Losing Thousands to the IRS?

The truth is, most creators are donating thousands to the IRS by doing their own taxes. And today I'm going to prove it. Hi, I'm Ralph Estep Jr. I'm a licensed accountant with over 30 years of experience. In this game.I'm known as the Content Creators accountant. And I'm a creator just like you. And before I get started today, I want you to know we're going to be talking about taxes today.I do taxes in all 50 states and actually I do them for creators all over the world. So today isn't about theory. This is what I see every day.

I'm rising, climbing, flipping the seed, break the chain, psych the dream. I'm a creator. A creator on fire.

I'm going to show you three ways that do it yourself. Taxes cost you thousands of dollars every year. I'm also going to show you how it increases your chance of audit and examination risk.And then I'm going to tell you what a good tax pro actually costs and how to pick the right one. And yes, you'll know if it's time to hire me. So before we even get rolling, yes, you can hire me if you go to content creators accountant.com taxes.I'll put that in the show notes, but it's content creators accountant.com taxes. Let's start off by talking about this. Hiring a tax pro isn't about being big.A lot of people think, well, Ralph, I haven't gotten to that stage of my business. That's not what we're talking about today. I really don't think that's relevant. It's about being exposed. And here's the problem.Content creators get exposed fast. And the reason they get exposed fast is because guess what, our income is. Weird, isn't it?Strike doesn't look like PayPal, AdSense doesn't look like brand deals. And tax software doesn't understand your business. It just files forms. And that's where I see so many people get themselves in trouble.Sure, you can go log into one of these online tax software things, but it's not designed for content creators.It's going to talk you into things that don't fit with you and you need the benefit of somebody like me that's lived in this and actually understands this realm. So let's get into why you're losing thousands. I know that was a bold thing I started with, but I truly believe that's the case.Let's get into number one, missed deductions. Now, these aren't fake write offs, these are real ones.And the reason that so many content creators stumble here is because you can't deduct what you didn't track. That's where we really have to start. It starts there. It's not that most creators miss deductions because they're lazy. That's not what it is.They just don't have a system in place. Money is scattered, money is all over the place. They've got mixed accounts.And when that leads to is missed deductions, receipts in your camera roll is not a system. That's the problem. The first thing we got to understand is that you've got to have a system. Think about this for a second gear.Software, subscriptions, editing costs, storage, business smiles, home office rules. We talked about that on the last show. Phone and Internet allocation.Those are all things that need to be tracked so you can be effective, so you're not missing those deductions. Don't forget about the big ones. Contractors, travel, those conferences and education, all of this needs to be done correctly. And here's the problem.This is where a lot of content creators are losing thousands of dollars because they, first of all, they don't know what they can deduct. And secondarily, they don't have a good tracking mechanism, which leads us to the second bucket. And that's bad classification.This is what I call the silent tax bill. The problem is a lot of content creators misclassify income and expenses constantly.And the problem is when you do that, those little mistakes stack into big tax bills. And the problem with this is home a lot of tax software. And listen, I've done like I said, I've been doing this for 30 years.Tax software will talk you into things and it makes you feel confident when you do it. You're like, oh, this works for me. The problem is the IRS doesn't care if you meant well.I've had a lot of clients say to me over the years, they say, Ralph, I use this online software and I meant to do it right. The problem is the IRS still, they don't care about that. They want to know that it's done right or not.One of the big problems I see with content creators are personal expenses buried in the business categories. And let me tell you right now, if you ever are subject to an IRS audit, this is the first thing that auditors look for.They're going to tear apart those expenses and they're going to go digging because they know a lot of content creators have a big old mixy mess of this. And once they find one thing man, let me tell you right now, they're going to keep going and keep going and keep going.And this is true for brand deal income if it's treated inconsistently or stripe or PayPal deposits that recorded as income twice. And Those, those dreaded 1099 mismatch issues, that's a big issue as well. Which leads me to this problem. No planning.See, if you don't plan, you pay more because you're always reacting. And that's one of the things I think that we really need to lean into right now. Do it yourself is reactive. That's what it is.You're reacting to after the fact. You finally sit down in March and you're saying to yourself, I got to go do these taxes. I hate doing these taxes. You're reacting to that.But working with the pro. Somebody like me is being proactive. And I say this to clients almost every single week. Planning is where the thousands are found.We talked at beginning about losing thousands. Well, they're not found in being reactive. They're found in being proactive. See, the truth is, most creators don't have a tax problem.They've got a timing problem. They've got a systems problem. They got a keeping track of problems.Here's a couple things you really need to think about, and we talked about this on previous shows, is what are you doing your quarterly estimates, right? Do you have a strategy before you reach your end? And do you structure your business in a way that makes decisions? Not after it's too late?I want to give you a couple of simple examples right now. I'm going to keep it really simple. Let's say you're doing $85,000 in gross sales. That's the top number.That's what's coming in from all different directions. And let's say you miss $12,000 of legitimate deductions and you might be saying, Ralph, wait a minute, that's $12,000. That's a thousand a month.I've seen creators miss more than that. Here's the thing you need to understand. That can be thousands of dollars in extra tax easily.Don't even, don't even think about adding the penalties, the cleanup time and the stress. And here's the truth. Most traders miss more than $12,000, which leads me. So we talked a lot about the money side of this.I think I've convinced you about you missed deductions. You're not tracking. You don't have a system. Let's lean into the second thing I mentioned at the beginning, and that's audit and examination risk.And I'm not trying to scare you today. The truth is, from a statistical standpoint, very few people get audited.But that said, I always tell clients, if you're the unlucky winner of the audit lottery, it's not a good place to go. And you're not getting audited because you're a bad person. You're getting audited because your books need attention. There's inconsistency.And the biggest thing I see with people who do it themselves is that inconsistency. So let's talk about, like I said, I've been doing this for 30 years. Let's talk about some of the audit magnets.These are things that if you listen, nothing else I say today, be on top of these things. Big deductions with weak records.This is probably the number one thing the irs, if they're looking at your return, they're going to look at statistics. They're going to say, okay, why is this person writing off so much more travel than this person?Or why is this person's utilities so much higher than somebody else's? It could very well be that. That's legitimate.I've had clients who had situations where maybe they were a content creator and they had a big building, they had an organization, they had a team of people. Well, I would expect the utility cost to be higher, but that's the thing the IRS is going to look at.And the fix to that is having strong records, having receipts, having documentation of that. Another big audit red flag. And we talked about this in the prior show. Home office claimed wrong. I said something bold a couple weeks ago.I said, you're probably doing it all wrong. This is a big issue for audits. You got to make sure it's exclusively used for business. That's a big one. I see. Here's another one.And this one steps on a lot of content creators toes. And not just content creators, but business people in general. Meals and travel sloppy.Yeah, you've got that credit card statement, but that's not going to work for the irs. They want a copy of the receipt. Here's a little quick tip. Take a picture of the receipt.Write on the receipt who joined you and what the purposes were. That's a big one. You want to be able to document this.The IRS isn't saying you can't take these deductions, but what they are saying is you've got to make this clean. Sloppy is not going to work. Here's another big one I see with content creators Other expenses in what I'll call the junk drawer.You know, they've got. They've got their utility costs and their gear and their subscriptions and all the equipment stuff.And then they've got this other category that just says miscellaneous. And when I look at that as a percentage, like the miscellaneous is bigger than the others. Big red flag for the irs.They want you to categorize those things and put those into the correct bucket. So again, we go back to having a system, tracking and putting those things in the right buckets. Here's another big one.You got to be on the lookout for big swings in income when there's no story.One of the things that I look at when I prepare tax returns for any business person, I take a look at the prior year tax return and compare it to the current year tax return, because the IRS is going to look at trends. Now, it could be maybe you lost a big client or maybe you gained a big client. That makes sense. There's a story behind that.But don't let yourself get into this place where it just is up and down like a roller coaster. Here's another big one. I'm not going to give you too many more because I don't want to overwhelm you with these.No mileage logs, no receipts, no systems. Those are the things that really get you in trouble. This is what leads to that dreaded IRS notice. And listen, nobody wants the IRS notice.But here's the thing that I help my clients with. I prepare them that if they get that IRS notice, we're in good shape. We've got the receipts, we've got the mileage logs.We figured out the home office correctly. You've got a system. So even if you. Here's the thing. I want you to. Big takeaway right now.Even if you did nothing wrong, you're saying, Ralph, I did everything right. I followed all the guidelines. And audit cost you in time and it cost you in peace. Yeah, you might win in the end. I've had situations.I'll give you a great example. About 15 years ago, I work with a client. They got audited by the irs, and we had. This person's records were in perfect order. But guess what?It still cost him a ton of time. It cost him money to pay somebody like me to go represent him.At the end, the IRS didn't assess any additional tax, but it was still a cost of his time and his peace. Now, thank God, in that case, we had his records in order. Can you imagine if your records weren't in order.Well, let's go to the big third thing we talked about, and that's time and the stress cost. Because this is the part that creators feel immediately.When you sit down in February, March, or hey, maybe you're waiting till April, that do it yourself tax steals your creative time twice. You might be saying, wait a minute, how's it stealing twice? Here's how it steals you twice all year. Because you're mentally carrying it with you.Most people that I talk to, they're thinking, oh man, tax time is coming. I gotta be prepared for tax time. I gotta make sure I'm doing this, that and the other thing.And a lot of times they don't do it, they just put it off. So that's the first time it cost you, the second time it cost you. Is it tax time? Because now you're doing a cleanup and that's not a fun place to be.It's what I call spreadsheet archeology. It's not a fun, that's not a good business model if you're doing it as you go.And listen, if you listen to me at all, you know I'm all about building systems. You know, I'm all about doing that weekly check in, keeping track of stuff, and just keeping that in line as you go.Because here's the truth as a content creator. Your best hours where your, your energy, all your passion should go to creating, not trying to decode tax rules.That's not your lane, that's not your goal. Do what you do well. And if your tax process makes you dread February, guess what?And I say this out of abundance of concern for you, that process is broken. So let's talk about now. I promised you, we hooked it, we hit the big three. You know, you're losing deductions is costing you thousands of dollars.You're opening yourself to audits and examinations and the stress of all that, and you're losing valuable time. And it's taken away from your passion. So let's move right into when it's time to hire tax help. These are your signals.And listen, it's not all about income. A lot of people say, like I said at the beginning, oh, well, Ralph, I'm not big enough. It's not about that. It's really about complexity.It's how complicated is your situation? Here are the signals that I see. Big picture signals.Number one thing, if you've got multiple income streams, if you've got money coming from, from coaching, selling, selling products, maybe you've got some adsense you, you've got some Stripe PayPal platforms. If all those things are coming in from multiple locations, that's a signal that you might need to look out and hire somebody.If you've got brand deals and platform payouts, again, that's a sign that you might need to hire somebody. And the reason that is, is you're going to start getting tax documents, what's called a 1099k form.That 1099k form might not match what you're getting in your books for deposits because of fees and from expenses. Here's another big one to watch out for. Time to hire somebody.If you've got contractors, if you're paying employees, or maybe you're paying subcontractors or independent contractors, if you've got editors, there is a complexity in that. You may need to click W9 Forms. You may need to send them a 1099 at the end of the year. This has grown beyond do it yourself. Here's another signal.You're guessing on quarterly taxes. Now, if you're getting to the point where, where you've got a consistent net income, and when I say net income, I mean income after expenses.And you're thinking, wait a minute, I'm not even sure how much I'm supposed to be putting aside. And you're just worried sick about am I going to owe a lot of tax time? And trust me, I see this all the time.People say to me, Ralph, I'm having a banner here, but I just don't know how much I should be putting aside. That's a great time to consider hiring somebody. Here's one. It's a simple one. You don't know what's deductible.I said a few minutes ago, I don't want you to become a tax expert. Yes, you need to understand some basics. You need to understand the main buckets of that. I don't want you to become a tax expert.Just like I don't want to be a doctor, I don't want to be a lawyer. I don't want to be an engineer. I'm an accountant. I'm a tax guy, and I'm also a content creator. I don't want to be for you, that tax expert.And if you're asking yourself right now, I don't even know what's deductible, it's time to hire somebody. Here's another big one. You're mixing money.If you're mixing money like a big old Sally, you know, that's one of my high horse I talk about all the time, right?If you're mixing money, you've got to get in front of somebody and help them build a system for you that is going to lead to lost money, audit risk and stress. That is a big one. That mixing money is a big one. And if you feel stress every time money hits your bank account, guess what?It's time to hire somebody. Big takeaway.If taxes are stealing your piece, if they're taking away from your ability to make content, if they're taking away from your passion and your creativity, it's time to do that. Which leads me to this. How do you pick the right tax pro? This is a question I get 10 times a day during tax season.Because the truth is, all tax pros are not the same. There are some that are really good with this and some that aren't great. So let's start by saying this.As a creator, you need somebody who understands creator money. Creator money is different. If you listen to my show, you know, I say this almost every week, things are different for us. You need a guide.You need somebody that understands the ropes. You need somebody that has been down these roads, that understands this infrequent income and multiple platforms and the gear and the travel.You don't need somebody just fills out forms. I'm going to pick on the big box store tax preparation houses.Those folks get a four or five or six week tax course where they're learning stuff to fill in forms and fill in the blanks. That is not the person you need a tax pro who, who understands your industry, who understands the nuances of your business. Here's.I'm going to give you a big takeaway. Five questions to ask any tax pro. Number one question and listen, as a tax pro, I'm totally thinking this is fair.Number one question, how many creators do you work with? Start there.If you're looking to hire somebody, reach out to them, call their office, send an email, chat with them online, ask them that very basic question. How many creators do you work with now? For example, I work with a ton of creators.If I didn't work with creators, you asked me that question, I'd say, you know what? I don't work with creators. That is probably not a good fit for you. Another question you can ask again, we're leaning in to our specific industry.How do you handle multiple platform payouts? It's kind of my catch question.If you think about, if you ask a tax pro that question and they kind of look at you like I have no clue what you're talking about. It's time to move on, go find somebody else. Here's another question you can ask. Do you offer planning or only filing? I said this a few minutes ago.My value and most tax pros value is not in preparing the tax return.Yes, it's great to keep you out of trouble with the irs, keep you compliant, make sure you're doing all the right things, but the real value of this is planning.It's trying to decide what is the best entity structure, what is the system we need to set up to make you effective, and how do we plan for what's going on? That is a huge thing to ask is that question. Because what you're going to find and trust me, I've been doing this for 30 years. It's not.I'm just my first rodeo. I've actually been doing accounting work since I was 8. I grew up in the accounting firm family. My dad's an accountant.You need to have somebody that understands the value of planning. And at the same time, you've got to be willing to pay for that planning as well.This isn't a time to say, well, I'm just going to have somebody do my taxes. Yes, there's value in that. There's definitely a benefit to that. But the real value is in planning. Here's another thing you can ask a pro.What bookkeeping standard do you expect? Because this is going to lean into cost is going to lean into what the expectations are.A lot of accountants will say to you, well, I need you to bring what we call tax preparation ready. I need you to have a profit and loss statement. You might be saying, Ralph, what is a profit and loss statement?Understand what their expectations are so that you can meet those expectations as you go.And listen, if they're really good at what they do, they're going to help you build a system to develop the information that they're going to want from you. And the final question, and this one is one you've got to absolutely ask. What happens if I get an IRS letter?What happens if you get the IRS letter that says, hey, we need you to explain something, or you get one from the state? If you file state taxes, it could be a state tax letter. But ask that in the front end. What do you do if I get that letter?And if you get a weird response like, well, you know what? After tax season rolls up, man, I'm in. I'm in the islands. You're not going to find me. That is not the right person.One of the Things I tell my clients all the time is, I'm here year round. I'm a professional accountant. This is where I live. When you get a letter, let me know about it. Send it to me right away, Work on it together.Here's some red flags to watch out for. And listen. After 30 years, clients have told me what these things are. Number one red flag.If they rush you, if they're not giving you time, if they're not giving you attention, if they're not giving you information of, hey, have you considered this? Have you thought about this? I looked at your numbers and I thought, this is strange. Here's another big one.If they talk down to you, one of the biggest compliments I've ever received from a client. They said to me, Ralph, you put this in terms that I can understand. You want to find a tax pro that does the exact same thing.If they're talking up here to you in accounting ease or legalese, or this form does that and this form does that, that is not the person for you. You need somebody to explain it where you are. Somebody that takes that, that lingo and breaks it down to what you can understand.Because at the end of the day, it's your tax return. You're going to be the one that's responsible for money.If you owe the irs, if you get a refund, or if you get audited, ultimately that's your responsibility. So if they're talking down to you, they're not communicating with you, move on to somebody else.If they don't understand the different platforms, like if you say to them, hey, I get PayPal and Stripe and AdSense, and they go, what's an AdSense? Move on to the next person. Or if they price like a commodity, not going to beat up that one a lot.Understand the pricing, understand what the expectations are and get a feel. Is this. You know, it's funny about.So I guess about 15 years ago, I hired a marketing person to come into my practice and he sat down with me and he said, I want to look at your price of your business. I want to tell you what your business is. And I said, okay, great.So he spent a couple meetings with me, looked over things, and he came back to me one day and he said, Ralph, he says, what business are you in? And I thought he was punking me a little bit. I thought he was playing games with me. And I said, well, I'm in the accounting business.And he says, no, no, that's not really it. And I'm starting to think, wait, A minute. This guy is the marketing guru, and he's telling me, I don't know what business I'm in.I said, oh, I got it. I'm in the consulting business. And he goes, not really. I said, dude, where are we going with this? I said, okay, I figured it out.You're really focusing on the tax business. I'm in the tax business. And he says, no. He says, Ralph, you're in the relationship business, and that's what we need to lean into.You need to find a tax pro that understands relationships, that understands that they're building synergy between the two of you. That's the person you're looking for. And now I want to talk to you a minute about why I think you should hire me.I'm going to be very bold in this episode. I'm not trying to sell you, but here's why content creators hire me, and I'm going to just lay it out for you.They hire me because I'm a creator as well. I speak the language that you live in every day. I understand the different payroll platforms. I understand AdSense and Stripe and PayPal.I understand the uneven income. I understand the gear. I understand the nuances. I understand the travel costs and the contractors and all of those things. I get it.I'm also a licensed accountant. I hold a license in the state of Delaware that says you are a professional. I have continuing education that I have to meet every year.And I've been doing this for 30 years as a professional. And here's the thing that sets me apart. I don't just file forms for people. I don't just put numbers onto a page.I help you bring structure and strategy, and I help you pay what you owe and not a dollar more, because that's really the end of the day.There was actually a Supreme Court case that was decided that taxpayers are allowed to use the system to pay as least as they're legally required to pay. That's why people hire me. Because, listen, like I said, I do this in all 50 states for creators all over the world.So no matter where you are, the beautiful thing about Zoom and the Internet is I can meet you right here, face to face. I can help you out with where you are. Because at this point, you don't need judgment. You just need clarity, and you need somebody you can trust.Let's talk about what this should cost, because a lot of people ask me that question, like Rob, okay, you sold me. I definitely am over my skis, for lack of a better way of saying It I don't want to lose money. I don't want to get audited.I don't have the time to do this. Let's talk about what it should cost you. Price really depends on two things. It depends on the complexity of your situation and the cleanup.Let me talk about both of those complexity. It depends on how many employees you have. Do you have contractors? You have multiple income platforms? What does your system look like?So that's where it starts at complexity. Accountants like me bill, based on how complex your return is, are you an llc, Are you an S corporation?All those things are going to matter into that decision. But here's the big one, and this is one that you can manage. It also depends on the cost of cleanup. Now here's what I'm talking about there.The truth of the matter is, no matter who you talk to, if your books are clean, it's going to cost you less to get your taxes done. This is just a true statement.If I've got somebody that comes in to meet with me or they send me their stuff electronically and it's a mess, they're going to pay more. Why? Because I'm going to spend time on that. I've got to put staff members reviewing the information. That chaos costs more. Because guess what?If I'm going to be effective in my job, if I'm going to do the best job for you, I've got to reconstruct everything. I have a professional responsibility to make sure your books are in order. You're not paying me for forms. You're paying me to break that chaos.You're paying me, you know, for judging these things and protecting you and really planning. That's the big takeaway here, is if your books are in order. So if you hear nothing else I'm saying right now, get your books in order.Hire somebody like me to help you get your bucks in order, and then what you're going to find, it's going to cost you a little less.Let's talk directly about ranges because, and it depends on where you're located, to be honest with you, some parts of the United States are higher than others. If you're foreign, it might be a little bit more. But a simple creator might be in the hundred dollars, a couple hundred dollar range.For example, in my practice, we start at $400 for a standard individual tax return. If you've got a business tax return, it's. It's going to be started about $1,000. But I'm just being honest with you.That's what it costs and the more complex your return is, it's going to cost you around $1,000. Now, listen, if you need cleanup, you need reconstruction.If it's a big old shoebox mess, kind of an insider accounting term, we say somebody brings us a shoebox full of receipts, you're going to probably pay two or three times that. And here's the thing I want you to understand. The most expensive Tax Pro is the cheap one who misses things. Because a lot of people stop there.Like, you know what? Your prices are a little high, Ralph. Here's a firm belief I have.You get what you pay for, and if you get the cheapest, you're going to pay for it in the long run because, number one, they're probably going to miss deductions because they're not going to lay into you and spend that time uncovering your information. Number two, you might end up getting audited or examined because they don't understand your industry.They've not spent the time to understand your records and really build the story around those.And number three, you might end up with a lot more stress because all of a sudden, that person rolled up their shop at the end of April and you can't find them. And then you get a letter. And it could be a simple letter, just asking a simple question. So you get what you pay for.And the most expensive Tax Pro is cheap compared to the one who misses everything. And again, if you want this handled correctly, here's what I want you to do. Go to content creatorsaccountant.com taxes right there.You can schedule a call and I'll talk to you about exactly what makes sense for you. And if you want me to do your taxes, I can handle that. Like I said, All 50 states and creators worldwide, this is what I do.Been doing it for a long time. You can look at my reviews online, but go to content creatorsaccountant.com taxes. It's all about stopping the guessing.Stop donating money to the irs, get your time back. And let's get this right. Because the truth is, do it yourself. Taxes is costing you thousands.It's opening you to audit risk, and it's sucking your creative time and again.If you want creator fluent Tax pro who does this professionally again, he probably feels like I'm selling you today, but I really have passion for what I do. Go to content creators Accountant taxes again. I'm Ralph Estep jr. I am the content creator's accountant. And I'll see you again soon.

Every beat I drive, just opens the door.