In this episode, we are going to talk about End of Year Bookkeeping and Tax Prep. We sit down with Maya Weinreb, founder of Solvency Now Bookkeeping, to discuss the most important thing you can do RIGHT NOW to get your books ready for tax season and common bookkeeping issues people make in real estate investing. Because if you are anything like me, you would rather keep what you worked for rather than give it away to the tax machine in D.C.
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End of the Year Bookkeeping and Tax Prep with Maya Weinreb
Hey, everybody, welcome to the final episode of Season 2 of the Real Estate Run Down. You know, as we’re wrapping up your end, nothing, nothing since quite like another layer of great stuff to be challenged on after Thanksgiving dinner than tax prep, right? I know, that’s exactly what you guys were thinking. But the reality is, everybody comes to the end of the year without thinking about it. And I’ve got a special guest on the show today that is all about tax prep and bookkeeping, and how to get you ready for your end. So buckle up guys, because we’ve got Maya Weinreb on the show, and she’s going to help us understand what we’ve got to do to make sure that we finish out the year, the best that we can. So welcome to the show, Maya. Hi, thank you so much for having me. Hey, so the reality is, nobody likes taxes, except for people like you. Right? Yeah. Well, now I don’t even I don’t like taxes. I like making taxes and bookkeeping simple for people. So it’s not a big, scary, overwhelming thing. But I definitely pay taxes. I hate it. Here’s the thing. I mean, you said it right. So everybody wants to not pay taxes, but they don’t want to pay attention to something that’s big, scary and ugly. Right? Yeah. And so they wait until the last minute they know, and probably one of the most heard phrases I hear is, why didn’t my accountant tell me that? Right? Yeah. So walk me through a little bit. Why did you got involved in bookkeeping, what your goal is and how you’re helping people not have that same? Why didn’t my accountant tell me that conversation?
Yeah, I mean, I have that same conversation with people all the time. People tell me, why didn’t my accountant tell me that? And the truth is just to address that, that accountants or CPAs, or tax preparers, they are like, you have to think of it most of the time. Like they’re a big machine, they turn out tax returns, that’s what they do. They take the data you give them, they turn out a tax return. They oftentimes, like there are, you know, tax preparers, CPAs accountants, who will sit down with you and explain stuff to you and I have met great CPAs that do that. But oftentimes, they’re so busy that unless you specifically ask them to sit down and do a consultation, or tax planning or Tax Review, or whatever they call it, they’re not going to do it, they don’t even think about it. So they might know stuff. But they don’t tell you unless you ask. So, it’s a little bit of like, as individuals, we have to take more ownership and responsibility instead of getting to the end of the year and going why do we have to pay so much in taxes? We asked for tax planning,
You know, and I just literally got off my tax planning call, my final tax planning call for the year. And, you know, it’s a lot like that. I mean, people you know, it’s like getting mad that, you know, your clothes are out of style. So you hire somebody to organize your closet. Right? But all they’re doing is organizing what you already have. They’re not the one that says, hey, those plaid shorts went out when you were in high school. They’re just taking what you have and organizing it. So your shorts are over here, your long sleeve shirts over here, right? And that’s where a lot of people, I think miss it, because they don’t get into it. And then there’s only so many things you can do once it’s done, right? You’re just reorganizing it in a different way.
Exactly. And I have a friend who is a stylist who would be laughing at this a lot because she would you know, because she comes in and tells people to throw everything out of their closet and you know, basically, and get all new stuff. But yeah, exactly. That is the thing that CPAs are just organizing what you give them and telling you based on this that you gave me, “Here’s your tax liability.” And then you have to ask them, “Okay, in order for me to have less tax liability less next year, what should I do?”
Right. So let’s, let’s talk to the audience about what are we going to do, let’s just assume that somebody is going to listen to exactly what you said, to make sure that they have the lease liability. And today is January one, and we know that we’re going into next year. What would you advise someone to do with their calendar with how they do business? I mean, look, we already know 22 is done. Right? We know what our sales are, we know what our profit margins are. We know what all those things are. What are we going to tell people going into in January? That’s going to set them up for a win on their 23 taxes. Yeah, so I want to address it real quick though. So we’re at the end of 2022, but I would say that most people, most business owners unless they have a bookkeeper, they don’t know their numbers. They don’t know their profit. They don’t really know their sales. Maybe they do their sales, maybe they have their top line revenue? So I would the first thing I would say is you got to get bookkeeping. Now I own a bookkeeping firm. So I’m obviously like, that’s the one I’m pushing always. But there’s no, there’s nothing else that you can do until you have your bookkeeping numbers, like any anything you want to do, whether you want to get tax planning, whether you want to get a loan, whether you want to, you know, budget for next year, you need your profit and loss, you need your balance sheet, there’s, you know, that’s the first thing to do. So if you don’t have bookkeeping, one, I don’t know how you manage your company, but some people do, but two there’s nothing else that you can do without having that. So that’s the first thing everybody has to do. And unfortunately, more people than you expect, don’t have their bookkeeping together, or they have a spreadsheet or they have a general idea. Well, and you know, that’s probably been fairly lethal this last year with the price changes and everything. You know, we’ve got fuel surcharges. Again, we’ve got commodity prices moving, we’ve got you know, in my world, it’s concrete and two by fours, and everything’s changing. And so if you’re going, if you’re not being accurate about what I bought last month, what I sold last month, what my inventory is, what my inventory carrying costs are, you could really be sitting there with fantastic sales numbers, and terrible profit.
Exactly. And I have clients that are real estate investors, and you know, we do their books in such a specific way that they can see the profit on each property. Yeah, yeah. Because you have to be able to do that. Right, you should, you should be able to drill into that and go, Hey, I made money on this one. But I didn’t make money on this one, especially as we see market reversal, right? We’re down about 5% in most major markets from the peak, right? So if you were going off of last year’s numbers, where I can buy it for $300, I’m going to throw $100 in it, and I can sell it for $500, 5% off of 500, that’s going to eat up $25,000. If you’ve got longer market time, you can be down as much as $50K on your profit margins. And if your costs crept up, you can be in a squeeze there where you may not want to sell that thing, because you’re going to take a loss, right? And so those are the kinds of things that bookkeeping does a lot with and if you don’t know your bookkeeping, you could be running into the end of the year going, Hey, I need to hurry up or buy some stuff because I made too much money when the reality is you’ve lost money, right? Yeah, and so you’re going after the wrong things. So if we’re looking at that, and we’ve got our booking keeping in place, we’re gonna make that assumption that we know what our bookkeeping is, and we know that we have a profit. And, we know that we don’t have time to do anything this year. What are we going to do, like from a long term? You know, because and then we’ll talk about what we can do in the last 30 days, right? We’ve got I mean, we’ve got the race to the finish line. But what in an ideal world, somebody with good cost control, good bookkeeping, what are they going to want to look at for a tax prep tax planning thought process, so that they can make sure that they’re having the right conversations with the right people, at the right times to make sure that they’re getting the best insight into what to do in a month by month basis in their business?
Yeah, so it’s obviously going to depend very much on the individual. I’m not a tax planner, so I can’t necessarily tell you exactly what you should do. But I can say that, assuming you have your bookkeeping, all done, right now is the time to reach out to your CPA and ask for tax planning, and have them look at your numbers for the year and make suggestions right now you have a month left to make decisions for the end of the year. And there’s obvious basic things I can tell you like I mean, obvious to me, but you know, if you’re a business owner, and you’re making over $100,000 in revenue, which you know, a lot of real estate people are you and you’re making decent profit out of that, at that point, you should definitely elect to be taxed as an S corp. Now, I know a lot of real estate investors, for instance, have a lot of different LLC’s. So it’s not that you necessarily need all of them to be an S corp. But, this is something where you would talk to your CPA, ask for tax planning or hire even a separate tax planner, if your CPA doesn’t do tax planning and look at that and go okay, if I was an if I had like a holding company that was an S corp that all of the the profit moves into and the holding company owns the LLC, you know, that type of thing. Is that going to save me money or not? And in most cases, it will but not in all cases. So you definitely have to check with your tax planners, CPA on that.
So what I hear you saying is most people don’t have their bookkeeper talk to their tax preparer. So they’re they’re going in with things done a certain way because the bookkeeper did it the way that the bookkeeper did it. The tax planner is going, Oh my God, that’s why did you do that? And the book, will, because that’s what Bobby said. So having that conversation of what do we want to do? How do we want to elect to do that? How are we even basically paying people? Yeah, those are very basic questions. But it’s surprising to me, but I’m not surprised. Yeah, those are some of the most overlooked things, because it is so simple.
Yeah and that’s one of the biggest things that I get, well, how can my accountant never told me that? Well, “you never asked.” I try to as as a business owner, myself, and as someone who I have about 150 companies that were doing bookkeeping for, I try to go through and when I’m, you know, onboarding them, or talking to them, the beginning looking at their structure and making sure that it’s going to be as efficient as possible for them but in the end, your bookkeeper works for you. So they’re going to do what you ask them to do. And if you don’t understand that stuff, as a business owner, which most business owners don’t, unfortunately, the bookkeeper is not going to do anything. You know, me, because I’ve done a lot of research on this stuff. And I’m a business owner myself, I will give you recommendations, but I also can’t give you like legally advice on how you should do your taxes or anything. So I will say, check with your CPA, you know, check with your tax planner, but I would recommend that for your business, you do XYZ, and that will save you more money on taxes.
So here’s one thing I would recommend people do for their business is get their bookkeeper and their CPA on the same phone call, right?
Yeah, it’s not a bad idea. It almost never happens.
No, it doesn’t. But you know, I’ve learned more things by going like this. My CPA and my bookkeeper? Well, we do this. Well, we do that? Well, we did. Because just like you said, you I, as a small business owner don’t always know what questions to ask. bookkeeper does, and your accountant does. So between the two of them, they can have the conversation and then ask you, do you agree? And you go, well, is that what’s best for me? And they both say, yes. Then you say, Yes, I agree. And then you collapse. I’ve learned a lot by just allowing the specialists to do what the specialist does, to make the best situation out of it. At the end of the day, I am where I need to be, and can make sure that I have what I need. Because I’m not the one trying to make the decision. Right? The one that is ultimately making the decision. But I’m, I’m doing it in a way in in a fashion that it helps us. We’ve got this all done properly. And we were set up.
Right, exactly. I honestly have to tell my bookkeepers. I know that in customer service, there’s a concept that the customer’s always right.
There’s no excuse at all.
Yeah, on bookkeeping and taxes, like they don’t know. So they might think, and they might tell you, but you can’t do I have to explain this to my bookkeepers, you know, and we have it as a firm policy, just because the client asks you to do something doesn’t mean you can do it, you have to make sure that it’s legal. And it’s not that we have bad clients. We just have uninformed clients, like they don’t always know or they heard something on Tik Tok or, you know, whatever.
And there’s three very important facts that they forgot in the whole conversation when they related to you. Right?
Yeah, that’s the thing too, when they say my CPA said, we always have to take it with a grain of salt, because did you fully understand what your CPA was saying? And did you ask the right question? Because when I get that I go, Okay, can you have your CPA? Email me then and explain it? Because I’m just not sure I totally understand what you’re saying, or can we get on a call altogether? Because it’s CPA will sometimes say, Well, based on this information that they gave me, this is what I said but what you’re saying is actually this is that when that’s what they thought and it’s not I never almost never think that people are trying to do something shady, it’s more just they don’t understand they don’t know you can’t do it that way.
Right. And as we all know, it’s in the fine details, that the real yes or no answer is so can you you know. Can you deduct the vehicle on your taxes? The broad stroke answer is yes. Then you get into the technical detail of if you don’t own a business, then no, if you are a certain size vehicle, then yes.
It has to be over a certain weight, it has to be for business. It has to be so many things.
It has to be all of those things. But the broad stroke answer is that yes, you can. Now let’s get into particular details. So that’s a very important thing. And that’s one of the things that I’ve learned is I just get out of the way. And I let the people that know what they’re talking about, have the conversation with me there so that we can get that ironed out and then move on. Because that’s why so many things, right?
Exactly. And I don’t, I don’t ever pretend to know everything about bookkeeping and taxes, because one things are always changing. And to the it’s just such a broad area. But I know that I know 90% more than 90% of the people on the planet on the subject. And so when I come in, I have to know that I’m the I’m the expert on the subject, I have to tell them, I have to give them the information that’s going to help them because that’s what I want. I want them to succeed in their business. And not because I’m, you know, like, Oh, I’m better than everybody. Because I, you know, when a marketing person starts talking to me, I don’t know that much about marketing. I’m like, Okay, tell me I need this information. Right. But when you’re talking about bookkeeping, I know more than most people and I want to be able to help them.
The other thing too, though, you know, where the sources, you know, where the information is, you know, the lingo, you know, you know what, what it was, you know, so much more in the general sense that it will give you a better gut feeling about what you may be missing, where, you know, the average person goes, well, I know I can write off a vehicle, but I didn’t know about the whole business. And I’m okay, stop, right. Yeah, exactly. So when you see people kind of going through this, and then they finally get, I feel like we’re getting this picture put together, right, so we’ve got the good bookkeeping, we’ve got the accountant and the bookkeeper talking, and we know what’s going on? What are some of the things that you see once that starts to happen that people are able to do that helps them with their year end tax planning?
Yeah so, like I said, one of the first things is making sure your business structure is correct, because an S Corp is always going to save you so much money in taxes, and in some cases, maybe a C Corp would as well. But most people don’t realize that just starting an LLC doesn’t do anything an LLC is taxed the same as sole proprietors the same as self employment income, so you’re paying the self employment taxes on it, right? So if you do, exactly, so if you do the S corp election, as a business owner, you have to put yourself on payroll. So now you’re paying payroll taxes on whatever is a reasonable salary, but the rest of the money passes through to you as a draw, and you’re only paying income taxes on it and not payroll taxes or self-employment taxes. Right. So that’s one of the biggest, biggest things. Yeah, the next thing is setting up retirement accounts. And I’m no expert on retirement accounts. But I know that that’s gonna save you money on taxes. And after the S corp election, the next thing that is just the basic no matter what, you know, income level, you’re at retirement accounts.
Yep. Well, and you know, then you got, I mean, then there’s certain things like combining retirement accounts with key person insurance, right? I mean, all of these conversations are ones that you can have. But if you don’t know, your business structure, you you may or may not be able to do those things. Right. Yeah. You know, here’s another thing.
They all build, you have to have your bookkeeping, you have your business structure, you have to have, you know, all of that information. And then exactly, you can figure out,
You know, what are the other things that I hear a lot of people get confused is the difference between cash flow and profitability? Right? Some people look at it, they go, oh, man, we got a million dollars a month in sales. We’re doing this, we’re doing that. And the next thing, you know, they’re out of business. Because that a million dollars a month in sales and 1,000,002 in costs, right. But how do you? How do you set up the controls in a bookkeeping scenario that allows me to understand on a monthly basis, that I not only have great cash flow, but I’ve got profitability, and I really need to be looking at some of these tax advantaged things because my profitability is great. Yeah, my cash flow is there to pay for things like retirement accounts, life insurance policies, things like that.
Exactly. Yeah. Life insurance policies, especially if you have life insurance policies on your employees. That’s where you’re gonna you know, it’s like a qualified thing. Um, yeah. So what I would say is a lot of people know this word, the word is budget, and you know, governments talk about but And companies talk about budget. And I feel like it’s a very useless and effective word. Because all it means is you looked at last year, and you made a plan on how much you want to spend this year or this period. But it doesn’t actually give you any control. So the term that I use, it’s financial planning. And I have some of my full service clients, what we do is we set up financial planning for them. So we’ll make them set up a separate bank account, that’s just for all the income. And obviously, if you have separate, you know, properties are different things. And you’d have to set this up per property, unfortunately, you’re tracking them separately. So obviously, real estate investors get some extra work to do on that. But if you have an income account, and all of the income that comes in, throughout, let’s say, the week just sits in that account, at the end of the week, you take that amount of income and do financial planning with it and go, Okay, so here’s my payroll, here’s my bill. And then here’s the profit, or there’s no profit, but you can’t continually as a company spend more money than you make.
Well you can if you’re the government.
That’s why it’s such an ineffective term budget. I, I never want to be in government, but I’m like, let me at that budget, I will fix you guys. Yeah, so um, yeah, as a business, you can get loans you can get, you know, there was the PPP loans that helped everybody out, which, again, I want to say that people who didn’t have bookkeeping and didn’t have correct tax structure didn’t qualify for in 2020. So that sucked for them, there was the EIDLl loans right now, there’s a lot of people giving out business loans, SBA loans, all these things. So you can operate at a loss for a while, or if you have investors, you know, that’s a different thing. But in the end, a company has to know what their income in as, and they have to spend less than they make. So you set up that income account, then you can do financial planning, based on that the amount of money that came in that week. And,
And that’s important, because you know, when you just look at the basic p&l, that’s not going to tell you that, right?
No, well, unless you run it for the week, you know, or the time period that you’re looking at. But unfortunately, what most people do is they have or not, most people, because as companies get bigger, they often get a bunch of bank accounts. But that’s not necessarily useful either. And like, they’re all designated for a specific purpose. But let’s say a small company are just starting out, you know, they’ll have one business bank account, and all their income goes in, and all their expenses go out. And they never know how much money they actually have available. Because there’s always, you know, checks clearing or auto payments clearing. And it’s not, they have no way to have control over it. Yeah. Whereas if you put that money in the income account, and you don’t spend a dime until you sit down and you do your financial planning, and you just you can just you know, just make a spreadsheet, make it simple. You go on had 50,000 Come in, I have 25,000 in payroll, here’s the bills that are due this week, and there might be weeks, you know, that you can only pay some of the bills, and then there’s weeks that you have extra, and you put that in your reserves. And if you’re smart, you set it up, you know, a lot of these big gurus will talk about, you know, pay yourself first put 40% aside, so if you can do that and your financial plan and put aside as much as you can to reserves that will save you for times that are lean or or you put in you know, a savings for the next property you want to purchase for the downpayment, you know, things like that.
Yeah, you know, and I think that that’s, that’s very important. I know that one of the first things that my my bookkeeper did for me, gosh, this was I don’t even want to say 1999. One of the first things that she did was took away my debit card, right? Yeah. Because I was running my business on a debit card, because I didn’t like credit, right? I didn’t want to get out over my skis. I didn’t want to, I didn’t want to buy stuff I couldn’t afford. But the reality was I kept changing the bank balance on a daily basis. It was driving her nuts, right. And so again, like you said, you get to that income account where you’ve actually got real funds there and you’re paying bills out of that, rather than changing your daily balance. You’re doing the same thing, right? Yeah. So when you see people, when they’ve taken back control of their bookkeeping, they know where they’re out on a weekly basis. They’re planning for retirement accounts and those kinds of things. How effective is that in getting them in control and in front of their tax problems?
Oh, my gosh, it makes a huge difference. I mean, you always know where you’re at. Right? You know, we have clients who aren’t necessarily having a good year, and they’ve had to get loans, but they know exactly it shows on their profit and loss that they’re, you know, for the year they’re negative $200,000. And they asked me, What does that mean, and I go, that means you use the money that you borrowed, you’ve spent more money than you meant. And I, I’m not even able to by wanting to talk to all of my clients and tell them, you know, my opinions or advice, but I would tell them like, this is time to look at your expenses, this is time to look at your payroll and see, like, maybe you want to be making more money. And so you want to be able to afford all these things. But you can’t right now. And so you have to get your spending underneath your income. And you’ve been working on trying to make more money. I know, that’s the ideal solution, making more money. But in the short term, like you have to have, as a policy make more money than I spend, like, an everybody spends more than they make on all budgets across the board.
And here’s another thing too, you know, people don’t want to pay taxes, right? So they go through life, or they go through, you know, the bookkeeping process, the girl, you know, we got to do this, we got to do that. But the reality is when the bank looks at you, and you didn’t pay any taxes, because you lost money, the bank doesn’t want to loan your money. Right? So the reality is some of that is healthy, to have to pay some taxes. Right?
Yeah, it really depends on what your purpose is, and your plan. And that’s, that’s something to talk about with your tax planner. I know most people don’t want to pay taxes. And they are always planning on how do I pay the least amount of taxes. But I do run into though I tried to get a mortgage, and I couldn’t get approved for a new loan, because it shows that I have no profit. Well, of course, it shows you have no profit, because you worked with your CPA and tax planner on how to make everything that you spent tax deductible, which is great when you’re trying to save money on taxes, but like you said, if you don’t show a profit, you’re not gonna get along, because you look unprofitable.
Right. And that’s where you got to have that balance. And again, that comes back to the planning, right? It comes down to having that conversation with your bookkeeper having a conversation with your tax preparer, having that conversation with your strategy people that say, Hey, this is where I want to be. Exactly, and leave the tax number out of it. I want to be able to buy two new pieces of equipment and a new house at the end of this year, what do I have to do, your tax preparer is gonna say, well, you’re gonna need to have $300,000 in income to qualify for those things. In order to do that, you’re gonna have to do this, you’re gonna have to that your bookkeeper is going to have their opinion on that. And then you’re creating a strategy by which to run your company. That is not whimsical, it’s not something that is happening, moment by moment, it’s something that is following a budget, right? So you can look at that budget, go, Hey, these are my expenses, these are my profit margins, these is this is what should be in my account at the end of each month, and know where you’re at, and know how you got there, and where you’re going next, right?
100%. And that’s very important, because there’s also kind of a spot that you can get into as a business owner where you’re starting to make good money, but not enough to where you can do all the really cool loopholes and stuff, right? And so it’s like, you’re just going to have to pay taxes. And if you have this idea that you don’t, and I hear this from people who are W two employees as well, I don’t want to get into that tax bracket, I don’t want to pay those taxes. So I’m not going to ask for the raise, I’m not going to you know, ask for the promotion, I don’t want the promotion, because I’ll end up paying more taxes. And it’s heartbreaking to me because you have to keep growing, like everything costs more. So whether you’re an employee or a business owner, you have to keep growing, you have to hit that next level. Yeah, you might have to pay more taxes, it sucks. You have to bite the bullet, I had to pay more taxes for last year than I did the year before. And I’m not at a revenue range where I can make everything tax deductible and you know, put my logo on every piece of clothing I own or you know, anything like that. I can’t do any of the really cool fancy loopholes that Trump gets to do where he’s not paying any taxes. So I have to pay more taxes. But my company is growing and I’m showing profit and if an investor or a lending, you know, institution looked at my books, they look decent, there’s profit.
Yeah. And you know, I mean, look, here’s the reality. There’s, there’s two things to think about, you know, taxes mean that you’re profitable. So that’s not bad, it means that you have to pay a portion of what you’re making, because you’re profitable. The other side of that is you’re gonna pay taxes at some point. I mean, taxes, you know, a lot of the a lot of the loopholes and a lot of the things you’re talking about a tax deferment, right? So I made money in this company, and I bought a piece of real estate and I used Cost Segregation I used, you know, bonus depreciation. But that just offset that’s called an offset. Right. So just to offset that, but when this sells, I’ve got to recapture I get to pay that taxes. And, you know, my brothers is of the mindset that we’re never going to see a cheaper tax bracket than today. So mad about paying taxes today, and not having to deal with it tomorrow. Right?
Yeah, I’ve definitely seen I look at some of the historical tax rates for corporations and in the 80s. They were insane.
Right. And I don’t agree with my brother on that. Fact. Right. We both view it differently. But neither is really wrong. Because he’s paying it now. And I’ll pay it in the future. Right? Yeah. Hey, minefields, right. Sure. feature comes, we’ll determine if my brother was right. Or you know what, because because he’s already paid that he’s already settled that that it’s no, it’s no, we don’t need to worry about it.
Exactly. And I would probably agree with you just because I’m of the mindset of, it’s better to have the cash flow in your pocket than in the government’s pocket. So even when people tell me friends and family that they are waiting for their tax refund. I’m like, Why? Why did you overpay the government? You’re getting you’re giving the government a loan? At no interest? You could have done something useful with that money.
Yep. And yet the same person when you don’t pay your quarterly fees, or you don’t pay, you know, if you don’t, if you do an extension, you don’t pay, they charge you 18% interest, that’s the same person that you’re giving an interest free loan to.
Right, exactly. And waiting months and months to get your money back.
This has been an awesome conversation. It’s really, I mean, guys, you need to replay this and look at all of the great advice that you’re getting here. Because not only we’re talking about how to structure properly, and what things to look at, but we’re also talking about procedures, and things that that an expert like Maya is telling you to do to simplify your life for down the road to get the best systems in place to make sure that your life is as carefree as possible when it comes time to dealing with this issue of taxes. So we touched on so many things during the last 40 minutes here. But what are some of the things that is there, one thing that we didn’t touch on the people need to know, as we close out this last episode of season two.
You know, this isn’t necessarily going to be a tax planning thing. But I just need a plug for a 1099 because it’s the end of the year, and a lot of business owners don’t think about 1099. Every single vendor that you pay that is a service provider, obviously not groceries and you know, not Starbucks or not restaurants. But any service provider that you pay needs a 1099 it’s due January 31. So now is the time to make sure that you have all your ducks in a row, you have all the W nines from them. And real estate, investors don’t always think about all the service providers that they employ. We’re talking plumbers, we’re talking property managers, we’re talking. Yeah, your accountant, you know, all these different things that you don’t think about that might need a 1099. Now, historically, the government hasn’t imposed any of the penalties that they can on 1099 any year, they could, and this is why people don’t really think about it, it’s never, they kind of they have so much else to do that they’re not really imposing those penalties. But technically, legally, if you don’t issue that 1099, you can be liable for that vendor self employment taxes, and you can get a late fee if you file it late. So we try to encourage all of our clients to you know, get those ready. And what happens is that they don’t think about that the plumber needs a 1099.
Right, because I got an invoice from him and I paid the invoice and I did the deal, right. We had the transaction. I mean, it’s on my credit card statement. I don’t need that.
Right. And he’s not a contractor. Well, he’s applying to hire him to help me.
Right. Yeah, you know, that’s really key too, because we’ve got 87,000 new IRS agents. Those are exactly the kinds of things that they’re going to be digging up. And when you think about that unemployment tax, have Social Security tax, Social Security is bankrupt, right? We’ve known that for years. So where are they going to be going out and digging all this out of they’re going to be digging it out of you and me, Johnny Q. Public here on these kinds of things. And that’s exactly the kind of advice I have. That is a golden nugget right there. Because how much does the self-employment tax? How much is that going to cost me?
Yeah, I mean, it could be, you know, 15%, with all of the different items included,
So we got 15% and if I had $10,000, in unaccounted for expenses, that I didn’t get the W nine on and I didn’t get that all taken care of. That’s another 1500 bucks out of my pocket out of my profitability. And then if the chances of them find it in one year, they’re gonna start rolling into all the years. So that just could turn in from a, well, I don’t need it for the plumber 200,000. All right, I’m pretty quickly if you’re not paying attention.
Yeah. And exactly. And my mission statement for my company is complete and perfect financial records for the business owners peace of mind. And that’s the most important part is, as a business owner, you know, you are trying to do whatever is your business, you’re trying to, you’re trying to make money, you’re trying to help your community, you’re trying to help your clients, your customers, whatever. And you need the peace of mind to be able to concentrate on that, if you are stressed out, because you don’t have your numbers you don’t know if people got a 1099 You don’t know where things are at it is the opportunity cost, you’re not going to be able to make more money to service your clients because you’re stressed out about all this other stuff. And it’s so real to me, because you know what all of my clients tell me when they come to me, they’re just so stressed out. So that’s been really trying to make sure people are educated, and have someone to help them so that they can achieve their goals for their company.
There you go. One final golden nugget from my and I just, I mean, there’s just so many things here. I’m thinking back through and I’m headed down the hall right now to make sure we got all of our 1099’s done and everything like that, because you’re right. I mean, these little things add up to big dump dollars. And, you know, there’s no sense paying somebody else’s bills. So guys, thanks for tuning in to all of season two. And thank you, Maya for being a part of our final episode as we go into the holiday season. And, guys, thanks for tuning in to the Real Estate Run Down. Don’t forget to like, share, and subscribe to the Real Estate Run Down wherever you get your podcasts. If you want to know more about how you can get a hold of Maya shoot me an email at [email protected]. I’ll give you all of her information. get you connected with her and you’ll be able to get one on one tax prep and bookkeeping services from a gal that she proved it right here today. She knows her stuff. So thanks again guys signing off from the Real Estate Run Down.
Thank you so much. Bye bye
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About Maya Weinreb:
Maya started Solvency Now Bookkeeping 5 years ago with the mission to provide perfect and complete financial records which results in the business owner’s peace of mind. They do full-service bookkeeping, meaning AP, AR, payroll, payroll taxes, sales tax, 1099’s, tracking financial transactions, and anything a business owner needs to handle their company finances. They also partner with CPAs and tax preparers so that their clients are covered in those areas.
Website – https://solvencynow.com
Facebook – https://www.facebook.com/solvencynow
Instagram – https://www.instagram.com/solvencynow_bookkeeping
YouTube – https://www.youtube.com/channel/UCrddILpwqG96-BECYqIQ0-g
Company LinkedIn – https://www.linkedin.com/company/solvency-now-bookkeeping