Simplify Your Tax Season with Dawn Patton

Akua: Our favorite time of year is upon us as an independent business owner tax season is here, and we are here to make sure that you have everything that you need to prepare for your 2025 taxes. So this is why we brought in Don Patton, who is the CEO of Patton and Co to essentially walk us through strategies that business owners need to be implementing this year for their 2025 taxes.

So this episode was so helpful. And I just loved the way that Don Broke down how we can really make sure that our tax strategies are up to par and really just made it easy. So I’m really looking forward to this conversation and I know you will too. So let’s get into it. Welcome to unbreakable business, the podcast where we uncover the untold stories behind entrepreneurship.

This isn’t about polished success stories. It’s about the sleepless nights, unexpected roadblocks, and unshakable grit that builds businesses that last. Every week we sit down with entrepreneurs who faced it all, sharing raw, honest conversations about challenges, growth, and the moments that made them unbreakable.

Whether you’re just starting out or chasing your next breakthrough, This podcast is your reminder that you have the strength to keep going. Hello. Hello, Dawn. Welcome to the Unbreakable Business Podcast. How are we doing?

Dawn: Oh, we’re doing great. Thanks for having me here.

Akua: Well, thank you for being here because this is not our favorite time of the year.

For me, it’s not. But you know, now I’m not as stressed about doing my taxes, but you were truly doing the Lord’s work. So thank you for being, for

Dawn: being here. My pleasure.

Akua: Yes. Okay. So one thing I think is just. so important for us to just really kick off this conversation is just obviously 2025 taxes. I think it’s so important for us as business owners just to always be prepared and just know despite, like I have somebody that do my taxes, but I always like to know what’s going on.

And so can you walk us through some of the common tax mistakes that you have seen businesses currently doing?

Dawn: Yeah. I mean, you mentioned two there, so let’s break it down. One of them I feel like is doing taxes yourself, like not having help. So you mentioned you have someone who, who helps you. Great.

Because when it comes to entrepreneurs and taxes, entrepreneurs, we’re so used to like bootstrapping and doing everything ourselves, right? Taxes should not be one of those areas. I’m sorry. Like I empowerment entrepreneurs everywhere, but like taxes just changed so much. And there’s so many like ifs and buts and domino effects and things that change that I’m like, just.

Just, just don’t mess with that yourself. Outsource it, find someone you know and trust and like can get along with to outsource. You don’t have to settle for someone who you feel like talks down to you or someone you don’t get along with. Like, shop around, you know? I’m right here. But shop around.

Akua: I love that.

Dawn: Me. And get help with taxes. And then the other thing is, when you do get help, don’t just bury your head and like, okay, I have someone doing it, now I’m going to check out of the process because It’s just as important for you to like meet with that person and go through it. Otherwise, it’s, it’s like doing it yourself.

Like there’s going to be mistakes that are made. The person who you’re hiring to do it doesn’t know your business as well as you do. The person you hire to do it will have insight that you’ll only gain if you have a conversation with them, talk through taxes with them. So outsource, but don’t like totally check out.

is the tip there.

Akua: I think that’s such a good point because I feel like that’s kind of how I used to be. And then, um, now that I hired my tax guy, he absolutely like says that to me. He’s like, no, I love him because he really does hold me accountable. Um, because money is something that I You know, and I think as a business owner, it’s gotten a lot better as the times have gone on, like, you know, as the years have gone on, however, it’s truly something that I’m still deconstructing, like my relationship with money.

And so like, there’ll be times where I just like, feel like, uh, you know what I mean? But he’s just so wonderful. And I now ask him a lot of questions just to make sure that I understand even of like always touching base of like, how much should I be putting away? Like, like very common questions. And what’s really.

Nice is, um, you know, even with HoneyBook, we have these like tax saving buckets that make it so much more easier to where like you can be proactive in your own way, where like when you get paid, it splits your money up into like how much you need to save and stuff like that, which is absolutely has been a game changer for me because again, it makes me more proactive and really helps benefit that relationship to where, again, I’m being proactive.

I’m also making his job easier. You know what I mean? And then I’m also to being much more aware and much more confident in my own business. So I absolutely love that you, that you shared that I think. I want to bring this up again because I asked this last year and I think it’s a really important thing for businesses to know.

We have sole proprietors, LLCs, and S Corps. And I know, like, a lot more advanced business owners, they start to transition into S Corp. Let’s talk about the tax advantages for each one. Specifically, let’s start with sole proprietor and then move on from there.

Dawn: Sure. Okay. So you mentioned sole proprietor, LLC, and S Corp, right?

Akua: Yep. So these are,

Dawn: like, single owner business entity structures. If you have a partner, you’re going to be a partnership instead of one of these. When it comes to a sole proprietorship and an LLC, tax wise, those two are exactly the same. So there’s no difference there. The difference is a legal thing where an LLC is like protection from your personal assets.

And it’s saying, Hey, my business is separate from my personal assets. So if anything were to happen in your business. They couldn’t go after your personal stuff. Vice versa. Anything happens in your personal life, they can’t go after your business. So tax wise though, all the same tax advantages of a sole proprietorship and an LLC.

And when it comes to that business, it means that you’re filing your taxes on your personal tax return. So it’s one tax term that you file. You’re just showing your business is like a stream of income. Like if you have a W 2 or a rental property or business, All right, they’re consolidated onto one return.

If you have a spouse, they’re there on that return. Dependents, they’re there on that return. It’s everything. Now, when you get to an S corp, you have to be an LLC first before you can be an S corp. And an S corp is Legally, still going to be an LLC, but tax wise, you’re telling the IRS, Hey, I know I’m an LLC, but instead of being taxed like a sole proprietorship, I want to be taxed like a corporation.

And so you are approaching them, asking for this, Tax designation and an S Corp is a little bit different. We don’t recommend it until annual profits. So like the money that’s left over after expenses is at least 60, 000 or more because what happens with an S Corp is you still have all the same tax write offs as that sole proprietorship did.

But now as an S Corp owner, you have more, um, obligations and It, it can be a little nuanced if you don’t have a cash flow to support this, because you now have to be on payroll for yourself. You’re going to be paid like an employee and the business owner. So you’re still going to take distributions like transfers.

From your business bank account to your personal bank account, we’d call those distributions. You’re still gonna take that, but you also have to be on payroll and get a W 2 from your business and report how many hours you’re working like any other normal employee does. And then you have to file a separate tax return as an S Corporation.

So, if you’re hiring someone to do that, an extra fee comes with that. Or, if you’re doing it yourself. Some extra tax knowledge to know comes with that. Um, and then like I mentioned with the payroll, okay, are you paying for a payroll system? There’s extra fees to come with that. But the S Corp can save you money on taxes if you’re over that 60, 000 threshold.

If you’re under, you’re gonna be doing all this extra work with no tax savings and it’s gonna be more expensive for no reason. So when it comes to like tax write offs, You can write off the same thing in both companies. One is just for the people who are earning more and one is for the people who aren’t quite there yet.

Akua: I love the way that you broke that down and just really simplified it. And I wonder for business owners, if they are at that threshold, right? What are some other, like where I’m like, okay, what are some other markers to indicate that they are ready to file to become an escort? Because it sounds like even just like, okay, sole proprietor LLC, it seems pretty simple enough.

Right. That’s great. And Mike. Really straightforward, which is great. But I do know business owners as well, who are like contemplating, like there’s been conversations of like, do I become an S Corp? Do I not? So obviously if they’re already hitting that benchmark of over 60, 000, okay, there’s one, but are there other markers as well that business owners should be looking at to where they know that they’re ready to transition to an S Corp or not?

Dawn: Yeah, wonderful question. So you have that benchmark and that’s kind of like the trigger to start looking at an S corp and see, okay, should we do this or not? Now, the other thing is, you don’t just want to hit that 60, 000 benchmark once. It’s like, this is what we’re projecting for future years. We’re going to hit this or even more in future years.

Because you want to stay above that threshold to see the tax savings. And then a big one is the organization and cash flow. So we’re going to look at your finances and say, okay, is cash coming in consistently enough where you can be on payroll or is that just going to be this giant stressful burden and you’re never going to have cash for payroll because it all comes in in one month and you spend it all in that same month or something.

And then really just Do you want this extra burdens that come with being an S Corp? Is it worth the tax savings to you? Now, I recommend for anyone who’s at this threshold, go meet with a tax accountant who does tax strategy. And they’ll be able to compare being a sole proprietorship or being an S Corp and what tax savings look like.

Because you might not have any tax savings yet. And then the answer is no, don’t do it. But if I were to compare for you and say, Oh, you’re going to save 10, 000 this year alone, plus every year going forward. Yeah, it might. It might be reasonable to you to go through that extra work and the extra hassle of all these things to be an S Corp.

Akua: Oh my gosh. I love that so much. I think that’s such a great, like, I just have loved the way that you’ve broken this down and just simplified a lot of things where it just feels like it’s a lot more doable. But I think that’s a great point of like, okay, really talking to a professional as well to really look at your business.

Because again, each, every single business is different. And I think that these are really good markers to look at of like, okay, do I need to transfer over or not? You know, I think naturally for us as business owners, we. I know for me personally, scaling is a goal of mine. It’s something I’m in the very beginning stages of doing.

I know there’s several other business owners, and I think this is important even for business owners who are not there yet, because again, this episode is going to really give you the foundation, right, of how to make sure that you are taking strategic steps in your business. And so for business owners that are looking to scale.

What are some of the challenges that you’ve seen that’s holding them back in terms of like keeping their taxes in check and stuff like that?

Dawn: Okay, I’m gonna broaden this to more than just taxes and bring it up to like finances because

Akua: Please, yes.

Dawn: You had mentioned this before about money mindset. I think that’s one of the biggest hurdles or blocks or I would say opportunities to tap into to scale is working on that mindset.

Um, specifically about taxes, when it comes to taxes, I see a lot of entrepreneurs stuck in this mindset of, Ooh, I’m going to buy this because it’s a tax write off and I’m going to spend my money here because it’s a tax write off. And they’re so focused on getting those tax savings. that they don’t realize they’re hurting their business growth.

They’re so focused on saving a penny that they’re not like earning the hundreds and thousands of dollars more. I personally, I would rather make 10 times more and have to pay 10 times more in taxes because I still, that’s still more money in my pocket. Like you’re only paying a percentage to taxes.

Let’s say 30%. Okay. 30 percent goes to taxes. Every dollar more than you earn, then that’s 70 cents that you’re saving, like for yourself, so work on your money mindset. Don’t be so focused on paying zero dollars in taxes that you hold yourself back from making money.

Akua: Mm.

Dawn: And then Don’t be so, I mean, in that same breath, like, don’t be so scared of taxes and bookkeeping that you don’t look at your finances to help you scale.

Akua: Because a

Dawn: lot of times entrepreneurs will tell themselves this story of like, well, I’m not a money person or I’ve never learned and they stay stuck there instead of Taking time to learn and get comfortable with their money. Cause if you take time to analyze what your bookkeeping is telling you and look at your income and look at your expenses, look at where you’re making money, where you’re spending the money, look at your ratios for different revenue streams that you have, different project ideas that you have.

If you have a team, what is. Uh, like what’s their profit ratio kind of a thing, all these things, look at your money and it will tell you what you need to do to scale or where you need to tap into to really help you out.

Akua: Oh my gosh. I love that so much. And I love how like you’re talking about the money, money mindset, because that’s something to like, even as a business owner for me, um, I think a lot of us naturally, whenever we’re doing our budgeting or looking at our money, like we’re always like, okay, like how, what.

Like natural, it’s a natural instinct. Everybody does it. Doesn’t even matter if you’re an entrepreneur or not. A lot of us will be like, okay, what can I remove? What can I say? And it’s so funny. I was just having a sister about it yesterday and I was like, Oh yeah, you know, I’m doing my budget and this and that.

And she goes, Oh, you like looking like what you’re going to say? I was like, no, honey, I’m looking at how much money, more money I need to make. Like that. And she was like. Oh yeah, that’s like a good, and I was like, you know what I mean? And that’s something that like, I have literally have done that shift.

So like, I don’t feel restricted. I don’t feel afraid. It’s like, okay, if I want something in my business or even my personal life, instantly I go from not what can I remove, but how much more money can I make so that I can be able to attain that.

Dawn: I love that you’ve made that shift. That’s the exact same shift that helped me scale my business, helped with my personal finances too.

When I sat down to do budgeting with my husband and we’re like writing where we spend our money and he’s like, okay, so you really need to start spending less. I’m like, no, no, no. I just got to start making more. Like I’m not spending less. I’m sorry, but I can make more. I’m an entrepreneur. That’s why I started my business was so that I could have control of how much I make.

Akua: One thousand percent and I love and I think that’s something that we need to remind ourself because I do think it takes some Deconstructing transitioning from a nine to five into entrepreneurship because we’re so and you know, it’s nice having that steady paycheck You know what? I mean, but also to for like I think a lot of us as business owners It’s it’s really easy to get caught up in that because again, it’s a natural thing Everybody does it but again like you are a business owner.

So if you want to make more money You can make more money. You know what I mean? There’s no ceiling like there. You know what I mean? Like, so you can go as far as you want to go and make as much as you want to make. And I love that. That’s just such a reminder of like, okay, even with like your taxes and savings, like the more money you make, like, that’s a good thing.

Yes. You’re going to give more away, but. How much is that going to really benefit your life with the money that you’re making? How much more of an impact are you going to be making? And so as, you know, your business grows, at what point do tax strategies change, right? Like, do you have any advice on building a team, um, to just kind of handle your business evolving in that way?

Dawn: Yeah. Um, so in the beginning. And all throughout, I guess, basic tax write offs are going to be there for you. So it’s going to be things that you’re already going to spend your money on in business, like your office supplies, education expenses, if you have contractors or team members, home office, just like basic tax write offs will always be there for you.

As you grow and scale, kind of the more money you make, the more opportunities for tax strategy that you have.

Akua: And

Dawn: it’s interesting. It goes hand in hand with this conversation that we’re having about like, Kate, the mindset shift of, I’m not going to focus on what I can cut. I’m going to focus on making more.

It seems to be, we see this trend with our clients that are entrepreneurs who are making tons of money. Aren’t so focused on the tax savings, but it’s okay. Cause we’re there for them. And we’re trying to think through it for them. It’s our entrepreneurs who aren’t making a lot that are like, okay, I want a 0 tax bill.

Where can I, what can I do? What can I invest in? And all these things. And they’re so focused on just keeping their tax bill at 0 that they aren’t focused on like that, that growth and that income. And it’s interesting because there aren’t actually that many tax strategies for entrepreneurs who. are under, I would say it’s usually like 80, 000 to 100, 000 in profits per year, that okay, now we have cash to play around with.

Now we can add a bit more tax strategy to this because a lot of tax strategy, you have to Uh, it takes money to save money kind of a thing. And so you have to have extra cash that you’re willing to invest in investment accounts or invest in, there’s, there’s a few, uh, different tax strategies, but you’ve got to spend money to save money sort of thing.

And so. Long story short, I guess what I’m trying to say is the more you earn, the more opportunities are available to you.

Akua: To save, which is so interesting. Like the more opportunities are available to you to save. And so I think again, it just really goes back to that foundation of that money mindset of like, don’t limit yourself.

Right? Because the more money you make, the more opportunities you have to save. The money that you’re trying to save.

Dawn: Yeah, exactly.

Akua: That is, I love, you said it way better, like much more shorter and punchy than I did, but like, that is just such, such a good point. Cause I never viewed it that way. And so if you’re listening to this, I hope you’re like, I hope the wheels are turning.

I hope you’re like in a weird way, excited to do your taxes. And I hope you feel much more despite it. And if you have help or don’t like, I just hope that you feel a little bit more confident.

Dawn: Sorry. One more thing that just came to mind that I want to say is when you’re in. And I don’t want, I don’t want this to come across like I’m saying making less than 60, 000 per year is like a little income because the fact that you’re just Coming up with this idea out of your head and starting a business and making it out of thin air and making your own money is incredible.

So if you make one dollar, I’m celebrating you. If you make two, celebrating you again. Like, it doesn’t matter how much you’re making. Uh, so I don’t want anyone to hear that. But if you’re under that 60, 000 benchmark that we keep going back to, focus on your foundations. That’s what I would say to that.

Because when you scale, this goes to everything in your business. When you’re, when you scale, you’re compounding every single thing. So when it comes to bookkeeping, when it comes to taxes, money, mindset, all of these things that we’re mentioning, focus on your foundation so that as you grow, they’re not.

becoming even bigger glaring issues. It’s like, okay, I already have kind of set up the foundations for that. So don’t, don’t hear me out and say like, Oh, Don said that I don’t really have to worry about tax strategy right now. No, Don said, focus on your foundations right now and focus on doing the bookkeeping, making estimated tax payments, working hand in hand with an accountant, learning how to ask questions and be vulnerable to learning this.

new concept, new ideas, talking about money with someone else who, who knows money. Like these are all new things for all of us as entrepreneurs. So build those foundations right now. And that’s the focus.

Akua: Oh my gosh, I love that you brought that up. I think that’s so important because it’s not like, I just love that you address that because I know all of us listening to the show are all at various degrees of our income, right?

Like we’re all in a different spaces. And I just love that. I think that’s a really good reminder, right? That it’s not to shame people of like, who’s making this amount of money. It’s just again, like this knowledge is power. And so the more knowledge that you have, you can make a lot more strategic decisions.

You’re a lot more prepared and most importantly, feel a lot more confident about the decisions that you’re making. And so I love that you brought that up with like being vulnerable, asking questions, um, especially if you have that person that you can go to, or if you can’t find that person. And I can guarantee you that some business owner knows somebody, right?

Like that’s how I found the person that I have is because I literally asked for references and then found him. And so, um, if you’re somebody that’s trying to find somebody to help you because somebody knows somebody. So, um, absolutely love that. So let’s talk about write offs because me, I’m like, it’s a write off.

I mean, the person who does my taxes, he used to call me all the time. He’s like, that’s not a write off, Aku. I’m like, it is in my mind. So. I like, I know like we hear the common ones, right? Like, of course your office or, you know, if you have an apartment, like the certain square footage, you know, or, you know, typical things that we hear, but are there any misconceptions?

Cause I already have one in my head that he told me was not right. And I was like, Okay.

Dawn: Tell me about it. I’m too interested to like go on with the conversation. I gotta hear this.

Akua: Okay. First of all, I was at an event this past week in speaking and one of my friends, okay, so we, you’re going to be like, you guys, please don’t think I’m doing illegal activities because I am not.

Oh, I’m

Dawn: not judging. I love thinking outside the box when it comes to taxidermy. Okay. So

Akua: we were looking at like, you know, obviously we have speaking events and of course costs add up when you’re going to travel to speaking events. They do. So like, I definitely have. Invested in, you know, clothes and, you know, make, like, those things.

So we were looking at this, uh, this really cute, like, girl. I mean, people are going to be listening to that, like, Akua. It was where you can rent purses. Like, high end. Purses and I’m not a big purse girly, but some of these out some of these were like I’ll rent this and it was Very affordable like a hundred bucks and then you just have this like membership where you can rent these high end purses And I was like, oh my god, like I would go to a conference with this and my friends like yeah She’s like, oh, yeah, we can like write this off and I was like, can we really can we write that off?

Dawn: Um, I would say in your situation, probably not. What? No. Because it’s really just like, uh, like, like it doesn’t help your business at all. Right?

Akua: Okay. Yeah. It’s

Dawn: not necessary. It, it doesn’t help your business. If you’re, one of the examples I like to, or mindset shifts I like to do is say if you had an employee and they came to you and they said, Akua, can you reimburse this expense?

You’d be like, I’m sorry, what? I’m not paying for your verse. Probably. Right. I mean, maybe you’re super generous and you’re like, sure, but that you’d probably draw a line somewhere. Like maybe you’d buy him a new outfit for speaking. Yeah. Does that count? Yeah, I, I, we usually allow that.

Akua: Okay. I have a lot of things to write off then.

Dawn: No, I mean there’s, there has to be some lines drawn, so it can’t be like every time you buy clothes, for example, entrepreneurs. We are, we’re in, it’s tricky because the IRS is so outdated, like tax law does not address The personal branding and influencer lives that we all live as entrepreneurs these days.

Akua: Like if you’re

Dawn: an entrepreneur, you have a personal brand going, you’re showing up on social media all the time. And so we’d like to think like, okay, our presence, like anytime we do our hair, anytime we buy our clothes, anytime we buy makeup should be a write off because I have to show up and be the face of my brand.

But. That’s not actually how the IRS sees

Akua: it.

Dawn: Um, and there’s this famous court case where a news broadcaster, who’s on televised TV in front of millions, was trying to write off her outfits and the IRS denied it. And so, they’re not gonna let her, and she’s in front of millions, and we’re all in front of a couple hundred people that watch her Instagram stories, like, no.

You know, but for like, a branded photoshoot, where you’re buying brand clothes for a specific photoshoot, and you’re going out of your way to find the right colors that you otherwise would probably not buy, yeah, something like that is Totally allowed.

Akua: Oh, okay. Good. So that’s helpful to know. I’m definitely going to send this episode to my friend and be like, girl, you are not trying to have me.

I’m not trying to be arrested by the IRS or audited. I will not be. And you shouldn’t either. Do not write this up. I want to know, okay, what are five things that are absolutely a write off in your business? And what are five things that are not? Like, that’s like a misconception that you would think is a write off in your business, and it’s not.

Dawn: Okay, but Akua, my brain goes to, this is like, the typical accountant answer is always, it depends. Like,

Akua: Okay.

Dawn: That’s an accountant’s answer for everything. It depends. Because I could tell you. For sure office supplies. Yes. For sure business write off.

Akua: But there’s

Dawn: gonna be some people who are like unnecessarily buying office supplies who I’d be like, no, stop.

That’s not a write off. Just because you have a home office and you’re buying like loads of paper But then you’re using them personally or your toddler’s taking them to do her art on them all the time like no That’s that’s not a write off anymore.

Akua: Yeah.

Dawn: So, I don’t know. Sometimes it’s hard for me to see taxes in black and white because it’s, it’s such a gray area.

Yeah. It’s always going to be, it depends. So really what I’d like to say is on this matter is if you buy something that you otherwise would not buy if you weren’t an entrepreneur, it’s a write off.

Akua: It’s a write off.

Dawn: Yeah.

Akua: Okay. Now,

Dawn: think of this. There’s one thing that makes this more complicated and that is you have to put yourself in the mind of like being an employee too.

So for example, you going to this event to speak, if you had an employer who told you, Hey, I want to fly you out so you can speak at this event. Would you still try to find a cute outfit to go on stage with? Absolutely. Would you maybe still look at purses? Yeah, absolutely. All of those things. Well, now that shows you it’s actually a personal expense, not that you’re doing it because you are the entrepreneur.

Does that make sense, that distinction? It makes a

Akua: lot of sense, yes. Because now I’m thinking of like, I can’t be a write off, Akua, like things in my mind already on certain things. But I think that’s important, you know what I mean? Because yeah, there’s been times my tax guy is out, he’s like, Akua, that is not a write off.

And I’m like, Matt, in my mind, it is. So it should count. You know what I mean? And so, like, I think that’s just such a good distinction of like, if this is something that you would purchase as an entrepreneur and if you weren’t an entrepreneur, you wouldn’t purchase it. That I think is such a great distinction for business owners to decide of like, where it’s clear for them of like, is this a tax write off?

Is it not? And I think again, to your point of like truly it really entrepreneurship is, isn’t black and white and neither is the IRS. And so therefore I think it’s just like a good point of like each situation. And so I love that you just shared that. I think again, that distinction is just so, so important.

Like, so now for me, I’m even thinking, I’m like, Oh, okay. Like it just clicked. I’m like, I would never buy this. If I wasn’t an entrepreneur, you know what I mean? So

Dawn: yeah, yeah, okay, but let’s go through I know your listeners are like, okay Don’t but just spit out some examples for us So these are probably a tax write off, but still it depends because I’m gonna put in that that sentence there Yeah, things like okay.

We said office expenses office supplies Education that’s a big one. Mm

Akua: hmm

Dawn: Marketing, business travel, employees, contractors, hiring a team, those types of things, your home office, business use of your cell phone. That’s a big one. All of us are using our cell phone these days for business. So let your business reimburse you for part of that expense.

And there’s going to be lots of subscriptions and software expenses that you have as an entrepreneur. Those are all write offs. Is that a decent enough list?

Akua: That’s a decent enough list. Okay. I know it depends, but what are some crazy things that you have seen that you’re like, that’s not a write off?

Dawn: Clothes are a big one, and the clothes is gonna go back to, it depends. So, for the most part, clothes tend not to be a write off, but for special events or circumstances, if you are especially if it’s clothes that you’re like, I wouldn’t wear this. Outside of this thing for business, then boom, right off. But if it’s like, ooh, this is so cute and I’m gonna wear this all the time, can I write this off underneath my business?

Akua: No.

Dawn: No. Nice try, but no. I mean, you can, but good luck if you’re audited, I guess. Yes.

Akua: Yeah.

Dawn: Clothes is a big one. Personal hygiene, like doing your hair, makeup, nails, typically also not a write off. However, if it’s a one time thing, like you’re getting your hair done for a photo shoot and by done, I mean, styled, you’re getting hair styled.

Not like you’re getting highlights or you’re getting extensions put in. Cause that’s going to last you months and months. It’s I’m getting my hair styled for this photo shoot. Now it’s a write off, but I’m getting my hair done with color. extensions, whatever. That’s a personal expense. Nails also tend to be a personal expense.

However, there are times you can write that off in your business. We, we work with a lot of hairstylists and they use longer nails to help them, um, be more efficient when they do like, it’s like a tool to them to have these long nails when they’re doing people’s hair. And so in their case, yeah, now it becomes a write off, but that’s.

That’s right. That’s unique. Yep. It’s very niche.

Akua: Yeah.

Dawn: So there’s not many things that you could say like, okay, it’s never a write off because it just depends on the niche circumstances of the business.

Akua: Great. I think that’s really helpful. I think, again, that distinction of like, one time use, like if you’re purchasing this for a specific part of your business, whether that be a brand shoot or even meant to, like if you’re, you know, going to purchase a specific outfit, like whatever it is, or a haircut, and if it’s for this specific event, um, then that can kind of run off.

But if you know you’re going to wear these things and like, Afterword multiple times and it’s not a write off. And so I, I just love again that distinction. And then also thinking of yourself, like if you had an employer, you would be like, absolutely not. So then putting yourself in that shoes of like, okay.

And I think if anything, it just gives us parameters and much more knowledge because of what we can and can’t write off as, as business owners.

Dawn: Absolutely. Absolutely. Cause the IRS definition when it comes to write offs is it has to be ordinary. And necessary, what it comes down to is just us doing exactly what you were doing is kind of making a case for each write off that we have of like, well, here’s why it’s a business expense.

And it seems like wrong that we’re doing that with a big thing like taxes of just building cases. But that’s what that’s all the IRS has given us. That’s all we’re expected to do is case by case. Is it ordinary? Is it necessary? And a great distinguisher to that is, would I buy this for my employee? Even if you don’t have an employee, think about that.

Would I buy this for my employee? Now, once you have employees, like I have quite a few, it makes it even harder. Like I hardly write off anything for myself because. I have 20 employees. Employees. Yeah. I don’t think I’d write this off for all 20 of them. So probably shouldn’t do it for myself.

Akua: Yeah. Oh my gosh.

This has been so helpful. Okay. So what are three things business owners need to do to prepare for this year’s Tax season 2025.

Dawn: Yeah. Okay. Bookkeeping is the first thing that comes to mind. Get your books in order. A lot of people stress out about tax season more than they need to because they try to do all of their bookkeeping and all of their taxes in the same breath.

Spread out the bookkeeping, do the bookkeeping all year long if you can. If not, get your bookkeeping in order now. And then talk to an accountant as soon as possible. In fact, if you’re listening to this and you still haven’t hired an accountant, You’re a little late to the game. Expect to file an extension.

Extensions are not bad, though. In fact, I’m under the belief that extensions are good and positive. Um, there’s less of an audit risk if you file extensions, so we like

Akua: them. Okay. Yeah,

Dawn: fun tip. But hire an accountant. Be picky about the accountant that you hire. Make sure you like them and you’re not just, like, settling.

We see that a lot with accountants. That’s why I have to Say it multiple times on this episode. Um, and then get all of your tax documents nice and organized for your accountant. Put it all. I love saving it on a desktop, just having one file for tax documents where. You save your tax paperwork, you save a copy of your taxes to that once it’s done.

Um, but get organized with all of your paperwork.

Akua: Those are such key, key things. And they’re really simple, too. But I think, again, like, because, like, taxes aren’t the fun part of our business, it’s so, so important, though, because it’s gonna make the whole process smooth. And that’s why, I mean, I have QuickBooks.

But my tax person like set it up for me and showed me how to use it to where I can do my bookkeeping and so it integrates perfectly with my honey book account, which I love. And so like for business owners, like I always set time and you could do a weekly, whatever I set time once a month and I go through all of my transactions and then I like, and now it can automatically do it for you.

But sometimes I, but I always go in there to check to make sure that it went into the right bucket. And then also to like. to make changes in case it’s incorrect, but also to, there’s also ones that are like flag of like, is this in the right spot or is that not? So always making sure that you are taking the time.

And like I said, I do mine once a month, um, just to double check to make sure that everything is smooth because it really does make a difference because then he like is able to go in there and grab everything that he needs for my taxes every year. So a lot of the times, like it just, it’s It’s so smooth.

And then I like, he emails me like, your taxes are ready. And if he needs something else, but he lets me know, but like, I’m

Dawn: like, Oh, thank you. So when it comes to taxes in your situation, because you’re already doing the bookkeeping, taxes are pretty streamlined and simple, right? And the only hard part is when he tells you, you have to pay something and then you have to be like, Oh, Oh, okay.

Let me do it.

Akua: Yeah. Yeah. Yes. Yeah. But I think again, to your point of like organization is key, having systems in place to make sure that you’re on top of things is really going to make a difference in your taxing experience every single year. So again, like really getting that support because he’s the one that taught me how to do that.

Cause they can also teach you things so that again, it makes it easier for them to be able to do your taxes. And so those are things that I just don’t want business owners to forget. So I’ve heard a lot about high yield savings account. Does that number one, can you explain that? What that is for our audience?

Cause I think it’s important for business owners to know a couple months. I opened one, but two, does that help at all with taxes or no, is that a completely separate,

Dawn: it is a completely separate thing. Cause high yield savings accounts are more so like you’re making money. But goes back to our conversation of Hey, let’s look at how we can make more money.

And a high yield savings account is a great response to that. So the difference between a high yield savings account and a typical business savings account or typical savings account is The high yield savings account just has a higher interest to it. It’s a no brainer. I think everyone should have high yield savings accounts.

I don’t know why anyone uses normal savings accounts. Well, I do. It’s because that’s the default. When you open a bank account, they give you a normal savings account. And in order to have a high yield, you have to go through one extra hurdle to jump through. But like, jump through that hurdle. Uh, it’s worth it.

And it just means that you’re making more money off of your savings. So, I love that you have a high yield savings account. I think that’s great. We recommend everyone put their tax savings into a high yield savings account. So like, every month when you’re setting aside money for taxes, or you said HoneyBook is constantly taking out that tax, put that in a high yield savings account so that it’s making you money.

Before you go have to turn it over to the IRS.

Akua: Yes. Oh my gosh. That’s such a great idea. I love that tip. And again, business owners make it like take that extra step to get a high, because I think again, to your point, it is separate from taxes, but like you said, right, if you’re looking for other ways to make more money, building wealth in your business, that’s like a key foundational step that you can take.

Immediately. And then that’s brilliant. I didn’t even think of that, like putting your tax savings in there so that it’s collecting money. And then like, again, like you feel more confident and you’re like, okay, like I got a little something, something left over. You know what I mean? Like, I think those are such, like, it’s doable.

There’s, those are really simple things that are very, very doable.

Dawn: Very. And like everyone, I don’t know, everyone loves to, um, showcase like affiliate marketing and income of like, oh, I’m making pennies on the dollar for being an place or whatever. I personally, I’m like, I have very little affiliate income.

I make more money off of my high yield. Savings account than I do affiliate income and yet no one’s talking about how amazing that is. So I love that you brought it up Yeah, I’m just I love it.

Akua: Yeah. Okay. So then really quick to even add on to that What are some things that business owners should look for when trying to determine their like what high yield savings account to go for?

Dawn: Yeah The biggest thing is some banks have Minimums of like you have to have this much money in your savings if you’re using your savings account just for taxes you’re gonna Put money aside in it, and then take it all out to pay taxes, so you wouldn’t want to have a minimum. And then the other thing is, some banks have annual fees.

You’re gonna, yeah, let’s see, minimums, annual fees, and then what is the interest rate? Those are kind of the three things that you’re gonna look for.

Akua: Okay. Super helpful. Okay. You guys, if you are looking like make this a priority to get a high yield savings account, I have loved this conversation so much.

Number one, I have enjoyed talking about taxes and money and what I can and can’t do. Thank you for that. for that reminder. Okay. So we have now implemented into the unbreakable business rapid fire. So I want to ask you a couple of rapid fire questions before I end with our usual question that I always ask every guest, but escort sole proprietor or LLC, which do you think is best?

Dawn: LLC.

Akua: Okay, why?

Dawn: Okay, LLC is just the legal designation, and then from there you can decide, be a sole proprietorship when you’re not earning, when you’re under that 60, 000 benchmark we talked about, or once you get over that, then you can easily convert to an S corp. So LLC because you can be either of the other two.

Akua: Okay, okay, okay. I love that. The craziest tax story, like craziest tax story you’ve ever had.

Dawn: Um, okay. Well, I’ve had multiple of these, but they’re crazy every time. And it’s someone who comes to us who hasn’t filed in like 20 plus years. We’ve had multiple of them.

Akua: Oh my gosh!

Dawn: Like so what do you do?

Akua: I know I’m like what okay, so walk us through one of these and what what did you do?

What happened? Like what does that look like?

Dawn: Well, normally they are like trying to buy a house or something They’re like, uh, I finally have to do my taxes, but the IRS hasn’t caught on that. They’re making money under the table. So They haven’t filed anything and the IRS, you only need to file the past seven years.

Like once it’s past seven years, they can’t collect or do anything. So really we just go back seven years of bank records and we remake the whole thing. We remake their income and their expenses and we file tax returns. And it is so hard because as you can imagine, someone who hasn’t filed taxes in 20 years, they’re not great at keeping records.

Akua: And

Dawn: they do not want to file their taxes, so they are dragging their feet, they’re hating every step of it, you’re just trying to be their cheerleader, because you know that they need this, but, yeah, that’s,

Akua: mm hmm. Ooh, that was spicy. I had no idea that, yeah, I mean, I was like, oh, and they’re still walking these streets after not filing for 20 years?

Kudos to them.

Dawn: Here’s the thing. Entrepreneurs need to hear this. We are all, every single person listening to this podcast is way too small of a fish. Like the IRS does not care about us. Okay. They’re not going to come after us. They do not have the resources or the time or the money to come knocking on our door and care about us.

If you make a mistake, they probably won’t even notice. Okay. So like, don’t fear the IRS. Just, just focus on you and your business and try to do the best part with filing your taxes. But yeah, if, if they’re not coming after these people who haven’t filed in 20 years, they’re not going to come after you for writing off a purse.

Akua: I know. And all of a sudden I just got purse after purse. I’m just kidding. I would never. But no, I think that is such a good reminder of like, again, like the IRS is not that scary. And so, yeah. Okay. Another question. What is the most amount of money you have saved for a client?

Dawn: Over 50, 000.

Akua: Okay, that’s solid.

That’s a solid number though. Okay, so when you do it when you do right y’all you can get almost 50, 000 saved All right last rapid fire question, what is the one thing you love most about your job

Dawn: the people I work with

Akua: love that Kept it short and sweet. Okay, so this was a fun rapid fire a little spicy Okay We love to end every single episode with is what is having an unbreakable business mean to you

Dawn: to me?

It means having an aligned business like having a business that You You don’t have to take a break from because it’s just integrated. It’s part of who you are. It fits your lifestyle. It’s aligned to you and your life and it’s not draining. You’ve set up systems and processes, you’ve set up offers that are life giving, so that’s unbreakable.

Akua: Ah, I love that so much. Creating a business that aligns with you, your spirit, your heart, your soul. I think that’s just so, so important because again, it brings you joy. It keeps, because that’s, when you’re doing something that brings you joy, that’s what’s going to keep you going. That’s what’s going to help you create a system.

sustainable business. And so, um, I think that’s such an important, important reminder. So thank you so much. And Dawn, I’ve loved this conversation. This has been fun. Yay! Yes. So no, this was great. And so for our audience that want to be able to connect with you, um, where can they find you? How can we support you?

Dawn: Yes. Okay. Come hang out with me on Instagram. First and foremost, my handle is patent. accounting or come to our website. It’s patentaccounting. net. Uh, my name’s Dawn Patton, hence the name, Patton Accounting. I know, kind of a boring firm name, but here we are. Don’t forget the name. Come see me and hop in my DMs and say hi.

Akua: Oh my gosh, 1000%. Also, I feel like Patton Accounting, it’s very, it’s very on brand. Like it feels very aligned with like taxes and money and all that stuff. So I’m digging it.

Dawn: It makes sense, right? Yeah. Yeah. I mean, yeah, sounds, it sounds like it fits into the accounting world, . It

Akua: does. It really does. So I love it.

It’s easy to remember. And so, Dawn, thank you. Thank you so much for being here and for all those listening. Until next time, thanks for tuning into Unbreakable Business. If you love today’s episode, don’t forget to subscribe, leave a review and share it with someone who needs a little extra inspiration.

Remember, no matter what life throws your way, you have the power to. To keep going and your business can be unbreakable to you until next time. Keep building, keep growing and stay unbreakable.