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How to Hire a CPA for Your Interior Design Firm with Kate Snelson

March 01, 202442 min read

How do you know when you should hire a CPA for your design firm? How do you know if you’re hiring the right CPA? Do you need to hire a CPA who works in your same city? Same state? Kate Nelson is answering all of our small business accounting questions in this conversation.

Starting a small business always requires us to track income, expenses, and—what we owe the government. But trying to navigate that on your own as a new business owner is… tricky. Kate is back to help us identify red flags to steer clear of when talking with a CPA, the types of questions we should be asking them, and all things business expenses. You’re sure to find this conversation helpful even if you’ve been in business for a bit. We’ll see you in there!


In this episode, we cover:

  • Why you need a CPA as a design firm business owner

  • How to hire the right CPA for your business

  • If you need to hire a CPA in your same city and state

  • Red flags to look for before hiring a CPA

  • If you should file taxes annually or quarterly

  • How to know when it’s time to hire a CPA

  • Things people commonly miss about business structure from a tax perspective

  • The best software (free and paid) to help track business expenses

Do you feel more prepared to find, hire, and work with a CPA for your design business? Let us know if you have more questions you’d like answers to—find Kate and me on Instagram!

More about Kate Snelson

Kate Snelson is a CPA and mom living in Oklahoma. She has spent 6 years in public accounting working in firms ranging from small local to top 25 in the US . After having her first daughter she realized that she wanted more time freedom and began her own business working directly with small business owners.

Links and Mentioned Resources

How to Hire a CPA as an interior designer 

The Studio

Episode 9 with Kate

Wave Apps


Design Docs

Mile IQ

IRS Common Deductions 

Charts of Accounts in The Studio

Guide: Your Tax Calendar; Dates You Don't Want to Miss!

Connect with Kate Snelson



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This episode is brought to you by Nello Marelli

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More about Colorful Conversations with Katie

Welcome to “Colorful Conversations with Katie”! Join us for a vibrant webcast where we seamlessly blend the realms of design and business in a fun and professional setting. Available on YouTube or any of your favorite podcast platforms!

Hosted by the dynamic Katie, a seasoned expert with nearly 20 years of experience in both fields, this engaging series promises to ignite your creative spark and sharpen your entrepreneurial acumen. From exploring the latest design trends to uncovering strategies for building successful ventures, we dive deep into the colorful world where aesthetics meet profitability.

Whether you’re a budding designer or a savvy entrepreneur, this webcast is your go-to source for inspiration, insights, and a dash of lively conversation. Tune in and let your imagination, business and life take flight!

This post may contain affiliate links, so I may earn a small commission when you make a purchase through links on my site at no additional cost to you. 

This episode of Colorful Conversations with Katie is brought to you in partnership with Leah Bryant Co.

The unedited podcast transcript for this episode of the Colorful Conversations with Katie podcast follows

Katie Decker-Erickson (00:03.254)

Hey Kate, welcome back to the show.

Kate Snelson (00:05.858)

Hey, I'm glad to be back.

Katie Decker-Erickson (00:07.63)

And we're so excited. New year, new accounting, new fun. And if anyone's rolling their eyes listening to this, yes, I think we can all agree. Most of us look at accounting and go, wah, which is why we bring Kate back to the show, to talk about all these things. So really wanting to dive in as we focus on this series of launching your own design firm, one of the most important things, getting the right CPA out of the gate. What does that mean for an interior designer? How do I know?

that I'm getting the right CPA. And maybe before we even answer that question, why do I need a CPA as we sit here in February? Tell me the why I should start with a CPA before I think I need one.

Kate Snelson (00:52.202)

I think, think about the business and the tax cycle where we're at right now. In February, we're gearing up to file our taxes based on last year. Um, and for some of us, that's great. It's no sweat. We've got things buttoned up and for some of us, it's terrifying. We've only got a month and a half left. Um, just depends, you know, on where you're at. And so either way, if you are terrified and you don't know what you're doing, it's a good time one to find the right person for you. If you wait much longer.

Katie Decker-Erickson (01:10.527)


Kate Snelson (01:21.126)

that you're not gonna find someone who's gonna file your current tax return, but also find someone who can do next year for you and keep you set up and think about your future and your growth. Honestly, I tell people, I know it's scary sometimes thinking about CPAs, and I know that there are really expensive CPAs out there, but there are affordable CPAs out there too, based on your business size. If you're just really clear about what you're looking for and what kind of structure and help you need and kind of on what cadence.

It's really easy if you don't set a clear cadence with a CPA to fall into the trap of I'll just email when I have a question and then I'm surprised I just got a $250 bill or I never hear from my CPA. It's like, well, did you ever ask them a question? Would you expect to hear from them? You know, what do you think is missing?

Katie Decker-Erickson (02:02.603)


Katie Decker-Erickson (02:11.192)

And that probably really ties nicely into, how do you know what CPA to hire? How do you know you have the right CPA, not only as a designer, but also just with how your business runs? How do you ferret that out?

Kate Snelson (02:26.922)

I always tell people, you can interview CPAs. Think about it that way. You don't just have to walk into the local shop and take what's available to you. You really can go out and interview people and find out what's gonna be a good fit and what's not gonna be a good fit. There are a few things to think about. One is someone who understands your industry. If you start talking about getting retainers, buying product, markup, and they look like they're super confused and they have no clue what you're talking about, probably not a good fit, right? Because those are really basic.

Katie Decker-Erickson (02:32.322)


Katie Decker-Erickson (02:52.686)

I'm going to go ahead and turn it off.

Kate Snelson (02:56.526)

basic things in your industry. And the other thing is you wanna find someone who you have a good vibe with. I tell people if you don't think your CPA is being nosy, they're not really working hard for you. They're taking what you gave them and they're putting it down. So I often have to ask uncomfortable questions about marital status. Yeah. Are you married? Do you think you're gonna be married next year? Do you think we're gonna have kids? You know, a lot of those kind of stupid questions. So if you are sitting across from someone who...

Katie Decker-Erickson (03:09.762)

Hmm. That's a juicy tidbit. Yeah.

Kate Snelson (03:25.914)

You're never going to tell that information to anyway. It's probably just not going to be the most productive relationship for you.

Katie Decker-Erickson (03:33.33)

Nobody ever says that. It should feel oddly uncomfortable because of the number of questions you're being asked and what personal nature they are of, which it brings up the importance of trust. I think fundamentally, if you feel you can't trust your CPA or trust the person you're interviewing, if you just have a gut instinct, you should probably just walk out the door.

Kate Snelson (03:52.694)

I think that's fair because really you should walk away from the table wondering, I'm 26, why did they want to know if I'm going to have kids in the next five years? Why did they want to know if I'm living on my own or if I'm living with my parents or I'm living with a boyfriend? You know, those are all the kind of questions that are uncover, that are going to uncover potential deductions and even future planning areas. And I know sometimes it's easy to say, well, I don't have kids right now. I'm never going to want to pay them for my business. Or if I do, who cares? It's in the future.

but a lot of those things play into early decisions. So if it's just not a good fit, there's plenty of CPAs out there, there's no shortage of us. You should be able to find someone that you vibe with. It doesn't have to, and if you're comfortable with maybe the stereotypical older man, that's great. And if you're not, there's younger people in the profession too. You might have to look a little harder.

Katie Decker-Erickson (04:30.946)

I love that.

Katie Decker-Erickson (04:43.318)

Just call Kate. She's available. But I think that brings up an interesting point, too. I think your reference to the older stereotypes we have of the industry, I think a really great thing for people to know is your CPA doesn't have to be in your town. If you're comfortable in a remote working environment and you want to structure your business or have structured your business to the point that it is not necessarily geographic-centric, even if your people are and you haven't

office, your CPA does not only not have to be in the same city, they don't even have to be in the same state. I say that with a caveat, they have to know what they're doing and they have to know the rules of the state that you're in and so you'll want to interview for that, but it really opens up a really nice pool of people.

Kate Snelson (05:30.822)

Well, and think about your communication style, like what you're saying, right? Find someone, they don't necessarily need to sit down next to you, but if you're comfortable in a virtual environment and you're using a program like Slack or any instant messaging where you're comfortable just pinging someone. That communication style isn't necessarily gonna match with someone who's sitting in an office from eight to five and you can email them and they're gonna respond to you within 48 business hours. So if you're in a situation like that,

your biggest complaint is going to be, they take days to answer me. And that's just their standard operating method. So it's just important to express your communication preferences and find someone who's close. If you're doing everything virtually, you might not, not every CPA is going to understand that.

Katie Decker-Erickson (06:16.714)

I think that's brilliant. That's such a good nugget you said about cadence. Find someone whose cadence and SOPs flow with where you're at. If they're always gonna be wanting you to come into their office and you're like, I don't have time to be marching into an office to do this, probably not a great fit. I wanna flip that around. What, when we're interviewing CPAs, what are the big red flags that you're like, if a CPA does this or says that, you probably shouldn't hire them.

Kate Snelson (06:47.15)

I'll tell you my biggest industry pet peeve, CPAs who wanna put a paywall up on any piece of information. If you can't sit across from them and say, should I be an LLC or not? And if they say, oh, well, we'll look at it, right? They're saying, yeah, once you pay me, I'll give you the information. That's just not, that's not the style I ever wanna be involved in. When I'm doing business with somebody, I just think it's professional courtesy.

Katie Decker-Erickson (06:50.007)

Yeah, do it.

Kate Snelson (07:12.046)

You know, to answer some questions when someone's taken the time to schedule a meeting with you and sit across from you and get to know you, it's just not, I just don't think it's good faith to put everything behind a paywall.

Katie Decker-Erickson (07:12.526)

I like that term.

Katie Decker-Erickson (07:23.37)

I like that too because what they're missing out on is their chance to show that they're a subject matter expert and win your business by doing that, right? How do they know? How are they ever gonna explain to you so you know that they're capable if they won't share any information and then how can you feel confident hiring them?

Kate Snelson (07:40.818)

and just an extra peek behind the curtain of the accounting world. Most systems are set up that there's someone at the top who's reviewing and signing work, and there are a few people at the bottom who are preparing work, and it's not a bad system, but you need to ask the question enough to know that, because if you think you're working with Sharon, and then all of a sudden you're getting emails from Suzy, you're like, I don't know what's going on, and you ask Sharon a question, and she has to ask Suzy, because Suzy's the one who looks at your stuff all the time. Suzy has to tell Sharon, Sharon has to tell you. You just need to be...

aware of those things, it's all going to impact how quickly you can get responses and information and people just don't always know that that's what they're signing up for. But it's the most common setup for CPA firms.

Katie Decker-Erickson (08:22.114)

That's really helpful information, because we understand how interior design firms are set up a lot of times. But in other industries, you just don't know what you don't know. And I think that's the big thing, too. As we get into February here, we just came off of 1099s. If 1099s were a disaster for you, this is one more reason to go find a CPA at this point in the year. Do not wait till next January. Do it now. Another one.

is quarterlies versus annual. When are you paying taxes? And the government doesn't like it when you keep their money for longer than they think that you should. And they will penalize you quite lovely for that.

Kate Snelson (09:01.826)

Absolutely, they want everyone to be a traditional W-2 worker because they're gonna get social security and Medicare and withholding from you every two weeks, every week depending on your pay cycle, right? And that's how the government is and we talk about you hear it a lot that you don't want to be getting big refunds Because you gave the government an interest-free loan But think about if you owe a big tax bill, the government is not interested in giving you an interest-free loan either So they want to get paid quarterly

That's what they've agreed on. They think it seems fair. I wouldn't say that it necessarily is, but that's what they've written into law. But it's also important to know that like everything governmental, it makes no common sense. So the IRS quarters are not at all regular business quarters. They're odd dates. Some of them are four months and some of them are two months. And you make your final payment for the year in January of the following year. So it doesn't always...

I've seen some people get burned that way too where I end September 15th, you know, hey, it's time to make a quarterly payment and people are like, the quarter doesn't end for another two weeks. No, sorry. That payment is due today.

Katie Decker-Erickson (10:11.591)

And they will add interest if you don't pay it today plus a penalty.

Kate Snelson (10:15.734)

Absolutely, and that's one thing they'll charge interest and penalties based on how long an amount is outstanding So if you don't pay first quarter and you make a huge payment in the second quarter They're gonna charge you interest for the half that should have been the first quarter between the first quarter and the second quarter And they'll run it all year long They're happy to do that, but it makes hardly any sense and it's almost impossible to replicate their calculations Even by any CPA for exactly what penalties and interest are going to be we can give you an estimate You're impossible to get exactly what they think

Katie Decker-Erickson (10:38.646)


Katie Decker-Erickson (10:46.462)

Which makes it all the more of a confounding thing, the IRS. I just feel like it should be an emoji with a giant question mark over it, because how it works, when it works, it leaves a lot of us in the dark. But.

I think especially people who are not CPAs, this is why you need a CPA. Because you guys rummage in all of the rules and regulations and get updates in that industry about what's changing. There's no way we can keep pace with the IRS. I don't know how you guys keep pace with the IRS. It just seems like it's constantly in flux, depending on who's in office. There's just so many rules about it. And it really is kind of baffling.

Kate Snelson (11:24.418)

It is, and one thing to keep in mind with estimated payments, there's a few different ways to do it. One way is to just assume your income is the same as last year. Take your tax bill and divide by four. And that's what your CPA who's preparing your tax return, you pay them one time fee, that's what they're going to provide you, a scheduled list of payments. That's that. And so I hear from people a lot, well I never heard from anybody what I was supposed to be making estimated payments. And I go look at their tax return packet and I'm like, well, you know, here's the sheet.

But it's not based off your current year income at all. So I hear people in every side of the coin, right? I'm making so much less this year. Do I need to make estimates? I'm making so much more this year. I'm so nervous about estimates. So having a good working relationship with a CPA who's gonna at least communicate with you quarterly based on actual numbers, is the best way to save yourself headache and confusion. And really just that mental dread you have to carry around.

Katie Decker-Erickson (11:55.639)


Katie Decker-Erickson (12:18.326)

100%. And getting accurate information to you as a CPA really is our job as business owners, because you're only as good as the information that you're given. That being said, what software, if we're starting a firm, we're in a firm and not loving our software, what software do you recommend to make this doable so that we can have a good conversation between us and you as a CPA?

Kate Snelson (12:45.474)

Yeah, I think it's going to depend on the size of organization you're running. Just know that there are small business CPAs out there who don't expect you to have an entire accounting staff on file that they can work with what you can put together and help you get there. So if you're just starting out, you need very minimum. I just need to know what I'm spending and what I'm making. That's it. There's a free option. It's It'll connect to your bank account. It pulls all your transactions in.

Katie Decker-Erickson (13:09.887)


Kate Snelson (13:14.138)

doesn't do is project tracking and it's not going to do inventory. Just keep that in mind. Um, but that's your free option. That's kind of, I think it's great for a cash based service business, right? Um, cash leaves, it's an expense cash comes in. I made money. If that's what we're working with wave is great. A step up from that. Yeah. A step up from that is going to be QuickBooks. Um, it's the most prevalent that everyone knows. And even within QuickBooks, you've got a couple options. There's desktop.

Katie Decker-Erickson (13:18.734)


Katie Decker-Erickson (13:26.263)


Katie Decker-Erickson (13:29.838)


Okay, we'll put it in the show notes. Yeah.

Kate Snelson (13:44.498)

I personally know from the back end of QuickBooks, they're going to stop supporting desktop and they're going to stop releasing new versions. They threaten it every few years, but they seem to be kind of standing their ground this year. So to me, it's not going to grow with you. I wouldn't start that way and it's kind of expensive.

Katie Decker-Erickson (14:00.386)

That's a really juicy tidbit that they're actually going away with the desktop version. So if you're there, get over to the online version now and save yourself the headache.

Kate Snelson (14:11.298)

Yeah, if I was just starting out, I would. Switching from desktop to online, it's a headache. I've been just knowing that desktop is not gonna run more than two or three years with you. I wouldn't start out that way. So QuickBooks Online is the other option, and it, I think, is great for businesses. There's different packages. You can start with the lower package. You can scale up as you need to or scale up based on features you need or don't need. My only real advice is...

Katie Decker-Erickson (14:23.79)

Great tip.

Kate Snelson (14:38.822)

Stay away from QuickBooks Self-Employed if you can, because it doesn't upgrade easily into future plans.

Katie Decker-Erickson (14:45.902)

That's a great, great tool. And how far in your revenue do you feel like QuickBooks will take you until you're grossing how much as a firm? Is it pretty high? OK. Yeah.

Kate Snelson (14:54.966)

QuickBooks, I don't know that I would, it's pretty high. I don't know that I would have a solid dollar cap on it. I think it's more about the size of your operation and eventually you will outgrow the project tracking features in QuickBooks and you'll outgrow how many people are gonna have their hands in things and segregation of duties, you know, if you really grow. But for most small businesses, QuickBooks is there. I've also heard Design Docs, I don't know if you've heard of that one, I've heard of it with another interior designer.

Katie Decker-Erickson (15:02.606)


Katie Decker-Erickson (15:17.559)


Kate Snelson (15:24.002)

I wouldn't say it's my favorite. It does great for project tracking, but the accounting function is not great. Um, and we're seeing that we're kind of replicating data between design docs, which is giving the business owner the real time information they need. Where am I on this project? How much retainer can I bill against? Um, versus, but having very limitations on what we can do as far as general business expenses, there was sort of replicating that in QuickBooks.

Katie Decker-Erickson (15:40.46)


Katie Decker-Erickson (15:48.97)

It's interesting you should say that because we as a firm have chosen to keep our QuickBooks strictly.

strictly separate from any other softwares we use. Because as much as we want them to play nice, they just never seem to quite play nice. And I don't know. I don't think there's fault necessarily to be found in that. There's so much changing, like we talked about with the IRS. There's so much that changes with sales tax, all of those things that it seems like, I don't know if this has been your experience. I'd love to hear whenever we have plugged QuickBooks into something else, we end up having to back it back out because it just doesn't work the way it's supposed to.

Kate Snelson (16:23.27)

Yeah, I rarely find integrations that work well. And then most of us kind of know the big offenders. If we look at someone's books for the first time and I see, oh, we're integrating with HoneyBook or a few others, I'm like, I know there's gonna be issues. Something's not gonna come over right. And it's not the end of the world. I mean, we can fix it. And some integrations, you can set them up correctly if you know what you're doing, but it's really easy to just pick the wrong option. You're off to the races.

Katie Decker-Erickson (16:37.454)

That's not.

Kate Snelson (16:50.502)

And then at the end of the year, someone looks at your books and says, no, this has been wrong the whole time.

Katie Decker-Erickson (16:54.922)

Yeah, which is terrifying. Let's be really honest. For the designers that are just getting started or have started and they're going to come to a Wave app, I always think back on starting with a shoebox of receipts. How bad is that? Is that a really bad thing to start with a shoebox of receipts out of the gate?

Kate Snelson (17:13.59)

My advice is always yes. Don't start with just keeping your receipts. Don't start with a Google Sheet. Don't think I'm just gonna run stuff through my personal account for a little bit and I won't forget anything. I'll remember everything. You're gonna forget the Canva auto charges your personal credit card. You're gonna forget that you went and had Starbucks with a client at a meeting, right? You're gonna forget that stuff and the way to make sure you don't forget is to run everything through a business account.

Katie Decker-Erickson (17:15.998)

Okay, that's honest.

Kate Snelson (17:39.11)

that is connected to an accounting program. It's bringing in every single transaction and we're reconciling to our bank accounts. The only way to make sure you don't forget everything.

Katie Decker-Erickson (17:49.134)

I love that. How do I know when I need a CPA? Because I have a bookkeeper, let's say, and I really like my bookkeeper. And they're not a CPA, but I really like them. And I don't have a shoe box of receipts, so I'm doing OK over here, hypothetically. Why do I still need a CPA if I'm happy with my bookkeeper? Because I'm a really new business or I'm just starting out.

Kate Snelson (18:13.482)

I work with bookkeepers all the time that are fantastic. They're just not necessarily tax experienced. And I personally partner with a lot of them where they're in the ground level, they're doing the books and they turn them over to me and they're really nice and they're really clean. And I love it. So you can definitely find a CPA who's happy to work with your bookkeeper, trust me. But I would say it's gonna depend on a few things, the size of your business, your cashflow. If you're paying your bookkeeper, you're paying your expenses and you've making $5,000.

probably not worth the CPA. If you made $5,000 last year, this year you made $20,000, next year you're gonna make $50,000, it's time, right? We're progressing rapidly. And when you grow really quickly, it's easy to miss advantageous options and not find out for three or four years that you could have been saving $10,000 every year for the last three or four years. But I really think there's a CPA out there that can fit everyone. So this kind of goes back to our first, you know, part of the conversation, that not every CPA

Katie Decker-Erickson (18:53.378)


Katie Decker-Erickson (19:10.446)

Mm-hmm. Yep.

Kate Snelson (19:13.442)

is crazy expensive and is only affordable if you're making hundreds of thousands of dollars. That's not the case. There's plenty of small business CPAs out there who can work hand-in-hand with your bookkeeper at a lower rate because you've got a qualified bookkeeper who's preparing your books for you. And then the other thing to think about is to think, did I owe last year at tax time and I hated that feeling, right? Then work with the CPA because they can help you. Well, some people expect it, they know it, but some people...

Katie Decker-Erickson (19:27.854)

That is so smart.

Katie Decker-Erickson (19:35.55)

Nobody likes that feeling. Yeah.

Kate Snelson (19:41.534)

You find themselves in a position where they were completely surprised by owing even $3,000. I mean, to some people that's a lot of money to come up with a week before it's due.

Katie Decker-Erickson (19:49.974)

Yeah, that's a change. Yeah.

Talk to me about a credit card. Do I need to have a business credit card out of the gate? Like, you kind of alluded to this. And like, we think we'll remember the charges and we'll remember all this stuff. Your advice, get a business credit card out of the gate, or you can maybe make it a month or two. Or what would you say to that?

Kate Snelson (20:12.762)

So like everything, my advice is it depends. If you're an LLC, get a business credit card. It's if you're using your personal credit card, you're sacrificing the liability protection of your LLC. If you're not an LLC yet, you can get by with using a personal card, but you need to make one completely business dedicated. Anytime we're using it.

Katie Decker-Erickson (20:17.762)

I love that honest answer.

Kate Snelson (20:38.626)

If you have two credit cards and you say, I love my rewards points on my Amazon credit card, that's great. Only use the Amazon credit card for business purchases then until you get a business credit card. Then you can connect that credit card to you, your accounting software, and make sure that you're not missing transactions and make sure that you're accounting for all the payments. You might pay off a credit card out of your personal account and we wanna make sure you get basis credit for that. So it really is just gonna depend on your size. If you're an LLC, I say, get the business credit card.

If you're not an LLC yet, you've got a little wiggle room, but you really want something dedicated to business. It's the only way to make sure you don't miss out on things.

Katie Decker-Erickson (21:15.594)

Well, and two, if you're not an LLC, not only is there those reasons, but you alluded to it, which is the liability reason, which we're going to, I mean, yes, Legal Podcast, great conversation about that. But.

How you structure yourself out of the gate as a business is so important when it comes to taxes. And another reason to bring on somebody early before you've even established your business and have the conversation with the CPA. What are the tax benefits of being an LLC? What are the tax benefits of being a DBA? I mean, what are the options? And what do you feel like people commonly miss when it comes to figuring out their structure from a tax perspective?

Kate Snelson (21:57.23)

And this is the perfect question that if you ask somebody this question and they won't take the time to explain it to you, even if you say, I'm not ready to hire yet, can you answer these questions and somebody won't take the time to explain it to you, cross them off your book. They're not the person for you. I know a lot of people, they get this question like, oh, well, you're not big enough for me yet. You know, come back when you're big enough. Don't work with that person. But to answer your question, I can't talk about the legal.

Katie Decker-Erickson (22:22.926)

great advice.

Kate Snelson (22:27.138)

protections that you would get, you know, that's better safe for a lawyer, but I can definitely talk to you about the tax differences between them. So a DBA, a sole proprietor, which is just, I have no formal organization, it's just me operating under my name or a single member LLC, and you've done no extra work to create a tax selection, they're all taxed the exact same on your schedule C, and under any of those organization types, you can and should include your expenses.

Don't fall into the trap that, oh, I'm just operating as myself. I can't deduct my expenses. It's not true. You can deduct anything you spend on your business if you're a DBA, a sole proprietor, or an LLC. The LLC?

Katie Decker-Erickson (23:07.306)

We repeat, you have to repeat that one more time. That was so good, Kate. We repeat, you can deduct what, Kate?

Kate Snelson (23:13.782)

You can deduct any and all business expenses, whether you're a DBA, a sole proprietor, or an LLC. So don't think, I haven't gone to my state secretary of state yet and formally organized my entity. I'm just missing out. You're not missing out. Don't just slap those 1099s on the form and move on. Include your expenses.

Katie Decker-Erickson (23:33.138)

Include your expenses. Okay, what qualifies as a business related expense? Give me some examples that are common and then tell our listeners what are the ones that you often see that people miss.

Kate Snelson (23:45.402)

So the best advice if you want a good common list, any of your accounting programs, they're gonna come with what's called a chart of accounts. You should be able to search or navigate right to it. And that's gonna be the most common categories of expenses. The other option would be just pull up, it's the IRS form 1040 schedule C. It's gonna show you all of the common categories too. But the general IRS rule is anything that's usual and business related is a business expense.

Katie Decker-Erickson (23:56.276)


Katie Decker-Erickson (24:06.955)


Kate Snelson (24:14.266)

So they haven't taken the time to listen.

Katie Decker-Erickson (24:14.306)

What does that mean? Usual and business related? I mean, that sounds like an IRS term, Kate. You really need to break that down for us. Usual and business related sounds very governmenty. What does that actually mean?

Kate Snelson (24:19.984)


Kate Snelson (24:26.146)

It just means that we need to be thinking about every expense. Does it promote further my business in some way? Was it a requirement of my business versus is it a convenience thing? Right? So if I'm out to meet with a client and, or we're not going to meet at my office cause here I am in my at home office. Right? So we're going to meet at the local coffee shop to have this business meeting, we're going to talk about business. I'm going to try and land them as a client.

there's a clear business relationship to that expense, right? I'm not just out there having a good time compared to, oh, I drove around town to look out my window and get inspiration, right? That's not necessarily gonna be the best business relation.

Katie Decker-Erickson (25:10.171)

The IRS might see that a little differently than you do. Yeah.

Kate Snelson (25:15.514)

Definitely and when we're thinking about my lid, I mean that's the IRS gold standard is to end receipts too I mean, that's their gold standard. It's in practice. Not everyone does it but their gold standard is that you've made a note on every receipt If I go out to the coffee shop, I'm writing I met with Katie We discussed this project at such-and-such location to be started this day Or if I'm taking a trip somewhere That's the gold standard for the IRS

Katie Decker-Erickson (25:38.406)

Nice. You need that level of detail.

Katie Decker-Erickson (25:44.05)


Kate Snelson (25:44.886)

Now I would make an argument that we're using our business card, right, and those kind of clues ascend that we thought it was business. But we do, I mean, I think if you really want to be audit proof, that would be the gold standard is to keep track of why is this business related. And the more you get in the habit of that, I also think the easier it is to not miss things. Right, because now we're in the habit of thinking through everything, why is this business related? And we can even get...

I wouldn't call it creative, but we can get a little inventive maybe. I want to do this. How can I make it business related? Right. That's the other way to back in. I want to go here for a week. Is there a business conference there? Can I make it a business expense? You know, that's another way to flip the coin and try to make it work.

Katie Decker-Erickson (26:17.582)

Hmm. Yeah, absolutely.

Katie Decker-Erickson (26:33.29)

Yeah, it makes sense out of it. I think that's great advice. What do you feel like new business owners miss when it comes to this arena altogether? Or those, there's so many facets when you start a business that you're thinking about. And I think, especially for creatives, we come at the whole idea of the CPA, kind of what we said when we started. It's just not like the most exciting part for us, to be completely honest. It's a mandatory, but it's not like what makes our heart beat faster. What do you feel like is most commonly missed?

Kate Snelson (27:02.382)

I think people often miss mileage. They think, oh, I was out on a business errand, so when I stopped at the gas station, I swiped my business card. Not gonna cut it. Don't just keep track of, oh, I swiped my business card. Any bookkeeper or CPA is gonna say, hold on, hold on, we need to know. There's two ways to deduct auto expenses. One is the mileage, and it's at a really nice rate. I mean, 62, 63 cents a mile, kind of waffles every year. But that's more than it costs you, depending on where you live.

Katie Decker-Erickson (27:12.736)


Katie Decker-Erickson (27:20.769)


Kate Snelson (27:31.15)

I guess I should say for sure in Oklahoma, but more than it will cost you, you know, to drive a mile based on gas prices. I mean, the other is to deduct those actual expenses of the gas station, but just know that either way, you have to have the mileage number because we have to report it to the IRS no matter what. Even if you say, oh, we're just gonna deduct my actual gas expense, doesn't matter. You're required to report your actual business miles and your overall miles. I don't think people forget to track that.

probably the most.

Katie Decker-Erickson (28:00.638)

OK, so back to the this isn't something that makes our heart beat faster. What if I'm going, how do I track this without it being painful? Kate, I don't want to have a notebook in my car and be like, I went and saw Susie Smith to talk about her kitchen, left my house at such and such a time, arrived at Susie's. How do we do this so we meet the IRS standard, but this is not a complete pain to do?

Kate Snelson (28:24.934)

So the IRS would love for you to have a notebook. It's their favorite thing. But there's more modern options.

Katie Decker-Erickson (28:28.943)

I'm sure they would. Now let's be pragmatic.

Kate Snelson (28:33.274)

There's more modern options. Mile IQ is a great app that I see people use all the time. It'll track all of your driving and you just go through and look at your log maybe once a week and single out, this was business, this was personal, this was business, this was personal. Make a little note if it was business, you're done. It's tracked everything. You get a nice little printout at the end of the year. They even estimated your total deduction. QuickBooks has a similar feature. Yeah.

Katie Decker-Erickson (28:45.953)

Oh wow.

Katie Decker-Erickson (28:55.438)

For real? Oh, I like that. I really like that.

Kate Snelson (28:59.522)

It's nice, it shows you a nice little log, it even works across multiple vehicles. And if you've got a couple of cars you're using.

Katie Decker-Erickson (29:07.503)

Wow. Okay, but.

Kate Snelson (29:08.47)

and QuickBooks has something similar, I don't think it's a slick. So that's just my opinion.

Katie Decker-Erickson (29:16.138)

OK, so My only queue is a great one. Are there other apps or pieces of technology that you love for keeping track of billable time for clients? Or I mean, as you know, when you're starting out or getting going or your first year, any tips, tricks, hence time savers are immensely helpful. Are there other pieces of software when it comes to deductions or billable hours to clients that you really love to use and rely on?

Kate Snelson (29:42.126)

I would say there's free versions and there's paid versions. And depending on where you're at, sometimes the free version is enough for you and you can make it work. So we can go as simple as, I set up a Google Drive folder for receipts. And every time I get an email with receipt, I pop it in. Right, we can go as simple as that's gonna save you at the end of the year, not having to search receipt, you know, in your email account and try to find everything. If we're in the habit of that.

Katie Decker-Erickson (30:05.846)


Katie Decker-Erickson (30:10.274)

I've never been there, Kate, never.

Kate Snelson (30:14.218)

And there's also, I mean, QuickBooks, you can attach your receipts to the transaction and it's all there for you to find any time you need it. That's great. It takes more time. Someone will charge you a little bit more to do it, but I think it's worth it depending on the number of transactions you have. There's free time tracking apps. There's, I think there's some paid ones. QuickBooks has a time feature.

If you wanted to go that route, you'd have to pay for it. It's probably good if you have a larger team, you're trying to track time for multiple people versus just yourself. So I think it just comes down to cost. Honestly, at the core, they're all gonna do the same thing, right? We're just tracking time. But look at how it integrates and is it worth doing something manually versus something that's gonna do it for you.

Katie Decker-Erickson (30:52.617)


Katie Decker-Erickson (31:03.402)

Well, and I think that's a key point. It's so easy when you're starting out, everything's gone to a subscription model. So by the time you pay for your Canva and then you pay for your QuickBooks and then you pay and pay and pay and pay and pay, you can go subscription poor out of the gate.

Your point about free apps getting you started, I think is so incredibly helpful. And then as you evolve and you take that tool for a test drive and you're like, this is a tool I absolutely love. I'm willing to pay that premium because I do want more out of it because it's doing such a great job for me, then fine, make the expense. But I love free apps for test driving.

Kate Snelson (31:37.21)

Well, eventually you're gonna get to a point where it's just a math problem, right? If I'm sitting here and I'm manually dragging my receipts to Google Drive, okay, that takes me an hour a week. Well, there's gun, you're going to hit a point where you're making $100 an hour doing other tasks. You don't have any more free hours in the week. And this app is going to cost you $10, right? It just, you're going to hit a point where it's just a math problem. How much could I be making with my time in this arena? I actually like to be in.

versus how much am I losing, what's my opportunity cost to do it myself, or how much could I pay an app to do it.

Katie Decker-Erickson (32:13.166)

It makes complete sense. Anything we haven't covered that when you talk to designers, you wish you could say to them when it comes to starting their business, getting going, and getting their feet underneath them from a financial perspective.

Kate Snelson (32:29.486)

I would say it's never too early to start talking to a CPA. Again, I feel like I harp on this a lot, but if somebody won't take an early meeting with you and say, you've got my email, feel free to ask me some questions as you get started. Doesn't mean you're hiring them on day one, you're not signing a $2,000 a year contract with them, but try to make a connection, because what you don't want is to need someone and have no idea where to start. So start making connections. I think...

It's great to ask people in your industry who, hey, are you really happy with someone? Because if they're really happy with someone, they know your industry, right? You've already kind of checked the first box. And we're all kind of trained. Don't talk about finances. It's tacky to talk about money. But really, when you're in entrepreneur circles, it's really common. Do you have a CPA that you like? Do you have a tax person you like? And oftentimes, if you get someone you know to vouch for them, that's to me.

Katie Decker-Erickson (33:06.126)

So true. That's a great admit.

Kate Snelson (33:26.626)

It already checks a few boxes.

Katie Decker-Erickson (33:29.118)

I totally agree with you. I think this is great advice. And just to take the fear out of it. I think there's so much fear in going out on your own anyway or being in the startup portion of your business. What do we do? How do we do it? And just to be able to have this conversation with you to say, yeah, no. Start having the conversation with someone, and if they try to build you out of the gate, they're probably not for you anyway. You want to find someone who grows with you.

It's huge to have someone who will partner with you from the outset and say, hey, I'm betting on you. I see what you're doing. I want to have the conversation with you now. I think you're going to grow, and I want to be a part of that growth journey with you. When you find that person, don't let go.

Kate Snelson (34:07.778)

And someone who cares about you and sees you as more than just a potential paycheck, right? Somebody who I love when I have a meeting with somebody and I say, hey, I'm really honest with people, hey, you're not ready for me. I'm going to cost you more than you're going to pay over here. Let's give you some over here resources. And when you come back in a gear and now I am worth the cost to you, you know, that makes me happier.

Katie Decker-Erickson (34:32.202)

Makes you so happier. And imagine the trust that person feels too, because you weren't just there to take their money. You're actually there to help them succeed so they can grow into what you can offer them. And then when they do, yeah, come back. What a great win for both of you at that point.

Kate Snelson (34:48.142)

Yeah, I mean I've had it happen plenty of times, so I just think people should know. You can definitely talk to people for free. And if someone's not willing to, it's not the person for you.

Katie Decker-Erickson (34:49.528)


Katie Decker-Erickson (34:59.598)

I absolutely love that. That's why in coaching we offer discovery calls. I don't want to charge you for me to give you business advice until you've been able to sit on a phone call and decide, am I your person? And if I'm not your person, great. And if I am, let's get busy making your business better.

It's such a valuable point. Kate, a great conversation as always. Thank you so much. Brilliantly said, so well executed. We'll put all sorts of links in the show notes. We'll also include that IRS link of the common deductions that people miss in our show notes so we can get that for everyone too. And then the gold standard, you're actually looking at the IRS's list. We'll provide that. Then we're not liable.

Kate Snelson (35:37.75)

Yeah. And there's going to be, I mean, there's going to be categories that don't exactly fit the IRS, but it's a good starting point for sure. It'll help you get kind of the core things. But again, any accounting program is going to have a preset chart of accounts and it's going to be a great starting point.

Katie Decker-Erickson (35:49.39)

That's what we need.

Katie Decker-Erickson (35:53.994)

I love it. Thank you so much, Kate, for your time. It means the world.

Kate Snelson (35:58.106)


Katie Decker-Erickson (35:59.187)

Bye bye.

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