Taxes as a Creative Act with Tax Expert Hannah Cole
“Data is neutral, it's not there to criticize you, it's there to tell you information and you can put whatever story on it you want, but ultimately it’s pretty objective, and it's really wonderful as a measuring stick.”
In this episode of Strategy Snacks, I’m joined by Hannah Cole, a tax expert who specializes in working with creative businesses and mission-driven solopreneurs. She’s not only an accounting and tax wizard, but she's also a creative and is very impressive in the way that she bridges the gap between the creative world and the sometimes-considered-less-creative-world of taxes and accounting. She’s sharing her quick tips for business owners, especially if you’re just starting out. I learned a couple of new things throughout this conversation and I think you will too. Remember, if you’re a business person, tax planning is definitely for you!
Topics:
Why it’s important to Hannah to lift the shroud of misunderstanding around taxes and numbers
The reminder that numbers and data are neutral and why you have to get comfortable with them as an entrepreneur
How taxes were one of the biggest hurdles Hannah faced after graduating college and how it became the why for her business as a tax expert
The order (for tax purposes) that Hannah suggests business owners should follow as they set up their business
About Hannah:
Hannah Cole is a tax expert who specializes in working with creative businesses and mission-driven solopreneurs. A long-time working artist herself, she’s helped tens of thousands of self-employed people skill up with accessible tax and money education, through her Money Bootcamp program, speaking engagements from Florida to Alaska, and on the Sunlight podcast. She is the founder of Sunlight Tax.
For more from Hannah, be sure to:
- Check out her website.
- Follow her on Instagram @sunlighttax
- Download her free Visual Tax Guide
-PODCAST EP: S Corp Mistakes That will Cost You Thousands
-PODCAST EP: LLCs & Why You Need to Separate Your Accounts
For more, make sure to:
- Follow me on Instagram @frenchie.ferenczi
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Frenchie Ferenczi: [00:00:00] hello hello, and welcome back to strategy snacks. I'm Frenchie Frenzy. And today we are joined by Hannah Cole, who is, uh, we met through Farnoosh BTS, which is like one of my favorite groups I've ever been a part of. She is not just an accounting and tax wizard, but she's also a creative and she really does something very impressive in the way that she bridges the gap between The creative world and the sometimes considered less creative world, but I would argue it might not be that less creative world of taxes and accounting.
So Hannah, it is so good to have you here. Thank you for being here. I would love for you to introduce yourself to our listeners.
Hannah Cole: Sure. Thank you so much, Regie. It's an honor to be here. Yeah, so I am have always been a practicing professional artist, like with an MFA and solo shows and galleries including one that starts in two weeks,
And basically when I had the experience of starting my own you know, like, starting out as a professional artist, I had such horrifying [00:01:00] experiences that with other, with accountants judging me, because I was a creative person, that I ultimately decided to go back to school for accounting and get a tax expertise.
And so I started my company, Sunlight Tax, where I serve self employed people, solopreneurs creative people, most especially with just really clear. tax information, no jargon, just totally understandable, really geared towards helping you, you know, set up to pay quarterly taxes and, you know, your estimates and get your bookkeeping on track.
Just those sort of basic things that you need, but that are often extremely mysterious and difficult to access through, you know, traditional accounting world. Well, that's
Frenchie Ferenczi: so important. I, before we get into our questions, I will just say that I feel this way about strategy as a term a lot, right?
There's these just like concepts or skills that are so like shrouded in mystery in the way that we talk about them that they feel completely untouchable. And taxes is definitely one of those [00:02:00] strategy. Capitalist strategy is one of those. Insurance. I actually think nobody understands insurance. So maybe that one doesn't really count.
But I think it's so great and so important to have people like you who are just simplifying the way we talk about concepts that are actually quite simple and somehow got like over complicated in the game of telephone that brought us to where we are now. So, so glad you do what you do.
Hannah Cole: Thank you. And I agree.
Frenchie Ferenczi: So to start us off I would love to hear about kind of one of your Your biggest business wins one of the moments that you really like to celebrate most in your business journey thus far.
Hannah Cole: Sure. I was thinking about this. I think really it is getting super comfortable with numbers. This is not something everybody has to do, especially to the degree that I have, but I grew up allergic to math.
I was a painter. And you know, now I run launches for an online program and I look at my. Financial statements every month. [00:03:00] And I, I've just realized that like. Data's neutral, it's not there to criticize you, it's there to tell you information, and you can put whatever story on it you want, but ultimately it's, like, pretty objective, and it's really wonderful as a measuring stick.
And so to try and, like, get rid of that mental garbage of making it tell you bad stories, which is really the reason that I resisted it so badly. I'm actually just like trying to look at it just like, okay, numbers help me realize if I'm doing what I wanted to do and help me know where to adjust in order to do it better.
So that is my business biggest, my biggest business win. There's many areas where that covers.
Frenchie Ferenczi: Totally, totally. But no, but I love what you said about neutrality because I feel like I talk about this a lot in different ways. But one example I think of all the time is that I use Alexa, our little home robot person.
Just as you
Hannah Cole: said that [00:04:00] the podcast listeners their, their home instruments
Frenchie Ferenczi: of all. Exactly, exactly. But I use. Schmalexa to for my kids sometimes to like put a timer on. So I'll be like, Oh, okay. So let's say three minutes until we have to leave the house. I have two toddlers. I turn a three minute timer on.
And then I'm like, Oh, she just said we have to go. And it kind of just like takes it out of like their mom telling them what to do. And I'm like, or there are times where I always write our menus on this whiteboard in our kitchen. And I'll be like, They'll be like, oh, I don't want this for dinner. I'm like, oh, but this is what the menu says.
And there's something about creating that neutrality that is really it. People, you receive the information better. And I think that's true when we're looking at the numbers in our business or the information in our business. Mm-Hmm. , or whether it's my toddlers figuring out what's for dinner. And so I think any way.
You know, for anyone listening, you can really start to think about how do I neutralize this so that I can get curious about it? Because if you get, if you put the story on it, you shut [00:05:00] down a lot of the time because there's like a lot of shame. But if you keep it neutral, that's when you can get curious and you can fix it.
Hannah Cole: Absolutely. And it takes some practice. And I think you really have to come at it, especially in the beginning with a ton of compassion, self compassion, because like, and I say this as, as a visual artist, who's always been far more interested in like, innovative, groundbreaking work than financial gain. And like, my balance sheets never looked too good.
So like, it felt like, you know, if you're making all your decisions based on artistic integrity and like, you know, big, big vision. You know, great, hopefully where that shows up is in the painting is like killer, right? It might not show up on your numbers. And so you have to understand you're making a trade, like, I'm now much more at peace with that.
But at the time I would be like, I don't look at my numbers because that's where I look bad, right? That's where what I'm doing doesn't seem to make sense. [00:06:00]
Frenchie Ferenczi: I love that. I love that. Okay. Okay. So. Speaking of feeling not so good or feeling like our data is judging us, talk to us a little bit about one of the hardest business lessons you've had to learn along the way.
Hannah Cole: Taxes. No question. I mean, it's why I do what I do. I, I felt when I you know, moved to New York City and had to become, you know, like, do my first quarterly tax payment, I, it hit me like a shovel to the face. I just, art school had not prepared me in any way, and I was, I was enraged at how unprepared, like, Not one conversation had ever come up and suddenly here I was faced with this difficult thing.
And I found that like, talking to accountants was not helpful. I found myself being extraordinarily judged and shamed for my lack of knowledge. As opposed to somebody being like, let me open the door for you and like, help you crack this thing. So that. That was extremely awful and terrible. [00:07:00] I messed up very badly in many ways.
I was audited. I, like, all kinds, all the terrible things. Like, I'm a good teacher because I've done everything wrong. Like, that's why I'm good at this. Because I understand the fear and I understand, like, the, you know, where, where people kind of misunderstand it. Yeah. So, yeah, I, I am from the school of hard knocks on this stuff and I really get that it's scary, scary, scary, and that accountants just often, I, like, I think there's more women in accounting now, but like as a woman, as a mother, as a creative person, I just did not feel seen in that space and did not feel valued.
Frenchie Ferenczi: Yeah, yeah, that's so frustrating, right? Because like, I do think it is like this. Well, one, you go into higher education, you learn all this stuff and then. You get spat out into the world. I'm like, you know, I feel like in the movies, parents are always like, don't go to art school. You need a real job. Right.
And then it's like, [00:08:00] well, how unfortunate is it that these art schools aren't actually preparing their students to make money off their business or off of their work and to actually like be strategic and smart about how they're doing it. And so that kind of perpetuates that cycle rather than like, you know, actually creating a world in which the starving artist stereotype doesn't really need to exist if you can learn a few ways to go about it and ways to have both your passion and your money makers and all those things.
Yeah. Oh man. I can't imagine being in New York where everything is like 10 times more expensive than anywhere else and learning all these lessons. It was awful.
So thanks to all those hard lessons. Tell us what is one strategy snack or business tip that you want to share with our listeners? Yes.
Hannah Cole: So especially when people are starting out their business, it can be very easy to get random tidbits of information [00:09:00] here and there and feel that you need to do this one and this one and this one, there is actually a good order to go in when you're doing different business setup things and you don't have to do all of them at once.
So the one I'll give you, cause I want to keep it at nice and edited for your short podcast is an S corporation. So there's talk. You might hear people say, Oh, you should become an S corp. Here's the thing. I have seen so many people form S corporations when they shouldn't like without knowing what it means without knowing what their legal obligations are on the other side of that or tax obligations.
And before they've ever done a break even analysis and. If they had ever done that, they would know that they'd lose money by forming one. So just want to give a little quick guideline for people about forming an S corporation. It's a wonderful thing, but it comes later in the game. So S corporations basically can save you money on self employment tax, but [00:10:00] only once your income is above a certain threshold.
And it's not a one size fits all threshold. If you're in New York city, like Frenchy. The threshold is very high because New York does not acknowledge S corps. And so, and there's an extra tax, right? When you're when you become one. So you have to be very careful not to get random internet advice about this stuff and actually have a sit down with somebody and do a break even analysis on an S corp.
But. If you do it and it comes out in your favor, it's great because you can save a lot of money in self employment tax. And as a rule of thumb, I would say if you're outside of New York state, above 50, 000 in profit, so that's after expenses, that's not revenue, that's profit, above 50, 000 is starting to get to be where it's worth a conversation with an accountant about if an S corp is right for you.
And please note, I said accountant, not lawyer. It's the thing you file with the IRS. It's a, it's a tax thing. Yeah. And if you're in New York, it's going to be [00:11:00] a lot higher. The threshold might be closer to 200, 000, like way higher
Frenchie Ferenczi: in profit and profit. Wow. Okay. Yeah.
Hannah Cole: Yeah, so you really want to, you want to be careful and not get in a group of business buddies and somebody says, Oh, you need to form an S corp and then go out and do it.
It's something you need to really like, take a look at your own situation
Frenchie Ferenczi: before you do it. I love it. And I'm so glad that you specified in profit because I have heard a lot of, you know, people love to talk about escorts. Like, what's one thing you wish you'd done sooner in your business, you know, filed for escort status or whatever it is.
And everyone I've heard talk about it always talks about it in terms of gross revenue. Meaningless. Meaningless. And so I think it's really, really helpful that you actually talked about it through the lens of profit because that is significant difference. Oh, amazing. Okay. Where can people find you, connect with you, all of those things for more tax, digestible tax goodness?
Hannah Cole: [00:12:00] Absolutely. So I have a podcast, the sunlight podcast, and you can find that. And you can also find a visual guide to tax deductions. It was designed by an artist, which is me. It's a visual guide to tax deduction. So that's all on my website, sunlight, tax. com. And if you want, maybe I'll send you a couple sunlight podcast episodes that are specifically about S Corps because I have a whole bunch of them because this is an ongoing challenge that I see.
So that, that is useful probably for your
Frenchie Ferenczi: listeners. Amazing. Amazing. Thank you. Last question for you as an accountant, when you help people with their taxes, You can work with people in any state, right? It's not like the bar association that you have to be like a lawyer in only certain states or what have you.
You can really help people across the country. Correct.
Hannah Cole: And in fact, so I'm an enrolled agent, which is I'm licensed by the IRS, which is federal. So I'm actually federally licensed and specifically licensed in federal tax law. So that is all 50 states.
Frenchie Ferenczi: Amazing. Amazing. Thank you so much for being here, Hannah.
So lovely to chat with you. [00:13:00] Everyone, please listen to this and learn and go find out more because I was actually having a conversation earlier today in a workshop that I was hosting with a woman and she was talking about how she was wanting to incentivize people to purchase something now so that they could write it off in their 2023 taxes.
And she's like, I don't think everybody thinks about their taxes the way that I do. And I'm like, I think you're right, but they should. And so, uh,
Hannah Cole: Frenchie, I want. Every year I host like a free like tax planning, you know, save more money at the end of year workshop. It's my least popular one and I can't figure out why because it's like, this is free money.
This is a class on how to get free money and people don't show up. I don't know if it's holiday craziness or that people just think, Oh, tax planning is for somebody else. It's not me. It's somebody else. But if you're a business person, it's definitely for you.
Frenchie Ferenczi: Oh, my gosh. I love it. Thank you so much to everybody listening.
Make sure you connect with Hannah. Follow Hannah. Go download [00:14:00] her beautiful visual guide and we'll be back with more snacks very soon. Bye everyone. Bye.