Episode 28: Tackling Your Business Taxes with Amy Northard

Episode 28: Tackling Your Business Taxes with Amy Northard

Episode 28: Tackling Your Business Taxes with Amy Northard

This week I sat down with CPA for Creatives, Amy Northard.

Amy Northard, CPA provides tax preparation and bookkeeping services to creative small business owners. After graduation from Indiana University, and then passing the Certified Public Accountant’s exam, Amy began working at a small/mid-sized accounting firm, primarily with small businesses and personal taxes.

Although she learned a great deal during her time at the firm, she had always felt the pull of entrepreneurship since her days of childhood lemonade stands. Her life-long dream finally came true when she opened Amy Northard, CPA LLC, where she passionately works with creative small business owners all over the US to take the stress out of their creative business taxes.


  • Why ignoring your taxes results in a lack of clarity around what’s going on with your finances and your business
  • When it could be okay to have a loss in your business and the view you should have if there’s a recurring annual loss in your business
  • Where to start with getting organized with your taxes
  • What paying taxes actually means
  • Strategies to look at in reducing what you own in taxes – this doesn’t mean spending more money in your business.
  • When it makes sense to do your own taxes versus working with a tax professional
  • What to keep in mind when it comes to keeping track of your business write-offs
  • How to stop the catch up cycle with your tax
  • Amy’s rule of thumb for what to set aside for taxes
  • Business bank accounts you need




6 Retirement Moves to Make in your 30s

6 Retirement Moves to Make in your 30s

By the time you’re in your 30s, you should be on the road to building a solid financial future for yourself. If you’re not quite there yet, don’t fret. Start by taking action on one of these 6 steps below to get yourself on track for a financially sound retirement.

1. Set aside at least 15% of your income.

If you’re late to the savings game and haven’t been able to stash away, you’ll want to aim to put aside 15% of your income in savings. Preferably this is off the gross number, but if that feels too strained, aim for the 15% of your net (after tax) income. If you’re just starting out, focus on building up your retirement accounts with about 10% of the money and put the other 5% towards an emergency fund. Set money aside on a systematic basis each month.

2. Guard against lifestyle inflation.

Since you’re still early in your career, chances are there are (hopefully) plenty of raises and income bumps on the horizon. Just because your income grows doesn’t mean you can automatically rely on the small increase to your savings as well. Each time you get a raise, aim to increase your savings rate by a percentage or two right away. This will ensure you don’t get used to the extra money in your budget and end up relying on it for everyday spending.

3. Start envisioning your retirement.

It may seem a long ways off, but envisioning the type of retirement lifestyle you want for yourself will better prepare you for how much money you need set aside for your future years. Do you picture a life with month long trips abroad and second homes in the mountains or will you spend time close to home with family and do some volunteer work? These are two very different lifestyles that will likely command very different amounts of money to sustain.

4. Pay attention to taxes.

Taxes account for a significant chunk of your income that you don’t get to touch. Ensure you’re maximizing employer benefits in terms of Flexible Spending Accounts, Health Savings Accounts, and 401(k) contributions. Do the math on if a Roth IRA (or Roth 401(k)) contribution makes sense lieu of going the Traditional route. Sometimes paying taxes today instead of in the future makes the most sense. Keep track of your donation receipts and if you own a business, learn what counts as a write-off and what doesn’t.

5. Rebalance your investments every six months.

Now is not the time to gamble with picking hot stocks (at least not with the bulk of your portfolio). Select a well-diversified portfolio allocation based upon your time horizon and risk tolerance and then mark a date to rebalance back in line with the intended allocation every six months. If you can’t stomach the swings that will come with your portfolio over the years until retirement, it might be best to consult with a professional or select a more conservative allocation that could be less volatile.

6. Learn to negotiate.

Your ability to earn an income is one of your greatest assets, which is why it’s important to continuously invest in your skillset and get comfortable with negotiation. An average raise of $5,000 per year invested and earning a 6% annual return over 30 years will add $395,290 to your portfolio – all because you felt comfortable going in for the ask! Take time to list out your skills, do research on what comparable companies and positions pay and work with your boss to set a strategy to get your income to where you’d like it to be.

Whether you start with one or all of the above, just get started! The earlier you start on building a solid financial future, the better off you’ll be.

This post originally appeared on U.S. New & World Report.

How to Pay Yourself from Your Business

How to Pay Yourself from Your Business

For most of us, the first dollar made is always special. Some of us even frame that dollar bill and hang it in a place of honor along with degrees, certifications and plaques. But for business owners, there’s often another milestone that gets forgotten: the first dollar you actually pay yourself from the business that you created. Paying yourself from your own business is an important step in setting up a healthy, functioning enterprise. After all, what’s the point in starting a venture that won’t ultimately benefit you? Unfortunately, many business owners don’t put much thought into that process – at the cost of their own misfortune. There are plenty of considerations to take on before you write yourself a check, and a few you probably wouldn’t think of. Here are some items to take into account as you reap the benefits and cash in on your hard work.

  • Pay yourself based on last month’s earnings. Projecting your income is difficult for new business owners, who may still be finding clients and getting used to the market cycle of their industry. You can remedy that by basing this month’s salary on last month’s earnings. This way, you won’t be forming your spending habits based on the current month, which is still in flux.
  • Don’t forget to deduct taxes. One common mistake that new business owners face is forgetting to set aside money for taxes each month. Depending on how your business is structured, you’ll want to set aside between 30 – 35% of your net business income (after expenses) on a monthly basis into a separate bank account. This will ensure you have the funds on hand to pay quarterly estimates. Pay yourself after you’ve set aside for taxes or ensure a portion of the taxes are factored in to being withheld from your paycheck if you’re also doing payroll.
  • Pay yourself a set amount. This is my method of choice. Instead of zeroing in on a percentage of income to pay yourself, simply choose to give yourself a salary and decide on an amount to be paid at the same time each month. To do this, you can schedule automatic transfers from your business account to your personal checking account. Any excess funds can build up in your business account and act as a buffer when times slow down. You can modify the amount if you find yourself earning more or less over time.
  • Your salary depends on how your business is structured. Sole proprietors have the most freedom in how they’re paid. You can transfer money every time your invoice is paid or once a month. Those with other business structures may have strict rules on how they’re paid, especially s-corps or corporations. Make sure to consult an accountant to verify that you’re paying yourself correctly per government regulations.
  • Change your tax structure and get paid differently. While many business owners start as sole proprietors, they may decide to change their business entity once they become more established. Some structures require that you pay yourself a fair market wage and then receive any remaining profits, which will be taxed at a lower rate. This can save you money on taxes, but can also get more complicated. Consult a tax professional who can tell you what forms to file and how much of a salary to draw.
  • Keep separate bank accounts. Having separate bank accounts is a must for any business, no matter if you’re working alone or with a small team. A business account provides proof to the IRS that you have a business and not just a hobby. When it comes to getting your paycheck, you can schedule automatic transfers from your business account to your personal account or do it manually every time a client pays you. You should also use a business credit card for all expenses and use a personal credit card for your regular spending. This will also help you divide your expenses when tax time comes.
  • Consider business and personal goals. When it comes to determining how much money you’d like to or need to take home from your business, be sure to consider your personal lifestyle expenses along with the goals you have for your business. Can you reduce your take-home pay while you invest in team growth and putting systems in place? Can you reduce your personal lifestyle expenses and goals while you build your business? What are you hoping to achieve in your personal and professional life in the next year to three years? Are you setting aside for those things? Be sure to consider how outside factors can influence your pay and adjust where necessary.
Are Your Finances as Bad as You Think?

Are Your Finances as Bad as You Think?

When meeting with prospects for an initial consultation and with clients for their first meeting, I tend to get the question of “how do we compare to your other clients?” Most people have an image in mind of where they think they stand with their finances. It’s either bad, reallllyy bad, okay, good or great. Ultimately though, it’s hard to have a sense of confidence about where you stand without first doing the work to figure out, well… where you are standing. I wish I could tell you that it won’t be as bad as you think or it will be as great as you imagine, but honestly, we won’t know until you take the time to evaluate where you stand and figure out what kind of moves you need to make to get to (or stay) where you need to be. If you’re looking to take stock and see which boxes you have “checked off,” here are some important, self-evaluating questions to ask yourself to assess the current state of your finances:

  • Do you have a fully funded emergency fund?

If you’re a single income home, you should aim to have 6 month of “must have” expenses set aside into an easily accessible and liquid (i.e. cash / savings) account. If you’re a dual income family, you can likely get a way with 3 months, but 6 is better. Life is unpredictable and unexpected things happen all the time. It’s not a question of if things will happen, but a question of when and your finances will be in a much better state if you have the cash set aside to handle those unplanned moments than if you need to rely on credit cards and dig yourself into debt.

  • Is your credit score in the “excellent” range?

Aim for a credit score to be 720 or higher. Your credit score is your financial report card, except there’s no getting rid of it after college. This number will save or cost you money over your life. The higher your score, the lower the interest rates you receive and the more money you save when it comes to taking out a mortgage or car loan. Your credit score simply indicates your creditworthiness and tells a lender how reliable and timely you will be in repaying a loan. Having a strong credit score is invaluable to always provide you the best financing options. Related article: What Millennials Need to Know about Their Credit Scores

  • Are you saving at least 10% for retirement?

If you’re in your 20s, you should aim to save 10% of your income for retirement. If you’re in your 30s, aim for 15%. The earlier you start saving, the better and when it comes to determining how much you should save, it’s important to think through the future you want. Take the time to consider what it is you would love to do in retirement and when you think you’d want to retire.

  • Are you able to meet everyday expenses?

If you’re relying on credit cards and debt to get by, chances are it’s time for a financial change. Often times the reason people feel like they’re living paycheck to paycheck isn’t because they don’t have enough money. It’s that they aren’t wisely spending the money they do have. When this is the case, it can be a fairly straight forward exercise to get your cash flow in order so that you can meet everyday expenses with ease. It’s important to first understand your current spending habits by tracking your spending. Once you know where your money is going, you can determine which expenses you can eliminate altogether and other spending habits that could be altered to more easily cover your fixed expenses and align the rest of your money in the areas you care about the most. (Note, if getting out of debt is necessary – I recommend freeing up money to go towards a debt pay down plan).

  • Do you feel well compensated for your job?

Remember that when it comes to compensation, it doesn’t have to only be about the salary. You can also consider benefits, bonus structure, employee stock options, flexible vacation policies and work from home arrangements. If the income and benefits you earn for the work you do doesn’t feel good, it might be time for a change. Don’t be unwilling to negotiate a pay raise, especially after successfully completing an important project. If you’re working hard and doing great work, ask to be compensated for that. If your current employer isn’t able or willing to pay you what you’d like, are you ready to consider a move to another company or start a side hustle? Forbes reports that employees who stay in companies longer than two years get paid 50% less. If you don’t feel well compensated right now, know that you have options if you’re willing to take action.

  • Is your net worth growing?

 Your net worth is your total financial worth – measured in dollars and is something I consider a measure of your financial health. After you take all your assets and subtract all your liabilities, what you’re left with is your total net worth. As the years progress, what you want to see happen is that your assets grow and your liabilities decrease. Start with where you are today – know your number – and keep track every 6-12 months to see if your assets are, in fact, increasing over time. If your net worth is stagnant or in decline, you’ll want to know what is causing the lack of growth so that you can tackle any issues getting in the way of your financial health.

  • Do you have a debt pay down plan in place?

If you have debt, you’ll definitely want to have a pay down plan in place. There are many ways to get out of debt, but the two most effective ways are the debt snowball and the debt avalanche. Both plans involve aggressively paying down one balance while making the minimum payments on the rest. The difference lies in what order you tackle the debts. With the debt snowball method, you pay off your debt from the smallest to the largest balance so that you establish good habits and roll more and more money into the next debt. With the debt avalanche method, you pay debts down from the highest interest rate to the lowest interest rate so that you pay as little in interest as you can and roll that savings into the next debt. The most important thing is to have a plan in place on how YOU are going to pay down your debt and stick to it.

  • Are your taxes under control – did you owe or receive a refund?

Ideally, you want to break even at tax time, otherwise you’re giving an interest free loan to the government if you get a refund (or you feel kind of annoyed if you owe). Zero is the goal! If you owed a lot for taxes or you received a sizeable tax refund, something went awry this year. The way to make sure you don’t owe again next year is to understand your tax liability and adjust your withholdings accordingly. Perhaps reach out to your human resources department to update your W-4 or adjust your quarterly payments if you’re self-employed and business is growing.

  • Do you have the right kinds of insurance in place?

Insurance is a tricky topic, but at a minimum you should ensure you have some sort of health insurance and disability insurance in place. In addition, you’ll need life insurance if there are others who are dependent on your income. Property and casualty insurance (such as auto, home, umbrella and renters insurance) are also important to have in place. Always work with your broker or agent to confirm you have the appropriate level of coverage needed for your situation. Don’t just guess at it!

  • Are your investments appropriately diversified?

If you’re saving for retirement and your investments are sitting in cash, chances are the answer to this question is “no.” Your investments should be allocated based upon the time frame until you’re needing the funds. There’s debate between when to invest or not invest for short to mid-term goals, but if you need the funds in less than 5 years, a CD is going to be your safest bet. If you’re investing for the long run, ensure you have a mix of equities and fixed income, small and large firms and domestic and international. Leverage mutual funds and exchange-traded funds, which will help you to diversify when starting out with smaller sums of money. How many of the above did you answer “yes” to? If you’re 10 for 10, then chances are you’re on a solid financial track! If there are any questions that left you wondering or thinking you might need a change, there’s no better time than now to make some adjustments. The best thing you can do is be aware of how you’re doing and keep track of your financial health year after year.

20 Smart Choices to Make With Your Tax Refund

20 Smart Choices to Make With Your Tax Refund

If you’re someone who receives a tax refund, the sudden surge in cash, no matter how large or small, is sure to put a smile on your face. You overpaid your taxes for the year and now you have some extra money you weren’t necessarily expecting. So, what do you do with your tax refund? Here is a list of 20 smart money moves you can make with your tax refund:

1.     Start or add to your emergency fund It’s always a good idea to have rainy day money for the ‘just in case’ moments in life.

2.     Put it towards something you’ve been saving for Maybe you’ve been saving for a large purchase like a car or new technology. Your tax refund may not cover all of it, but it can certainly help you save up for that big-ticket item a little faster.

3.     Pay down a debt If you have credit card debt, this is exactly where your tax refund should go. Get rid of those high interest payments first!

4.     Make a home improvement Home improvements can increase the value of your home and your level of enjoyment in your home. You can definitely use a tax refund to tackle that landscaping project, put in those French doors or put it towards any home improvement project you’ve been dying to get to.

5.     Give it away to a charity Giving money away to your church or a cause you believe in is a wonderful way to use your tax refund and may become a tax write off on next year’s return.

6.     Invest it in your business Own a business? This extra surge in cash can be put towards new equipment, software, inventory or something else that can make your business run more efficiently and be more profitable.

7.     Buy something you want (within reason) Although not the most financially savvy option, it’s ok to splurge on yourself every once in a while when you’ve been working hard to save and tackle debt.

8.     Make an extra mortgage payment Making extra mortgage payments help you pay down the principal amount of your loan faster, reducing the length of your loan and interest payments.

9.     Have an experience Buy an experience with your tax refund instead of an item. Experiences create memories that have much stronger lasting gratification than a shiny new toy.

10.  Buy someone a gift If you’re the generous type, show someone you care about them by buying them a gift just because.

11.  Invest in yourself Prioritize your own personal and professional development by investing in your growth.

12.  Open a Roth IRA If you haven’t opened a Roth IRA yet, you can use your tax refund to open one now. I like how these retirement accounts work and recommend them even if you already have a 401(k).

13.  Save it for your child’s education Open or make a contribution to a 529 plan that specifically allows you to set money aside for education purposes.

14.  Pay it forward Next time you’re at Starbucks, pay for the guy or gal in line behind you. Spreading goodwill and good cheer is an excellent use of money any time of the year.

15.  Host friends and family Invite everyone over to your place and host a get together! Fun times all around and you won’t worry about dipping into your regular grocery budget this month.

16.  Update your wardrobe Use a portion of the money to add one or two staple pieces to your wardrobe.

17.  Re-energize your health Join yoga, Pilates or a gym. Try purchasing a couple of workout DVDs or spending a few extra dollars on healthier items at the grocery store. A healthier you could translate into reduced costs for medical expenses over the long term.

18.  Visit friends or family Not everyone lives close to their friends and family. Maybe you can take that trip upstate or buy a plane ticket cross country to spend some good quality time together.

19.  Be extra generous Give your mailman or garbage man a tip, leave a little extra for the waiter, buy an extra box of Girl Scout Cookies!

20.  Do a little bit of everything Typically, I recommend a 50 / 30 / 20 allocation: 50% towards debt, 30% towards savings and 20% towards a splurge on yourself. This gives you the best of all worlds and ensures you’re putting the money to good use! What are you planning on spending your tax refund on this year? Tweet me @marybstorj!