Money Myths

Financial Clarity Starts Here.

As a Backpocket CPA, we actually don’t file tax returns.

Our purpose is deeper.

Help entrepreneurs ACTUALLY UNDERSTAND what is going on financially.

Our big focus lately has been getting ahead of taxes.

And as I review more and more tax returns for clients, I come across this beautiful row 38 - Estimated tax penalty.

And more often than not, it’s populated with a value.

Meaning many of you are paying a penalty by not paying enough tax throughout the year.

Now sometimes this can be strategic, but I’d say 0/10 entrepreneurs have a strategy of paying increased fees for not filing taxes quarterly.

Let’s save you some money!!

The unfortunate truth

So an easy way to save money - avoid paying fees to the IRS for not paying enough tax through the year.

How much will you save?

However much is populated in row 38.

This can be thousands of dollars just by better managing your cash flow.

How to start managing your cash flow better

Estimated tax payments are due quarterly.

With this in mind, you need to plan for a tax outflow every 3 months.

That means setting aside your earnings for taxes AS YOU EARN.

The easy way

You know how much you make monthly.

So take 25% of that amount, and create a target in your budget to set aside that money every month.

This will result in probably setting aside too much for taxes, but if you have the cash flow for it, it’s an easy way to get ahead.

Then you can adjust the strategy as your return is prepared.

The more accurate way

Estimate your tax due and pay tax based on your estimate.

Woah, we went deep fast!

If you’re unsure how to estimate your taxes, you can use this simple template I’ve created for you.

The video inside the template will walk you through the details.

With this template, you can compare to prior years and estimate your current year tax due so you can plan to set aside cash as you go.

Happy taxes…?

(Not sure if that’s a thing.)

Action Items:

1. Look at your 1040 tax return Box 38…are you paying penalties?
2. Evaluate your cash flow to begin paying estimated taxes quarterly.
3. ​Download the estimated tax template to begin estimating your taxes.

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Money myth of the week 🤐

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This is probably one of the best reasons to not pay estimated taxes.

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Said differently, I’m fine paying a 3% fee when I can earn 10% on my money when it’s with me.

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It may be true.

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But it’s worth being honest if you can actually achieve those returns.

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And how much your tax bill affects your cash flow when due.

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If it’s a big hit every year, then I’d venture to say it’s worth paying at least something quarterly to even out the cash flow.

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Tell me your best dad joke 🤣

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Got any dad jokes to share? Let ‘em rip by responding to this email. 😜

Thanks for reading, and see you next week!

Ryan Page, Backpocket CPA

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​Find me on LinkedIn or Book a 1:1 Call​

Whenever you're ready, there are 3 ways I can help you:

1. ​Family Legacy Builder: Our course on how to take full control of your family finances. I share 8+ years of expertise in budgeting, saving, and developing your debt plan.
2. ​CASH Clean Up: Our flagship financial tune up that will have you in control of your finances in less than 2 hours.
3. ​Business Scan: Our deep dive review of your Quickbooks Online business books giving you an action plan of exactly how to fix your bookkeeping.

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