outsourcing Can Save You Money

Yes, it may be difficult to give up control and oversight over such an important aspect of your business, but then again you most likely went into business for yourself to make money, not to let it go towards costs that you can minimize by taking proactive measures.

And, if you do all of your bookkeeping after-hours, wouldn’t you rather have that time to spend with friends and family, and save yourself from getting burned out in the future?

To take it a step further, certain tasks like drawing up contracts should be left to the lawyers as they know exactly how to draw them up in a manner that not only makes them compliant but also protects you against missing vital points within the documents.

Something like marketing should be left to professional marketers since they know what works vs. what doesn’t in terms of marketing techniques for a particular industry and target market.

There is no reason to throw good money into marketing campaigns that you design if you don’t know the first thing about analyzing a target market, or the expected response rates among the different types of marketing avenues.

And when it comes to web design, generally the first thing a potential customer sees that reflects your business, you should always opt for a professionally designed option rather than something that looks like it was done in a matter of minutes with a free program or which is reminiscent of a 1st grader’s art project.

Sure you can teach yourself to do any task, but you need to ask yourself if the time spent self-teaching is worth more than what you could be making if you were spending that time running your business.

You need to consider the fact that these tasks may be (I like to say definitely will be) more effectively and efficiently completed by a professional.

Plus, if this newly learned skill is for one-time use only, then you need to ask yourself if it’s really worth the time and energy.

This is exactly why I feel strongly that you always need to be careful when you take on do-it-yourself projects, especially in business.

If you mess up something the cost to fix it will almost definitely be much more than the cost would have been to hire someone to do it correctly from the start.

Outsourcing May Save Your Reputation

Let’s not make this all about the monetary costs either.

What happens if you draw up your own contracts incorrectly and then get into a dispute with a freelancer you hire?

Word can get out that you don’t abide by your own terms.

Worse yet, you can seem like a scammer!

What happens if you think something is cute or funny for a marketing campaign but it turns out that it’s offensive?

Odds are your reputation can take a severe hit–both professionally and personally.

Worse yet, you could face public backlash which we all know doesn’t blow over very quickly.

Not everything has to do directly with money.

Sometimes, your sterling reputation is priceless, and having even the slightest tarnish can put you in a bad place.

The bottom line is that you need to consider the customers first and foremost.

They don’t care if you do any of those things yourself or if you outsource, they only care about the product or service you deliver to them.

And, if trying to be the jack of all trades is negatively affecting those results in the customers’ eyes because you are spending too much time on projects that are not your bread and butter in terms of skill or expertise, then you probably won’t have to worry as they won’t be customers for very long.

Taking everything into consideration, oftentimes it just makes good business sense to stick to one area and bring others on board with professional experience and expertise to handle everything else.

Where To Find Freelancers To Outsource To

Outsourcing requires trust and control.

One is difficult to give.

The other is difficult to give up.

Both are necessary and you try to do everything on your own.

You’re the:

• accounting department
• legal department
• sales department
• IT department
• customer service department

Wait.

Where do you find those people, those amazing freelancer folks who will help you complete your business website?

Or to help you with your Pinterest account?

Or to set up your QuickBooks Online subscription?

Back in the day, you’d have to turn to the good ol’ yellow pages and start phoning random companies.

What’s that you say, you don’t even know what “yellow pages” are?

Let’s skip that then lol.

Even as recently as a few years ago you would head over to craigslist.

But it’s essentially left for people selling household goods, looking for sex, or scamming the gullible.

So we can skip that option as well.

It doesn’t matter where people used to turn to when looking for quality freelancers, because I’m going to tell you where to go to find the services you need.

So, where do I think are good places to find freelancers to work with when you’re ready to start outsourcing?

Logo & Graphic Design Work

My Recommendation

Outsource Graphic Design

Post your project and watch the designs come in then choose the best one. No more hoping the person you hire will deliver good results.

Get $40 When You Sign Up

Personally, I’ve had great success outsourcing work via crowdsourced sites.

Crowdsourcing is simply a way of having your ideas laid out, and then having designers (or whoever based on the project) compete for your money by submitting their interpretations.

You get to direct them, communicate directly, and have them make as many changes to their designs as you want, assuming they don’t get frustrated and give up on trying to please you.

My personal favorite is freelancer.com.

It’s where I held my contest for the logo design for this very website and I couldn’t have been more pleased.

For a small contest that didn’t have a huge prize, the quality of submissions and the responsiveness of the freelancers left me feeling that no matter which one I chose I couldn’t go wrong.

I’ve also had the logo for AccountLancer done on there as well as some video asset work.

Aside from a few hiccups with the site itself, I have been 100% pleased with the workers I’ve partnered with.

Freelance Writers & Copywriters

Sometimes you would rather pay someone to write your sales pages.

Or your email newsletters.

Or even your blog posts.

There’s nothing wrong with that and it can actually free you up to do other, more important tasks such as income-generating opportunities.

upWork is a very popular place for finding all kinds of freelancers.

It’s an easy-to-use interface, and it does have some nice features like being able to manage teams.

The English skills tests are mostly self-administered and don’t accurately reflect the true conversational skills of non-native speakers.

But, they don’t ask for very much money either, which can be good or bad.

It seems like the best of all worlds with the ability to take advantage of crowdsourcing as well as using the standard practice of finding freelancers by posting a job and allowing them to apply.

Fiverr gets a lot of attention, and it really isn’t so bad if you hire the right freelance writer.

But, as I have found out, if you have high standards and expect quality work, you need to pay a commensurate amount for it.

Plus, you may have to spend much more than $5 to get even the basic version of what you want, much less the highest-quality version of it.

I’m not a fan of being cheap–especially not on a quality writer when it comes to content because I’ve seen how cringe it can end up being.

If I can’t handle content creation myself, I’ll pay someone who will get it right the first time without having to spend extra time reviewing it for spelling, grammar, or context.

Website Design & Maintenance

I’m not even going to allow you to entertain the thought of using a freelancer to build a website or give you website support services.

Seeing as how this is the core of everything you are working towards, you want to be working with a reliable, reputable web design company that you know will be around to give you support after the project is completed.

What can be worse than hiring a random freelancer to fix a website problem, then when you need them again, *poof* they’re nowhere to be found.

You only want one set of hands working on this, not a different person each time something comes up.

Ask your friends who they use.

If you have a favorite blogger scroll down to the footer to see the name of the designer or simply send them a message and ask.

If one of your fellow online business owners has a great-looking and functioning site ask them.

Whatever you do, I can’t stress enough how difficult it is to try to find a freelancer who will be both high quality and reliable in case you need something 6 months down the road.

Small Business Bookkeeping

This is a really touchy subject for me.

Being an accountant who works with small business owners such as writers, bloggers, coaches, and the like I know how concerned you can get when it comes to your money!

I also know that many people don’t know what to look for or what to expect.

The first thing I want to say is that I do not recommend any service that doesn’t allow you to interview potential match’s bookkeeping services.

One of the most important things you can do is speak directly to your potential business partner so that you get a feel for their knowledge and personality.

If you aren’t 100% comfortable with someone you simply move on.

Unfortunately, sites like bench.co just assign you to someone–no way for you to check credentials or even know if they have an understanding of your particular business.

If you really want to find someone who is going to be a great fit, go right to your preferred accounting program.

Both QuickBooks Online and FreshBooks have directories of experts on those respective platforms.

You can go directly to those people’s sites and set up appointments rather than rely on a random pairing on something as important as tracking your money.

Virtual Assistants (VA)

Perhaps the most important freelancer you will have on your team is your VA!

They do so many things from email management to responding to social media to keeping your calendar organized.

The people I know who have “full-time” virtual assistants say they don’t know how they ever operated without them.

I have clients who offloaded all of their administrative tasks to VAs which enables them to spend significantly more time doing the most important task–generating revenue!

It’s such an important position that people have started creating courses to teach people how to become a VA and even coach them.

When you’re looking for a qualified VA, some of the courses even offer you access to their students.

A prime example of that is the Pinterest Virtual Assistant course which has a form to fill out and then qualified Pinterest VAs will contact you (that link at the beginning of the sentence takes you there).

Another place to go is Facebook.

There are a lot of groups such as Virtual Assistant Jobs which is a huge group with lots of interaction among members and job seekers.

The important thing to remember is that there is no such thing as perfection–you can’t always blame the source for a bad interaction with a potential VA.

That’s why you have to interview and test potential candidates.

One last tip–don’t be afraid of bartering either as that can be a different approach to finding people to outsource work to.

When you find the right fit, however, people always wonder how they ever operated without one before!

Besides these few examples of freelancer matching sites, there are dozens more, and most likely many of them will be quite similar.

No matter what site you use to find your future freelance workers, you need to make sure to do as much research as possible before committing to giving your hard-earned money to any of the people on any of these sites.

The last thing you want is to waste your limited resources only to discover that the person you hired is less qualified than originally advertised or worse, simply steals the work of others and tries to pass it on as their own.

Wrapping Up

Well, I’d say we discussed a lot about outsourcing and how it can help your small business.

We discussed how outsourcing can make you money.

We covered how outsourcing can save you money.

We addressed outsourcing as a way to preserve or maintain your reputation.

We even went over all of the places to turn to to find freelancers to whom you can outsource stuff.

The bottom line is that outsourcing is a valuable way to approach many business tasks that you shouldn’t be doing yourself to help jumpstart your small business’s success!

Your Turn

Are you the “wear all hats” type? Do you prefer outsourcing everything except for the main revenue-producing tasks? Heck, do you even outsource those and just sit back and delegate everything? What are your favorite resources for finding freelancers to hire?

It’s not because I’m some anti-television nut, not at all.

It’s not because I read a money-saving tip telling people to do so.

It’s not because I cut out all spending as a method of building wealth.

It’s actually a much simpler answer:

I don’t care for the programming.

Too many “reality” and competition shows.

Too many shows with the same premise.

And then the remakes–talk about unoriginal!

Most of it’s fake or interchangeable in my mind.

That’s why I cut the cord on cable many years ago.

And I’m not alone!

With cable and satellite television programming costing more than some car payments these days, people are looking for ways to watch their favorite shows without blowing a majority of their discretionary funds.

I can completely understand.

I laugh when I hear what some people pay for something I, for the most part, find absolutely dreadful.

Heck, I hear what my parents say they pay and even then they occasionally complain about “nothing be on”.

But I’m going to let you in on a little secret:

My Recommendation

Stream Live TV With Hulu

Hulu lets you watch live TV and sports, as well as older series/movies and original content. You can even try 1 month for FREE!

Go Get It!

You *MAY* Get Free Cable Television

Yes, I said it.

It’s completely possible to get free cable television.

I know this because I am able to.

It’s not guaranteed to work in all cases, but this is what worked (and still does) for me.

That’s why I starred AND underlined the word “may” in the heading!

There are no strings attached.

You don’t need to buy one of those black box cable television descramblers or whatever they may be called these days (if those are still a thing–I’m probably dating myself a bit here too).

You don’t need to buy any equipment to connect to your computer.

You don’t need to tap into your neighbor’s cable television service (which is illegal by the way and I would never suggest you do that).

You don’t even have to go to any of those life hacking or cheap living sites to learn how to build your own antenna.

You have all you need right at home already–assuming you have a fairly modern television.

I will warn you that you do need a little free time and some patience, but that’s all.

Sometimes it takes up to an hour to process, but in the end, it could be worth it!

How *I* Get Free Cable Television

Again, this isn’t a trick.

I’m not using a black box cable television descrambler.

There’s no hacking or illegal tech either.

All I have is my television which had a built-in HD tuner and a cable connected to the wall jack:

This is the best part!

I’m using nothing at all.

As you can see above, there isn’t a cable box.

And I swear that I didn’t conveniently remove or photoshop an HD antenna or anything just for this article.

So how did I get this to work?

Oh, you’re going to love this:

It’s so simple it’s disgusting.

I scanned for it!

Yes, that’s all I did to get cable television beyond what my Limited Basic plan calls for.

All I had to do was go to my television’s setup, and tell it to scan for available stations.

When it finished after an hour, it had found all of the standard stations which are included with the Limited Basic cable package my HOA dues cover, plus about 32 or so “digital stations”.

The best part was the tv’s built-in tuner also pulled in the in-between HD versions!

After the scanning was done, all I had to do was go through the channels one at a time and when I came across one that was in standard definition, I simply removed it from my available channels.

Now, I know what you are thinking…this must be some sort of fluke, like when you were a kid and set the tv to channel 2 and the cable box to the porn channel and you could see it semi-clearly.

I’ll be honest, I was skeptical too.

So I went to my parents’ house and conducted a little experiment.

You see, they have a completely different cable television provider than I have, and they have newer tv sets.

The results were the same as mine, except better.

On their television, the digital music stations came in with the sound and picture, where I didn’t get anything.

So that told me all I needed to know–this wasn’t something relegated to only my television or my cable television provider.

You can try it for yourself one evening or weekend when you have a little spare time.

Who knows, maybe you will even have better results.

The TV Channels I Get

Ok, so we talked about the equipment I use to get my cable television programming.

We talked about the process, too.

Now, let’s talk about the TV channels I get using this little trick.

My Recommendation

Watch Live TV w/Sling

Replace your traditional money-sink cable service with a cheaper streaming option like Sling. You don’t need a contract to save, either!

Go Get It!

Local TV Stations

With my Limited Basic cable television subscription I get the normal local tv stations:

• PBS
• CBS
• Univision
• NBC
• FOX
• CW
• Something Called My33
• ABC

Using my TV’s scanning feature, I also get the same ones, but the HD versions on the in-between identifiers.

For example, if PBS in SD is channel 2, I get the PBSHD designation on channel 2-2 as well.

The same goes for each of the other local TV stations, all on the “-2” channel numbers.

Cable Channels

Similarly to the local TV stations, my specific plan comes with a few SD cable channels:

That’s it, that’s the extent of the cable channels I am supposed to get with my Limited Basic plan.

Just like the local tv stations above, I also get the first column of these cable channels in HD on the “-2” intervals, too!

Plus, living in South Florida, it’s good to get The Weather Channel during hurricane season, even with the local tv stations since it gives wider coverage.

When I used the scanner on the TV, I started getting the following cable channels:

• FXM (Fox Movie Network)
• BET
• USA
• TBS
• TNT
• FX
• HGTV
• Comedy Central
• ESPN, ESPN 2, ESPN U
• And a ton more of the “real” cable channels

I’m pretty sure I get at least 75% of the most popular stations out there.

It’s probably mostly all of the sub-100 numbered stations which are all of the most common ones.

Not Cooking, any of the FoxSports college stations, regionals like MSG or YES, HBO, Starz, etc. mind you.

There are some other obscure Spanish, shopping & local stations too but those are pretty irrelevant to me.

What If You Get No Cable TV

The great thing about technology is that we do have so many options available to us besides traditional cable television subscriptions.

One of the things that I hear people doing is using an HD tv antenna.

Sure, it sounds old-school, but there is a big benefit to it:

All over-the-air television signals are uncompressed and therefore are true high-definition signals.

That means even if you can’t get free cable television the way I am able to, you may be able to at least get the next best option.

There are a few caveats, however:

• The further you are from a tower, the weaker the signal will be and the fewer channels you will receive
• The makeup of your home will also impede the signal
• Line-of-sight to a tower is important in terms of trees, mountains, hills, other buildings, and structures
• Naturally, the weather will also play a part

The FCC even has a DTV Coverage Map showing you which DTV signals you should be able to access and how strong of a signal you should get.

It’s not exact, but can be used as a reasonable guide.

But, if you get lucky and buy an HD tv antenna like one of the ones below, you may be able to keep your entertainment budget lower than if you paid for cable television.

Wrapping Up

I get it, this trick won’t work for everyone or you may want/need more variety than what you can get.

If you prefer something else, there are plenty of streaming options.

Some offer you original content, while others just curate content the way your cable service would.

Which one(s) should you use?

That’s totally up to you and you should always take advantage of free trials to see if you will get the most out of a paid subscription.

My Recommendation

Amazon Prime Video For Variety

Amazon Prime Video gives you access to hundreds of movies and tv shows as well as live sports and a bunch of Amazon Originals!

Go Get It!

Your Turn

Have you tried this simple technique? What have been your results? Let us know and please include your city/state too. Even though this will vary based on televisions and cable television providers, maybe someone from your area can get it to work narrowing the problem down to your TV or provider!

No more being able to take advantage of an employer’s plan.

Well, unless your spouse has access to a good one.

Or are young enough to be on your parents’ plan.

But, in general, you’re on your own, and it sucks.

Not only are premiums rising each year, but so are deductibles.

Add to that the lack of help and affordable options the marketplaces provide, and the whole thing makes you want to scream.

Enter the self-employed health insurance deduction.

With this little gem, you may no longer have to itemize in order to deduct your health insurance premiums.

You may no longer have to meet certain minimums before your medical expenses qualify for deducting.

That’s a huge benefit.

It’s not, however, without its drawbacks and confusing rules…

My Recommendation

Affordable Health InsuranceS

Looking for medical insurance, dental/vision, or small business health insurance? eHealth has multiple options for you all in one place.

Go Get It!

The Self-Employed Health Insurance Deduction Requires Business Profits

There isn’t anything wrong with reporting a loss on your Schedule C business.

At least not when it comes to your income tax return.

It happens very often, and realistically, it’s part of doing business.

There are certain times when you must show a profit, however.

One of those times is to qualify to take the self-employed health insurance deduction.

If you are reporting a net loss on Schedule C, you cannot deduct any part of the health insurance premiums you paid.

That’s $0.

No deduction can be taken at all without reporting profits.

At least not for the self-employed health insurance deduction, but you can still claim those health insurance premiums if you qualify to itemize and meet the Medical & Dental Expenses minimums on Schedule A of your 1040.

And, it’s not one of those grey areas, where you can choose to be as cautious or aggressive as you feel comfortable.

This is taken verbatim from IRS Publication 535, Business Expenses (even keeping the exact punctuation!)

You were self-employed and had a net profit for the year reported on Schedule C (Form 1040), Profit or Loss From Business; Schedule C-EZ (Form 1040), Net Profit From Business; or Schedule F (Form 1040), Profit or Loss From Farming.

One thing to be aware of is that the health insurance premiums are not a business expense, and therefore don’t get reported anywhere on the Schedule C.

Even if you pay the premiums from the business bank account, it has no impact on the business’s taxable income.

[This comes into play a little later in the article.]

There is a ray of hope though.

If you have some income, but not enough to match the amount of the insurance premiums you paid, you can still get a little benefit.

You are allowed to deduct the amount of self-employed health insurance premiums to the extent that it brings your Schedule C net income to $0.

Here are a couple of examples:

1. John has a freelance writing business that’s set up as a single-member LLC which gets reported on Schedule C. It’s the first year of operation and the company reports a loss of $1,500. John also pays $2,500 for health insurance coverage. He cannot claim the self-employed health insurance deduction because there was no business profit to cover the premiums.
2. Marci is a beauty consultant who operates as a sole proprietor. She reported $5,000 of net income on Schedule C but had paid $8,500 in health insurance premiums. On page 1 of her 1040, she can only claim $5,000 as the self-employed health insurance deduction, because she didn’t have enough profit to cover the entire amount of premium payments.

One thing that can be done, if you itemize deductions and have enough in qualified medical expenses, is to report the premiums that don’t qualify for the self-employed health insurance deduction on Schedule A.

The self-employed health insurance deduction isn’t an all-or-nothing proposition, you can deduct everything you are entitled to as an adjustment to income on page 1, and report the rest with your other medical expenses and it will be totally allowable.

You Can’t Be Eligible For Group Health Insurance

This is where it gets a bit tricky…

You cannot take the deduction for any month you were eligible to participate in any employer (including your spouse’s) subsidized health plan at any time during that month, even if you did not actually participate.

The simple part of the equation is this: if you are covered by group health insurance through an employer, you cannot take your insurance premiums as the self-employed health insurance deduction; you can only claim it as part of your Schedule A itemized deductions (if you itemize).

Almost as simple is this fact: if your spouse is covered by an employer’s group health insurance, you can’t take the self-employed health insurance deduction.

Now, for the tricky part.

Even if you or your spouse are eligible for group health insurance coverage via either one’s employer, you cannot take the deduction for self-employed health insurance; again, it would have to go on Schedule A if you itemize.

It doesn’t matter if your spouse takes no part in your business, or vice versa, the only option you have is to itemize if possible.

The fact to pay attention to–with regard to claiming the self-employed health insurance deduction–is the eligibility to be covered by group health insurance.

Now for the really tricky part.

This can change from month to month.

For any month during which either you or your spouse are eligible for group health insurance coverage, you lose the self-employed health insurance deduction.

BUT…

You can claim the deduction for any month during which neither party was eligible for group insurance.

That means you have to be very diligent when it comes to record-keeping.

First, you don’t want to mess up by claiming amounts you aren’t entitled to, which would be bad.

At the same time, you have to pay attention so you don’t miss out on claiming a huge benefit by being able to deduct portions of your insurance under the self-employed deduction option.

Here are a few examples:

• Mike is single and runs a landscape architecture business full-time. He is allowed to claim all of his health insurance premiums for the self-employed deduction.
• Jennifer is single and works full-time in a law firm as a paralegal. On the side, she runs a small event planning service. She has been covered by an individual health insurance plan all year, and on April 25th became eligible for group health insurance coverage under her employer’s plan but chose not to participate. Jennifer can only take the January, February, and March premiums for the self-employed health insurance deduction because she became eligible to participate in the employer’s group health insurance in April. The payments made for insurance premiums from April through December can only be deducted on Schedule A if Jennifer itemizes.

• Rick and Joan are a married couple filing jointly. Rick is a stocking manager for a home-improvement chain, and has been eligible for group health insurance coverage through his employer for the entire year, but doesn’t participate. Joan owns an online crafts business and has a health insurance policy covering the two of them. None of the insurance premiums from Joan’s plan are allowed to be included in the self-employed health insurance deduction because Rick was eligible for coverage all year (even though he has no role in Joan’s business and doesn’t participate in his employer’s group health insurance). All of the insurance premiums must be claimed on Schedule A.
• Taylor and Analise are a married couple filing jointly. Taylor began the year as a partner in an ad agency, participating in the company-sponsored group health insurance. She was fired on June 4th, but was hired by a rival in July, becoming eligible for the new company’s group health insurance as of October 17th. Analise is a caterer who maintained a separate individual policy all year. Only the payments Analise made for coverage during July, August and September are permitted to be taken under the self-employed health insurance deduction, because Taylor was eligible with one company until and including June (even if it was just for 4 days), and then became eligible for the new employer’s plan in October. Even though Analise’s policy is just for her, being married made her eligible for coverage under her spouse’s group health insurance, which nullifies her ability to claim the self-employed health insurance deduction for all periods of spousal eligibility. All other premium payments must be reported on Schedule A.

As you can see, it’s not cut-and-dry.

Actually, it’s damn flat-out confusing if you have no experience with income taxes.

Some of the rules can make your head spin and seem completely illogical, but as they say: them’s the rules!

Health Insurance & Self-Employment Taxes

In the first section, I mentioned health insurance payments not being a “business expense” even if it’s paid from a business account.

I said that it will come up again at a later time, and this is that time.

The health insurance premiums paid aren’t considered in any capacity for the purpose of self-employment tax calculations.

On Schedule C, the line for insurance specifically states “other than health”, while 1040 Schedule 1 specifies the self-employed health insurance deduction.

You need to pay close attention while attempting to DIY taxes.

Generally, people will look at their income statement and take a percentage of the net income from that report to remit for their estimates.

Some people may take it a step further and use that figure combined with the IRS Self-Employment Tax worksheet or some website calculator to come up with the exact amount they should pay for their self-employment tax payments.

The thing that people without a background in accounting or tax preparation do wrong is they don’t add back the health insurance payments to the income statement’s net income figure before doing the calculation.

This is important to know because in both of those cases that figure would be short, and you would end up owing more than you thought when it came time to file your income tax return.

Self-Employed Health Insurance Deduction & Medicare

Let’s face it, not everyone retires.

Some people continue to run their businesses well into “retirement” simply because they enjoy it or they don’t want to get bored.

Some of those people use Medicare for their insurance needs.

Without getting into the history or the boring legal details (especially since I’m not an attorney and have no business discussing it?) here’s how it works:

You can be on Medicare and still claim those premiums under the Self-Employed Health Insurance Deduction.

In fact, you can even claim your spouse’s premiums as well!

And if you have Medicare Insurance covering under-27-year-old children their premiums are even deductible.

The other rules still apply, however, so be careful that you actually qualify!

Christian Healthcare Ministries Don’t Count For The Self-Employed Health Insurance Deduction

A new trend these days (and over the past few years) is to join a Christian Healthcare Sharing Ministry such as Medi-Share or Liberty HealthShare.

The simplest term for your expenditure within this type of organization is pooled-money contribution rather than an insurance premium.

These types of organizations are generally faith-based and collect a monthly fee from their members, then distribute the money.

Health “insurance” cannot be withheld based on faith–or lack thereof–yay, at least the government has some standards!

This is the first way in which Healthcare Sharing Ministries don’t qualify as a tax-deductible “insurance” expense because they aren’t.

Rather than paying the bills of the insured to the healthcare provider, the ministries reimburse the individual members, essentially transferring the money between individuals.

In addition, there are some items that are excluded from reimbursement based on Christian beliefs which further prevents it from being deducted as “insurance”–absolutely zero judgment here, but stating a fact because people inevitably wonder “why?”.

So what’s the attraction or benefit if it doesn’t qualify for the self-employed health insurance deduction nor the standard insurance premium deduction?

It’s cheaper than traditional insurance, in many cases outweighing the tax savings.

There are downfalls too, but I suggest you read this review of Liberty HealthShare from Club Thrifty and this review of Medi-Share by PT Money since each is based on personal experience with the respective programs.

Wrapping Up

It’s important to understand that these are only basic explanations and examples of how the self-employed health insurance deduction works.

There may be other limitations on your ability to claim all or part of the deduction based on your particular circumstances.

It’s always my recommendation that you consult a qualified tax preparer when it comes to anything tax-related, especially if you don’t have a background in taxation.

If for nothing else, you can always hire one just to double-check your own calculations.

My Recommendation

Affordable health Insurances

Looking for medical insurance, dental/vision, or small business health insurance? eHealth has multiple options for you all in one place.

Go Get It!

Your Turn

Were you aware of this deduction? Is this something you might want to look into further to get more value out of your insurance dollars?

I’m self-employed and set my own hours.

I work from home and don’t have kids.

Publix Supermarket is a 3-minute drive from me.

Well, that does it…

I shouldn’t need to use Instacart unless I’m lazy, right!?

Just like everyone should stop paying for cable television.

And quit drinking lattes.

I mean, that’s what “money/social experts” seem to think.

But there’s much more to it than just that.

I do have friends, many of whom have kids.

I hear all of the adventures of “dragging them along everyplace” (their words, not mine!).

I hear the wishes of “It would be great to have X brought to me”.

I totally get it!

Hell, I’d love to have someone bring me 5 cases of bottled water and other supplies, especially when building my emergency preparedness kit.

I still can’t bring myself to use this grocery delivery service, not because I’m cheap, but for other reasons…

My Recommendation

Home Grocery Delivery Service

Never go off of what one person’s experience is–try Instacart and see for yourself if it’s a service that benefits you & makes life easier!

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How Does Instacart Work?

Before we get into the three main issues, this is something that has been brought up numerous times.

No one seems to be able to answer with authority anymore the question of “how does Instacart work?”

Some regions require an Instacart Express subscription.

In some regions, you can simply order and pay the fee.

Sometimes the fee can be waived.

None of this information is transparently available on the Instacart website.

Many people in the comments on this very article state as much.

Apparently isn’t as simple as signing up, ordering, paying, and knowing exactly how much your Instacart order will cost anymore.

If I was desperate to have a grocery delivery service available to me, this would be a 4-part article!

Alas, it isn’t so let’s get to my actual complaints about Instacart!

I Don’t Trust Instacart Shoppers

Personally, I know my mother taught me how to shop.

She showed me how to use coupons, not obsessively to the point where the search would outweigh the benefit, but like a normal person.

She taught me how to look for the best quality groceries.

And most importantly, she taught me that everything has an expiration date.

That’s right, it’s not just the produce.

Or the meat.

Or the dairy.

Even pantry and dry-packaged items have expiration dates.

This is where my mistrust comes in.

On the site, I don’t see anything about qualifications except for age, availability, and ability to lift heavy loads.

Simon over at the Rideshare Dashboard has a pretty in-depth overview of the Instacart job signup process for being an Instacart shopper.

He specifically mentions the fact that viewing training videos and passing the associated quizzes is no longer a requirement for becoming an Instacart shopper.

There is also some talk about actual in-person training which doesn’t seem to inspire much confidence either.

So, who is to say that when I place an order, the person who does the picking will have any knowledge about shopping other than what food is what?

If I order meat, will they just grab a package that comes close to the amount of weight I desire, or will they actually inspect it for quality (fat content or color)?

Will they know that eggs need to be checked to make sure they aren’t cracked on the bottom and stuck to the carton?

Hell, will they even open up the package to see if the eggs are cracked on the top?

You might want to read this article about cracked eggs and bacteria.

If I order produce will the picker know how to test fruits or vegetables for freshness?

I have a hard time paying for a service that is 50-50 at best to deliver me the best quality items available at the time.

Now, this isn’t to say that all shoppers are bad–there are always good and bad people in any line of work–but a generalization isn’t a shot at anyone in particular so please understand that if you or someone you know is a shopper/driver…no one is speaking about them personally!

However, there are instances of Instacart shoppers purchasing products for their own use on the customers’ dime which doesn’t help alleviate any trust issues and not just in one instance, but across the country.

I guess that can happen when you have to pay for an expensive car on tips.

I Don’t Trust Instacart Fees/Pricing

Just today, I tried a little experiment.

I had just come back from that Publix which is around the corner from my house.

Yes, in the middle of the morning on a Friday…that’s one of the best parts of a business owner.

But I digress…

I decided to go to the Instacart website and test out the prices.

Unfortunately, I had to create an account first, which I also find to be a pain in the ass, and don’t really trust sites that don’t let you see how they work without giving over your personal info.

Hesitant as I was, I did it so I can gain access and see what the prices were like.

Now, I did read the FAQ about pricing and averages and data feeds and all before doing my comparison.

That in and of itself gave me pause because if you have all of these disclaimers, you are essentially saying that your prices probably won’t match the store’s prices.

It’s basically just an excuse to charge even more on top of the standard grocery delivery service/subscription fees.

Anyway, the first thing I looked at was Fresh Express Baby Spinach because I knew that I had just bought it and remembered the price I paid was $3.99 each BOGO.

I did a search on the Instacart Publix section and found this:

The BOGO is correct, but the pricing is off.

And just to compare it to what the store itself advertises in the current circular:

Notice in the 2nd image, it says “SAVE UP TO $4.19”?

That means the most expensive Fresh Express product that Publix sells under this sale costs $.40 more through Instacart.

Want another one?

Good, because I tested another one from the Publix ad simply to see if there might be something to this.

This time I tested a 5lb bag of Organic Russet Potatoes:

So this one even tells you that it’s on sale and displays the “savings” as well.

But compared to the one from the Publix ad…

Sure there’s no picture on this one, but it really doesn’t matter because the Instacart image is just a plain bag and anyone who has ever been grocery shopping knows, those 5lb bags always are branded.

Getting back on track…

The Publix ad shows, again, a lower price.

And remember that “savings” Instacart displayed?

Well, it appears they not only charge more than the store does, but also calculate everything differently, reflecting larger price savings than Publix offers.

And I tried a bunch of other items too, but I wasn’t in the mood to start clipping images of everything…you can do your own test to see how your area stacks up.

It just doesn’t sit well with me.

If everything is $.40-$.50 more expensive and you are paying for the service on top of that I call bullshit real quick!

Sure, the store may dictate the pricing via Instacart, but here’s the real problem:

Instacart is getting money from the store to provide the service and from you in the form of fees/subscriptions.

That is double-dipping, and that is where my big issue with the price differences comes from.

Instacart Isn’t Partnered With All Of My Stores

This may be insignificant to many people.

That’s cool because this is only pertaining to my personal reasons for not using the service.

If any of you are friends with me on Facebook or follow my Facebook Page or Instagram feed you’ll know that mention an Italian market frequently when I talk about food (and if you aren’t, go follow NOW ? )

That’s because 90% of the items I buy from it beats the pants off of any of the national/regional supermarket chains.

And in case you’re wondering, I mostly buy fresh meats/produce and cook my meals from scratch rather than buying prepackaged foods–not a judgment, but it does clarify why I don’t get much use out of a big supermarket.

Here’s the thing–in my area, there are 4 options for using Instacart, and my main store isn’t one of them.

Side note: Instacart is in a bunch of Aldi stores which is a place I definitely think people should give a shot!

So, when it comes to the one I do go to that is in my service are–Publix–I only go there for the BOGOs, and occasionally when I get coupons for $5 of $50 in the mail direct from the store itself (which is like 1 month a year).

And when I go, I may end up spending between $15-$25, which makes even a $5 delivery fee a relatively HUGE amount!

It’s kind of like those dumbass pizza chains that give you a $7 pizza after applying the promo code but then charge a $4 delivery fee (and they all suck anyway hahaha but you get my point).

If you shop frequently or in a larger volume than I do and can get that fee down to a tiny relative value, that’s great…it just doesn’t work for me.

Instacart And Store Receipts

A big issue stems from the pricing differences and receipts–or not getting the original.

Some people have come to me to argue that you don’t get the original receipt from the store because you are buying from Instacart.

The argument is that as a reseller you shouldn’t get a receipt showing what the original cast was the same way you don’t get a receipt from the store showing its own purchase price in addition to your copy.

The fault with that argument is simple:

Instacart isn’t buying items to store and sell later via its website.

Instead, the company is providing a personal shopping and delivery service.

This is exactly why you should get the original receipt–as a personal services company, you should be allowed to compare what the cost difference is between doing it yourself and what the Instacart costs add.

Personal shoppers do exactly that–spend the client’s money at cost and add their fee on top.

That’s an important piece of the puzzle for a lot of people.

People who budget their time and money want to know if the added cost is worth outsourcing grocery shopping as opposed to doing it themselves.

It’s not a minor thing for a lot of people, especially when they take the time to really break it all down and see a sometimes large percentage increase in cost by using the service.

Instacart Customer Service

It does seem as though there is one “bright spot” about using Instacart for a grocery delivery service.

The reason I put bright spot in quotations is that I firmly believe that with the best companies you will never hear anything about their customer service (good or bad) because they deliver from the start.

But I digress…

It seems from most accounts and especially down in the comments that Instacart customer service is pretty good.

As mentioned in point #1 above, there have been many instances of Instacart shoppers buying their own items on the customer’s order.

I definitely can understand some people’s worry about becoming an identity theft victim in these circumstances.

Alerting Instacart customer service seems to quickly resolve the issues.

This appears to also go for underwhelming selections picked by the Instacart shoppers.

Again, while I think it’s terrible to have to even contact Instacart customer service for these negative issues, at least they are given the latitude to fix it quickly.

Update For 2020 & Beyond

I hate talking about hot-button or “moment-in-time” issues, but this needs to be addressed.

(To be clear, I am not using the names or buzzwords here specifically because I am not trying to capitalize on those searches)

A lot of people are starting to comment about how life is changing for them.

Using Instacart and similar grocery delivery services can certainly make life more manageable, particularly if you unexpectedly find yourself home with children for an extended period of time.

Or if you are elderly.

Or have a compromised immune system.

Having Instacart deliver the groceries will certainly allow you to practice (extreme?) social distancing or at the very least insulate yourself.

Trust me, I’m acutely aware of the importance of this as my mother is immunocompromised due to a kidney transplant.

This all goes back to my main point–that I have questions about the service.

Never do I say you should not try Instacart.

I never even say that it’s a bad service.

Never do I say these people shouldn’t try to earn a living.

So, especially now with the situation impacting the way we go about our daily lives, it’s important to understand that I am simply voicing my own personal concerns about Instacart.

If shopping using the Instacart grocery delivery service makes your life easier, go for it.

If it makes you feel safer, use it.

Again, you need to do what works for you and your particular situation, regardless of what anyone else has experienced–including me!

My Recommendation

Meal Delivery Service

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Wrapping Up

Look, not everyone is going to agree with me.

I not only recognize that fact, I expect it.

I also realize the marketing agencies are all over the negative trying to convince people of how great Instacart is via ad campaigns and social media.

Plus, I actually wrote about how personal finance should be tailored to the individual and not used as a blanket or a one-size-fits-all type of deal.

So, sure you may be like many of my friends and not want to drag screaming kids up and down the aisles of your grocery store (again–their words, not mine!).

You may not care that you’re paying higher prices on top of the service fee because any amount would be worth having that task off of your shoulders.

The quality or shelf-life of your food may not even matter because you never even considered it important yourself.

You may have the money in your monthly budget to pay for the convenience.

That’s all cool with me.

Again, this is all due to my own personal manner of handling my food needs and my personal living situation, and yours may vary greatly.

I’m just voicing my own concerns because I hear about people using the service or waiting for it to be available and I keep thinking about those three things each and every time.

Your Turn

Have you ever tried Instacart? Tell us your experience–good, bad, ugly it all helps! And if you haven’t used it yet, what are the reasons for your own hesitance? Share your experiences in the comments below!

If you have employees you run payroll (hopefully) on a regular basis.

It’s yet another part of being a business owner.

It can also be a pain in the ass.

I mean you already have enough to do as the “boss”.

Add to that:

• Employee time tracking
• Payroll calculations
• Submitting payroll taxes
• Filing W-2 & 1099-NEC forms

Even if you are the only employee, you still have to do all that.

Do you really need to add more to your already full plate?

No.

That’s why Gusto exists.

It allows you to outsource payroll to free you up to do everything else!

It also allows you to pay yourself a real salary and not have to mess with self-employment tax!

I use it to run payroll for my own business.

Every client of mine with employees uses it to run payroll, too.

There are plenty of reasons why.

These are the features people like most about using Gusto.

My Recommendation

Gusto Small Business Payroll

Click on the button to get a $100 Visa gift card after you run your 1^st payroll & pay your 1^st invoice. That pays for 2 months of service (on the lowest level)!

Go Get It!

Gusto Has A Simple, Clean Interface

These days it seems like companies want to throw everything at you at once.

The website has almost become a free-for-all of information.

They’ll pack as much information as possible on each page of the site regardless of the impact on user experience.

It’s almost like these companies are trying to overcompensate for something.

All it does is cause information overload and analysis paralysis in the people using the site.

Gusto doesn’t do that.

The user interface is simple.

The work area only contains important info.

Have a look for yourself:

There’s nothing extraneous here, just the Things To Do and the Calendar.

Everything else is contained neatly in the left-side menu section.

It doesn’t get much cleaner or simpler than the Gusto dashboard, does it?

Gusto’s Guided Setup Process

How many times have you had to set up an account in a new app, program, or system and were completely lost?

How often do you sit there like “where do I start?” and then “what do I do next?”

Well, Gusto takes the guesswork out of the small business payroll setup process.

There’s literally a numbered list of steps to follow so you can get to run payroll quicker rather than spinning your wheels setting up the account:

It really doesn’t get much easier.

You start at task #1 which is entering your address.

Then you move on, in order, to:

• Adding employees
• Entering federal tax info
• Entering state income tax info
• Connecting your business bank account
• Establishing a schedule to run payroll
• Entering historical payroll info
• Signing the documentation to allow Gusto to do things on your behalf
• Verifying bank connection
• Dealing with potential unpaid payroll tax liabilities from a previous payroll provider

Gusto simply takes the guesswork out of the setup process.

Why is this such an important feature you ask?

1. You save time by completing everything in order
2. The chance that you miss/forget something is greatly reduced

As a small business owner, you are probably all about saving time so that itself should be enough reason to like this feature!

The other benefit is making sure everything is completed the first time because we all know that it’s a pain in the ass to think you’re all done and ready to go only to have to stop and go back to fix things.

100% Automated Payroll

Didn’t I just get finished saying how business owners love saving time?

Well, yeah, here is another time-saver Gusto provides when it comes to needing to run payroll: automated payroll.

If you’ve run payroll before, you probably have had to call in or log into your payroll provider’s website and enter the information.

Even if it’s for a salaried employee, some companies require “verification” by continually inputting it.

It’s a repetitive and time-consuming way to run payroll at the very least.

It’s even worse when you are the business.

You know, the only person doing everything:

• Run payroll each pay period
• Sales
• Marketing
• Bookkeeping

Under normal conditions, you need to remember to run payroll for everyone, including yourself.

It can be terribly difficult to juggle so many tasks.

Gusto actually sends out email reminders a few days before your payroll is set to be run, then again to remind you when the last possible time is to run payroll so it’s paid on time.

But even then, it’s easy to forget to run your payroll on time, even if it is for yourself, with all of your responsibilities?

That’s what makes the automated payroll feature so valuable to many of my clients.

Instead of setting reminders or forgetting about the emails Gusto sends you, you can simply turn on the automated payroll called auto-pilot.

Set your salary.

Set the payroll periods.

Then turn on auto-pilot and BOOM!

You.

Are.

Finished.

Automated payroll for the win!

Gusto will run payroll for you without you being required to lift a finger.

It doesn’t get much easier than not doing a thing and still having you and your employees receive their money, does it?

Payroll Calculations Done For You

Sometimes we want to create payroll checks that come out to a certain amount net of taxes.

These paycheck calculations are a little more complex than many people care to try by hand.

For instance, you don’t necessarily want automated payroll, but instead, you want to customize your payroll checks based on sales.

Or maybe you want to issue a bonus check with the net payment being a specific amount.

Gusto makes it easy to figure out the payroll calculations.

All you do is plug in the number that you want to net payroll check to be and that’s all she wrote.

You don’t have to go searching for some random website with a calculator to do the payroll calculations for these kinds of payroll checks not knowing if it’s even accurate.

You can simply run payroll of all kinds from within Gusto and know that you are getting the correct payroll calculations.

Plus you can always all Gusto support to walk you through the process to make sure you are doing it right.

Payroll Taxes & Payroll Tax Returns

Who will tire first:

Me of continually writing about saving time or you of reading my mentions of it over and over again hahaha.

The truth is it’s such a huge factor for small businesses that it bears repeating!

Once again, using Gusto to run payroll saves time for busy entrepreneurs.

This time, it’ll potentially save money as well!

How?

When you run payroll manually you have to be responsible for sending in the payroll taxes.

Real quick–when are you supposed to send in those payroll taxes?

Most people don’t know.

What’s worse is there is no one answer because your deposit period depends on your company payroll tax liability.

Some payroll taxes need to be deposited by the 15th of the next month.

Others are required to make payroll tax deposits on a specific day of the week depending on the payday.

Still, others must make the payroll tax deposit the next business day.

Not only is it yet another deadline to keep track of, but it can also be costly if you forget since you are charged a penalty if you transmit payroll taxes late.

The payroll tax returns are a little different since most of them have the same filing date.

But that doesn’t mean it’s not easy to forget to file those as well, particularly if you are new to running payroll.

This includes:

• Monthly/Quarterly State payroll tax return
• Quarterly and or annual federal payroll tax returns (Forms 941/944)
• Quarterly state unemployment tax return
• Annual federal unemployment tax return (Form 940)

Gusto takes care of all of this hassle by doing all of these tasks for you…

AUTOMATICALLY!

You never have to do anything or pay extra for the service; it’s part of the process for everyone.

That “set it and forget it” aspect is one of the things that everyone loves.

And the fact that they don’t have to deal with quarterly estimates anymore too hahaha.

W-2 & 1099-NEC Filing

It’s not just the withholding tax deposits and the quarterly payroll tax returns that get taken care of.

Gusto also takes care of the W-2 filing and any contractor 1099-NEC filing.

Those two are required for each of your employees and independent contractors to file their own income tax returns.

With Gusto doing the W-2 & 1099-NEC filing, you are actually helping them get their own taxes done quicker.

Plus, you’d have to spend extra time and money doing it yourself.

If you do your own W-2 filing for your employees or 1099-NEC filing for contractors–whichever you have, or maybe both–you have to pay on a per-filing basis.

Let’s be real–no one wants to spend more time or money than they have to.

Gusto handles the W-2 filing at no additional cost.

The same goes for your 1099-NEC filing.

It’s another “set it and forget it” feature so you can go about your business making money!

One Fee Covers All Your Small Business Payroll

Here we go, this is where most people complain about everything:

The pricing!

Except, with Gusto, there is never any confusion when it comes to how much you will pay.

You always pay one monthly fee that covers all services.

Yes, your fee pays for:

• The ability to run payroll for as many pay periods as you want
• Automated payroll
• Direct deposit of paychecks to employee bank accounts
• Withholding tax deposits
• Quarterly payroll tax returns
• Annual payroll tax returns

One fee for everything.

Music to your ears, amiright!?

That makes it so much easier than wondering how much you’ll pay based on hiring new people or wanting to switch from paper checks to direct deposit.

For small businesses, knowing exactly what your costs are each month makes budgeting and operating your business so much easier!

Everything With Gusto Is Digital

Even in today’s digital age, so many things still have to be manually printed and signed.

And there are still people out there manually writing a check for each employee (no joke, I had 2 such clients at my last firm!).

It makes no sense.

Gusto embraces technology and the digital age and makes setting up your payroll account effortless.

You digitally sign and submit all of the account onboarding documents.

Your employees get their own onboarding package online, then digitally sign those documents.

The documents to make Gusto your agent with the state and IRS are digitally signed and submitted.

You don’t have to run over to the local office supply store or call around to friends and family to find a fax machine.

There’s no running out and wasting money on a package of envelopes just to mail a few sheets of paper.

There isn’t any need to run to the store or Post Office to buy stamps to mail back the signed documents.

You and your employees do everything on your computer and never have to leave the house.

Gusto + Accounting Software

My Recommendation

QuickBooks Online

QuickBooks Online simplifies your small business bookkeeping. It also integrates with Gusto seamlessly making it the perfect pairing!

Go Get It!

This is something that most of my clients (or anyone else I speak to about payroll providers) don’t even consider.

Having an accounting integration built into your payroll processor is pretty important, if not essential.

What happens when you do your own books in, let’s say QuickBooks Online, and you see the payroll withdrawal in your bank feed?

How do you break down the different categories?

Do you even do it or stick everything in your wages account (which, by the way, isn’t the correct way to do it ?)?

I certainly hope not!

For my clients, I set up an accounting integration for QuickBooks Online inside of Gusto.

Then I map everything to the proper accounts and set the sync option to “automatic”.

Now, whenever anyone runs payroll, it automatically gets sent to their QuickBooks Online file with the proper account lines broken out.

All they need to do is click “match” in the bank feed and boom! it’s recorded correctly.

When I explain it, I (almost) always get that “ahhhhhhh” response.

It’s the little things that help make running a business easier!

Having accounting integrations makes it so much easier than trying to figure out–or remember–how to book the transactions each time you run payroll.

Warning–QuickBooks Self-Employed doesn’t connect with Gusto, nor does it give you the ability to create custom tracking accounts.

Gusto Only Offers Payroll-Related Services

Your dentist isn’t also your tailor.

Hopefully, your lawyer isn’t also your gardener.

Your tax preparer better not also be your barber/hairstylist.

At least I hope none of those are true!

The point is that you want the people and services you work with to be experts in those areas.

Gusto does exactly that!

It helps you run payroll, that’s it.

It’s not trying to do all things well.

It’s trying to be great at one thing.

That’s the problem with so many of these all-in-one solutions.

None of them are great at every service they provide.

Think of it like this:

If you go to someone who says they’re a CFP, CFA, ChFC, JD, and 10 other acronyms what the hell are they actually an expert in?

They can’t possibly put enough time into each area to truly be an expert in everything, yet they have to spend enough time in all of them to maintain their licenses.

So, in reality, they are an expert in nothing.

A jack of all trades, but a master of none as the saying goes.

With Gusto, you are only getting payroll-related services at a high level.

That’s what you should expect from a payroll provider!

Wrapping Up

Like I said at the top, I personally use Gusto to run payroll for my own business.

That’s in addition to having 20+ clients that need to run payroll reliably.

I’d recommend it for any one of the above reasons, but considering all of them together makes it a no-brainer for me!

Plus, I honestly have never had to deal with any serious issues with mine or anyone else’s payroll while using Gusto (unlike some other payroll processors I’ve had horrible experiences with in the past).

But hey, don’t take my word for it–find out for yourself!

My Recommendation

Gusto Small Business Payroll

Click on the button to get a $100 Visa gift card after you run your 1^st payroll & pay your 1^st invoice. That pays for 2 months of service (on the lowest level)!

Go Get It!

Your Turn

Do you run payroll in your business? Do you do it by hand? Have you ever looked at a payroll provider like Gusto or more traditional ones?

Honestly, I don’t even know what an “expensive car” means in that world.

My father was never a car guy.

Most of my friends weren’t either.

My first two cars combined only cost about $2,000–probably the exact opposite of owning an expensive car.

Sure, at one point I went a little overboard with a car, but the car itself wasn’t expensive.

Truth be told, I really don’t care about, nor equate quality to the price tag of a vehicle.

The idea that cars supposedly represent a person’s social or financial “status” is just a joke to me.

Too often I see people with a crazy expensive car with absolutely no class or decorum whatsoever.

Or having to pay so much for the car that they can’t afford to insure it.

So that right there tells me that the idea of cars as status symbols is a completely flawed theory.

Aside from that, I just have issues with…

Expensive Car = High Maintenance

This is quite simple: I don’t want to be bothered with all of the hassles of owning an expensive car.

I don’t want to have to be anal about where I drive, or who/what I allow inside.

I don’t want to have to carry a towel to wipe it down every time I drive it.

I don’t want to have to hassle with going to a specialized shop for routine maintenance.

I don’t want to become one of “those” people who look at their car like it is one of (or even better than) their children.

I don’t want to have to deal with any of that stuff.

It’s not that I don’t want to take care of my possessions, that’s not it at all…

My issue is that I don’t want to spend the amount of time of money that is required to endure that such a costly possession is well-maintained and cared for.

It Costs More To Insure An Expensive Car

High car insurance premiums charged by auto insurance agencies are associated with shiny, expensive, new cars.

Why?

For starters, an expensive car is usually equally expensive to repair/replace.

Also, they are highly sought after by thieves due to the high cost of the individual parts.

Part of that issue is also how/where you store your car–a garaged vehicle is considered safer than a street-parked one.

Unfortunately, I don’t have a garage in which to keep my car parked, which makes me susceptible to this last factor.

There are also driver factors that raise the insurance rates…

So let’s not pretend that you aren’t going to be opening up your fancy new luxury or sports vehicle to see just how far it can be pushed?

The bottom line is that I don’t want to pay more for my auto insurance than I do for my mortgage payment!

Damage From Road Debris/Parking Lots

I’m probably not alone when it comes to being the victim of damage to a car that was truly not my own fault or avoidable.

Debris on the road can be kicked up by other cars which has the potential to scratch my own car, cause dents, or even crack the windshield.

Trucks that are by law supposed to cover and secure the crap they are transporting often do not, and that stuff flies all over the place.

Idiot people who shove shopping carts across parking lots recklessly can scratch and dent cars and not think twice about it.

I’ve seen and experienced these things with my own two eyes, and it’s very frustrating to have to deal with them after the fact.

The frustration level probably increases significantly when you own an expensive car and the repair costs are higher.

Sure, in parking lots you try to park strategically:

• Choosing a space next to a curb
• Parking at the far end of the lot
• Illegally taking up two spaces (either side-by-side or facing each other)

I definitely won’t recommend that third option, however.

Even taking precautions won’t guarantee your car will remain safe from dumb or careless people.

Or even cheap cities that refuse to fix potholes or torn up roads for that matter!

What really blows my mind is seeing someone deliver for Instacart or the local pizzeria in an expensive car and wondering how much damage gets done.

Other People’s Bad Driving

Going back to the parking lots, at one time I came out of a mall only to find that my front passenger-side door was dented, yet no one was around.

No note, no witnesses, and of course no security cameras to review in an effort to catch a glimpse of what had happened.

I don’t just talk–I follow my own advice like what I mentioned in the previous section:

I’m the type of person who likes to park far away from my destination, knowing that most people are too lazy to do so themselves.

I also like to park against the curb so the possibility of a moron opening their door into mine is limited to one potential side.

Sadly, people always find ways to be stupid and careless:

• Not paying attention when opening their door
• Being preoccupied using their iPhone
• Talking with others in the car
• Not being aware of their surroundings
• Trying to find where their destination is
• Eating
• Putting on makeup
• Working–YES I HAVE SEEN THAT!

All of these things can easily be avoided but aren’t because people don’t consider anyone else but themselves.

Oddly enough, a fair amount of this idiocy comes from people who are driving in an expensive car as if they don’t care.

Mother Nature Can Wreck an Expensive Car

When I lived in New York, it was the snow that made driving difficult at times, and the road salt which was the enemy of metal parts and a car’s finish.

When I moved to south Florida, it became the thunderstorms and the damage from hurricane season.

In destructive weather, anything has the potential to damage a car.

I’ve seen trees and light poles knocked down, resting on top of cars.

I’ve even seen street and store signs pulled off of structures and thrown through windows, landing inside of cars.

Hail can be large enough to crack windows.

Even if I did have a garage within which to store a car during these times, it’s not always guaranteed to be safe.

In heavy rain, the streets can flood so quickly and high that you can’t see what you’re driving into.

Under those conditions, you could easily drive into a ditch or large pothole.

I’ve had a cracked rim on my 2018 Honda Accord that cost me $750 to replace so imagine the kind of cost damage like that and worse would cost on any number of status brands.

It makes my head hurt just thinking about that number lol.

Imagine what kind of numbers we’d be talking about having to need in your emergency preparedness plan to cover damage to a Mercedes or Masaratti!?

Kids Playing In The Street

This is something I know about firsthand because I was one of the people I’ve grown to bitch and moan about.

Growing up, we’d play football and basketball, toss a baseball and ride bikes or skateboards in the streets right next to parked cars.

I’ve crashed a bike, skateboard, and even my own body into a few.

Now that I have my own car and know how much time and money it would cost to repair it from damage caused by any of those activities, I understand why we got yelled at so often as kids.

It still doesn’t change my mind, however.

Maybe I’m a hypocrite or out of touch now, but I still don’t want any of the neighborhood kids doing kickflips on their boards, or throwing a baseball across the parking lot when my car is only a few feet away.

Perhaps if I had more money than I knew what to do with, and I could own a fleet of cars if I so desired, I would reconsider.

It’s doubtful that would ever be the case, though, as I could think of numerous other things to do with that kind of money.

To be honest, I don’t even like driving to begin with.

Like, despise would be a better word to describe my feelings toward it.

Who knows what can happen in the future, but even though I tend to stick to my convictions, I will never say never.

But again, it’s a personal choice.

For me, I just don’t care enough about cars and what they “say about me” to spend the money.

If you do, and you can afford it, great, I’m happy you have something that brings you joy!

Wrapping Up

There it is, you now know my reasonings for not having an interest in owning an expensive car.

I don’t want to pay for it or the higher insurance and maintenance costs.

I don’t want to worry about others messing it up.

I especially don’t want to have to deal with the weather in South Florida and what it can do to my beautiful expensive car.

Hey, you can agree or disagree, but this is my money.

You are more than welcome to spend your own however you choose.

I get it.

Some people get wrapped up in the pitch by marketing agencies making them think that owning an expensive car will make them cool or special.

Some people want to be viewed in a certain way.

Some people are used to living a certain “lifestyle”.

Some people just have so much money they don’t know what else to do with it.

This is just my opinion on owning an expensive car and not a judgment on any of those people!

Your Turn

What are your thoughts on owning an expensive car? Do you care more about your “image” or your money? In your experience, has it been worth the money?