Feeling intimidated by taxes or bookkeeping? It doesn't have to be scary! Our guest Emily Bryant knows the ins and outs of bookkeeping and the uniqueness of selling on TPT. 

Emily has been in the Tax and Accounting Industry for 10 years and started her company, All About Accounting, in 2017. She is packed with knowledge and advice that can help you optimize your tax strategy and business bookkeeping. The best part? Her business works EXCLUSIVELY with the TPT Community! 

In this episode, you will learn: 

• the difference between a CPA and an enrolled agent 
• what bookkeeping is and why it's important 
• how bookkeeping can impact your taxes 
• best practices for separating personal and business transactions
• new law updates regarding the 1099-K form and how it affects TPT sellers (beginning in the tax year 2023) 
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Resources and Links 

Follow Emily on Instagram at @allaboutacctg 

>> Tax Readiness Hot Sheet for Teacher Sellers <<   

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• TPT Store: The Southern Teach
• Website: thesouthernteachdesigns.com⁠
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• Blog: The Southern Teach Blog
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Mentioned in this episode:

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Kirsten 0:00

you're listening to the creative teacher podcast, a show for busy teachers looking for ways to engage, inspire and make an impact in their teacher businesses. I'm Kiersten, a teacher business owner who is all about simple and actionable tips, strategies and resources that result in wins, big or small. If you're looking for that extra spark of creativity, you've come to the right place. Let's dive in together.

Hello, and welcome to another episode of the creative teacher podcast. I wanted to have a special guest on to talk about something that we are probably for the most part not too keen on really thinking about or discussing. And it's still important. Either way, it's so important in our business, and that is taxes and bookkeeping. So it seems like it's a scary concept, for me at least. But I have a special guest, Emily Bryant, who is breaking it all down for us, and hopefully will help you breathe a sigh of relief.

Well, we have a special guest on the podcast. welcome Emily Bryant.

Emily 3:42

Thank you. Thank you. Yeah,

Kirsten 3:44

to be here. Yeah. I'm excited to talk about taxes and bookkeeping and all that good stuff. Because it's a very, it's a subjects that I really don't know very much about, to be honest.

Emily 3:55

Not many people do. It's one of my favorite things to talk about. But it's so important. It's one of the biggest expenses you'll ever have. Right?

Kirsten 4:01

Yeah. And you know, like TurboTax is great. It's a great tool. But there's so much more into it that you probably need to know other than just filing things on TurboTax. So just go ahead and talk about yourself and any teaching experience you have. How you got started in all of this?

Emily 4:21

Sure. Well, I'm Emily Bryant, I'm the founder of all about accounting, and we specialize in educating the TPT community about their newfound tax and accounting obligations. And for those sellers who are at a point in their TPT journey, that are wanting to outsource the monthly bookkeeping and tax preparation, we're able to step in as their dedicated expert in that space and help them with that. That's awesome. Yeah, as far as teaching though, so I've never been a teacher per se I grew up coaching various, you know, kids, team sports, I was very athletic as a child. And that way I like to give back and actually had somebody In one of my Facebook groups asked me, Are you a teacher and you know, and I give the whole school not really like never in a classroom setting. And I gave her like my Instagram, and she came back to me 30 minutes later after watching some of my content, and she's like, you're a teacher, you teach adults about taxes. Yeah. And honestly, that was like the nicest compliment I've ever received. And I actually use that. So when we were at Rachel and I shoes, like our client director, she's kind of like sales and pricing and all of that. We were at the TBT conference, and when people would ask, like, Oh, what do you teach? And I was like, I teach adults about taxes. So that was just my little soundbite that I

Kirsten 5:38

Yeah, it's so true, though. It's like, teachers don't necessarily have to have taught students or children, school aged children in the classroom or anything like that. There's all kinds of teachers in all kinds of spaces. So, so tell us about your journey as an accountant, like, I'm sure many of us are probably not familiar with the process of becoming an accountant, but I'm assuming it's very like, like rigorous, you know, to get through being certified. So tell us about that.

Emily 6:07

Um, there is like, first and foremost, I think myself as an entrepreneur, not really an accountant, like I just happened to be doing accounting. And so I got my bachelor's in accounting. And I'm actually an enrolled agent, an enrolled agent is a federal license issued by the IRS that basically says, You are a tax professional, like you are allowed to do tax returns, like you understand the law, like you can do all of that. The difference between that and a CPA. So I had to pass three exams, in order to get my license, I have to do continuing education every year to maintain that license. Similar to a CPA, where you have all of these courses to pass, it's a lot more broad. And I knew that I didn't want to be in public accounting, like I don't want to work with companies that are on you know, this stock exchange. It wasn't my bag thing, not my thing. And they can go in very different directions. So CPAs, they can specialize in audit, they can specialize in tax, they can just be in like corporate. So if you talk if you just like meet a CPA on the street, and you ask them a tax question, most of them will say I don't I can't prepare your taxes. I have no idea. Oh, no. Yeah, like that's it? It's because they don't specialize in it. Right? Yes, one exam to say that. Yes, I knew that at a time. But that's not their specialty. So there's a little bit of a difference there.

Kirsten 7:30

That's good to know. So like if any of us are deciding to hire, like if we're thinking some general CPA Oh, that's, that can be my accountant. They don't not necessarily know as much or are trained as much as maybe somebody who is certified in what you have. Yeah. Now

Emily 7:49

they're like, if there's if there's a CPA that is like advertising services as like, as as a tax accountant, then they probably know that's what they specialized in. It's more of the like, oh, no, my friend's Sisters Brothers cousin is a CPA, I'm gonna ask him, and then they're like, No, that's usually kind of what happens, or they'll give you some like advice, but like they don't like you just don't know, like, Hey, do you know about taxes and preparing taxes in terms of the licenses? My continuing education as an enrolled agent, all of it is required to be about taxes. So it's like 72 hours, about taxes, whereas a CPA can be about anything? Like, how do I like, make my practice better? How can I like do like auditing all of these different areas that it might not even need to be tax specific? Okay,

Kirsten 8:38

interesting. That's good to know, as well. Yeah. Well, we're talking about bookkeeping today. And, you know, among other things, but what is bookkeeping in general? And why is it important, especially for entrepreneurs like you and I.

Emily 8:58

Alright, so bookkeeping is like to kind of break it down into one nice, neat little sentence. Bookkeeping is a way to organize all of your monetary business activities. Just kind of a mouthful, but I mean, it's a lot. So it's kind of you don't have to be good at math. But it's basically people who say, Oh, you must be good with numbers. You're like a bookkeeper. And you could do these things. And it's like, no, it's Middle School. Math is algebra, it's organizing, like it's barely even that like, it's just organizing your numbers in a certain way to be able to answer some questions. And

Kirsten 9:30

why would it be important for us to be able to manage all of that? Well, alright,

Emily 9:35

so the first thing of why it's where I'm going to say there's like two main reasons why it's important. The first one would be that you have to have it if you have any hope of following the law. Right? Because you're welcome for you. Exactly. Your bookkeeping is your tax return. Like that's what your taxes are based on. So if you don't have it, you have to come up with something and that takes a lot of time and people do a poor Job a bit and they don't check their work. And it's just, it's garbage. So, having bookkeeping will help you stay away from the IRS, they will come after you.

Okay, that's pretty simple, we don't want that. So

that's reason number one. Reason is also important because it helps you assess the health of your business. So like use that like information that's all nice and organized to make spending decisions, tracking trends, identify red flags, and kind of use it as a baseline for your budget for your future. And just, like, help grow your business, so like one just like fear of actually like, you know, government oversight, and then to it actually will help you grow and be successful.

Yeah, that sounds sounds pretty important. So that's great. So how can bookkeeping impact our taxes? So like when we are, you know, managing all of our expenses and all of our profits and all of that? How can that impact the taxes that we have to pay quarterly or annually?

So because like earlier, I said that your bookkeeping is your tax return. So you're gonna pay taxes on your net income. And you need obviously, you need bookkeeping in order to track that. And so the impact there of like, good bookkeeping versus bad bookkeeping, I always say the number one reason business owners pay more in taxes than they should, is because of bad bookkeeping. So you could miss expenses. Like you might not know, if you're mixing your business and personal expenses and all of that. You might just forget that you paid Canva on a personal card, and then not include it and get a tax deduction for it. And more frustratingly, like, on the other side of that, if you are not maintaining your bookkeeping properly, you could duplicate income. And what is worse than like missing out on deductions is like paying the IRS more in taxes, because you said you made twice as much as you should have, like, which is awful. And I have met, like I have had clients come to me where they've had a duplicate a 1099, that we've had to go like resolve that resulted in $18,000 in taxes that they would have paid if they if I didn't catch it for them, essentially, I was like, Hey, are you sure that's the amount because your QuickBooks set otherwise? Huh? Can you double check this?

Yeah.

$18,000 Yeah,

I mean, that's a pretty big chunk of change there. But yeah, that like makes sense. Because especially when, like, if you're going in and filing taxes, there's usually you pretty much are itemized, itemizing a lot of things. And it's so easy to just be like, Well, I was about this much on that, you know, the certain items. But if you're, like, overestimating a lot of it, that's more that you end up having to pay to the IRS and all that stuff. So I totally agree on that. As far as like, you really have to keep things pretty. Pretty accurate and exact as possible.

Yeah, the exactness is important, in terms of I mean, most people that I talk to, like a lot of TPT sellers, they come to me, they're like, scared to death of the IRS. Like they do not want to, like, draw their attention at all, which is fair, like it is scary that you're like, Okay, that's like government agency. Yeah. But if you are estimating them, if there are any numbers that you are estimating, like, that should be a red flag, right there for you. Is that your oh, I need to not like I you actually need to have the proof behind the numbers that you report. Mm hmm. And the best thing to do is just like keep receipts, track those, but like, also track it in your bookkeeping, have a separate business bank account, at least like those numbers are there? But don't just be like, oh, yeah, I think I spent like 500 bucks on Canva that's like, really high is I think it's like $50? Yeah, for Canva Pro or whatever. Right? Like, that'd be even if you're using like the paid version. There's Canva Yeah, so it's just you gotta have the, the receipts I think that's the same nowadays. Yes. Oh, but like, seriously, like,

literally show the receipt, literally

show the receipts show what you spent your money on. And a big thing. Like to kind of touch on that a little bit. There's, there'll be accountants that will say, Oh, you can rely on bank statements like you don't need to keep your receipts. If you go to Walmart, and you go, like, you can buy all sorts of things at Walmart, you can spend a lot of money at Walmart, and you spend like $200 And you're like, oh, no, that was for business. You kind of need a receipt itemized receipt of what did you actually buy? Because like, I can buy groceries at Walmart. I can buy swimsuits at Walmart. I can buy a lot of things at Walmart, right? That have nothing to do with my business. Right and a bank statement. is only going to show Walmart. That

is a good point. And like sometimes I mean, I don't know if this is it sometimes helps. But it's still you don't really know exactly just based on the statements in your bank account. But I will like if I'm buying something personally versus something in my business, I'll just just put a little you know, those little what are they called those little separators on the little conveyor belt? And oh, yeah, like you separate your purchases. Yeah. That I pay one with my business card, one with my personal card. That kind of helps. You know, that's one way to separate it. But it's, it is the best way to do it. Just the only part that I don't do is save the saving those receipts so that I can go back and remember, Oh, wait, what was this on? So? But

yeah, like that's, I mean, like one, do that step one, do that, because then you can show like, hey, so if the in that scenario, if the IRS were ever to audit you, and I was your tax accountant, I'd be like, this was for business, and I will go show them your personal bank statement. And your business bank statement. Look, these purchases happened on the same day. Yes, she separated out her business and personal that's going to be business. And like that's like a bit of, you know, kind of proof. There's not the best, but like that is a leg to stand on. If you're going to take that step, right. The best one would just be shoved that business receipt in a Ziploc bag. Or better yet, take a picture of it. If you have QuickBooks Online, you just take a picture right in the app,

and you're saving QuickBooks Online. That's it. I never thought of that. That's awesome. Yeah,

like it's just like, right, right there. Like I mean, most of my like, actually, even a lot of TPT sellers they have it's mostly like online, like emailed receipts. And you can actually set up a forwarding address, where you can forward that receipt straight into your QuickBooks. And so I do that because minor, like 99% of my business receipts go are emailed to me. So like I review them, send them and then I put them in an email folder, just like just in case they bounce back or whatever now.

Yeah, covered all the bases. Exactly. Well, you've we've already kind of touched on this as far as like, trying to not mix in your personal and business transactions together, whether it's on like your you know, one card or when you're at the store grabbing a couple of things for your business, a couple things for like personal. But what are some best practices in general, regarding separating those types of transactions? Having

a separate business bank account? And we can touch on that like a little bit further is what if you're an LLC? What if you're not an LLC? Or is there a difference? Does it matter? If you're an LLC, you have to have a separate business bank account in the LLC name. Now, the LLC could just be under your social security number, right? Or you could have an EIN for that. If you have an EIN and you set up a business bank account, under the LLC, but as attached to your social, you need a new business bank account. Okay, because an EIN and a social security number, let's do an employer identification number and a social security number. Those are separate entities. And so an LLC, you are trying to create a separate legal entity. And so if you have something that you own, personally under your social security number, but it's in a different person's name, you are now mixing business and personal and you could blow up your LLC. Yeah, but if you don't have an LLC, it does not matter if you have a business bank account, like legally. But for ease of bookkeeping, get a separate bank account, if you want to make it a business bank account, all the better to you, if you don't want to go through that create a different personal checking account. And if you're an LLC, you don't have that option, you must have a separate business bank account. And it has to be in the LLC, his name and identification numbers are what they are. Okay,

so if you are starting that LLC, or if you have one, don't use your social security number go with the EIN or

my recommendation is that if you set up an LLC, you should get an EIN at the same time. Yeah, just do it all in one because yes, like it's just it's just makes it easier. You can you know, there's like even more separation. And at that time, set up your business bank account, so you get your EIN and then you go set up a business bank account.

Okay, that seems like the best method

to go, but I know everybody has it is but like sometimes, like in a different situation. So yeah, in terms of like LLCs and stuff. For a lot of TPT sellers, your biggest risk is of like litigation, because you sell digital products, right is going to be copyright infringement. You know, like, I remember there was a big Warner Brothers thing TPT sent out a little while back now. Yeah, that's your biggest one. And when you take a step back from it, the first step in sort of copyright infringement is you're gonna get a letter says, stop what you're doing right now. CSUN? And then you're like, Oh, yep, sure, I will definitely do that three, any, like, change, right? And then you change it, and then you don't have this risk, right? So right, you'd have to be like doubly not super smart to ignore those to then put yourself at risk. So sometimes it doesn't really like you don't really need an LLC, but like, sometimes it's nice both, both in terms of like, a comfort for you feeling like, you know, you're gonna do this, and I feel like a true business owner, and this feels legit. You don't need to have an LLC to be a legit business. But I understand that there's like, kind of feelings that are tied to that having that, right.

Well, yeah, and that's good to know that if you're not maybe ready, or you're still kind of starting out, you can at least just take what you have currently with your bank, and just create a separate a new checking account, at least. So you can get a debit card and all of that stuff. So you can start making purchases, and even just being able to route you know, whatever you make on TPT into that specific bank account. So that's really good to at least start there. Before you want to deep dive into other things. Oh,

yeah, cuz it what it does. So when you do that, do that separation use chart that you just described, it will make your bookkeeping so much easier, because it means that you can delay actually doing your bookkeeping. Right? Now, I don't really want to advocate too hard. Because like, there's, like, it's there's so many important reasons to like, maintain your bookkeeping throughout the year. But if you are a small seller, you're just starting out, you're probably not looking at, you're not, you're just trying to like create product, create products do these things. And you're the accounting side is just so far on not your list of things to think about is that you can just use, at the end of the year, if you have kept everything separate, you literally have a list of transactions that are all your business income, all of your business expenses. Now, and now if you're like making money, you could just transfer the money if you need the money from your business activities. You didn't just transfer it out. Right. Yeah. And like, and that's it, but you're still left with these, you know, 12 bank statements of business activity that you can work from?

Yeah, so that's definitely a good start. So I totally recommend that if you're kind of like listening, like, I need an LLC to do all of this. No, that's not the case. So yes, but it's, you know, depending on where you are in your journey, that's kind of where you kind of go from there. So those are some really great tips on that. So I guess recently, there are some new law updates on 1099 Ks, if you want to just kind of explain what a 10 99k is. And then how would that impact TPT? Sellers?

Absolutely. So starting in a tax year 2022. So this year, so when this airs, I believe we will be filing 2020 twos taxes, which means that you will receive or will have already received a 10 99k. If you have made $600 or more from a merchant processor, it used to be 20,000. And so a lot of TPT sellers didn't have to worry about it, because they didn't hit that $20,000 In the year threshold. But now it is $600. So that's gonna be a lot more teeth, that is a lot more TPT seller. And merchant processors are like Hyperwallet, PayPal Venmo stripe, square, all of those, like QBO payments, those are all merchant processors that have to follow this law of if they have ran through through them the number of like dollars that you have made, it is $600 or more, they are required to send you a 10 99k.

And I know like I got one from TPT last year, and it's usually I think they sent it around December or January, but there is an email you get where I think you have to fill out the information and they send it to you. And you can look back. Yeah, but yeah, so so

anything. So I know there's a big there was a big push with like the Hyperwallet switch. And there was a lot of people that were upset about all of the personal information that was that TPT was collecting in order to facilitate this law. If it's not, they're not just asking for it because they want your information. They're actually required by law to have it before they pay you anything. Okay, because if they if you make over $600 They have to send you a 10 99k And if they don't, those are penalties that TPT has to pay, or like well Hyperwallet in this case, like Hyperwallet has to pay those penalties and do you think they are going to choose paying those penalties over your decision or your lack of wanting to share your personal information. Right now they're, they're like, this is a risk assessment here. You can give us your information or you could not sell on TPT or like not get your payouts

they're about their bottom line. And that's, you know,

that's what is. So there's light. And so I think there's always like a miscommunication about what why that information is being asked for and why you can provide it. And you know, as you know, a sentient being you can decide not to, but there are consequences to not doing that. Right. But anyways, more about the 1099 case, the thing that can happen with this that usually gets sent out that you mentioned in December is TPT, sends out an email saying, if your deposits were in Paypal, let us know, because PayPal is also a merchant processor. So if your payouts from Hyperwallet, are deposited into PayPal, PayPal thinks that's income, and will also send you a 10 99k for that same money. Okay, thereby duplicating your income and you having to pay more in taxes. But that's not actually true, right? But they can't tell the difference. And so in December Hyperwallet, CBT, they send an email saying, Do you think this is going to happen? And then if the answer is yes, then they try to they try to not send you a 10 99k and then PayPal sends it to you instead. But even that is not like, good. So my recommendation is always to set your hyper wallet to your bank account. It is cheaper anyways. Yeah,

I think yeah, I have mine dirt. Like as soon as I guess we were able to apply or sign up for hyper wallet, I made sure that I was connected straight to my bank account. So all right, well, that's good information to know. So $600 or more from the 2022 year, you should be if you haven't already gotten that email from TPT. Regarding the 10 99k. All right, well, thank you so much for all of this good advice on income taxes and bookkeeping. Where can we learn more information about you in general, like what other resources do you have for us?

So the best place would be to follow us on Instagram. And our handle is at all about ACC T G. And I know I know, that's a really dumb abbreviation. So it is what it is. But if you also just search all about accounting, you should find us. It's me dressed up as an IRS agent, a lot of it and it's fun. But you can binge that content. And that's where we create all of our sort of educational materials. And that's the first place things get pushed out. But we also have a Facebook group if you're kind of more interested in like asking questions and having more of a discussion in the community. It's called Tax Tips for the TPT community. And those are really like the two main main places to kind of reach out. All right, well, sounds like learn more.

Thank you so much, Emily, for being on the show. You are welcome.

Thanks for tuning in to the creative teacher podcast. If you enjoyed listening to today's episode, feel free to subscribe and leave a review. I'd love to hear your feedback. You can also find me on Instagram at the southern teach. I cannot wait for you to join me in the next episode for more tips and inspiration. Have an amazing day.