Create the Perfect Makeup Artist Invoice Example for it Professionals

Makeup artist invoice example for IT

taxes I know they can feel super overwhelming if you're a freelance makeup artist so I figured why not just ask an expert my name is Tiana Robinson and I'm a pro makeup artist an international beauty educator my mission is to empower makeup artists just like you to grow into makeup moguls welcome to make a mogul TV in this episode I'm bringing on my friend Terry Chantelle to talk about taxes for makeup artist Terry is a tax expert with over 14 years of experience owning her own tax firm which specializes in helping new entrepreneurs learn everything they need to know about how to keep more of what they make and in this conversation we get into the difference between a business and a hobby women if you should become an LLC the importance of tracking your expenses whether you should file annually or quarterly how to handle paying out your subcontractors and Terry lets us know if the current tax plan is coming for your coin so if you're ready to step up your finances and stop being shook when tack time rolls around keep on watching [Music] okay sorry so I wanted to just talk to you because there are so many makeup artists who are in the industry but have no idea about finances and are even more lost when it comes to preparing themselves for taxes and so what ends up happening nonsense understand is just don't file and so you know within my community it is so important to me that we are building businesses that are above ground and that are financially healthy because another one of the challenges that I see over and over again is makeup artists are making money but they're not for gonna profit and so I just wanted to kind of get you on the line to just have a conversation just around how do we build businesses that one help us actually make money but also how do we manage ourselves on the day to day so that when tech type text on comes around we're not overwhelmed we're not scared but we're empowered and like ready and are in the best position to either like not o or if it's possible to get money back so let's just hop into it so can we just start with what is the difference between a hobby and a business in regards to how the IRS treats the term I've been doing taxes for 14 years now I kind of understand the mindset the first thing between the hobby and in the business is your mindset yeah because you look at it as a hobby you're you're going to whether the IRS needs a hobby or not you're going to treat this it's like a hobby and run it as a hobby and not have the ambition and the want to really educate yourself and accept the responsibilities of a business person to hobby so the first thing is understanding that you have a responsibility as a business owner to know this stuff into it now the IRS looks at at a business as basically someone who makes a minimum of six hundred dollars Oh what are they here yeah oh now there's a second question in turn the second part without getting too technical the total amount of money that you make for the year determines if you have to file but let's just say that you have a full-time job let's use someone you have a full-time job and you've made a minimum and you made money on the side the IRS says that anything that you make you need to report the income you you don't have LLC if you don't through file and get a DBA you don't have to have a business license if you are in the business of selling something in your intent is to profit from it then you are a business that is the difference between a hobby and a business if the intent is to profit then you're a business I'm happy oh oh I have a show dog and we won some money some cash prizes or I'm kind of doing things and yeah I made money from it but I'm not in the business to do it's just a hobby of mine so that's a bit I read dogs to make money from them that's a business the intent to profit is what makes you a business okay oh that's super clarify so in our case the moment that you put yourself out there is I'm a makeup artist book me your business no matter if you're me right right make money from there you want business okay and a lot of you know so that means that from that moment you should be filing on your personal return how does that have like how does that work popular question that I get so let's say I'm an example person so let's say I have these two pieces of paper this is what it looks like when you file your taxes as an individual with no business this is your tax return if you have a business I just put that on this one and staple it together okay it's all one form to your personal turn the only time it starts to be separate is if one it's an actual entity like an S corp or something or a partnership established LLC it's a partnership or it's an other than that it's gotcha okay so that's the perfect segue to my next question which I know a lot of makeup artists are just so confused about at what point should you become an LLC or maybe an S corp like at what point should you incorporate and become official should your based on how much money you are bringing in like what does that start making sense strategy you are bringing in 700k profit after expenses and everything okay so the moment is it's because I'm in two points point one becoming an LLC really because it's not attached to how much money you make it's about protection and it's about it gives you limited liability protection basically you become an entity in your once is once you file anything once you become an LLC so people make and it's an investment in Texas to become an LLC it cost $300 yeah I don't normally suggest that says oh I'm about to start selling things on Poshmark I'm gonna LLC my you know Terry's trinkets I wouldn't suggest just doing that first because it cost yeah there's a lot of responsibilities okay let s say you are in a business player someone you're a hairstylist you products one people you're doing things you could potentially there's some risk involved and they could sue you I was at by that person more sooner than later to hell they'll see it so that and elet limited liability is if someone Sue's you they're suing your business and your personal assets or a separate so when you want that protection that's the main reason that you want an LLC first off even if you're not making that much money just right up but the second reason you will want an LLC is because now this is a business I want to establish credit in this business it's growing we have to start to come in an actual formal business entity and being in becoming LLC to be able to do those types of things that makes so much things yeah so can we switch gears a little bit and talk about filing are there any benefits to filing quarterly versus violating just one time once a year they're only doing one time when you hear people filing every time those certain taxes come out you know you're going to pay your Social Security you're going to pay your medical there's nothing you can do those little boxes they're going to come out regardless the only one that you can kind of watch away with is the federal taxes but Social Security Medicare it's a pay-as-you-go system it's a lock that at you as you make it the money you pay into the IRS gosh that same law applies to business owners but the difference is we don't have a vehicle of a job of an employer taking that money from our checks so we're responsible to pay those make those payments quarterly they're called estimated tax payments right it's for a profitable businesses on a on a continuous basis Oh at the end of the year so if you're 100 percent full time yeah every time you do your taxes you owe $5,000 they I'm going if you continue to do that they're going to penalize you they're saying hey old us $5,000 in 2017 you need to estimate that you're going to owe us $5,000 in 2018 so decide that five thousand by four and make four equal quantumly payments to us otherwise we're going to penalize you because we are a pay-as-you-go system so that's what's happening quarterly and a lot of businesses don't really fall into that rhythm and here until they move completely out of that refund range their profits are wrong they don't even know about that they don't have a job that's kind of balancing it out so it's something a lot of people are like oh so I'm supposed to leave got it yeah yeah okay that makes so much sense that you for class so what are the penalties of not paying or filing your taxes whether you do a quarterly or what have you you know just skip it altogether what what's the potential risk so if you're not filing your taxes you're never paying you go on and do that then when you're trying to draw certain benefits as you get older you're not going to get that nice learn that we get pay if you retire you know you're not going to get those papers not that's your retirement plan right - you are by the time you do start filed right you have a mind to roll to make more money at some point you're going to be a profitable business going you've been flying under the radar our problem in a year in a moment I am officially a makeup mole like I took the team I'm tight on his class and I'm just making money and I'm just coming up off the radar and boom I made $40,000 this year it may send the rest breakfast girl where have you been since 2012 we have not I didn't know where have you been so you don't want that money there are certain flags and triggers that happen you're putting money in your bank you're swiping all these cards so it can the IRS problems usually you get away with it for so long and then they catch you when they go all the way back and they catch everything that you've done basically another problem with that is you want to purchase things like first you want to buy houses and you need tax returns for all of that in taxes and you are saying only made $5,000 every year then you aren't going to be in a position to really you know have things you own in your name you're going to always hold on someone else so you just again that's why I always go back to mindset it's because I think we see too much of the mindset where we're just trying to get away from the IRS we're just trying to like not pay them go below you don't beneath the radar but really you're hurting yourself you just have to accept the responsibility that this is a business and I have taxes so the best thing to do is to learn how to pay the least amount of taxes yes and I love that that is your philosophy of not flying on under the radar but you know as a business how you keep as much money as possible that you make so with that being said let's talk about expenses because that was a big one that comes up all the time and when I asked the question on my social media of what you know what questions they had for you it was expenses expenses expenses so can you give us just a quick high-level what are the types of things that you can as a makeup artist definitely anything that you use to slay anything close to that process not just only your makeup supplies and Russia but educational things to become a part of you know the makeup mogul University and the licenses you know anything that is going into running your business pretty much now there are other things that I like to teach my clients about when it comes to business expenses that aren't so obvious so that you know your name you know in the deep dive class with you an hour later and everyone else in the university but but the most basic thing is everything that you use to run and operate your business is a potential business expense but if you don't keep track you don't know I mean I see it so many times so how much did you spend and makeup it's pretty expensive grand enough what that mean like - yeah no it's so what happens in there like I don't know so let's just say I spent a thousand but if they had caught up they make which is why I love what you said about really making a profit no you have to make your numbers tell us for if you don't make if you don't have a mechanism some type of school then allowing your transactions make those numbers tell a story if you know that I spent twenty five hundred dollars in makeup and I only took in you know eighteen hundred dollars in services it felt like I was making money because I made five hundred dollars that day I did that whether it was yeah but then you like oh I haven't even made back the money for my makeup yeah differently and move differently I always tell people you need the numbers to tell you the story because when it's just just out over a whole year you can feel like you're profiting and you're not because you have a real job here yeah it's useful when you know that I need to make my money back you're going to plan differently you're going to move differently you are going to say you know what at a minimum you're going to come up with analytics okay I know that it cost me fifteen hundred dollars and supplies a year I need to book at least ten appointments that I'm going to make $150 at a minimum that's right after that is all profit so the business will tell you what it needs but if you're just out there just doing makeup and shopping you really don't know exactly where you're yeah yeah so do you have a recommendation for a tool or system that artists can use to kind of track their expenses as they go yes there are different principle there are so many different tools what you want to look up if just Google I'm online on bookkeeping system so there's of course your QuickBooks brush books and those are the most popular ones and then I have a lot of smaller like spring ones that I like to for newer beginners to look at and it's really easy to do your own bookkeeping once you learn it it does it may seem overwhelming at first like what I have to do all this stuff but really once it's explained to you in laymen terms you'll be like oh yes you have to have the mind to every month or every so often take care of it and make sure it's right so when it's time to file your taxes you are getting credit for every single dollar that every eyelash and this I tried everything yeah yeah so there are tools help keep up with that but a lot of people don't they get exhausted at the thought like Oh do that and that's why I'm vegan and I said it's a mindset shift because when I start to tell people these moves out like lose out on all the potential you know expenses that you could be writing off it's just kind of a part of the thing and I just wanted to share what's been working for me because it's it's not something I hear a lot of makeup artists talk about but it's become really easy so I actually have the PayPal MasterCard and so it's literally a debit card but I love using it because every time you swipe the card it sends you an email with the receipt so I have my yeah I have an email address that it's payment at Tyler Robinson comm and it goes straight to payment at Tyler Robinson comm and I have a spreadsheet and I just enter everything into my spreadsheet so literally and I only use that card for expenses so really everything is you know in the spreadsheet it takes the effort of going through and entering but at least you have a receipt for every little thing like when I travel and I you know buy meals when I Hotel like everything is accounted for because I'm like I need all of my coins okay cuz up before you even know it's like I didn't realize I was spending all this money just run my business bad about charging you know charging your word and have you gone through do you have your own personal store the first time you know because I've been honest since the beginning my husband is like really financially savvy and so he isn't on it you know he's OneNote you need to accept all these fingers moving about tracking my expenses because I didn't want that sticker shock seeing that bill because you know you you spend so much and then you know you have you know the money coming in so luckily that hasn't been my story but I know so many artists that that is the story and it's just like it's not a fun thing to go through [Laughter] I love making beginners experts you know that's my thing so I tend to get people who are ready in their life but I just don't know in most people they don't know until they not otherwise you know yeah and it's not something that within the makeup industry that we actually talk about a lot so that's why I really wanted to bring you on to have this conversation so at least we have the awareness like oh I should be thinking about this because it actually helps me to you know keep more when I'm when I'm making so I'm just happy that you're here and sharing this and I know that the artists that are in makeable university um it's just gonna like change everything for them like you said even in regards to how you approach your race like when you know you know your numbers it's like all that fear around charging it kind of goes out the window cuz if you want to have a business if you kind of have to flip a profit right like you have to be actually making my so it's just a different mindset so the other question that I wanted to ask you and it's kind of unrelated to that but kind of related to expensive a lot of makeup artists um do write off and you know when you're doing large bridal parties a lot of times you'll bring other makeup artists on to support you so you pay them out and it's like well how do i you know how do i do this so when you are I guess subcontracting um how do you manage that as as the prime of the person that's kind of doing the hiring you have them invoice you do you is that something that you can write off a lot of artists just kind of wanted to know just generally how they should handle so it depends so let's just always examples are better to walk through so let's say you Tiana you I'm doing a bridal party and there's 15 bridesmaids so I need to bring in a couple people mm-hmm but the bride is paying for everything so all that money is paid to you right um it looks like my Anna Mae oh yeah each one $200 each so that's $600 they like just to make it easy like they they paint you 1,600 it looks like you made 1,600 but you really only made one right away so how that would look is there you would love that in your expense tool whatever you are using you will love that some kind of way of saying I paid this person in that person and make sure that it's written down somewhere if you if that is the only time that you ever use those makeup artists and you don't use them ever again then that's pretty much the most that you have to do but let's say you have someone that's sort of your gold shoes yes with you so by the end of the year maybe you pay her $6,000 be brave you got really you know $500 a month you're paying her so you paid it one person at that point that would be a subcontractor and you will want to issue them a 1099 because the IRS is very particular about certain expenses if they're inflated they want some sort of specific official paper trail that is based so you would basically get that makeup artist just like a job you know I need you to fill out this w9 give me your ID your social because I'm going to give you a 1099 because this $6,000 that I paid to you is going to look like I made sixty six thousand when I own sixty running to pay your own taxes we do that you will issue them with their another whole process right let them attend night yeah so so you issue a 1099 basically online waste now is that the same because I know for me personally um and I just have my with you your hand of the side but it's not the same when you are let's say hiring a photographer for you you as the client your tax preparer it's their job to get okay got you know do I need to issue them with 1099 or not right that's all you need to know but if you just hire a photographer and on to my end of the this plane I would put that in the applicable place that's a service got you I will put it in other expenses yeah it's more so service the person that built your website you would give them a 1099 now your website right oh it so there's a sort of subjective definition okay got you but if you worked for a team your brand Jelena this basis been made so it's depending on how it works like he's your in-house you follow me everywhere I go you're my that's different then oh I just hired you for this intrepid a so will be it will go a different place you know for me I will put in a different place and give you different direction which is guys it's great that you know just that one piece of information I like to give you just the me to know oh wait I don't remember so do you see a subcontractor or is he a service like oh you just need to know if I am if I pay someone over six hundred dollars roughly here then I probably need to give them with ten and I need to express that and know how did you think so that at the end of the year I can write this off spacing without the IRS saying did you make that up prove it yeah so $600 is the cutoff where you need to with the IRS because their thing is they put that responsibility on you as the business owner because I just want to know that we want to know every dollar that people make we want to know what they think and if you're paying people out there then we want to know that now keeping it real does everybody do with that $600 that's where the whole concept of getting paid under the table come from not at you so you may not see it a lot because you're like wait I know people do I've never got it too naughty not I've been assisted they usually that's look that's the way it's supposed to go but when it gets in the thousand dollar rain just like don't play around if you can yeah all right ladies you know be looking looking up and I'm pay attention to how much you're paying folks my next question just generally has to do with the recent tax changes are there things cuz I know there's been rumors that like they're things that now we can't write off that we used to be able to and so there's a little bit of fear there so just generally are there things that we should know used to be writable that now we can't or now the can you still not be able to like what was the shape okay but not much has changed there are some things that have changed for me as a tax preparer explain but for the purposes of like what we're you know what you need to know not much has changed everything that you okay just the way I could breathe a little bit anymore just the way of me some of the mad for some writer you know may have changed a little bit but in terms of the expensive oh I did have one epic one final question and that is at what point should people actually hire a bookkeeper versus just kind of doing it yourself typically so the way bookkeepers work the way I would say the way bookkeepers work and flex a number of transactions that are going through your account and how much you have handling how many business announcing paths so first to define what bookkeeping is when you use that one PayPal MasterCard that you can if your your accounting system tries to be smart and it says just whiteness at McDonald's this was food used to type it out so this would you don't apply it tries to be too hard and do that but it is it it's a computer it's not as smart as it's you know it's not a hundred percent right Oh a book or goes in in on a monthly basis it looks at all all of those transactions that you swipe it in make sure that they're all categorized some says unknown and you have to go in and check the categories that it put to improve it so what happens if you do that correctly on a monthly basis and at the end of the year all you have to do is click a report and it'll save you spit this much at McDonald's this much announcer but in that they know that unless you made sure that every time you swipe it it was categorized correctly because it prior so a bookkeeper makes sure what one of the main things a bookkeeper does is on a monthly basis it makes sure that your transactions are categorized correctly and everything is accounted for that really if you don't have a lot going on if you're only going to the store it's vicious you're just a makeup artist and you're swiping your card you know don't start a few times a month there's really no reason to be paying someone to do that you can I Michael Owen but you can really do it yourself but oh but let's say for I'll use myself or an example when I had several specs change so not only I not only do I have okay I'm paying for software I have all these thieves coming out for all of the website this bet you know I'm going on dinners I'm going to a conference I'm having to buy things for this location that location I have expenses allocated to different businesses and different names when time consumed but I have a bigger operation going on and it's - its time-consuming for you know right but it's it's too time-consuming it's becoming overwhelming you know I'm a makeup artist and I also have this t-shirt brand over here the makeup little brand and I also have all of these students and I'm making money from my mock-up makeup mobile I have three different business accounting okay we're time for you to make sure that all three of those and counts or straight every month you're having so you're making money you know there's you know ten thousand fifteen twenty thousand dollars coming in you're spending five ten you know so there you need a bookkeeper at that point it's like it's because what happens is at the end of the year someone's trying to clean it up and it it will cost you $2,000 just for someone to try to do your whole bookkeeping critical here like two three thousand dollars just yeah come behind and try to clean it up because your books accidenti taxes right for clean you can't even get straight on the taxes but right right right speaking of different accounts um like should you have different bank accounts for your money is okay to be operating out it out of your personal account what is that never your personal account way no matter what whether you're an LLC or not no we don't operate out of our personal so you shouldn't have you should have and then as you can come more active in your business it's going to sort of tell you what you need to do you're going to create systems around your hand you know for a lot of people that one business accounts for money going in and point out and for some people it may it may be time to have one it's just more money coming out you know my employee I've kind of had people that were payroll up now yes sympathy will dry but you know what you do yeah cool okay I have one last question for real it just came to my mind and like three question agog that last question but speaking of having different accounts um should we get into the habit of actually paying ourselves so like setting aside every two weeks I'm gonna actually pay my like pay myself as though I were an employee of my my business is that necessary or if for tax purposes or not mm-hmm example one let's say you or you want to put yourself on payroll then you would just use a regular transfer and you wouldn't categorize it and search and such you know you would you know which role mm-hmm from you know very standpoint it really depends on where you are in business there are times where every dollar I made literally just goes okay now I can go you know you just business so it just depends on where you are honestly yeah just depends on where you are but if you are paying yourself so that you can keep track of it's difficult if it's irregular gosh you yeah you know that's you know just being honest it's difficult if it's if you're on an irregular you know I I'm just doing stuff every other week or different things so if you're not getting paid on a regular basis or on a regular basis but I definitely was the number one key is to let all of the money flow through your account and then just withdraw it out and make sure that that does not look like an expense but it looks like just what's wrong and there's a way you can categorize that on there so that it you know it doesn't look like an expense but it just depends on so if we could just use an example if you know that you regularly make $1,000 a month and you want you say okay I just want 500 of it every month mm-hm plus you know possibly maybe put in some aside for taxes you know I leave you know you just kind of have to understand what your situation is right at a minimum if you're making like consistent money to pick a percentage 20 percent 15 percent depend on how much you're making to put aside for tax okay that every week every two weeks at a minimum do that have except like you eat it could be your personal savings account but I'm putting this in here mm-hmm I'm put in like a hundred bucks the side of my taxes so when I found my taxes because I'm in the mindset that this is not a hobby business of business and when it's a business I may owe taxes and I will be prepared when the tax preparer say oh you have a little bill got you I haven't say I can put it aside yeah money already yeah yeah and so what is the what's the general range that folks should think about putting aside for tax preparedness I generally say 20 percent okay I generally say 20 percent typically some people hold on if they have a job look and they know they're making a considerable amount on the side they will actually allow their job to take a bit more out of their paycheck in an old family house that's when you kind of under you understand like my clients like you know I'm just let them check out more so it balances because remember I said it's the same tax returns right meet the you know it all tallies it's all like one bottom line so right sometimes people don't realize that the money or they they have kids and they got some credits for that that it's really making up for the taxes they would have old they don't really so that's another illusion of like I'm making money because if you have a job and you have kids it can all seem like it's not affecting you you know that not keeping up with those expenses or whatever because it kind of balances out but yeah right alright well I feel smarter and I feel like this is gonna be so helpful with at least just giving makeup art look just empowering makeup artists with at least the awareness of it these are things that I should be considering and it's not as overwhelming as a lot of people make it make it out to be like like I said my solution you're just using my paypal you know using that one card for everything I don't use any other card for anything else like anything online it goes to that card so that just made it so much easier but you know to plug into an app like all you native apps and everything and it's not a big deal it's not as hard as people make it see it yeah people just think it's a big joke but I'm always and when you ask that question about it's a two separate tax return yeah you'd be kind of client let me tell you they were her they had what houses cash I'm talking about 100,000 won only by the Duke and I was doing their texting almost April 15 and but but they also had jobs yeah she said okay taxes and she said okay and I'll just give you the business stuff later I was like that areas so I get like people are surprised like they really just in a head bunny like that came so you know it's something you know top dog that name work fine house cash did not know that their tables a big one why I'm never really I tell people don't don't feel bad that you don't know it's not a smart thing is that you have it it's new territory yeah yeah market not know that you know it's one well sorry I am so excited for your course and make a mobile University because we're gonna go even deeper into all of this so really excited to have you sharing your smarts with with our communities so how can people find you online and connect with you if they want to follow you or you know just be connected with you if you love this conversation and want to watch make up mobile TV episodes weekly don't forget to subscribe and hit that notification bell and be sure to share this video in the comments let me know if you learn something new or feel more confident about managing your coins I love hearing from you I'll see you next time and I ate a big deception okay Terry is a tax expert with 14 with over 40 mm disease and disorder will pay now sub crack