Melissa Whaley, Author at She Owns It

Tax Deductions You Might be Missing Out On by @WhaleyBookkeep

December 18, 2015 by Melissa Whaley Leave a Comment

As the end of the year draws to a close, taxes may be the last thing on your mind.

However, filing season is just around the corner in the US and I think you should know about some tax deductions you might be missing out on as a business owner.

Home Office Deduction – In years past there has been a taboo about claiming a home office deduction. However, in 2013 the IRS introduced a new way of claiming this deduction called the “Safe Harbor” Office in Home deduction. This allows self-employed individuals to deduct $5 per square foot of space in your home use exclusively for business use. The key word here is exclusive, it cannot be your kitchen table or bedroom that you work out of. It can be a corner of a room that you only use for business purposes, but you need to be able to prove the exclusivity of the space.
Business Mileage – Often if we are working from home, we are also traveling to meetings, local events, or co-working spaces for business purpose. You can now use apps like MileIQ (https://www.mileiq.com/) to track these business miles and claim them on your tax return. The new standard mileage rate for 2016 will be 54cents a mile (that can add up quickly). To claim this deduction you need to record the starting and ending mileage for the year on your car, total miles for each business trip, reason for trip. Most apps do much of this for you. If you put a lot of miles on your car then you can purchase a product like Automatic (https://www.automatic.com) that actually plugs into your car and records all your driving data.
Credit Card Processing Fees – If you accept Credit Cards or PayPal then you can deduct all the fees associated with their services. Just make sure that you actually are claiming the total income you received (how much was invoiced) and not the amount the company deposits into your account (usually after fees are taken out)
Credit Card and Loan Interest – If you have a dedicated business credit card or took out a small business loan then you can deduct the amount in interest you paid over the calendar year. This doesn’t work if you bought a few business things with a personal credit card.
Health Insurance Premiums – If you are Self-employed and paid health insurance premiums for yourself, spouse, or dependents; these are a deduction on your tax return.

As with any tax advice, these are general tips and may not apply to your specific tax situation. Please take the time to consult with a tax professional to review your own tax situation and see what deductions you might be missing out on.

Want some guidance on getting more organized for tax time? Download my Free Guide to Reducing Tax Time Stress.

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Hello there, I’m Melissa Whaley, owner of Whaley Bookkeeping. I specialize in virtual bookkeeping and tax preparation for entrepreneurs. It excites me to help people understand and take control of their finances, especially in their businesses. I believe that anyone is capable of success if their passions are accompanied with the right tools. I love working with new business owners to help them set-up systems that will take the stress out their finances.

I am a licensed tax preparer in the state of California and have been helping small business owners since 2009. I am a Wave Accounting Pro, Quickbooks Online ProAdvisor, and Freshbooks Bookkeeper.

You will often find me drinking a cup of coffee while hanging out in Facebook Groups, or on my YouTube channel making videos to help Etsy sellers with their bookkeeping. In my personal life I am married to a wonderful husband, have a 6 year old daughter and a 1 year old son.

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Melissa Whaley

Building a Business through Community by @WhaleyBookkeep

November 27, 2015 by Melissa Whaley Leave a Comment

by Melissa Whaley | Featured Contributor

I am an extrovert, which can be quite a challenge when working from home with a toddler. It became even more of a challenge when I moved over 400 miles away from my hometown so my husband could pursue a master’s degree. Isolation and loneliness can easily set-in when working from home, but I managed to use technology to my advantage and build a community that moves with me.

This is about my story but, I will leave you with a few key takeaways that I’ve learned while building my business through community.

Before joining a few key Facebook groups, my business was pretty stagnant.

I had one or two part-time clients and I wasn’t terribly motivated to put myself out there and grow. Once I got active networking with other women business owners, I was inspired and motivated to get my butt in gear and make my business a serious thing. I can definitively say that 75% of my new clients this year have come from my relationships inside Facebook groups.

When I first started using Facebook groups they had nothing to do with business. I was in local mom groups, interest groups, and a few buy/sell/trade groups. Then a friend invited me to join her Facebook group for lady entrepreneurs, and everything changed.

Jessica Rea introduced me to her Ladypreneur Community and it opened my eyes to a whole new way to network with other women. They were struggling through the same things I was and offered their support when I was frustrated or in need of guidance. I could also offer support to those who needed my expertise, taxes and bookkeeping. It was in answering people’s questions without any agenda that I found myself getting more and more new client inquiries.

I eventually found other great Facebook groups that grew my network and community more. I was able to connect with other bookkeepers who were working from home and talk about our unique challenges. I was able to find a group of seasoned tax pros where I could ask questions when I got stuck on something.

I have learned about marketing, design, and better business processes all from the people I have met in Facebook groups. It was, and still is, an incredible the wealth of knowledge and community I was able to tap into.

Here are a few things I have learned from being an active and contributing member of Facebook Groups:

Not every group is the right fit.

There are literally thousands of groups out there targeted to entrepreneurs and business owners, don’t feel like you have to join them all. Also you may need to test drive a few groups to find the one (or couple) that you really jive with. If you find that you aren’t benefiting from a particular group, then leave. You don’t have to be in a group just because someone said you should.

Facebook groups are for networking, not marketing.

Every group has it’s own unique set of rules, but please don’t be that obnoxious girl that is trying to promote her business without actually providing value to the group. Take the time to get to know other people in the group, build relationships, and share knowledge freely.

Make sure people know what you do.

When you join a new group, take time to introduce yourself according to the group guidelines. Also be sure that if someone clicks onto your personal profile that they can find your business info. Whether it is linking your business page to your personal profile, or just putting a link into the description of your profile and cover photo (thanks Jessica for that trick). Groups are linked to your personal profile, not your business page, so don’t make it difficult for people to find out more about what you do.

I feel so much less isolated now that I have a community to go to when I need interaction. I have developed genuine friendships with people that I have met in Facebook groups. I have completely changed the way I run my business because of the information and relationships that came from groups.

How have Facebook groups or other communities help you build your business?

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I am a licensed tax preparer in the state of California and have been helping small business owners since 2009. I am a Wave Accounting Pro, Quickbooks Online ProAdvisor, and Freshbooks Bookkeeper.

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Melissa Whaley

Five Elements to A Killer Invoice by @WhaleyBookkeep

October 19, 2015 by Melissa Whaley 2 Comments

Getting paid is a pretty important part of owning your a business, so you want to make sure that it is as easy as possible for your clients to pay your invoice.

If you are service based, or invoice for products, then these tips will get your invoices into tip top shape!

1. Branding – Make sure your client knows exactly who this bill is from, and how to contact you if they have questions. This includes the basics of name, location, and contact info. But this also includes Logo and color coding to match your overall brand. The look and feel of your invoices does not have to be boring!

2. Clear Definition of Charges – Make sure that your list of charges are clear so your client knows what they are paying for. This means itemizing stuff, if there are multiple elements to your charges. If you use more flat rate billing make sure you have good descriptions for what the product or service is so clients are not having to ask questions about their invoice and delaying payment while you go back and forth.

3. Terms/ Due Date – You want an invoice that clearly states when you expect payment. You’ll often hear terms like Net 10 or 30 thrown around describing terms, and those can be listed or you can simply put the date payment is due. Part of a good working relationship with anyone includes clear expectations and timeliness of payment should be a big part of that. There are accounting systems now that can send automatic reminders if payment is late. Use these tools to your advantage so payments aren’t delayed.

4. Payment Button – Make it easy to get paid! If you use a system like Wave, Freshbooks, or PayPal they are able to integrate credit card payments right onto the invoice. Features like this allow you to get paid much faster than waiting for a check in the mail. If you aren’t using this type of system yet, then at minimum list out how clients can pay (Credit card, check, bank transfer, etc.) and if they need to go to some other place to do it, then make that as easy as possible.

5. Send It – This may sound silly, but you won’t get paid if your invoice isn’t sent. Most invoicing softwares let you send invoices via email so they get to your customer fast. However not all situations are right for emailing invoices. Make sure you know how your client processes and pays their bills. Some services like FreshBooks will even send invoices via snail mail for you for a small fee.

Still not sure if your invoice is up to par?

Here is a sample from my own invoicing software, Wave Accounting:

When I send an invoice through my software this is what my clients see when they click the link.

I have my logo at the top left, a clear due date, A description to my item, and integrated payment. And of course if a client is looking at this, that means I hit sent.

What are you using to send invoices? Comment Below or Tweet Me!

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I am a licensed tax preparer in the state of California and have been helping small business owners since 2009. I am a Wave Accounting Pro, Quickbooks Online ProAdvisor, and Freshbooks Bookkeeper.

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Melissa Whaley

Top Free Money Tools for Entrepreneurs by @WhaleyBookkeep

September 21, 2015 by Melissa Whaley Leave a Comment

As many of us start our business, we don’t always have the funds to invest in accounting software or tools right off the bat. Lucky for us there are a host of Free, or nearly free, tools that will allow you to start your business off on the right foot.

Here are my Top Four Free Money Tools for Entrepreneurs

1) Wave Accounting – I have written whole articles just on the awesomeness of Wave Accounting which you can read here. Wave is specifically created with small businesses in mind. The free version of Wave includes Invoicing, accounting aka income and expense tracking, receipt uploading, and email support. It is a very easy program to use and they have an excellent training video series on their Wave University page. They also have mobile apps for invoicing and receipt snapping on the go. There are a couple paid features to Wave that you can enable including accepting credit card payments directly on Invoices, premium support, and payroll if you need it. Check them out at https://www.waveapps.com/

2) Mint.com – When you are starting a business it’s not just about your business finances, your personal budgeting is important to keep tabs on too. Mint is a wonderful tool to help you track all your finances. You can link up all kinds of bank, credit card, and loan accounts to get a clear picture of your financial health. Set a monthly budget and goals and use their notification settings to help keep yourself on track. Mint is an Intuit product so it is pretty powerful. They have added a lot of cool paid features recently like bill pay and credit tracking. They also have a great mobile app for checking your budget while out and about. Check them out at https://www.mint.com/

3) Paypal for Business – If you are buying things online, or accepting payments, then you need to be set-up with a proper business Paypal account. It should be completely separate from your personal Paypal, so you don’t have purchase confusion. Most people don’t realize that you can send pretty nice looking invoices straight from PayPal. While it is not 100% free to get paid via Paypal for a business, there is no upfront cost to setting up the account or sending an invoice. https://www.paypal.com

4) Google Drive – Rather than list each element of Google Drive, I will just say that all of it is awesome! When we’re talking about finances though, Google Sheets is a lot more powerful than you initial think. With the latest updates there are now pre-built templates, including a Monthly Budget, that you can customize and use as a Profit and Loss report. You can also track inventory within Google Sheets if you sell physical products. I know a TON of business owners who are still bootstrapping their financial tracking using Google Sheets. If you have some knowledge in spreadsheets, then Google Sheets is a simple and free option to track all sorts of things. Check them out at https://drive.google.com

Don’t let a small start-up budget keep you from using great tools. Give these a test drive and see what fits best for you, and your business.

Have another free tool you love? Comment below or Tweet me @WhaleyBookkeep !

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I am a licensed tax preparer in the state of California and have been helping small business owners since 2009. I am a Wave Accounting Pro, Quickbooks Online ProAdvisor, and Freshbooks Bookkeeper.

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Melissa Whaley

Is Your Money Getting Lost? 4 Tips for Better Record Keeping by @WhaleyBookkeep

August 19, 2015 by Melissa Whaley 1 Comment

by Melissa Whaley | Featured Contributor

I don’t think anyone sets out in business to have bad habits, but it happens to the best of us. We get busy, or we just don’t know any better what we are supposed to do.

Receipts get thrown away, we get behind and haven’t done our bookkeeping for months, or we wait until the last minute to throw things together for our tax return.

However, when it comes to record keeping, your bad habits could be costing your business money. If you aren’t clear on how much money you’re bringing in, then you are setting yourself up to overspending. The biggest hits usually come at tax time, because you are missing big deductions or weren’t prepared for your tax liability.

Fear not my fellow business owners,

Here are Four Tips to get your business record keeping on track and cut those losses:

1) Set up a Separate Business Bank Account

The law varies depending on your type of business entity, but the reality is you should keep your business and personal finances separate. Most banks offer low cost checking accounts you can open and use solely for business. Just having all your business transactions run through their own account will help you keep your business and personal finances separate, which is important. It will also give you the most basic look at what money is coming in and out of your business.

2) Use Accounting Software

There are some great options out there that range in cost from Free up to $100’s per month depending on the size and complexity of your business transactions. Most have a free trial. Try testing a few to see what works for you, or talk to a bookkeeper to see what software they would recommend for business size and type. A few options you might consider are Wave Accounting, Freshbooks, or Xero. Even if you are using a simple spreadsheet, that is a step in the right direction.

3) Scan Your Receipts

Receipts are the proof that your expense was indeed business related. In our world of technology and smartphones, there is really no excuse to not having record of your receipts. Many accounting softwares now have receipt scanning built-in, so you can snap the receipt on your smartphone and it auto loads into the software. You can also use Evernote to snap pictures of receipts to save in your digital filing cabinet. I strongly recommend storing your receipts in digital form. This way they won’t fade, degrade, or get lost as easily (We all know how tricky they can be!) Plus with all of the things we buy online, most of our receipts are already digital.

4) Hire a Professional Tax Preparer

DIY Software is great for many people, but if you aren’t sure how to answer the automated questionnaire then you’re out of luck and it won’t think the ask the questions a tax professional will. As much as we all want to be able to save money and do it ourselves, you’re not a tax expert. How do you know what is and isn’t deductible; how to properly depreciate vs deduct; whether or not you need to file 1099’s for those you have paid but weren’t employees; or how much to pay in estimated taxes? If any of those terms confused you, that is good sign you want to work with a professional, and save the frustrations of trying to do it yourself.

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I am a licensed tax preparer in the state of California and have been helping small business owners since 2009. I am a Wave Accounting Pro, Quickbooks Online ProAdvisor, and Freshbooks Bookkeeper.

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Melissa Whaley

Is My Latte Deductible? by @WhaleyBookkeep

July 10, 2015 by Melissa Whaley 3 Comments

by Melissa Whaley | Featured Contributor

If you’ve ever heard someone say:

“Oh you can deduct that”

but wondered if they were right, Here are the truths about deducting meals and entertainment in the US.

If you’ve ever heard someone say “Oh you can deduct that” but wondered if they were right, Here are the truths about deducting meals and entertainment in the US.

Your Latte (or lunch) is deductible when…

1) It is ordinary and necessary to entertain clients in your industry. “Ordinary and Necessary” are the IRS’s favorite words for any small business deduction. What they are really looking for is whether or not it is logical for you to be spending money to entertain a client. A Vegan health coach probably wouldn’t be taking their client to a steakhouse, nor would a virtual assistant be buying lunch for a client who lives across the country (unless they were visiting).

According to IRS Publication 463 “An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate.”

2) It was directly-related or associated to your business. That means you have a business project, or purpose, associated with your meal. So if you are a graphic designer, that means you met at a coffee shop with a current (or potential) client to discuss their upcoming website branding; and bought a Latte for the both of you while you talked. Another example is if you are working so hard on a project with your team that you decide to order pizza for the whole crew.

What would not qualify are daily coffee breaks from work, grabbing lunch with the girls, or cocktails with friends who may, or may not, be business related. It may sound complicated, but if you can argue that there was substantial business conversation then go ahead and record it.

3) It can’t be deemed “lavish or extravagant”. There is nothing wrong with giving a client the 5 star treatment. Just know that you won’t necessarily be allowed to deduct every penny that you spend. If you could have ordered a regular Latte for $5 but decided to order the $20 limited edition Kopi Luwak Latte (cause you’re cool like that) The difference in price between the $20 latte and the $5 latte is not deductible.

4) You have a receipt for your Latte. Just snapping picture of the receipt on your phone and writing a quick note of where, who, and what the meal was about will satisfy the IRS record keeping rules. Of course, shoving it into a folder works too, just make sure you know where it’s hiding if the tax man ever inquires.

The 50% Rule

After you have met all the rules, and your Latte is indeed deductible…

The IRS will limit your total meal and entertainment deductions to 50%. this means that only $2.50 out the the $5 Latte will be deducted on your tax return. I wish I could explain why, but I am not an IRS agent so your guess is as good as mine.

There are exceptions to the 50% rule, but your better off assuming it applies until consulting with your tax preparer.

While meals and entertainment are a deductible expense in our businesses, don’t focus too much on them or get carried away spending your money “cause it’s deductible”. If that is your attitude towards deductions, your profit is not going to be where you want it to be. But please, enjoy your latte!

If you are curious to learn more about business deductions you can check out the IRS Small Business Center.

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I am a licensed tax preparer in the state of California and have been helping small business owners since 2009. I am a Wave Accounting Pro, Quickbooks Online ProAdvisor, and Freshbooks Bookkeeper.

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Melissa Whaley