#141: Real Talk on Managing Your Money and Paying Taxes, with Bookkeeper Sabrina St. Peter

Deliberate Freelancer

Today’s guest is Sabrina St. Peter, founder of SmartSpark Business Solutions, a bookkeeping firm that supports brand builders and storytellers, such as professionals in public relations, marketing and advertising. Sabrina, who is based in Chicago, is passionate about small businesses in every form—from the freelancer to agencies with multiple employees. Understanding that most people did not start their business to pour over their bookkeeping, SmartSpark Business Solutions launched in February 2020 to make bookkeeping simple.

Sabrina and Melanie start off by talking about mindset and how we should think about our bookkeeping and finances. Being intimately familiar with your finances coming in and where that money is going will help your business grow more quickly than if you ignore it. Sabrina also talks about how to reframe financial situations. For example, you might be nervous to pay your quarterly taxes or hate “giving” away that money, but paying taxes means you earned a profit that quarter!

Sabrina starts at the basics and defines bookkeeper vs. tax preparer vs. accountants and how each person can help you. A bookkeeper organizes the business’s finances.

Sabrina walks us through how to set ourselves up for bookkeeping success. The first thing to do is have a separate business bank account from your personal account. Then, be honest with yourself about what you’re willing to do with your bookkeeping and what system will work best for you.

Sabrina gives us advice on how to find the bank account and system that’s right for us.

Sabrina recommends carving out time every week for a “money date” with yourself for 15–30 minutes to look at two main numbers: your income and your profit (income minus expenses).

She also recommends doing an expense audit every month: looking at and analyzing your expenses. For example, you might discover you’re paying for software or other subscriptions you no longer use. It also helps you recognize incorrect charges.

Time to talk taxes. If you expect to owe more than $1,000 a year in taxes, you should pay the estimated quarterly taxes or you will be fined. Sabrina gives tips on how to track your taxes, including smart templates that do the math for you.

Sabrina explains why we should keep all receipts, not just credit card statements, and how to store those documents. And it’s not just in case we’re audited. (By the way, the Inflation Reduction Act provided money to the IRS for more people to examine tax returns, which might increase the number of people who get audited.)

Sabrina talks about tax deductions and how we figure out what expenses can be deductions. Every business expense is not necessarily a tax deduction, but every business expense should be tracked.

Sabrina explains how a bookkeeper could help you, but also how you still need to help the bookkeeper and answer their questions.

Sabrina talks about subcontractors. She recommends if you hire anyone for a service, ask them for a W-9. However, if you pay people via credit card, debit card or a system like PayPal or Stripe, you do not have to issue the subcontractor a 1099 because credit card/banking companies will issue those reports. So, you only need to issue a 1099 if you pay them via cash, check or bank transfer.

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Resources:

Sabrina’s SmartSpark Business Solutions

Email: [e-mail]

SmartSpark Business Solutions on Instagram

SmartSpark Business Solutions on TikTok

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Online financial institutions:

• Relay
• Novo

Finance systems:

• Wave
• QuickBooks online

Companies that will track and send your taxes for you:

• Wingspan
• Creative Juice
• QuickBooks Self-Employed

Pay your estimated taxes online:

• EFTPS (Electronic Federal Tax Payment System)
• IRS.gov
• IRS2Go app

Apps that store receipts:

• Hubdoc
• Dext

IRS article: How long should I keep my tax returns?